The article analyzes the problem of justifiability of the coexistence of autonomous and budgetary institutions in the scope of their historical development as an institutional basis for reforming the public services sector to maximize their economic potential by introducing competition into this sector. A significant stage of such development is the transition from a soft approach to changing the type of separate budgetary institutions, which involves expanding their independence at the founder’s discretion, to a complete and imperative rejection of the possibility of remaining in their previous status. Unification of the statuses of budgetary and autonomous institutions, which accompanied these processes, manifested itself in changes to the parameters of their financial support by the founder, leading to a decrease in the level of previous independence, even for autonomous institutions. There are no practically significant differences in the legal regime of property owned by budgetary and autonomous institutions. In the current circumstances, special attention is paid to the status of universities. Definition of their type as budgetary or autonomous institutions doesn’t have a marked impact on the content of their foundation documents, which allows to insist on the necessity of further comprehension of the issue of university categorization if it remains relevant for the management of the higher education system. Transition period of coexistence between autonomous and budgetary institutions has been unjustifiably prolonged. While the authors prefer autonomous institutions with a slightly greater degree of economic freedom in the context of reforming public services, they nevertheless deny that this organizational form is optimal for functioning in a competitive environment. The article supports the idea of organizing the provision of budget services based on the separation of the function of managing the state property necessary for this purpose. The most important state institutions could play their own role in these processes.