PROGRAM BUDGETING
EXPERIENCES FROM SLOVAKIA
Ján Marušinec TbilisiJune 2007
General note on program budgeting
WHAT IS PROGRAM BUDGETING GOOD FOR?
Accountability
Effectiveness and efficiency
Transparency
1. IT IS AN ALLOCATION TOOL
2. IT IS A MANAGEMENT TOOL
Content of the presentation
Current development stage
Future challenges
Brief history of program budgeting in Slovakia
Program examples
Brief history of PB in Slovakia
EARLY STAGES: DESIGN PHASE (2000-1)
obstacles: the understanding of program budgeting is limited only on time-limited Government activities; middle-management of MoF is not identified with the change in the system of budgeting
U.S. Treasury advisor (upon ministers request) begins with the program budgeting preparation in Slovakia
pilot line-ministries produce simple program structures for budget year 2002
Minister decides about gradual introduction of the system: 4 pilot line-ministries, expanded to 10 line-ministries in 2003 and for 2004 full program budget
Brief history of PB in Slovakia
THE SYSTEM IS BECOMING OPERATIONAL (2002-3)
MoF issues PB methodology to be used in 2003 and guides the line-ministries intensively during the process of program budget preparation
New minister of finance supports the change and confirms the decision to apply PB globally since 2004
Big revision of programs, goals and objectives is performed based on the Government Declaration, MoF heads a new Steering Committee to coordinate budget reforms on line-ministry level
Budget for 2004 is in full program structure, but doesn't include other subjects of the public sector
Major reorganization takes place at the MoF
Brief history of PB in Slovakia
THE SYSTEM IS MATURING (2004-6)
Revised PB methodology is issued, Budgetary Rules include a definition of multi-annual program budget
State Treasury becomes operational, but doesn't support program classification of expenditures
MoF switches from inputs/activities to outputs/outcomes in budget negotiations, part of total budget expenditures is allocated for Government priorities, discussion on quality of performance indicators starts
6 pilot line-ministries get their own budgeting advisors within the WB project; their activity is aimed at improvement of budgeting and budget management through programs
Brief history of PB in Slovakia
THE SYSTEM IS MATURING (2004-6)program structures are relatively stabilized, MoF gives higher priority to goals, objectives and measurable indicators quality
budget discussion is more structured, non-financial data are used also by ministers and other politicians during the negotiations
State Treasury starts to execute the budget also by program structure since 1.1.2006
the new program budgeting module within the Budgetary Information System (BIS) becomes operational, fully integrated with all the other BIS modules
Current development stage
INSTITUTIONS CONCERNED
Public, media
Parliament SAO
Government
Line-ministries
MoF
Current development stage
BUDGET PROCESS
EXECUTION
MONITORING
& EVALUATION
PLANING
Current development stage
METHODOLOGY GOVERNING PB
Budgetary Rules Law
Methodological handbook of MOF on program budgeting
Manual on formulating goals, objectives, and measurable indicators
Manual on monitoring and evaluation of programs (in preparation)
Current development stage
THE PROGRAM SETUP
Programs, sub- programs and elements (permanent) or projects (temporary)
Goals (strategic, long-term, without specific value), objectives (specific, annual or multi-year, specific value)
Government approves program structure, Parliament approves programs, selected goals and objectives
Monitoring is performed on half-year basis, evaluation is missing at the moment
Current development stage
LOGICAL FRAMEWORK OF A PROGRAM
Results
Outcomes
Outputs
Inputs
Goals
M-T outcome objectives
Specific objectives
Output objectives
Inputs
Current development stage
PROGRAM EXAMPLE
Program: Law enforcement Goal: Ensure citizens safety
Sub-program: Area patrols Strategic objective: Reduce crime by 10 % to 2010 Measurable indicator: Crime rate
Element: High crime area surveillance Objective: Increase police presence in the streets Measurable indicator: No. of hours guarded
Current development stage
PROGRAM EXAMPLE II
Program: Road infrastructure Goal: Increase transport speed and safety
Sub-program: Highways and motorways Strategic objective: Increase East-West road traffic capacity by 10 % to 2010 Measurable indicator: Road traffic capacity in ths cars/hr
Element: Highway and motorway construction Objective: Build 50 kms of new highway system in 2007 Measurable indicator: No. of kms build
Program 070: Prison system
Goal
Ensure the proper functioning of imprisonment, and security of judiciary and prosecution buildings in compliance with national requirements and EU recommendations
Medium-term outcome objective
Increase the imprisonment of sentenced persons from 84% in 2004 to 95% in 2010
Program 070: Prison system
Specific objective
Gradually increase the average of prisoners per guard, achieve an average ratio of 2,23 in 2007.
Output objective
Increase the capacity of prisons by 250 beds and achieve a total capacity of 10 733 in 2007.
Program 070: Prison system
Result indicators
% of citizens that feel safe in the streets
Ratio of second offenders on total crime rate
Outcome indicators
% of imprisoned persons out of sentenced persons
Average number of prisoners per guard
Program 070: Prison system
Output indicators
Capacity of prisons
Average area (sqm) per prisoner
% prisoners working while in prison
Input indicators
Number of sentenced
Number of prisoners
Number of guards
Future challenges
INSTITUTIONAL CHANGES
Building-up of a functioning M&E system
Involvement of other institutions (mainly SAO)
Unified top-down approach (strategic policies)
Improve program formulation (objective hierarchy and quality)
Decentralization of budgeting in the line-ministries
Future challenges
TECHNICAL CHANGES
Improve EU funds integration into the budget
Improve management of multi-ministerial programs
Bringing order into non-financial data
Adjustment of IT systems to increased demands
Improvements in the budgetary process (reform burden)
Thank you for your attention
Monitoring and evaluation
Establishing M&E is a long-run process, starting with simple centralized model to enhanced decentralized one
Should provide feed-back to policymakers and program managers how they could increase efficiency and effectiveness
There is no universal model for M&E function across the OECD countries
Should be integrated into the budgetary process in some way, otherwise M&E is just formal issue
Monitoring and evaluation
MONITORING
During and immediately after the program execution phase
Focuses on financial aspects and physical outputs
Regular (frequent) activity aimed at checking the progress achieved in program implementation
Performed in-house by line-ministry monitoring units
Monitoring and evaluation
EVALUATION
Performed before (ex-ante) or after (ex-post) the program starts / ends
Focuses on overall program logic, outcomes and effectiveness of their achievement
Ad-hoc (can also be regular, but not frequent) activity aimed at evaluating the program performance
Performed by external professionals, managed by evaluation cells and coordinated centrally
Monitoring and evaluation
INSTITUTIONAL ARRANGEMENTS
Monitoring and evaluation cells in the line-ministries
Across the Government coordination of M&E methodology and implementation (MoF or committee)
Close link to budgetary process to really enhance program performance (carrot and stick)
Extensive re-education program for government employees (either new people are hired or workload of performing current tasks is reduced)
Data management
FINANCIAL DATA
Budget preparation phase
Budget execution phase (modified budget, Treasury data)
Accounting
Classifications used have to be consistent
Bridge tables help to keep up-to-date time series
Data management
NON-FINANCIAL DATA
Spread among various different sources / users
The same logic should apply as with financial data
An integrated IT management system should contain financial and non-financial data
Budget analysis is impossible without non-financial data