DECENTRALIZATION AND FINANCING OF SERVICES Gordana Matković Sofia, July 2007.
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Transcript of DECENTRALIZATION AND FINANCING OF SERVICES Gordana Matković Sofia, July 2007.
DECENTRALIZATION AND DECENTRALIZATION AND FINANCING OF SERVICESFINANCING OF SERVICES
Gordana MatkoviGordana MatkoviććSofia, July 2007Sofia, July 2007
ON DECENTRALIZATIONON DECENTRALIZATION
Decentralization means…Decentralization means…
Transferring different functions toTransferring different functions to Lower levels of state administrationLower levels of state administration
Non state institutions and stakeholdersNon state institutions and stakeholders Non government organizationsNon government organizations Private companiesPrivate companies CitizensCitizens
Non- state institutions and stakeholders Non- state institutions and stakeholders are included are included
On the supply side/through service provisionOn the supply side/through service provision
On the demand side/selection and purchasing On the demand side/selection and purchasing of services of services
oror Through participation in decision-making and Through participation in decision-making and
representing the interests of different groups representing the interests of different groups
Motives for decentralizationMotives for decentralization Slow changes, lack of efficiency, flexibility and Slow changes, lack of efficiency, flexibility and
innovation at central levelinnovation at central level
Local specificities and needs can be better identified Local specificities and needs can be better identified and resolved at local leveland resolved at local level
Decentralization also provides incentives for Decentralization also provides incentives for competition between:competition between: Local governmentsLocal governments State and non-state actors in service provisionState and non-state actors in service provision
Decentralization facilitates citizens’ participation in Decentralization facilitates citizens’ participation in decision-making which induces better quality servicesdecision-making which induces better quality services
There could also be OTHER MOTIVES There could also be OTHER MOTIVES
Resolving political crises due to ethnic and Resolving political crises due to ethnic and religious conflictsreligious conflicts
EU integration process (the effect of empathy)EU integration process (the effect of empathy)
Shifting responsibility to lower level government Shifting responsibility to lower level government to avoid:to avoid: Unpopular reform measures Unpopular reform measures andand Fiscal crises and deficit at central levelFiscal crises and deficit at central level
Limitations and PreconditionsLimitations and Preconditions
Adequate level of democratizationAdequate level of democratization Differences in the level of development between Differences in the level of development between
LSGLSG Control mechanisms adapted to a decentralized Control mechanisms adapted to a decentralized
functioning of state and societyfunctioning of state and society Adequate capacity at local levelAdequate capacity at local level Clear division of mandates, responsibilities and Clear division of mandates, responsibilities and
fundsfunds In transition countries reform “mind-set” more In transition countries reform “mind-set” more
present at central than at local levelpresent at central than at local level
Limitations arisingLimitations arisingfrom the specificity of social protectionfrom the specificity of social protection
Social welfare beneficiaries, are as a rule, Social welfare beneficiaries, are as a rule, the least empowered in society:the least empowered in society: Insufficiently informedInsufficiently informed DisorganizedDisorganized Do not have political powerDo not have political power Needs are concealedNeeds are concealed
Limitations arisingLimitations arisingfrom the specificity of social protectionfrom the specificity of social protection
Local governments do not see their Local governments do not see their (political) interest in allocating funds for (political) interest in allocating funds for social protectionsocial protection
There are other big problems that affect There are other big problems that affect a larger number of citizens / votersa larger number of citizens / voters
There is a greater chance that prejudice There is a greater chance that prejudice towards some groups is manifestedtowards some groups is manifested
What should be decentralized What should be decentralized in social protectionin social protection
Cash benefitsCash benefitsThere is no convincing proof for decentralizationThere is no convincing proof for decentralization
THEORYTHEORY Redistributive functions should largely remain in the Redistributive functions should largely remain in the
mandate of the central levelmandate of the central level
Less developed municipalities/regions would not Less developed municipalities/regions would not have sufficient funds for redistributionhave sufficient funds for redistribution
The interests of specific vulnerable groups will be The interests of specific vulnerable groups will be better protected if looked after at central levelbetter protected if looked after at central level
What should be decentralized What should be decentralized in social protectionin social protection
EXPERIENCEEXPERIENCE In the majority of developed countries In the majority of developed countries
minimum rules and financing are at national minimum rules and financing are at national levellevel
In most cases experience in decentralizing In most cases experience in decentralizing cash benefits in transition countries is not cash benefits in transition countries is not positivepositive
Decentralized system can lead to differences Decentralized system can lead to differences in accessing assistance, thus disrupting in accessing assistance, thus disrupting horizontal equity that can hardly be justifiedhorizontal equity that can hardly be justified
What should be decentralized What should be decentralized in social protectionin social protection
ServicesServicesWhy should then the system be decentralized in the area of Why should then the system be decentralized in the area of
services?services? THEORYTHEORY
Dividing the roles of service purchaser and service Dividing the roles of service purchaser and service provider corresponds to a decentralized government provider corresponds to a decentralized government
Local needs for services can be very specific due to Local needs for services can be very specific due to demographic, economic and social specificitiesdemographic, economic and social specificities
Inter-sectoral cooperation at local level is necessary in Inter-sectoral cooperation at local level is necessary in organizing servicesorganizing services
Decentralization also means inclusion of different Decentralization also means inclusion of different stakeholders in service provisionstakeholders in service provision
What should be decentralized What should be decentralized in social protection in social protection
EXPERIENCEEXPERIENCEAre we really talking about devolution if at central Are we really talking about devolution if at central
level:level: Policies, legislation and national standards Policies, legislation and national standards
are definedare defined Financing is secured through central Financing is secured through central
government grants government grants Inspection and control functions are organized Inspection and control functions are organized Good practice guidebooks are produced…Good practice guidebooks are produced…
DECENTRALIZATION AND FINANCING DECENTRALIZATION AND FINANCING OF SERVICESOF SERVICES
I case - I case - Financing of Residential Institutions (RIs) at Financing of Residential Institutions (RIs) at national & alternative services at local levelnational & alternative services at local level
Weaknesses/ShortcomingsWeaknesses/Shortcomings Strong incentive for placement of children in RIs (at the Strong incentive for placement of children in RIs (at the
expense of national budget)expense of national budget) The mere fact that RIs exist absolves local governmentsThe mere fact that RIs exist absolves local governments The poorest LSG do not have resources to develop The poorest LSG do not have resources to develop
alternative servicesalternative services In “better-off” municipalities/regions there are also many In “better-off” municipalities/regions there are also many
competing needscompeting needs
I case I case
Weaknesses/ShortcomingsWeaknesses/Shortcomings Social welfare at local level often “loses battle” with Social welfare at local level often “loses battle” with
education and healtheducation and health It is more likely that financing of alternative services will be It is more likely that financing of alternative services will be
irregularirregular Services, cost effective only when established for several Services, cost effective only when established for several
municipalities, will not be createdmunicipalities, will not be created More difficult to respect the principle money follows the More difficult to respect the principle money follows the
clientclient
II case - Everything financed from national levelII case - Everything financed from national level
ProblemsProblems Creating budgetary space for transitional costsCreating budgetary space for transitional costs Non-responsiveness to specific needs of local Non-responsiveness to specific needs of local
communitiescommunities Citizen participation in decision making and advocacy are Citizen participation in decision making and advocacy are
not possible and effectivenot possible and effective Dividing the role of service purchaser and service provider Dividing the role of service purchaser and service provider
will not be efficientwill not be efficient Lack of incentives for local level to choose “the cheapest” Lack of incentives for local level to choose “the cheapest”
solution for social caresolution for social care
III case - Both RIs and alternative services at local levelIII case - Both RIs and alternative services at local level
Risks of decentralizing prior to reforms:Risks of decentralizing prior to reforms: Reform ideas are usually more present at central levelReform ideas are usually more present at central level Does not automatically lead to the selection of the Does not automatically lead to the selection of the
cheapest and best care optioncheapest and best care option In some CIT local level tends to keep RI due toIn some CIT local level tends to keep RI due to::
Resistance of staff who are at the same time votersResistance of staff who are at the same time voters More conservative professional attitudes towards alternativesMore conservative professional attitudes towards alternatives
In some countries only mandate is shifted, but not the In some countries only mandate is shifted, but not the fundsfunds
III caseIII case
Risks of decentralizing prior to reforms:Risks of decentralizing prior to reforms: If resources are shifted to local level as well, it is less If resources are shifted to local level as well, it is less
feasible to financially “manage” reforms from national feasible to financially “manage” reforms from national level, that is:level, that is:
To “maneuver” with financial incentives for development of To “maneuver” with financial incentives for development of alternative servicesalternative services
To use potential savings (from deinstitutionalization) for To use potential savings (from deinstitutionalization) for development of alternative servicesdevelopment of alternative services
To obtain additional funds for poor LSGTo obtain additional funds for poor LSG
Problems of inter-municipal payments for servicesProblems of inter-municipal payments for services
What can we do? What can we do?
Do not opt for quick decentralization to lower Do not opt for quick decentralization to lower level government, especially if:level government, especially if:
Regional level government does not exist Regional level government does not exist There are no control mechanisms There are no control mechanisms If there are large differences in LSG level of If there are large differences in LSG level of
development development If LSG do not have adequate capacity If LSG do not have adequate capacity
What can we do? What can we do?
In some segments / under certain conditions - In some segments / under certain conditions - reforms should precede decentralization (e.g. reforms should precede decentralization (e.g. foster care) foster care)
Examine the option of “asymmetric Examine the option of “asymmetric decentralization” with clearly defined decentralization” with clearly defined responsibilities for development of alternative responsibilities for development of alternative care care
When implementing decentralization, financial When implementing decentralization, financial resources must follow the shift of mandates resources must follow the shift of mandates
What can we do? What can we do?
It should be noted that even services financed It should be noted that even services financed from national level and provided by non-state from national level and provided by non-state providers e.g. foster care, can be considered as providers e.g. foster care, can be considered as decentralization decentralization
One option for overcoming the problem of One option for overcoming the problem of resources captured in RIs, is to engage RIs staff resources captured in RIs, is to engage RIs staff in providing alternative services and/or in M&E in providing alternative services and/or in M&E
Financing from multiple sources (both national and Financing from multiple sources (both national and local) is perhaps the best financing option for local) is perhaps the best financing option for alternative servicesalternative services
What can we do? What can we do?
Transfers from the national level should be Transfers from the national level should be earmarked earmarked
Securing funds at national level for sustainable Securing funds at national level for sustainable financing, particularly for: financing, particularly for:
Services in small and undercapacitated municipalities Services in small and undercapacitated municipalities Services that are considered especially important by the Services that are considered especially important by the
national level and are not sufficiently recognized as important national level and are not sufficiently recognized as important at local level at local level
Covering transition costs in establishing services Covering transition costs in establishing services