Study of LGA Fiscal Inequities

Presentation of Draft Report Workshop 25 March 2014

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Overview of presentation

1. Objective of Assignment 2. Approach and Methodology 3. Key Findings and Conclusions

a) Patterns of inter LGA disparities (inequities and inequalities)b) Intra LGA disparities (within LGAs),c) Drivers of inequityd) The impact on service delivery,

4. Recommendations a) Local Strategies for staff attraction, retention and motivation,b) Greater attention to HTRS LGAs in central staff allocation,c) Improve transparency, LG OC funding and explore alternative

approaches

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1. Objective of Assignment

The analytical objective of the assignment is to analyze progress, achievements and challenges of the current strategies for addressing inequalities of recurrent grant allocations across LGAs.

The ultimate aim of the assignment is to provide guidance on how the declared Government policy of more equitable LGA staff and fund allocations (for the purpose of achieving more equitable service delivery), can be supported through the LGA grant system (both recurrent and development grant systems) and other relevant measures.

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2. Overall Approach

Documentary review, Analysis of patterns of resource allocation across LGAs

– Fiscal (and selected HR) data last 5 years.– General trends + sector analyses,

Fieldwork in 11 LGAs– Focus group discussions with LGA management teams, – Data on LGA internal resource allocation and service delivery in

all wards/facilities– Interviews and site visits to 117 facilities in 36 wards– Questionnaire survey data from 625 public servants .

Exploration of possible strategies – Consultations with national and LG officials and DPs– Review of experiences of previous strategies

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2.1 Team

Per Tidemand, DEGE Consult Team Leader

Nazar Sola, DEGE Consult LG HRM Specialist

Alloyce Maziku, DEGE Consult LG PFM Specialist

Tim Williamson, ODI Intergovernmental Transfer Systems

Cathal Long, ODI PFM / Fiscal Analysis

Julia Tobias, ODI Service Delivery / Governance Analysis

Helen Tilley, ODI Management / QA

Kevin Watkins, ODI Senior Technical Review

Coffey/Overseas Development Institute has with Dege Consult been contracted by DfID to undertake the assignment. The team reports to an inter-ministerial task force composed by: PMO-RALG, MOF, PO-PSM, invited sectors and DP representations.

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2.2 Overall work schedule

October 2013 – launch of study, draft IR November Discussion of Inception Report 23 January Field work preparation (testing, letters, travel booking

etc) – up to 7th February, Fieldwork in selected LGAs: 10 - 28 February Draft Final report: 20 March Presentation of report to Government: 25 - 26 March Final report: 7 April (for ODI final QA) – submission 14

April to Coffey 18 /22 April  to Client/DFID

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3. Key Findings

1. Definition of key concepts,2. General patterns of Financing services in LGAs3. Patterns of inter LGA disparities (inequities and

inequalities)4. Intra LGA disparities (within LGAs),5. What are the drivers of inequity?6. What is the impact on service delivery?7. What has been done to improve the situation?

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3.1 Definition of key Concepts

Definitions: Inequity = “fairness” – need based formula is a proxy, Inequality = variation in distribution (per capita), Disparity an overarching term to cover both of the above. “disadvantaged LGA” – relative underfunded/- under

staffed compared to average per capita or formula HRTS = Hard to Reach and Stay (LGA)

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3.2 LGA Finances – the importance of recurrent “block grants”

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National

Regions

LGAs

Subv & B

askets 

Subve-ntions

Localfacilities,providers

OC

– General Purpose

PE - Sector

 

Recurrent Block Grants

PE – General Purp

OC

- Sector

Transfers financing recurrent expenditures CapitalDevelopment

Grants

Own Source

Revenue

LGA

OSR

OC – General Purpose

Citizens

 

LGDG & Sector Development Grants

OC Facility User Fees

Capitation Grant

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3.2 Fiscal transfers are mainly for PE

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2009/10 2010/11 2011/12 2012/13 2013/140

500,000

1,000,000

1,500,000

2,000,000

2,500,000

Personnel EmolumentsOther ChargesDevelopment Expenditure

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OC is decreasing in real terms(per capita allocations in 2013/14 prices – analysis of sector recurrent)

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3.2 Inequalities in Sector Block Transfers

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Overall Sector Block Transfers 2013/14 Budget (Per Capita, TzShs)

Rural CouncilsArusha MC

Babati TCBukoba MC

Dodoma MCHandeni TC

Ilala MCIlemela MC

Iringa MCKahama TC

Kasulu TCKibaha TC

Kigoma/Ujiji MCKinondoni MC

Korogwe TCLindi MC

Mafinga TCMakambako TC

Masasi TCMbeya CC

Morogoro MCMoshi MC

Mpanda TCMtwara MC

Musoma MCNjombe TC

Shinyanga MCSingida MCSongea MC

Sumbawanga MCTabora MCTanga CC

Tanzania Shillings, Temeke MC20013/14 Prices Tunduma TC

0 Rungwe DC - 210,088 Kahama TC - 93426,261 Kibaha DC - 126,002 Kasulu TC - 1,00552,522 Mwanga DC - 119,722 Handeni TC - 1,10078,783 National 52,186 Musoma DC - 114,162 Mlele DC - 1,376

105,044 Urban LGAs 54,651 Korogwe TC - 108,370 Tunduma TC - 4,042131,305 Rural LGAs 51,427 Kisarawe DC - 105,812 Kalambo DC - 4,068157,566 Bariadi TC - 105,583 Butiama DC - 4,753183,827 Pangani DC - 100,457 Momba DC - 19,872210,088 Makete DC - 99,819 Ilemela MC - 26,389236,348 Mafia DC - 95,718 Urambo DC - 29,027

Urban Councils

26,867

Key

Units

Mainland Total (bn) Top 10 LGAs Bottom 10 LGAs2,345

Average Per Capita

Standard Deviation

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3.2 Inequalities in recurrent transfers over time(deviation from mean per capita)

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3.2 Patterns of Inequality and Inequity have across LGAs remained fairly constant

Patterns of Inequalities across major sectors tend to reinforce each other,

PE drives inequities – because of its size Analyses of Inequity (index of fit to allocation formula)

shows that:– Health and Education sectors are in relative terms most aligned

with formula – but because of their total size they drive the patterns of total inequity,

– The best fit to formula is found for health sector basket,– Over the last five years there have been no major improvements

in terms of greater alignment with formula based allocations

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3.3 Inequities Within LGAs – PTR Primary Education

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1634

65

14 2543

11

58

434

1030

5719

69

298

1150

224

19

87

780

934

5115

69

212

3256

93

11

56

107

pupi

l-to-

teac

her r

atio

Min Mean Max

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3.3 Inequities Within LGAs – PTR Primary Education

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Kibaha Korogwe Iramba Mafia Sumbawanga Kigoma Uvinza Bukoba Nzega Ushetu Msalala0

10

20

30

40

50

60

70

80

90

100

1614

11 10

19

11

19

9

15

32

1134

25

58

30

69

50

87

34

69

56 56

65 43 434 57 298 224 780 51 212 93 107

min mean max

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3.3 Inequities within LGAs – Other sectors and general observations

Secondary PTR also display significant variation within all LGAs – but not as substantive as for primary. However ranging from 42-149 in Uvinza and 7-34 in Bukoba,

Health sector staff in dispensaries ranges 1-10 in most districts, OPD per staff variation is enormous e,g, 225-2640 in Kigoma,

Agriculture extension staff distribution more difficult to compare but e.g ranging from average of 0.1 to 0.7 per village in Sumbawanga – outreach limited as rarely with transport,

Generally: Most variation within the LGAs that generally can be classified as HRTS.

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3.4 Drivers of Inequities

PE allocations (in particular education and health) is the key determining factor for overall patterns of fiscal inequities

Some workers will not and do not report to work if posted to certain LGAs;

Staff resist postings to remote areas within LGAs, even if they report to work in a given LGA – especially challenge for health sector

It is difficult to retain staff in remote areas even if they do report.

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3.4 Primary Education Staff Allocations

  2010 2011 2012 2013

PTR national average

51 47 46 43

LGA PTR min 26 24 26 25

LGA PTR max 105 74 61 76

LGA PTR st. deviation

11.9 9.1 7.7 8.5

LGA PTR above 50 68 50 31 37

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MoE started specific targeting of most needy LGAs in 2009,Improvements in equity – except for last year – as LGAs split (indicate LGA internal inequities)Improvements eased because of overall Norm almost achieved

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3.5 Inequities lead to inefficiencies!

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3.5 Significant potential for more effective use of staff

World Bank TZ Economic Update 2012 concludes that geographical re-allocations could lead to TZS 240 billion in efficiency savings

In health sector SDI data: 18% of staff conduct more than 50% of out patient consultations in dispensaries

Fieldwork: – many secondary teachers teach only 1-2 hours a day,– Many health facilities with very low OPD/health worker,– Management focus on (unaffordable) “staffing norms” rather

than most effective use of existing resources,– Some local strategies (e.g. Kigoma) have achieved results in

favour of improved staff allocations

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4. Main Conclusions & Recommendations

Main Conclusions Two Main Strategies:

– Support local strategies for staff retention and motivation,– Central (re) allocation of staff to most needy areas,

Complimentary Actions Draft Action Plan

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4.1 Main Conclusions

The inequalities and inequities in resource allocations across LGAs are without any doubt:

– Very substantive,– have persisted over many years – Mainly driven by PE allocations and HRM practices

In addition, there are very significant inequities in resource allocations within LGAs – the problems are most significant in HTRS LGAs,

The inequities are unfair and lead to substantive inefficiencies in service delivery

Some solutions have proved effective:– Targeting of staff allocations by the central government,– Local schemes for staff attraction, retention and motivation,– Local HRM practices

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4.2 Main Recommendations

1. Support local strategies for staff retention, motivation and service deliverya) TA for development and M&E of plans,b) Funding of the plans through a special budget allocation of approx 4 bn

TZS per LGA c) Target initially 30 most needy LGAs,

2. Central (Re) Allocation of staff to most needy LGAs1. Allocate additional new staff strictly according to relative needs: (rather than

only sector norms) LGAs that are above average staffed should not receive additional staff,

2. Consider reallocation of staff away from LGAs that are staffed significantly above average,

3. Establish a transparent system for monitoring of staff allocations, retention, and transfers

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Recommended Guidance for “Local Strategies”(Conditional for funding)

A situational analysis: – Relative use and effectiveness of staff/facilities/units to deliver services– The key factors that define specific areas within the LGA as HTRS

Proposed incentive structure for retention and motivation of staff in HTRS:– Targeted support for staff housing with indication of maintenance plans– Transport, Training scheme targeting staff in HTRS– Fiscal incentives for “settling in”, Fiscal incentives for staff attendance in HTRS

HRM Plans,– Plans for staff transfers– Plans for staff supervision and support

Contracting out of services– Use of contract staff (teachers etc.)– Outsourcing services

Monitoring the impact of the scheme through:– Staff attendance and Staff work load– Service delivery overall in the LGA, by facility and in local HTRS– Benchmarking unit costs

 

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Complimentary Recommendations

Increased and more equitable allocation of OC, Improved Transparency of LGA resource allocations and

use, Improved HRM and Performance Management Strengthen Demand Side of Accountability, Explore further use of market based approaches

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Draft Action Plan

Indicative outline page 59 Proposed institutional arrangements:

– A steering committee – composed of MOF, PO-PSM, PMO-RALG, MoE, MoHSW, MAFS, ALAT and selected LGA representatives,

– In the event of some DPs being willing to finance the activities, they should also be included in the steering committee

– The steering committee is chaired by PS PMO-RALG– A secretariat is established with senior representatives from the

above institutions and possibly supported by TA

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End of Presentation

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