county costs analysis details_john kinuthia

How Much Does it Cost to Run My

County Government?

John Kinuthia

Research Analyst30/09/2015

What we did…

• Estimated the costs of core personnel and

administration required to run a county.

• Core personnel is mostly senior staff, state officers

from both the executive and the assembly

• Administration includes support staff as well as

insurance costs at both levels of government.

• Operation and maintenance costs are calculated as

a percentage of total wage costs excluding

insurance

• We also calculated car loans and mortgage costs for

CECs and MCAs only.

www.Internationalbudget.org/kenya 2

Which data we used…

• SRC circulars issued between March 2013 and

December 2014.

• Reports and circulars from the Commission on

Revenue Allocation.

• Division of Revenue Bills and Acts 2013/14

and 2014/15



Core Personnel

County Executive

Governors

Deputy Governors

CEC Members

County Secretaries

Chief Officers

County Assembly

Speaker

Deputy Speaker

Leader of Majority

Deputy Majority Leader

Chief Whip

Deputy Chief Whip

Leader of Minority

Minority Whip

Chairpersons (excl the Speaker)

V/chairpersons

Speakers Panel

All other MCAs

Calculating the number of Assembly Committees

• The County Assembly Forum website had

committee data for all 47 counties but only 38

were complete.

• The actual number of committees fluctuated

between 15-26.

• We took an average of the 38 complete sets=

20 committees per assembly

• We used this average for all counties, rather

than actual numbers to avoid incentivizing

counties to have more committees


What is the cost difference based on the number

of Assembly Committee Numbers?

• The total running costs for counties based on

an average number of committees is Ksh 48.5

billion

• Using the actual number of committees the

total costs was slightly lower at Ksh 48.4

billion.

• However, the differences at individual county

level were more varied.



County

Average Committee

Number

Actual Committee

Numbers Difference

% Change in Total

County Costs

1 MAKUENI 20 25 10,218,000 1.0%

2 KILIFI 20 23 8,133,840 0.7%

3 MOMBASA 20 24 7,506,720 0.7%

4 UASIN GISHU 20 24 7,122,960 0.7%

5 GARISSA 20 23 7,104,240 0.7%

COUNTY AVERAGE 20 20 592,734 0.1%

5 WAJIR 20 17 8,133,840- -0.8%

4 VIHIGA 20 16 8,505,120- -0.9%

3 KAKAMEGA 20 16 (10,845,120) -0.8%

2 NAKURU 20 16 (10,845,120) -0.8%

1 TURKANA 20 15 (13,556,400) -1.3%


Adminstration

County Executive

Chief of Staff

Chair County Public Service Boards

Vice Chair County Public Service Boards

Member County Public Service Boards

Secretary County Public Service Board

County Treasury

Sub-County Administrators

Ward Administrators

Support Staff Governors Office-:of which

Cooks

Tea Person

Gardener

Advisors

County Assembly

County Assembly Staff

County Assembly Ward Staff

County Assembly Service Board

Core Personnel

• The total cost for core personnel in the

counties is Ksh 22.7 billion.

• The County executive makes up Ksh 6.6 billion

of this while the assembly estimated costs are

Ksh 16.1 billion.

• Ksh 6.7 billion of this are costs for operations

and maintenance.



County Core Personnel

Estimated Cost

(Billions)

Core County Executive Personnel 4.7

Estimated O&M for County Executive Core Personnel 1.9

Total County Executive Core Personnel Cost 6.6

Core County Assembly Personnel 11.2

Estimated O&M for County Assembly Core Personnel 4.8

Total Core County Assembly Personnel Cost 16.1

Total for County Core Personnel 22.7

County Administration

• The total administration costs came to Ksh

23.1 billion.

• The executive is the big driver of this cost

accounting for Ksh 14 billion while the county

assemblies cost came to Ksh 9.1 billion

• Operations and maintenance costs were Ksh

5.3 billion of the total.



County Administration

Estimated Cost

(Billions)

Executive Administrative Personnel 10.8

Estimated O&M for County Executive Administration 3.2

Total County Executive Administration Cost 14.0

County Assembly Administrative Personnel 7.0

Estimated O&M for County Assembly Administration 2.1

Total County Assembly Administration Cost 9.1

Total County Administration Cost 23.1

Bringing it all together

• Our total estimates for county running costs

was Ksh 48.5 billion

• The Assemblies make up Ksh 27.4 billion and

the Executive estimates are Ksh 21.1 billion


Car Loans and Mortgages

• SRC released 2 circulars (in 2013 and mid-2014) for

car and mortgage benefits for MCAs and CECs

respectively.

• The circulars suggested that these benefits would be

provided through the budget as cash-backed funds

(i.e., the full value of the loan would be set aside by

the government).

• Our total estimated cost for the two sets of officials is

Ksh 13.4 billion, which we spread across five years

(Ksh 2.7B annually).



County Expenditure Items Estimated Cost

Core County Personnel 22,696,579,009

County Administration 23,096,116,270

Car Loan and Mortgage 2,680,000,000

Total Estimated Costs 48,472,695,279

Total Estimated Costs as a % of Equitable Share 19%

Total Estimated Costs as a % of Kenya's Total Budget 2%

• The average cost of running a county is Ksh 1.03

billion

• At individual county levels, Nairobi has the highest

cost of Ksh 1.8 billion.

• Lamu and Isiolo Counties have the lowest costs at

Ksh 695 million each.

• Nairobi’s costs were two and a half times higher than

Lamu/Isiolo


Implications for the Basic Equal Share

• One way to think about this is by using the lowest cost

county as the base.

• Multiply base by a factor of 47.

• In this case, Ksh 695 million multiplied by 47 comes to

Ksh 32.7 billion.

• This is 13 percent of the total equitable share (Ksh 260

billion) in 2015/16.

• Each county should get this as the equal share and the

rest of their running costs should be determined by other

factors such as assembly sizes, population land area etc.


Expanded Car Loans and Mortgages Benefits

• In Dec 2014, SRC issued a new circular expanding

this benefits to all state officers and public officers.

• The benefit is stated as a 3% loan for 5 years for car

purchase, and a 3% loan for 20 years for a home

mortgage

• This increased the benefits going forward for MCAs

and CECs as well.

• Did not include in our estimates due to the very high

potential costs associated with this; not necessarily

to be implemented all at once



Job Title Job Group Car Loan Mortgage

Executive

Governors V 10,000,000 40,000,000

Deputy Governors U 5,000,000 25,000,000

CEC Members S 4,000,000 20,000,000

County Secretaries S 4,000,000 20,000,000

Chief Officers S 4,000,000 20,000,000

Chief of Staff S 4,000,000 20,000,000

Chair County Public Service Boards S 4,000,000 20,000,000

Vice Chair County Public Service Boards R 3,000,000 15,000,000

Member County Public Service Boards R 3,000,000 15,000,000

Secretary County Public Service Board R 3,000,000 15,000,000

Advisors R 3,000,000 15,000,000

Sub-County Administrators P,Q 3,000,000 15,000,000

Ward Administrators L,M 1,500,000 10,000,000

Support Staff Governors Office-:of which

Cooks A-F 600,000 4,000,000

Tea Person A-F 600,000 4,000,000

Gardener A-F 600,000 4,000,000

County Assembly

Speaker S 4,000,000 20,000,000

County Assembly Clerk S 4,000,000 20,000,000

Members of the County Assembly P 3,000,000 15,000,000

County Assembly Staff K-N* 1,500,000 10,000,000

County Assembly Ward Staff A-F 600,000 4,000,000

*This was taken as the median job group because the staff were not broken down by job groups

How much does this cost?

Depends whether it is a cash-backed fund like

the original benefit or not. If cash-backed:

• The cost for the scheme for all staff excluding the

CECs and MCAs is Ksh 120 billion

• When we add the CECs and MCAs cost based on their

old benefits the cost rises to Ksh 133 billion

• Taking into account CECs and MCAs with their new

benefits the costs shoots up to Ksh 171 billion


Car Loans and Mortgages Continued

• The December circular does not say that the fund is

cash backed; it does say that the scheme shall be

managed “internally”

• It is possible to pay an interest rate subsidy instead of

creating a cash-backed fund

• Benefit requires loans at an interest rate of 3% while

market lending rates stand at 16%.

• Counties could pay the 13 percentage point difference

on bank loans

• Lower upfront costs than cash-backed fund, but costs

spread over many years and no return to government


Car Loans and Mortgages

• We calculated the cost of this subsidy of 13%

on a reducing balance basis.

• The total costs comes to Ksh 6.5 billion for car

loans over 5 years and Ksh 207 billion for

mortgages over a period of 20 years.

• That is Ksh 1.3 billion per year for car loans

and Ksh 10.3 billion per year for mortgages.

• This does not include the cost of providing the

benefit to county service workers (health, etc.)


Information and Guidance Gaps

Items where more information is needed

1) SRC and others should provide clear costings for all

benefits to be provided

2) The basis for costing of group insurance should be clear,

and some estimates for real property insurance should

also be derived.

3) The basis for operations and maintenance cost estimates

needs to be clarified

4) The basis for costing of extra mileage for Members of

County Assemblies needs to be clarified and a

centralized database of distances created


Areas where guidelines might be required

1) What is the number of committees that each county

assembly should have?

2) What type of staff should be brought on board to

support the running of county assemblies and county

executives? What is the right balance between

administrative and technical staff?

3) Which staff hired by counties should be treated as

permanent and which should be treated as contract or

casual? (To properly establish gratuity costs)


Thank You


county costs analysis details_john kinuthia

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