joint synthesis paper on county budgets

8/13/2019 Joint Synthesis Paper on County Budgets

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Learning B Ding: Tward BeerCounty Budgets in 2014/15

A Jint Brie b Instte Ecnmic Aairs, TISA,

Internanal Bdget Partnersip, WALINET, Wrld

Visin Kena, ARTICLE 19, and I Cse Lie Arica

INTRODUCTION

As Kenas count governents coplete their rst budget process

under the 2010 Constuon, and begin the 2014/15 process,

it is e to take stock. To be sure, counes aced a nuber o

challenges in budgeng this ear due to a copressed e schedule,

inadequate support ro naonal governent, and liited capacit.

Our goal in this paper is not to point ngers or assign blae, but to

encourage learning as we go into the next budget ccle. It is onl through

understanding what did not work in this ost recent process that we can

ensure a beer process going orward.

Working together, IEA, TISA, IBP, WALINET, World Vision Kena, ARTICLE

19, and I Choose Lie Arica analzed a nuber o 2013/14 budgets, with

a specic ocus on the budgets o 5 counes where we work: Laikipia,

Busia, Hoa Ba, Uasin Gishu and Nairobi. However, the challengesand recoendaons discussed are relevant or an counes. In this

snthesis paper, we highlight twelve ajor challenges in these budgets,

and oer twelve recoendaons or resolving the. We have included

a suar o the 12 recoendaons at the beginning o the brie. We

urge all counes to resolve these issues in the 2014/15 budget ccle, which

has alread begun. This analsis will be copleented b a longer report

exploring the ke issues in each count, as well as the publicaon o an eas

to use tool or cizens to analze their own count budgets.

We oer one iportant note on the specic budgets we analzed. We

based our analsis on budgets that were provided to us b count execuve

ocers in each count beore Deceber o 2013. In an counes, there

were ulple versions o budgets circulang, and these budgets a

also have been revised since we copleted our analsis. It is thereore

possible that dierent versions o the budget have dierent inoraon.

Nevertheless, we take the versions we were provided to be the publicl

available versions at the e we conducted our analsis.

DECEMBER 2013

ThIS PoLICy BRIEf IS

JoINTLy ISSuED By:


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SUmmARy Of RECOmmENDATIONS

RECoMMENDATIoN #1:Count budgets, like all budgets, should include a narrave descripon o prograes to

accopan an tables.

RECoMMENDATIoN #2: All counes should separate recurrent and developent spending across the ull budget,

and ensure that these categories are consistentl applied to spending b dierent departents or inistries.

RECoMMENDATIoN #3: Good budgeng requires that salaries be distributed across sectors. Wages or a ver

large part o the budget or an sectors, especiall educaon and health.

RECoMMENDATIoN #4:All counes should ollow the Pfm Act requireents and the pracce o naonal

governent and provide esates o expenditure and revenue or at least two addional ears beond the budget

ear or both recurrent and developent spending.

RECoMMENDATIoN #5: Ever count should use the proper gures ro the Count Allocaon o Revenue Act or

their budget. Counes should also provide reasonable esates o the revenues the plan to raise on their own,based on gures ro prior ears.

RECoMMENDATIoN #6:Ever count ust enon the scal responsibilit principles and then provide gures that

show how the budget is in copliance with these.

RECoMMENDATIoN #7: The Pfm Act 2012 also requires that the budget esates presented to the Count

Assebl include expenditure inoraon at vote (inistr and departent) and prograe level.

RECoMMENDATIoN #8: Counes are ree to choose their priories, but should generall ocus spending on their

core uncons and should ensure that all ajor uncons receive unding, unless reasonable explanaons or not

unding a ajor uncon are provided.

RECoMMENDATIoN #9: All counes should set up a Count Eergenc fund and und it. The law is careul to

restrict the uses o the fund to urgent and unoreseen events that threaten[s] daage to huan lie, welare or

the environent.

RECoMMENDATIoN #10: Good budgeng requires that governents clearl explain not onl the total aount the

intend to spend on certain ites, but also the per unit aounts.

RECoMMENDATIoN #11:The Pfm Act states that

The Count Execuve Coiee eber or nance shall take all reasonabl praccable steps to ensure that the

approved budget esates are prepared and published in a or that is clear and easil understood b, and readil

accessible to, ebers o the public.

Good budgets should either have budget lines that are easil understandable to anone, or the should contain

addional notes that explain budget lines that are not sel-evident.

RECoMMENDATIoN #12:Going orward, count governents should clari how the plan to undertake public

consultaons, explain this clearl, establish structures, and set aside sucient unds or this that can be easil oundin the budget.


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CHALLENGES AND RECOmmENDATIONS

ChALLENGE #1:most count budgets do not contain an detailedexplanaon o the choices ade in the budget, or the nature andrelevance o dierent prograes.

CouNTy PRACTICE: Nairbis bdget did cntain narrave inrman, at least in te dra bdget, wile n ter

cnes we examined ave tis kind narrave detail.

RECoMMENDATIoN #1:Count budgets, like all budgets, should include a narrave descripon o prograes to

accopan an tables. In addion to inoraon that a be ade available through a budget stateent or speech,

there is a need or a publicl available narrave that explains the assupons used in the budget (assupons

about revenues and costs, etc.) as well as the reasons or spending ore in soe areas than others. for exaple,

this is where inoraon should be included about how cizen priories were taken into account as a result o an

consultaons conducted. This is parcularl iportant as counes begin to change their spending paerns ro

what naonal governent used to do. This could lead to a reducon in services in soe areas, and enhanceents in

others. The public should be able to understand these choices.

ChALLENGE #2: Both good pracce in budgeng, and the Pfm Act2012, require that counes disaggregate the budget and dividespending into recurrent and developent. man counes ailed todo this properl.

CouNTy PRACTICE: Mst cnes ave dierenated between te tw tpes spending, bt nt all. fr

example, Laikipia as nt separated recrrent and develpment spending in its bdget. At te same me, even

tse cnes tat ave igligted te tw tpes spending ave nt alwas dne s cnsistentl r accratel.

In sme cases, bdget lines are s diclt t interpret we cannt be certain weter te spending is recrrent r

develpment. Te Nairbi bdget lists a nmber asset prcases nder its recrrent expenditre; te Bsia

bdget lists a nmber seemingl recrrent acvies, sc as branding and markeng, as develpment spending.

hma Ba als incldes recrrent acvies as capital spending, sc as d aid, agricltre sws, and cas

transers. Sme bdgets seem t ave similar items (e.g., eqipment) in bt te recrrent and develpment

bdget.

RECoMMENDATIoN #2: All counes should separate recurrent and

developent spending across the ull budget, and ensure that these

categories are consistentl applied to spending b dierent departents

or inistries. It should be eas to understand what is recurrent and

what is developent expenditure and wh. Recurrent spending is that

which occurs ever ear and includes ites like salaries. Developent

spending reers to capital investent, spending that leads to the creaon

o assets. All budgets need both kinds o spending: recurrent to keep

governent running ro ear to ear, and investent to plan or uture

growth. It is crical to understand the weight put on each, and the links

between the. for exaple, assets ust be aintained and thereore

all developent spending requires recurrent spending on aintenance.

In soe cases,budget lines are so

dicult to interpretwe cannot be

certain whether the

spending is recurrent

or developent.


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ChALLENGE #3:man count budgets do not break down theirsalar costs b departent or inistr, but lup all salariestogether under a single budget head, like Execuve Servicesor Public Service. This akes it ipossible to know the trueallocaons to dierent sectors.

CouNTy PRACTICE: In te bdgets we examined, Bsia, Laikipia and hma Ba all did tis, wile Nairbi and uasin

Gis separated salaries b department.

RECoMMENDATIoN #3: Good budgeng requires that salaries be distributed across sectors. Wages or a ver

large part o the budget or an sectors, especiall educaon and health. for exaple, World Bank esates

ro 2012 put wage costs at 89% o recurrent spending in health. The naonal budget in Kena separates wages b

inistr, and there are exaples o good pracce such as Nairobi at count level.

ChALLENGE #4:man count budgets do not contain a ul-earraework (3-5 ears), even though it is a requireent o the PfmAct 2012 that at least revenues be esated or the ediu ter.The dra Pfm regulaons also require the sae on the expenditureside.

CouNTy PRACTICE: Nairbi as develpment expenditre and revenes r tree ears, bt nt recrrent

spending. Mst cnes nl made prjecns r sme tese elements. Bsia as esmated recrrent

expenditres r tree ears, bt as nl a single ear develpment esmates. hma Ba esmated revenesr tree ears. hma Ba als as sme prjecns r expenditre, bt te are nt cnsistent wit te nal

bdget gres r te crrent ear. uasin Gis and Laikipia ave nt esmated expenditres r revenes bend

te bdget ear.

RECoMMENDATIoN #4:All counes should ollow the Pfm Act requireents and the pracce o naonal

governent and provide esates o expenditure and revenue or at least two addional ears beond the budget

ear or both recurrent and developent spending. mediu ter expenditure esates are iportant, especiall

or developent projects, because these coit governent to spending in uture ears, which in turn reduces the

opons or uture spending. An decision taken toda that liits what a governent can do next ear should be

clear in the budget.

ChALLENGE #5:It is not eas to tell ro an count budgets onwhat basis the have esated their revenues and whether theseare realisc. Counes have two ain sources o revenue: transersro the naonal governent, and own revenues, but the guresthe have used in their budgets are oen quesonable.

CouNTy PRACTICE: Te crrect gre r nanal transers is cntained in te Cnt Allcan ReveneAct 2013, bt a nmber cnes, sc as Bsia and Laikipia, seem nt t ave sed te prper gres. Lcal

wn revenes are arder t esmate, bt ne sld be able t see w tese esmates cmpare t wat lcal

atries in te cnt were able t raise in te past as ne wa jdging w reasnable te are. Mst

cnes ave nt inclded sc inrman, bt bt hma Ba and Nairbi ave.


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RECoMMENDATIoN #5: Ever count should use the proper gures ro the Count Allocaon o Revenue Act or

their budget. Counes should also report local authorit revenues raised in previous ears as an esate o own

revenues. Next ear, these own revenue esates should be based in part on what counes are actuall able to

collect this budget ear (even i onl through the rst three quarters o the ear). Local revenues should be broken

down b all o the dierent sources that the count collects. Counes should also include an unding the are

receiving in the or o condional grants, and an unding ro donors.

ChALLENGE #6:Count governents have not explained howtheir budgets copl with the scal responsibilit principles inthe Pfm Act, which include liits on the share o spending orrecurrent expenditure in the ediu ter, the share o spendingon wages, the size o the debt, and so on.

CouNTy PRACTICE: Nne te cnes we lked at prvided tis inrman.

RECoMMENDATIoN #6:Ever count ust enon the scal responsibilit principles and then provide gures thatshow how the budget is in copliance with these. for exaple, the count should provide a global gure or the

share o the budget that is going to recurrent and developent costs over the next three ears and deonstrate that

it coplies with the liit o 70% over 3-5 ears or the recurrent share o the budget.

ChALLENGE #7: man counes have ailed to provide inoraonon prograes below the inistr or departent level. Thisreects the act that the used line-ite budgeng rather than

prograe-based budgets in the rst ear.

CouNTy PRACTICE: Nne te cnes we lked at prvided a cnsistent set prgrammes belw te

ministr level in teir bdgets.

RECoMMENDATIoN #7: The Pfm Act 2012 also requires that the budget esates presented to the Count

Assebl include expenditure inoraon at vote (inistr and departent) and prograe level. Counes should

begin to shi toward a prograe structure that provides inoraon about all prograes and eventuall sub-

prograes under each vote (inistr or departent). It is understandable that, in the rst ear, counes largel

used line-ite budgets siilar to the tradional naonal budget orat, but going orward, counes should provide

greater detail on their prograe structure.

ChALLENGE #8: Soe count budgets see to ocus on unconsthat are naonal without explanaon, while a nuber o countbudgets also ignore areas that are count uncons as per theconstuon.

CouNTy PRACTICE: Laikipa as prpsed cnsiderable nding r primar and secndar edcan, bt

wic are nanal ncns. Mst cnes in r sample did nt bdget sbstanal resrces r sing, wic

is a cnt ncn. Nairbi did allcate sme nding r sing, bt it is nt clear wat te mne is t be

sed r and mst it is recrrent. uasin Gis als bdgeted sme nds r sing, bt it appears tis was

mstl r maintenance estates.


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RECoMMENDATIoN #8: Counes are ree to choose their priories, but should generall ocus spending on their

core uncons and should ensure that all ajor uncons receive unding, unless reasonable explanaons or

not unding a ajor uncon are provided. I a count is invesng in naonal uncons, there should be a clear

explanaon o wh this is being done and how the count will ensure coordinaon with naonal governent to

avoid duplicaon, or situaons where inrastructure is constructed without unding or recurrent expenditure (e.g.,

schools are built without unding or teachers).

ChALLENGE #9: few counes have planned adequatel ordisasters. The Pfm Act recoends that counes do this bopening a Count Eergenc fund which can spend up to 2% orevenues each ear on eergencies, but ost counes have notdone so.

CouNTy PRACTICE: In r sample, Laikipia and Bsia clearl set aside mnies in an Emergenc fnd, wile te

ter cnes did nt.

RECoMMENDATIoN #9: All counes should set up a Count Eergenc fund and und it. The law is careul to

restrict the uses o the fund to urgent and unoreseen events that threaten[s] daage to huan lie, welare

or the environent.1 The aount that should be set aside is up to the discreon o counes, and should reect an

assessent o the risks o ajor disasters aced b each parcular count. Nevertheless, it sees reasonable to set

aside about 2% o revenues as iplied b the Act.

ChALLENGE #10: In an cases, counes have not provided

unit costs or ajor ites, but sipl block gures that akeit ipossible to know how an o parcular ites will bepurchased, or at what cost.

CouNTy PRACTICE: Nne te cnt bdgets we examined r tis analsis prvided cnsistent nit csts.

Laikipia did prvide tables igligng nit csts, bt tese are nt clear r cnsistent and d nt prvide

scient detail t be cnsidered sel measres nit csts. hma Ba did prvide sme detailed nit csts r

sta salaries, bt tese are nl r sta rm te previs lcal atries.

RECoMMENDATIoN #10: Good budgeng requires that governents clearl

explain not onl the total aount the intend to spend on certain ites,

but also the per unit aounts. This is iportant to understand how realisc

the budget is, and to ensure that governent is paing rates that are in

line with the private arket or goods and services. for all asset purchases,

count budgets should provide a unit cost used to esate the total cost. I

a count is proising to bu air condioning units, the budget should speci

a nuber o units and a price per unit used to esate total costs. for sta

costs, a nuber o eploees should also be provided. It should be possible

to calculate at least an average wage. Ideall, counes would also show, as

the naonal governent budget did in 2012/13, the actual class o workerand the salar or that class.

1 Pfm Act 2012, 110.

I a count isproising to bu

air condioningunits, the budgetshould speci anuber o units

and a price per unit

used to esatetotal costs.


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ChALLENGE #11:man counes have budget lines that are unclear.The lack o narrave and notes explaining these budget lines canlead to conusion about governent priories.

CouNTy PRACTICE: Wile man cnes sed a standard template prvided b nanal gvernment andbrrwed cdes rm te nanal cart accnts, tere are sll a nmber bdget lines tat are nclear in

mst bdgets. fr example, wat exactl will mne be spent n nder te llwing eadings?

Bsia: Trees r Jbs and Cnt t riendl medical centres (wat are tese prgrammes? will mne be

spent n salaries, rerbisment r investment?)

Laikipia: Resrce Mbilizan and Resrce Centre (resrces r wat? is tis mne r salaries? matcing

grants? resrce centre r wat r wm?)

uasin Gis: Cnt Gvernment Asscian Membersip fee and Inter-Cnt frm Cntribn (wat

bdies are tese and w are te dierent?)

Tese are examples, bt tere are man mre bdget lines tat are nt clear acrss te bdgets we examined.

RECoMMENDATIoN #11:The Pfm Act states that

The Count Execuve Coiee eber or nance shall take all reasonabl praccable steps to ensure that the

approved budget esates are prepared and published in a or that is clear and easil understood b, and readil

accessible to, ebers o the public.2

Good budgets should either have budget lines that are easil understandable to anone, or the should contain

addional notes that explain budget lines that are not sel-evident. It is generall a aer o coon sense to

deterine what is easil understandable and what is not in a budget, but count governents should also be able todeterine this ro public engageents during the budget process. Coprehensive narrave/notes, ollowing the

exaple o the naonal prograe budget in South Arica, should becoe standard going orward.

ChALLENGE #12:Counes ust set aside unds or publicparcipaon in planning and budgeng, but ost do not see tohave done so, or at least we are unable to nd it, given the budgetlines used.

CouNTy PRACTICE: Neiter hma Ba nr Laikipia seem t ave anting tat can be interpreted as civic

edcan r pblic parcipan bdgets. In sme ter cnes, like Nairbi, tere is a bdget r awareness,

bt it is nt clear wat tis reers t. finall, in Bsia, tere is an allcan r pblic parcipan, bt it is nl in

te Cnt Assembl bdget.

RECoMMENDATIoN #12:Going orward, count governents should clari how the plan to undertake public

consultaons, explain this clearl, establish structures, and set aside sucient unds or this that can be easil ound

in the budget. The Pfm Act also requires that the count treasur issue a budget circular in August each ear that

will provide inoraon on the procedures to be ollowed b ebers o the public who wish to parcipate in the

budget process.

2 Pfm Act 2012, 131(6).


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CONCLUSION

The 2014/15 budget process is alread underwa. While counes aced nuerous challenges in budgeng in the

2013/14 ear, count ocials can and ust do beer in the second ear o budgeng. This paper is designed to

provide soe guidance on how the can achieve this, and soe direcon to cizens and legislators about what to

look or as the exercise their oversight roles.

In addion to iproveents in the presentaon o the count budget esates, we urge counes to think abouthow to present other budget docuentaon in a siple and transparent anner. for exaple, the public and the

count asseblies should also access and review the Count Budget Review and Outlook Paper, the Count fiscal

Strateg Paper and quarterl budget ipleentaon reports. These docuents should also be produced in a

anner that is consistent with the presentaon o the budget esates. Counes should also consider producing

Cizens Budgets, as the naonal governent has done or the last several ears, to highlight ke areas in the budget.

In addion to the issues we have raised, we encourage cizens and ocials in ever count to discuss together

how the would like budget inoraon to be presented so that it is o ost use to count residents. Devoluon

deands an inored public, but it is not onl or count ocials to guess how to inor the public. Cizens should

also be asked, and ust oer, their views on how to ake budgets eas to understand and use.

joint synthesis paper on county budgets

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