Review of financial regulations and financial information systems for the management of social protection budgets
August, 2013
This report has been conducted as part of the Social Care Reform Programme supported by UNICEF and Embassy of Switzerland.
Report written by Antonina Kovalevskaya
The statements in this publication are the views of the author and do not necessarily reflect the policies or the views of UNICEF.
Corresponding author:
Antonina Kovalevskaya
Email:
SOCIAL CARE REFORM IN ALBANIA
Albania has embarked on a four-year endeavour to create what until now has not existed in this country – a fully functioning and sustainable system of Social Care Services. By the end of 2016, through this reform, Albania should have in place the “building blocks” to meet its long-term vision – the ability to protect and support our most vulnerable and at-risk citizens. Each Albanian must be allowed a fair chance to fulfil his or her full potential in life. Social Care Services have been very limited in Albania, largely provided by CSOs and other non-state agencies. Existing social services are fragmented, rudimentary and ad-hoc in nature. And, unfortunately, the need for Social Care Services is growing. From 2008 to 2014, the percentage of Albanians living in poverty actually increased from 12.4% to 14.3%, and those living in extreme poverty (unable to meet even basic nutritional needs) nearly doubled, from 1.2% to 2.2% (1 of every 45 Albanians). Economic growth does not automatically lead to a reduction of poverty – it can also lead to growing disparities, increased marginalization and more social exclusion.
Reforming social care services means meeting the needs of vulnerable people by responding timely and with efficiency to their complex needs. The focus on the reform is not an end itself, but rather a complex and well defined way to deliver outcomes to address the needs of all Albanian population at risk of vulnerability related to poverty, marginalization and social exclusion. Activities of the reform aim to:
- Develop new financial, administrative and legislative instruments that would enable for establishing a functional system of social care services.
- Clarify the accountability for national and local authorities, their roles and responsibilities in planning, delivering and monitoring social care services for Albanian families and children.
- Help transform the existing residential care services to more effective and efficient community based services
- Redefine the role of Social Worker and enable him to properly assess and address the needs of Albanian families and children through case management.
- Promote increased involvement of local government and civil society in the planning and delivery of social services
The reform of social care services is led by Ministry of Social Welfare and Youth with technical support from UNICEF and financial resources from the Swiss Development Cooperation.
ABSTRACT
This review describes the current status and suggests possible improvements to financial regulations and financial management system of social services in Albania. The purpose of the review is to provide technical support to the Ministry of Social Welfare and Youth in identifying any bottlenecks related to financial regulations and or mechanisms that hinder the reform of social care and the attainment of the goals and priorities in the development of the social policy undertaken by the Government of Albania.
The review includes core documents, laws and regulations governing the planning and delivery of social care services in Albania, either already approved or expected to be approved shortly. It seeks to accomplish the following main objectives:
- suggest recommendations to support the process of social services decentralization and development of community-based responses that meet local needs;
- suggest changes to financial information systems to improve monitoring of budget expenditures and support planning and delivery of local social care services.
The report presents the general background of the social services reform in Albania, the policy of the decentralization of authority for social care administration and the financial foundations of service management by the local governments, including the assignment of expenditure responsibilities in the area of social services delivery, as well as their management and funding.
The recommendations proposed are based on the understanding of the role of the financial system as an instrument that can contribute to attaining the goals and priorities formulated by the Government of Albania in its strategic vision and program documents that lay down the principles of reforming the social sector, such as increasing the responsibility of local governments for ensuring the sustainability and continuity of services, improving the standards of services for all groups in need, efficient provision of quality services and respect for the rights of groups in need.
The author thanks to colleagues from the UNICEF office in Albania, namely Vera Gavrilova and Alketa Zazo who assisted in collecting important information, and provided valuable technical input while finalizing the report.
TABLE OF CONTENTS
EXECUTIVE SUMMARY 6
INTRODUCTION 9
1. DECENTRALIZATION POLICY 9
1.1. Local revenues 11
1.2. Revenues of Municipalities and Communes 12
1.3. Sources of regional revenues 13
2. FINANCIAL FOUNDATIONS OF LOCAL GOVERNMENT 14
2.1. Local government budgets 14
2.2. Program budget 16
3. DECENTRALIZATION OF SOCIAL CARE SERVICES PROVISION 17
3.1. Principles of expenditure assignment in the sphere of social services 18
3.2. Intergovernmental transfers 19
4. ASSIGNMENT OF RESPONSIBILITY FOR THE DELIVERY OF SOCIAL ASSISTANCE AND SOCIAL CARE SERVICES IN ALBANIA 21
4.1. Economic assistance 21
4.2. Social services 22
4.3. The threat of unfunded mandates created by the centrally approved standards 24
4.4. Management, administration and funding of social services 24
5. FINDINGS ANS RECOMMENDATIONS 31
5.1. Establishment of new community services and increasing the variety and geography of services 33
Short-term (within one year) 33
5.2. Increase the responsibility of local government for the funding of social services, ensuring their sustainability and continuity 34
Short-term (within one year) 34
Medium-term (1-3 years) 35
5.3. Drafting, implementation, monitoring and improving the standards of services for all groups in need to ensure quality and efficient services 35
Short-term (within one year) 35
Medium-term (1-3 years) 35
5.4. Respect for the rights of groups in need, in particular children, the disabled and the elderly, meeting their needs and supporting their integration into social life 36
Short-term (within one year) 36
Medium-term (1-3 years) 36
5.5. Promotion for the involvement of social businesses in the financing and delivery of social community services 36
Short-term (within one year) 36
List of documents 38
TABLES
Table 1. 2010 Budget Summary by Level of Government
FIGURES
Figure 1. Revenue sources for municipal and/or communal budgets
Figure 2. Sources of regional budgets revenues
Figure 3. Assignment of responsibilities for economic assistance
Figure 4. Institutional forms of providing social care services
Figure 5. Public and private sources for funding social services
Figure 6. Responsibilities of different levels of government in social care services administration
Figure 7. Sources of financing new social services
Figure 8. Recommended assignment of responsibilities in the sphere of social services provision across government tiers
BOXES
Box 1. Exclusive, shared and delegated functions
Box 2. Main principles of the budgetary process
Box 3. What is PEIP?
Box 4. A case of assigning service providers rather than services across government tiers
EXECUTIVE SUMMARY
The reforms in the system of social care in Albania demonstrate the aspiration of Albania to become a modern European state. The social care system is based on the principles of equal accessibility to eligible individuals and groups of the social care services, and continuous improvement of service quality and accessibility. To operate the social care system, it is necessary to implement appropriate tools that would allow to clearly delineate the responsibilities between the different tiers of the government, to create incentives for prudent and efficient use of limited financial resources, and to ensure control over the outcomes of the social care system. Putting in place such a system is one of the main objectives to the Government of Albania.
This review was prepared to describe the current status and suggest future improvements in the financial regulations and financial management systems to social assistance and services in Albania. The purpose of the review is to provide technical support to the Ministry of Social Welfare and Youth in identifying any bottlenecks related to financial regulations and or mechanisms that hinder the reform of social care and the attainment of the goals and priorities in the development of the social policy undertaken by the Government of Albania.
The focus of the review is conceptual documents, development programs, laws and regulations governing the planning and delivery of social care services in Albania that were recently approved or are expected to be approved shortly.
The review seeks to accomplish the following main objectives:
- suggest recommendations to support the process of social services decentralization and development of community-based responses that meet local needs;
- suggest changes to financial information systems to improve monitoring of budget expenditures and support planning and delivery of local social care services.
The review presents the general background of the social service reform in Albania, the decentralization policy affecting authorities for social care administration and the financial foundations of service management by the local governments, including the assignment of expenditure responsibilities in the area of social services delivery, management and funding. The main limitations in the course of preparing this review had to do with the fact that the system of social care services financing is still in its early stages and that the system of public finance management in Albania is under continuous improvements.
The recommendations proposed in this review are based on the understanding of the role of the financial system as an important mechanism that can contribute to attaining the goals and priorities formulated by the GoA in its key strategic and program documents that lay down the principles of the social policy reform, such as increasing the responsibility of local governments for ensuring the sustainability and continuity of services, improving the standards of services for all groups in need, efficient provision of quality services and respect for the rights of groups in need.
Major findings and recommendations proposed in the review are as follows:
(i) the definition of the term “social service” is lacking in the current legislation in Albania. To make it possible to present the budget proposal, the budget law and the budget execution report broken down by social service addressed to specific target group (for instance, children with disabilities, children without parental care, children in conflict with the law, homeless persons, children and adults living with HIV/AIDS, adults with physical disabilities, adults with mental disabilities, unsupported older people, etc.) the definition of the term “social service” (“noncash social services”) should be introduced into the legislation of Albania. The definition of a social service should reflect its distinction from concepts such as transfers to citizens, social protection and economic assistance;
(ii) draw an inventory of all social services offered at the municipal level today. The output should be a detailed list of services, containing service description, service quality indicators and target groups definitions. The list of services can be presented in the form of a code of best practices, containing references to pilot sites where interested parties can observe best practices in service provision first-hand. The list of services should be publicly available, possibly through online websites;
(iii) create incentives that would encourage local authorities to take initiative and pilot new community-based social services. In order to achieve this it is advisable to establish an earmarked New Social Services/Programs Fund in the central government budget for awarding grants to municipalities and/or regions that have proposed best services/programs. The size of the Fund shall be determined based on the priorities of the GoA in the social policy area;
(iv) expand the fiscal autonomy of local authorities. For these purposes it is necessary to draw an inventory of the rights and responsibilities of the local authorities in regulating the local budget revenues. Such task would indicate which level of government (a) determines the policy, including the eligibility standards, the range of services offered, sets the quality standards, etc.; (b) provides the funding for service delivery and, (c) administers service delivery, i.e. operates the institutions that deliver the services or procures the services from potential non-governmental suppliers, keeps the records of service recipients, etc.;
(v) conduct a detailed examination of the existing regulations and revenues arrangements to assess the extent to which expenditure responsibilities of the local governments match revenue sources of local budgets, identify possible sources of efficiency gains; assess the extent of revenue autonomy of municipalities/communes (whether they can impose new taxes, change tax rates charge service fees, etc.). For these purposes it is necessary to assess the cost of carrying out expenditure responsibilities assigned to localities in the area of social services;
(vi) review the rules and regulations for the allocation of unconditional transfers. The size of an unconditional transfer allocated to municipalities/communes should be determined based on the list of representative services, composition of service consumers (their age, social status, level of income, etc.) and funding norms stemming from service quality requirements;
(vii) develop rules (recommendations) for social services/programs cost analysis by municipalities/communes and/or regions;
(viii) develop and approve the procedures for the procurement of social services from NGOs;
(ix) develop mechanisms for enhancing the involvement of local residents in the payable (contract-based) and non-payable (volunteers) provision of social services;
(x) propose guidelines for local governments concerning the development and implementation of social services standards;
(xi) develop algorithms (road maps) for assessing the need for social services and estimate the demand for social services by target group of service recipients;