A Framework For Assessing Subnational Government Performance

1
A Framework For Assessing Subnational Government
Performance

• Baoyun Qiao
• China Academy of Public Finance and Policy
• Central University of Finance and Economics

2
Outline

• Principles of promising practices
• Being Responsive Doing the right things or
  knowing what to do?
• Being Responsible Doing things right
• Being Accountable
• World Bank Approach
• Other Approaches
• Design Criteria for China

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Principles of promising practices

• Being Responsive
• Local services match responsibilities
• Budget priorities consistent with residents
  preferences
• Specifying mandatory standards and access of
  local services
• Improving the quality of life

4
Principles of promising practices

• Being Responsible
• Following due process Adherence to
• The principle of ultra vires
• The procedure bye-law
• Local master plans and budgets
• Zoning bye-laws and regulations
• Funded mandate

5
Principles of promising practices

• Being Responsible
• Being fiscally prudent
• Operating budget in balance
• Exploitation of own tax bases
• Expenditures in line with revenue means
• Observing golden rule for borrowing
• New capital projects specify upkeep costs and how
  debt is to be repaid
• Conservative fiscal rules to have sustainable
  debt levels
• All major capital projects subjected to referenda
• Striving to improve credit worthiness
• Maintaining positive net worth
• Commercially audited financial statements
  maintained

6
Principles of promising practices

• Being Responsible
• Earning trust
• Professionalism and Integrity of staff
• Safeguards against malfeasance
• Streamlined processes and e-governance
• Complaints and feedback acted upon
• Honest and fair tax administration
• Strict compliance with service standards
• Rewards for exceeding standards and penalties for
  lack of compliance
• Citizen friendly output budgets and service
  delivery performance documents
• Participatory budgeting and planning

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Principles of promising practices

• Being Responsible
• Working better and costing less
• All tasks subjected to alternative service
  delivery test -competitive provision across
  governments and public and private divides
• Financing creates incentives for competition and
  innovation
• - Comparative evaluation of service providers
• Benchmarking with the best
• Flexible administration accountable for results
  Government by contract, absolutely minimum set of
  rules
• No lifelong and rotating employments
• Task specialization
• General administration costs subjected to public
  scrutiny
• Boundaries balance benefits and costs of, scale
  and scope economies, externalities and decision
  making
• Boundaries consistent with fiscal sustainability

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Principles of promising practices

• Being Accountable
• Letting the sunshine in
• Local government bye-law on the citizens right
  to know
• New budgetary proposals and annual performance
  report posted at all libraries
• All decisions including the costs of concessions
  posted at the internet
• Value for money performance audits by independent
  think tanks
• Open information and public assessment

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Principles of promising practices

• Being accountable
• Working to strengthen citizen voice and exit
• New budgetary proposals, major contracts and
  annual performance report presented at a weekend
  town hall meeting open to all
• All documents subjected to citizen friendly
  requirements.
• Open processes for contract bids
• Mandatory referenda on large projects
• Taking steps to ensure that at least 50 of
  eligible voters vote
• Citizen boards to provide scorecard and feedback
  on service delivery performance
• Provisions for popular initiatives
• Bye-law on taxpayer rights

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World Bank Approach

• Assess performance of national government
• 2007 Criteria
• Macroeconomic Management
• Fiscal Policy
• Debt Policy
• Trade
• Financial Sector
• Business Regulatory Environment
• Gender Equality
• Equity of Public Resource Use
• Building Human Resources
• Social Protection and Labor
• Policies and Institutions for Environmental
  Sustainability
• Property Rights and Rule-based Governance
• Quality of Budgetary and Financial Management
• Efficiency of Revenue Mobilization
• Quality of Public Administration
• Transparency, Accountability, and Corruption in
  the Public Sector

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World Bank Approach

• The ratings process involves two key phases.
• In the benchmarking phase a small, representative
  sample of countries drawn from all Regions is
  rated
• In the second phase, staff rate the remaining
  countries using benchmark countries scores as
  guideposts.

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World Bank Approach

• Example Quality of Budgetary and Financial
  Management
• Comprehensive and credible budget linked to
  policy priorities
• Multi-year expenditure projections integrated
  into budget formulation process
• Spending ministries and the legislature consulted
  in budget formulation, adhering to fixed budget
  calendar
• Budget classification system comprehensive and
  consistent with international standards
• Minimal and transparent off-budget items
• Financial management
• Budget implemented as planned
• Budget monitoring based on management information
  systems
• Negligible payment arrears
• Fiscal reporting
• Reconciliation of banking and fiscal records
• Regular in-year fiscal reporting
• Timely preparation of public accounts
• Timely auditing of accounts and appropriate
  action taken on budget reports and audit findings

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World Bank Approach

• Example Grade 1
• a. If there is a budget, it is not a meaningful
  instrument, nor an indicator of policies or tool
  for allocation of public resources. There is no
  forward look in the budget, nor any meaningful
  consultation with spending ministries. No
  consistent budget classification system is used.
  More than 50 percent of public resources from all
  sources do not flow through the budget.
• b. Expenditures across broad budget categories
  have little or no relationship to the amounts
  budgeted. There is practically no monitoring and
  reporting of public expenditures. Payment arrears
  exceed 10 of total expenditures, or cannot be
  determined.
• c. There is no reconciliation of cash accounts
  with fiscal records. No regular, in-year fiscal
  reports are produced. Public accounts are seldom
  prepared, or are more than five years out of
  date. The use of public resources is not on the
  public agenda.

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World Bank Approach

• Example Grade 5
• a. Policies and priorities are linked to the
  budget. Multi-year expenditure projections are
  integrated into the budget formulation process,
  and reflect explicit costing of the implications
  of new policy initiatives. The budget is
  formulated through systematic consultations with
  spending ministries and the legislature, adhering
  to a fixed budget calendar. The budget
  classification system is comprehensive and
  consistent with international standards
  Off-budget expenditures are minimal, and
  transparent.
• b. The budget is implemented as planned, and
  actual expenditures deviate only slightly from
  planned levels 38 (by less than 10 percent on
  most broad categories). Budget monitoring occurs
  throughout the year based on well functioning
  management information systems. Payment arrears
  are negligible or non-existent.
• c. Reconciliation of banking and fiscal records
  is practiced comprehensively, properly, and in a
  timely way (daily or weekly). In-year fiscal
  reports are prepared at least quarterly, issued
  within 4 weeks of end of period, and provide
  accurate data on all budget items, with coverage
  of expenditures at both the commitment and
  payment stages. The public accounts are prepared
  within 6 months of the end of the fiscal year,
  and include full information on revenue,
  expenditure, and financial assets and
  liabilities. Accounts are audited in a timely,
  professional and comprehensive manner, and
  appropriate action is taken on budget reports and
  audit findings.

15
Other Approaches

• A comprehensive evaluation of states in US
• Criteria
• Information
• Infrastructure
• Money
• People
• Sources
• surveys,
• written documents
• interviews
• Methodology
• Defining the criteria
• Grading against criteria

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Other Approaches

• Example
• Money Criteria
• The state uses a long-term perspective to make
  budget decisions.
• The states budget process is transparent, easy
  to follow and inclusive.
• The states financial management activities
  support structural balance between ongoing
  revenues and expenditures.
• The states procurement activities are conducted
  efficiently and supported with effective internal
  controls.
• The state systematically assesses the
  effectiveness of its financial operations and
  management.

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Other Approaches

• Approaches focus on prospective outcomes
• Oregon Benchmarks 158 measures of social
  well-being in 1991 to 20 in 1999
• Florida Critical Benchmarks 268 indicators
  dealing with progress in families and
  communities, safety, learning, health, economy,
  environment and government.
• Alberta Measuring Up 27 indicators
• USA GPRA (1993) fiscal performance, initiatives
  and commitments
• Canada Agreement on Canada indicators not yet in
  sight.

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Design Criteria for China

• Define the responsibilities of sub-national
  government
• Public Services
• Sustainable Development
• Growth Capacity Building

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Design Criteria for China

• Defining criteria
• Basic Public Services Delivery
• Growth Capacity Building
• Sustainable Development
• Fiscal Health
• Accountability
• Public management

20
Design Criteria for China

• Representative provinces/cities
• Benchmark

21

• Thanks