Austrian Budget Reform - Performance Budgeting PEMPAL Workshop – March 13th 2018

Outline Overview budget reform Performance budgeting framework Gender budgeting Example: Education

Austrian federal budget reform Primary motivation: Improved budgetary decision-making Addresses the following weaknesses of the former system: No binding medium-term perspective Prevailing focus on inputs Control monopoly of classic cameralistics The budget as a comprehensive steering instrument for resources & outputs & outcomes Implementation in two stages: 2009 and 2013

Overview 1st and 2nd stage of the budget reform  Budgetary discipline and planning: binding Medium-Term Expenditure Framework (MTEF) & strategy report 2009 2013 4 key elements  Flexibility for line ministries through full carry-forward possibilities without earmarking Result-oriented management of administrative units Performance Budgeting incl. gender budgeting Accrual budgeting and accounting New budget structure: „lump-sum budgets“ new budget principles: outcome-orientation; efficiency; transparency; true and fair view

Budget planning process forecasts on a quarterly basis by an independent research institute top-down MoF targets budget negotiations passed by Parliament in May* budget controlling in-year reporting new laws/projects shifting of funds reserves annual budget implementing MTEF budget speech in October passed by Parliament before end of year * Amendment in 2017: alignment of the planning processes in autumn (MTEF and annual budget)

New budget structure Total Budget Headings Budget Chapters MTEF: 5 Headings Budget Chapters ~ 30 ~70 global resource frameworks instead of more than 1000 appropriation line items Global Budgets enacted by Parliament binding within public administration Detail Budgets ~ 250; shown in the budget flexible steering tool, easily adaptable to specific requirements Cost Accounting Transparent budget structure as a prerequisite for other reform elements

Budget 2017 33 budget chapters 5 budget headings

Integration of 3 perspectives: organisation, budget, performance Organisational Structure Budget Structure Performance Information Budget Chapter Mission Statement; Outcome Objectives Line ministry headed by the minister Global- budget 1 GB 2 Primary Activities* Primary Activities GB 3 GB 4 Primary Activities Primary Activities * to achieve outcome objectives xxx Budget managing bodies Explanatory budget documents based on performance contracts Detail Budgets

Performance budgeting framework Budget Chapter Annual Budget Statement Max. 5 outcome objectives at least 1 gender Mission statement Global Budget 1 – 5 primary activities at least 1 gender Global Budget 1 – 5 primary activities at least 1 gender Global Budget 1 – 5 primary activities at least 1 gender Detail budget Detail budget Detail budget Detail budget Detail budget Detail budget Detail budget Detail budget Detail budget Explanatory budget documents Objectives and Objectives and Activities Objectives and Activities Objectives and Activities Objectives and Activities Objectives and Activities Objectives and Activities Objectives and Activities Objectives and Activities Activities gender included P e r f o r m a n c e C o n t r a c t s

Gender budgeting Definition by the Council of Europe* Gender budgeting is an application of gender mainstreaming in the budgetary process. It means a gender-based assessment of budgets, incorporating a gender perspective at all levels of the budgetary process and restructuring revenues and expenditures in order to promote gender equality.

Why gender budgeting? To foster gender equality: Focus on the most important levers. Budgetary decisions are KEY decisions: Government policy is put into numbers. Therefore: Using the budget as a lever for gender equality!

Application of gender budgeting Constitutional budgetary principle: outcome orientation including gender equality Integrated approach: gender equality is to be considered in policy making and management ( strategy report, annual outcome and output statements, performance contracts) Goes beyond simply allocating separate budgets for women and men Integrated gender mainstreaming and budgeting requires gender analysis identification of challenges definition of objectives (i.e. outcome statements) action to be taken (i.e. output statements) evaluation and reporting (i.e. Annual Federal Performance Report)

Examples of gender-related outcome objectives Education Promoting equality in the educational system (reducing gender, ethnic and socioeconomic inequality) Family and Youth Facilitating the reconciliation of work and familiy life Labour market Reintegration of women into the labour market, especially after parental leave Interior Better protection against violence, especially violence against women, children and elderly people Finance Increasing the percentage of women on the supervisory boards of state-owned companies

Budget structure - example Heading Education, Research, Arts and Culture Budget chapter Education Global budget Schools incl. teaching staff Detail budgets Primary schools, general secondary schools Grammar schools (lower level) Grammar schools (upper level) Pre-vocational schools Vocational schools Austrian schools abroad …. in total 10 detail budgets

Strategy report (budget chapter) Budget chapter xx Mio. € Actual Budget Ceiling MTEF 2015 2016 2017 2018 2019 2020 Expenditures Changes compared to previous MTEF Total expenditures fix variabel Challenges Key spending areas ... Outcome objectives (at least 1 gender) Planned activities and reforms Risks, corrective measures

Annual budget statement (budget chapter) Budget chapter: Education Cash Flow Statement Ceiling MTEF Budget 2017 Budget 2016 Actual 2015 Receipts Expenditures – fix ceiling Total expenditures Net cash balance Operating Statement Revenues Expenses Net balance Legally binding MTEF = medium term expenditure framework

Annual outcome statement (budget chapter) Budget chapter 30 – Education Mission statement The ministry is responsible for shaping the framework of education policy. Improving the level of education and the equality of opportunities and gender. Outcome objective 1 Improving the education level of pupils Outcome objective 2 Improving the equality of opportunities and gender in the education system

Annual outcome statement (budget chapter) Outcome objective 1 Improving the education level of pupils Indicator 1 % of 18-20 year olds who have finished upper secondary education Last available value 2013: 87,8% Target value 2017 89,0% Indicator 2 % of pupils who still attend any form of education 1 year after mandatory schooling ends Last available value 2014 93,8% Target value 2017 94,2% Indicator 3 % of 5th graders who are eligible to advance to the next grade Last available value 2014: 94,6% Target value 2017 94,7%

Budget chapter at a glance Budget chapter: Education = financial information = performance information (outcome statement)

Annual budget statement (global budget) Operating Statement Budget 2017 Budget 2016 Actual 2015 Revenues from operating activities and transfers Revenues Personnel expenses Operating expenses Transfer expenses Expenses on financial activities Expenses Net balance Cash Flow Statement Receipts from operating activities and transfers Receipts from investment activities Receipts Personnel and operating expenditures Expenditures from transfers Expenditures from investment activities Expenditures Net cash balance Legally binding

Schools incl. teaching staff Annual output statement (global budget) Outcome objective 1 Improving the education level of pupils Global budget 30.01 Governance & Services Global budget 30.02 Schools incl. teaching staff Indicator Number of school places at upper and lower secondary school Primary activity 1 Quantitative and qualitative extension of full time schooling… Current value 118.000 Target value 2017 ≥200.000 Current value All classes from 5th grade upwards (9.003) Target value 2017 all classes until generation 6 Primary activity 2 Implementation of the „new secondary school“ with a teaching and learning culture … Indicator 1 number of classes using this model Current value Learn designers (generation 8) take part in advanced training Target value 2017 Certified learn designers (generation 8) Indicator 2 Number of new learning designers in schools ….

Global budget at a glance Global budget: Schools incl. teaching staff = financial information = performance information (output statement) = recommendations by the Court of Audit

Explanatory budget documents (detail budget) Objective Ensuring a high quality, European and internationally competitive Education, that opens up private and occupational development opportunities Detail budget 30.02.03 Pre-vocational schools Activity 1 Implementing the Goals of the QIBB-Initiative in the context of school development plans Indicator/Milestone 1 Finalization of School Development Plans (EUP) 2013/2014 Budget 2017 Personnel expenses: 2.2 Mio. € Operating expenses: 0.2 Mio. € Transfer expenses (to “Laender”) : 164.8 Mio. €

Detail budget at a glance Detail budget: Pre-vocational schools = financial information = performance information

Performance budeting process WHAT? WHO? Drafting outcome and output statements Line ministries Quality check  uniform quality of objectives and indicators FPMO „Comply or explain“ amendment of the outcome and output statements or explanation why a recommendation has not been implemented Plausibility check Ministry of Finance Preparation of the budget documents (draft Annual Budget, Explanatory Supplements etc.) Submission of the draft Annual Budget to Parliament Federal Government Discussion and adoption of the Annual Budget Parliament

Annual Federal Performance Report Kopfzeile 12.11.2018 Annual Federal Performance Report Ministries Performance Management Office Parliament & interested public evaluation statement on achievement of objectives reporting standardisation quality assurance coordination reporting discussion of results political accountability 31 May 31 October Fußzeile

Conclusions Challenges Requires relating budget to results Exceeds the scope of mere budget management Entails cultural change on the federal administrative and political level (setting priorities, transparent decision-making, etc.) Improvement of quality of performance information (ongoing process) Opportunities Facilitates targeted policy-making on political level Enables the administrative level to present its results & achievements Citizens are provided a better insight into where tax money is put

Thank you for your attention Contact: Monika Geppl Advisor Directorate General for Budget and Public Finances Department for Spending Reviews and Administrative Reform phone: +43 1 514 33 502051 e-mail: monika.geppl@bmf.gv.at https://english.bmf.gv.at/