Mid-Term Review Package on the Multiannual Financial Framework (MFF) ESF Committee Brussels, 12 October 2016

Mid-Term Review (MTR) Package on the MFF Obligation stems from Art. 2 of the MFF Regulation Adopted on 14.09.16 - Components of the package Commission MTR Communication – An EU budget focused on results – COM(2016)603 - Accompanied by a Commission Staff Working Document – SWD(2016)299 Commission proposal amending the MFF Regulation – COM(2016)604 Commission proposal for a new Financial Regulation + Amendment to 15 sectoral regulations, including the Common Provisions Regulation and the ESF Regulation – COM(2016)605 Commission proposal for amending the Interinstitutional Agreement between the EP, Council and Commission – COM(2016)606 Commission proposal amending the decision on the mobilisation of the Contingency Margin Commission proposal amending the EFSI Regulation – COM(2016)597

I. Commission MTR Communication – An EU budget focused on results – Key elements (1) A budget focused on results (BFOR): Where to spend EU money : how to achieve high added value? How to spend EU money : how to get more out of each € spent ? How can the performance of the EU budget be adequately assessed ? How to communicate about the EU budget : how to better explain to citizens what the EU budget achieves ? Commission proposes € 13 billion additional EU funding in 2017-2020 (incl. the 4,6 billion under the technical adjustment of the cohesion policy envelopes and 1,8 billion under the DB2017 mainly for migration) for jobs and growth, migration and security This includes the extension of the Youth Employment Initiative and increasing the YEI specific allocation by €1 billion for 2017-2020

I. Commission MTR Communication – An EU budget focused on results – Key elements (2) Other programmes for which COM proposes to increase their resources are: EFSI, Horizon 2020, the Connecting Europe Facility, Erasmus+ and COSME Amendment of the MFF Regulation to further strengthen the flexibility of the current MFF for dealing with unforeseen circumstances incl. i.a. the creation of a European Union Crisis Reserve (funded by de-committed appropriations from all MFF headings and without increasing the overall ceilings for commitments and payments of the agreed MFF ); removal of limitations to the global margins for commitments and payments to allow full use of the current MFF ceilings Revision of the Financial Regulation and 15 sectorial acts, incl. CPR and ESF Regulation, to provide for cost-efficient delivery mechanisms

II. Revision of Financial Regulation incl II. Revision of Financial Regulation incl. "Omnibus" Regulation – Amendments to CPR and ESF Regulation Focus of proposed amendments for the ESI Funds: Reducing administrative burden for beneficiaries: Simplified cost options (SCOs) Joint Action Plans (JAPs) Improving synergies with other EU instruments Streamlining financial instruments Increasing flexibility for investments in Member States Proposals take account of first recommendations by the High Level Group monitoring simplification for beneficiaries of ESI Funds

1. CPR Amendments - Reducing administrative burden for beneficiaries (1) Compulsory use of SCOs for ERDF and ESF grants/repayable assistance where public support does not exceed EUR 100.000 for operations not implemented exclusively through public procurement (moved from ESF Regulation) - (Art. 67(2a) CPR) Accompanying provision providing managing authorities with a 6 months transitional period (Art. 152(4) CPR) Increased options for MS to make use of SCOs: (1) Type of SCOs Lump sums: removal of the upper limit (Art. 67(1)(c) CPR) New possibility: financing based on fulfilment of conditions related to progress in implementation to be defined in delegated acts - linked to Art. 121 FR (Art. 67(1)(e) CPR)

1. CPR Amendments - Reducing administrative burden for beneficiaries (2) (2) Establishing the amount of a SCO Additional methodology for determining a SCO: use of draft budgets on a case by case basis and agreed ex ante by the managing authority in case the public support does not exceed EUR 100.000 (Art. 67(5)(a) CPR) Off the shelf SCOs: possibility for COM to adopt delegated acts for definition of standard scales of unit costs and flat rates and related methods (Art. 67(5)(a) CPR) Additional options for calculating staff costs From ETC Regulation: direct staff costs = 20% of the direct costs other than staff costs Clarification for calculating the hourly rate (1720 hours) Specific provision for staff working on part-time assignment on an operation with fixed hours per month + no need for separate working time registration  

1. CPR Amendments - Reducing administrative burden for beneficiaries (3) (2) Establishing the amount of a SCO Remaining eligible costs (other than direct staff costs) = 40% of eligible direct staff costs (Art. 68b CPR) (moved from the ESF regulation) New provision clarifies that for ESF operations the allowances and salaries paid to participants are not included in the 'remaining eligible costs', but are additional eligible costs.

1. CPR Amendments - Reducing administrative burden for beneficiaries (4) Clarification on management verifications when SCOs are used: managing authority has to verify that conditions for reimbursement of expenditure are met (no need to verify expenditure) (Art. 125(4)(a) CPR) Provision to apply retroactively  

1. CPR Amendments - Reducing administrative burden for beneficiaries (5) Encourage use of Joint Action Plans (JAP) Lower requirements for minimum public expenditure allocated to a JAP (EUR 5 Mio. instead of EUR 10 Mio.) and for the share of public support of OP (5 % instead of 20%) (Art. 104(2) CPR) No minimum requirements for first JAP submitted under the Investment for Growth and Jobs and ETC goals (Art. 104(3) CPR) Deletion of limitations for reimbursements (Art. 105(2) CPR) Various changes to reduce content requirements for the JAP (Art. 106 CPR) Adaptation of coverage of COM decision approving the JAP (Art. 107 CPR) No need for JAP steering committee to be distinct from programme monitoring committee (Art. 108 CPR)

2. Improving synergies with other EU instruments Changes on eligibility of expenditure to improve synergies with other EU Funds: provision allowing expenditure to be reimbursed from different ESI Funds and Union instruments on a pro rata basis in accordance with the document setting out the conditions of support (Art. 65(11) CPR) EFSI-ESI Funds complementarity

3. Increasing flexibility for investments in Member States Migration and asylum highlighted as horizontal priority for all ESI Funds (Art. 9 CPR) Possibility to transfer resources allocated under shared implementation to other EU instruments under direct or indirect management or to enhance the risk bearing capacity of the EFSI: MS have to submit request by 30 September, financial appropriations of future years only, programme amendment required (Art. 30a CPR; linked to Art. 125 FR) Streamlining of procedures for the amendment of the Partnership Agreement through an annual alignment exercise, (Art. 16 (4a) CPR)

4. Other changes in the CPR contributing to simplification Increased legal certainty for electronic documents: no originals are required if the national rules for certification of conformity are complied with (Art. 140(3) CPR) Clarifications on obligations on information and communication: apply to beneficiaries as from when they obtain the document setting out the conditions for support to the operation (Art. 115 and Annex XII CPR) Extension of the exemption to deduct net revenue for operations generating net revenue only during implementation (now for operations with total eligible cost below EUR 100.000 instead of EUR 50.000) (Art. 65 (8) CPR)

5. Amendments to the ESF Regulation Clarification on operations implemented outside the programme area (Art. 13 ESF - similar to Art. 70(2a) CPR) Deletion of provisions on SCOs which have been moved to the CPR, i.e. Compulsory use of SCOs for small operations 40% flat rate on direct staff costs to cover remaining costs of the operation. The CPR clarifies that remaining costs do not include salaries and allowances paid to participants. Reporting on the common indicators on the household situation: only twice (in 2019 and 2025) on the basis of a representative sample. Provision to apply retroactively

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