1. MINISTRY OF FINANCE, PLANNING AND ECONOMIC DEVELOPMENT August 2015 Budgeting for Service Delivery Consolidating intergovernmental transfers to local government 1

2. Structure of the presentation 1.Overview 2.Recurrent Work Plan Salaries and wage-related costs Lower Local Services Higher Local Services 3.Development Work Plan Capacity development Administrative and service delivery infrastructure 2

3. 1. Overview 3

4. Overview Sector Work Plan is the basis of the LG BFP and Budget Estimates New rules will give greater flexibility over budget decisions To guide decisions there are: General guidelines which cut across all grants and sectors Grant and Budget Information Papers with specific budget requirements for each sector Compliance will be checked and Performance Contracts will not be signed by the PS/ST unless these are adhered to 4

5. Structure of guidelines and GBIP General budget guidelines Key stages in budget preparations Managing the budget process (LG call circular, LLG processes, etc) Preparation of department work plans Grant and Budget Information Papers Roles, responsibilities and mandate of LG Purpose of transfers Grant structure and draft budget Grant-specific information and requirements Expenditure budget structure and performance indicators 5

6. Grant and Budget Information Paper Part 5 details Workplan and Budget requirements Allocating resources between budget categories Salaries and related costs (wage and non-wage recurrent) Budgeting for Lower Local Services (non-wage recurrent) Budgeting for Higher Local Services (non-wage recurrent) HLG Sector Management and Monitoring (non-wage recurrent) Capacity development (development) Infrastructure (development) 6

7. 2. Recurrent 7

8. Salaries and related costs There will be a ceiling (maximum) for: Technical, administrative and service delivery staff In addition, the budget for salaries should: be based on a verified payroll/staff lists submitted to MoPS/MoLG cover existing staff commitments, including vacancies and new posts provide staff to operationalise new infrastructure being delivered NB: any staff recruited outside staff ceilings must be a) hired on contract or b) be funded from locally raised revenues, donor funding or the UCG Some sectors may have guidance on: How should staff be allocated to LLGs and service units? How should other staff related costs be handled? Any excess budget (below ceiling) may be reallocated within sector limits. 8

9. Lower local services A floor (minimum) allocation for Lower Local Services In addition, the budget for lower local services should: Fund existing commitments for lower local services, before starting new ones Some sectors may have guidance on: How are responsibilities in the sector going to be split? How should LGs make allocations to LLGs and service units? Any excess (above minimum) may be reallocated within sector limits All LLS allocations to LLGs will be transferred directly by MoFPED on the basis of the LG’s budget allocations 9

10. Higher local services There is no floor or ceiling for higher local services. However, the budget for higher local services should: Fund existing commitments for higher local services, before starting new ones Reflect the main national priorities expected to be delivered by HLGs Some sectors may have guidance on: Required minimum levels of a service to be carried out Minimum allocations to a service delivery output/input (e.g. medical supplies) How are responsibilities in the sector going to be prioritised? 10

11. HLG Sector Management Processes A ceiling (maximum) allocation for management, support and monitoring set by sectors, with core processes set out which must be adequately provided for. The budget allocation will need to cover provisions for: HLG support teams (e.g. DHO, DEO) Special committees (e.g. District Roads Committee) Community participation Human resources management As well as, sector monitoring: Monitoring LLGs and Service Units (e.g. verification visits) Maintaining sector information (e.g. HMIS, EMIS) Other monitoring requirements requiring a budget allocation Any excess (above minimum) may be reallocated within sector limits 11

12. 2. Development 12

13. Capacity development Capacity building activities will be coordinated by management in a LG The LGs will spend maximum 10% of the DDEG allocation for capacity building activities In addition, each of the sectors will be encouraged to allocate part of the development grant for LG Capacity Building. The funds for capacity building will be used for: discretional skills development – minimum 80%; and career development for technical staff which are a requirement for confirmation or promotion – maximum 20% All capacity development activities will be: incorporated in a comprehensive LG capacity building plan budgeted at the HLG but address the needs of both HLG and LLGs 13

14. Infrastructure Division between service delivery and administrative infrastructure Discretionary Development Equalisation Grant (DDEG) Capital investments for service delivery – minimum 65% Capital investments for administration – maximum 15% Other development activities/expenditures – minimum 10% Sector conditional grants will have guidelines in the grant and budget information paper Vertical allocation of resources: DDEG will be shared between HLG and LLGs using a standard formulae 100% of the sector development grants should be allocated to the HLG (districts and municipalities) unless specified otherwise in the sector budget requirements The budget for each of the infrastructure outputs either for DDEG or sector development grants will provide for investment service costs, up to a maximum level Allocations should adhere to the positive and negative lists provided in the respective sector budget and grant information papers 14

15. Thank You Any Questions? 15