Comprehensive Evaluation of Execution of Local Budget Programs: Key Approaches

and Activities

2 March 2017,Kyiv

Evaluation of Budget Programs: An Indispensable Stage in Effective Budget Management

The performance program budgeting in the budget process is a budget management method, which envisages use of performance evaluation of budget spending at all stages of the budget process.

In the world practice, program evaluation is probably the most important element of the budget process, as it is based on evaluation results that decisions are made with regard to future implementation of specific programs.

Legislative Framework of Performance Evaluation

At all stages of the budget process, its participants shall carry out performance evaluation of budget programs within the scope of their responsibilities, which includes the activities of monitoring, analysis, and control over targeted and efficient use of budget funds.

The results of performance evaluation of budget programs shall serve as the basis for making decisions on amending – according to the established procedure – the budget allocations of the current budget period, respective proposals to the draft budget for the planning budget period, and the budget forecast for the two budget periods subsequent to the planning period, including termination of respective budget programs.

The Ministry of Finance of Ukraine shall determine the organizational and methodological principles for performance evaluation of budget programs.

Part 6, Article 20, Budget Code of Ukraine

Methodological Principles of Performance Evaluation of Local Budget Programs

Methodological recommendations for conducting performance evaluation of budget programs (Order of the Ministry of Finance of Ukraine of 17 May 2011, #608 (with amendments of 12 February 2012, #13)

The improved methodology of conducting comparative analysis of performance of the budget programs implemented by spending units of local budgets (Letter of the Ministry of Finance of Ukraine of 19 September 2013, #31-05110-14-5/27486)

Methodological Recommendations for Conducting Performance Evaluation of Budget Programs

Amendments approved to Order #608 by MOF Order #13 of 12 January 2012, extending the effect of the Methodological Recommendations for performance evaluation of budget programs of the state budget to the local level.

The Order provides general recommendations for conducting performance evaluation of budget programs both for the state and local budgets.

Methodological Recommendations for Conducting Performance Evaluation of Budget Programs (Cont’d)

It is recommended that key spending units of the state budget and local budgets use the Methodological Recommendations when evaluating performance of budget programs.

The Methodological Recommendations for performance evaluation of budget programs may be used by key spending units and other participants in the budget process when evaluating efficiency of budget programs within the scope of their responsibilities.

When arranging for the performance evaluation of budget programs, a key spending unit shall independently decide on:

– the scope and structure of the information to be used for performance evaluation of budget programs based on the specifics of its activities, goal and objectives of each budget program;

– sources of information; and– information gathering procedure and intervals, and the obtained information

processing and analysis technology.

Наказ Міністерства фінансів України від 17.05.2011 року № 608

Methodology of Conducting Comparative Analysis of Performance of the Budget Programs Implemented by

Spending Units of Local Budgets

It accounts for the specifics of budget programs in local budgets:

It applies the same criteria to determining the level of performance for all budget programs

It allows unifying the performance evaluation for all spending units

It applies a unified calculation algorithm using the formula-based approach

Methodology of Conducting Comparative Analysis of Performance of the Budget Programs Implemented by

Spending Units of Local Budgets (Cont’d)

Calculation of key evaluation parameters

calculation of the budget program average performance indictor achievement index

calculation of the budget program average quality indicator achievement index

calculation of budget program effectiveness comparison against indicators of previous periods

The methodology of comparative performance analysis of budget programs allows to:

Automate the performance evaluation of budget programs

Obtain the evaluation results immediately

Compare the evaluation results at different levels:

• within one key spending unit;

• between key spending units within the same budget;

• between key spending units of respective department (education, healthcare etc.)

The budget program comprehensive performance evaluation system shall:

Be easily understandable and clear

Apply the same approaches to all implementers of budget programs

Have the same formats and clear implementation deadlines

Establish responsibility

Provide all participants of the budget process with necessary information

Be built on principles of openness and transparency

Comprehensive Evaluation of Execution of Local Budget Programs: Level of Information Detail

• Міністерство фінансів України

• Місцеві фінансові органи

• Головні розпорядники коштів

Quantitative indicators

Qualitative indicators

Analytical (descriptive) materials

Analytical (descriptive) materials

Ministry of Finance of Ukraine

Local finance departments

Key spending units

Schematic Diagram of Comprehensive Evaluation of Execution of Local Budget Programs

Summarized evaluation information

Information notes about effectiveness ofbudget programs

Report on execution of budget program passport

Report on budget program performance evaluation results

Quantitative indicators

Qualitative indicators

Analytical (descriptive) materials

Analytical (descriptive) materials

Ministry of Finance of Ukraine

Local finance departments

Key spending units

To improve performance evaluation of local budget programs it is necessary to:

Amend the Budget Code, so as to establish responsibility for nonperformance of evaluation

Integrate the Methodological recommendations for budget program performance evaluation with the Methodology of comparative performance analysis of budget programs implemented by spending units of local budgets

Refine the rules of conducting performance evaluation of budget programs in the following areas:

– Set the deadlines for conducting the evaluation and the formats of evaluation reports– The annual performance evaluation conducted by key spending units must be

obligatory. Evaluation should cover tasks, subprograms, and the program as a whole– Determine the mechanism of impact of budget program evaluation results on the

allocation of budget resources in future periods– The report on evaluation results should be signed by head of the relevant key

spending unit and should have the status of a statutory document. Its availability and content should be verified by supervisory bodies

– The reports on evaluation results should be published and made publicly available Introduce evaluation at the level of lower-level spending units and recipients of budget

funds

Contact Information

INSTITUTE FOR BUDGETARY AND SOCIO-ECONOMIC RESEARCH

15-V, Borysohlibska St., 2nd Floor,Kyiv, 04070, Ukraine

Tel.: (044) 353-58-68, 492-97-80, 492-97-81 Fax: (044) 492-97-83

www.ibser.org.ua