Using performance information for management - Eneken Lipp, Estonia
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The document discusses performance-based budgeting reforms in Estonia. It outlines the challenges that triggered reforms, including a lack of cooperation between planning and budgeting. Estonia is now using performance budgeting, with 2/3 of ministry budgets connected to public services. The concept of performance-based budgeting in Estonia ties resources to outcomes through program budgeting, defining all government costs as services, and service cost accounting. New legal amendments effective in 2020 will integrate strategic planning documents with the budget at the program level, allowing some flexibility in reallocating costs. The reform aims to increase efficiency, transparency, and cooperation through unified performance planning and budgeting systems.
Using performance information for management - Eneken Lipp, Estonia
- 1. Performance Based Budgeting in Estonia Eneken Lipp Project Manager of Performance Based Budgeting Ministry of Finance, Estonia eneken.lipp@fin.ee
- 2. 1. Challenges and past developments 2. Concept and vision of PBB in Estonia 3. Findings of the reform and examples of practice 4. Performance data and reporting
- 3. The challenges that triggered the change • Lack of co-operation • Planning and budgeting as separate worlds • Too much attention to inputs • Not enough performance evaluation and monitoring • Number of planning documents • Number of people responsible for strategic planning, producing planning documents • Doubled activities, documents, functions, IT systems • Pressure on budget costs
- 4. Developments in Estonia In 2018 already using performance budgeting – ministry of Social Affairs, Ministry of Education and Research - 2/3 of the costs in the Budget
- 5. 2. Public Services 100% of Budget costs are connected to services 3. Service Costing Cost accounting of services in Ministries and Agencies. Agencies may choose between traditional and activity based costing. Performance Based Budgeting in Estonia where resources are connected to outcomes 1. Programme budgeting Structured strategic planning and budgeting in all Government areas and Agencies Unified performance planning and budgeting - Financial Management Information System and Costing Software available for all Agencies.
- 6. Performance planning and budgeting
- 7. Performance planning and budgeting
- 9. New amendments in budget law – takes effect in 2020 Planning documents connected to budget are: • Policy Fundamentals (Parliament) • Performance area planning documents (Government) • Programmes (Minister) The budget limits are set on programme level. The budget is divided as follows: Ministry, Performance area(s) and Programme(s). Flexibility rule: Gov. is allowed to reallocate costs between programmes up to 0,25% of programme fixed cost limit.
- 10. New framework of performance budgeting Governmentactionplan 4years Long-term strategic plan „Estonia 2035“15 years 5-10 years 4 years State Budget1 year Development plans of performance areas State Budget Strategy Performance report of development plansPrevious year Programme documents4 years Programme documents1 year
- 11. Expected changes Better management Less strategic documentsPrioritizing Efficiency Open data, Dashboards No more silos Customer Value Flexibility 01 02 03 04 05 06 07 To reduce administrative burden Flexibility for resource management Quality Management To increase co-operation between Ministries Transparency in budget planning Tool for agency management Instrument for policy planning
- 12. Main stages for ministries and agencies to prepare the PBB reform 1. Restructuring of strategic planning – new planning hierarcy 2. Mapping the services with its attributes 3. Creating the costing models (traditional or ABC) PROGRAMMES LISTS OF AGENCIES SERVICES COSTING MODELS OF AGENCIES AND GOV.AREAS 4. Setting the cost models in IS. Creation of management reports. MANAGEMENT DASHBOARDS Real-time budget and performance information reporting RESULTS
- 13. Evolvement of transition projects by each Ministry (november 2018)
- 14. OUTCOME People's ability to live independently, live in the community and participate in society has improved due to effective legal protection and legal aid and assistance Provision of services for victims and assurance of benefits. Expected result: services will become more victim- centered, given the greater protection and support of victims and needs of the victim, and the pursuit of the perpetrator of violence in the interests of himself and the victim. Preventive activities will have wider scope and reach for more target groups. The proportion of victims of violence during the year (baseline 2,3%; 2020 1,4%) Deaths due to domestic violence (baseline 10, 2020 below 5) Proportion of people that intervene domestic violence (baseline 77%, 2020 85%) Proportion of women aware of victim support (baseline 67%; 2020 80%) The proportion of victims of violence who have turned to victim-support (baseline 68%, 2020 80%) Proportion of attitudes accusing the victim (baseline 54%; 2020 45%) Social Care Program Program activity Targets to be achieved with additional spending request Example of additional spending request in 2018, 1.2 million € (Ministry of Social Affairs)
- 15. Findings during the reform • Ministries tend to have more services than agencies • Many direct services in Ministries could be provided by Agencies who manage the service more effectively and closer to the client. • Evidence that part of policy planning is made on Agency level. • Found „missing“ policy areas that were not consciously planned on ministry level before. • In smaller agencies some staff of management or chief-specialists are performing also technical support services. • Ministries still have some budget lines as part of „old habits“, while the service has already been moved to Agency. • IT agencies provide services that are closed long time ago. • Some agencies provide services below internal price (no overhead or development costs included).
- 16. Already showing benefits in management before the final stage of the reform (1) • Full transparency and alignment of goals and services – clear planning hierarchy and clear accountability system. • Performance agreements instead of budget approval. • Findings of doubled activities reorganized services between agencies. For example work counseling and training of child protection workers. • Change of management systems – strategy/development department and financial department have been united - benefits of cooperation. • Service based management has been introduced allowing greater agility in planning and designing services. • Forming informal temporary teams and team-leading to tackle short time development tasks. It means more flexibility in organizational structure, management and payroll.
- 17. Already showing benefits in management before the final stage of the reform (2) • IT developments in IT Agencies are planned in cooperation with the client-Agency. Additional spending requests. • Renewing the SLA-s. Negotiations on service level agreements with client-Agencies. The service costs are transparent. • Following the data (KPIs and actual costs) allows to detect errors faster. • half-year report - family benefits KPI performance 105% but costs of the service 50%. Report available instantly to the Agency, Ministry of Social Affairs and Ministry of Finance. • Some ministries start using the new system a year earlier unoficially. 2019. Programmes instead of implementation plans and cost accounting of services in paralleel with the old budgeting system.
- 18. Integrated reporting Resources Vehicles Buildings Costs associated to personnel IT assets Machinery and equipment Grants Material Events Other costs Costs by economic Content Labor costs Payroll, taxes, Representation Operational costs Transport, travel, trainings, research Personnel data Gender of staff Education Grouping posts of service Age group Years of experience Geographic location Salary full-time equivalent Reason for leave Flow Number of employees Clients Public sector Private sector individuals Other Revenue Capital costs Depreciation Planning hierarchy Performance area, Programme, Measure, Program activity, Service, Service activity Outcome, output and Quality indicators Time Work time used to services or activities Vacations Travel for duty Trainings
- 19. Government Dashboard Ministry Performance Area Dashboard Agency Executive Dashboard Service Managers Dashboard Performance management structure, KPIs and resource planning
- 20. Service managers compiling dashboars E-Governance Conference 9.Nov
- 21. This is a sample text. Insert your desired text here 11 Govenrment areas use new performance management and budget planning 4200 trained public servants 20 Performance areas – Strategic Outcomes ca. 40-60 programmes – Sub-Goals 150 Goverment Agencies and Ministries use service based management and service costing 2 Financial Information Management Systems adapted 150 Goverment Agencies start using Costing Software 4 legal acts changed and new Budgeting handbook released Estonian Performance Budget in 2020 1 new cost object, 5 levels