A.3 County resource allocation and use

TABLE A.3 County resource allocation and use

Enhance county planning, budgeting, and execution. Realign resources within and across sectors in counties that respond to local needs and national priorities for service delivery.

KEY ISSUES AND CHALLENGES CONSIDERATIONS POLICY OPTIONS

Planning and budgeting processes have not been sufficiently focused on the services counties are meant to finance.

Budget documents do not transparently set out either the allocation of funding across the county or the results that are to be achieved with public funds, making it difficult to evaluate the effectiveness of public spending. Planning and budgeting processes focus on the selection of capital projects, not recurrent delivery of services.

Participation processes are not working effectively. County planning and budget processes to focus more on the delivery of services and less on the selection of projects. Budgets should answer the simple budget questions: 1. What sectors and services is the budget being spent on? 2. Where is the budget being spent? 3. How much money is being spent at a school/ health facility/subcounty project? Clarity in decisionmaking and accountability processes, with rationalization of planning and budgeting documents to allow counties to focus on decisions relating to medium-term planning and then the annual budget. Rationalize planning and budgeting documents to allow counties to focus on quality. Remove the requirement for counties to produce a CADP in addition to the CFSP.

Provide more support and guidance to counties to improve the quality of their program budgets by improving the formulation and selection of the key outputs expected from each county department and identifying a few important results and indicators for each sector. By planning and budgeting in relation to service delivery results, counties may improve their allocation and monitoring of spending. The ways in which counties allocate resources to sectors also needs to be revisited if services are to be improved. Ensure subcounty structures and facilities (a subcounty agricultural extension team, or a health facility) are shown as a cost center in budgets to clearly show the funds they are allocated to provide services. This will help provide a greater results-orientation of the county budget. The key rules for participatory budgeting need to be clarified in many counties: What is the size of the allocation over which the participatory process is making decisions? How can residents make a proposal for consideration? What is the decision-making process for selecting projects? Counties must also provide significant administrative support if participatory processes are to be effective.

IMPLEMENTATION RESPONSIBILITIES

Lead: NT&P CECs (finance) Involved: MoDA National ministries County departments

TIME FRAME

Next 3 years

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TABLE A.3, continued Enhance county planning, budgeting, and execution. Realign resources within and across sectors in counties that respond to local needs and national priorities for service delivery.

KEY ISSUES AND CHALLENGES CONSIDERATIONS POLICY OPTIONS

Counties are not currently reporting against results (indicators and targets set in program budgets) in their County Budget Review and Outlook Papers (CBROPs). Furthermore, many sectors do not appear to have the national data systems needed to produce reliable data for sector outcomes.

County reporting is also not based on a common framework. This makes it difficult to compare county spending and outcomes for policy purposes. Common program structure and indicators agreement. Reporting against program expenditures and outputs. Ensure reports are used in decision-making and accountability. County systems and dashboards linking performance and resources, linked to the sector MIS and IFMIS.

National reporting comparing service delivery performance across counties in sectors. Counties need to report (in meaningful and comparable ways) on whether results have (or have not) been achieved. Good practices on reporting have been set that can be emulated by other counties. Nyandarua has started producing a county annual progress report that reports against the targets set in its program budget. This should be emulated by all counties. However, ideally this information would be part of the CBROP, rather than separate, to ensure the results of spending are connected to the broader review of the budget and to the forecasts for the next fiscal year. The National Treasury should coordinate an annual report on county performance with each sector providing a chapter. Develop a common program structure for all counties. As all counties have the same functions mandated by the constitution, it should be possible to develop a common program structure and common key performance indicators connected to national sector information systems, which makes sense for all counties.

There are inconsistencies between data collected by the Controller of Budget and county reporting through IFMIS.

There is no sector-specific guidance on how counties should budget for, manage, monitor, and report on funding for service delivery. Existing guidance on budgeting, planning, and financial management is generic but the services and investments in each sector are different. Develop explicit sector guidance for budgeting, management, and monitoring of service delivery within a common framework. Move to a single data source for county expenditure. To ensure there is a single data source, National Treasury, the Controller of Budget, and counties need to agree upon a common format for reporting through IFMIS, which may also require capturing some data from outside IFMIS.

Sector budgeting guidance should be prepared in a collaborative way between the national government and counties to ensure joint ownership. The National Treasury should coordinate this process, with national and county sector ministries and departments collaborating.

IMPLEMENTATION RESPONSIBILITIES

Lead: NT CoB CECs (finance) Involved: National sector ministries County departments Next 12 months

TIME FRAME

Lead: NT CoB

Involved: CECs Next 3 years

Lead: Intergovernmental forums Sector ministries CECs (sectors) Involved: NT MoDA Next 3 years

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TABLE A.3, continued Enhance county planning, budgeting, and execution. Realign resources within and across sectors in counties that respond to local needs and national priorities for service delivery.

KEY ISSUES AND CHALLENGES CONSIDERATIONS POLICY OPTIONS IMPLEMENTATION RESPONSIBILITIES TIME FRAME

The 30 percent development spending rule is distorting budget allocations. This is leading to “development” spending on infrastructure, crowding out spending on operations and maintenance, which includes essential health commodities and inputs for agricultural extension. In addition, the cap on payroll spending can constrain HR- dependent services (for example, health). The policy objective underlying fiscal rules should be clarified. Reconsider the division between recurrent spending and development spending at the county level. This currently adds little or no value.

Flexibility is needed in the determination of spending for service delivery needs, shifting from a focus on compliance to performance (for example, the 70 percent/30 percent “development spending” rule is one size fits all for all counties). Lead: CoB NT

Involved: National Assembly Senate Next 12 months

Source: World Bank. Note: CADP = County Annual Development Plan; CBROP = County Budget Review and Outlook Paper; CECs = County Executive Committees; CFSP = County Fiscal Strategy Paper; CoB = Controller of Budget; HR = human resources; IFMIS = Integrated Financial Management System; MIS = management information system; MoDA = Ministry of Devolution and the Arid and Semi-Arid Lands; NT = National Treasury; NT&P = National Treasury and Planning.