Summary of the Discussions

The first session was primarily focused on accountability and governance in service delivery at the local level. The framework for the discussion was provided through the presentation of the WDR 2004, presented byRitva Reinikka.  In this context, regional officials and local experts addressed Russia’s specific governance issues in the education and health sectors. This included discussion of responsibilities in service delivery at the regional and municipal levels; new legal status of service delivery institutions/facilities (i.e., the new assignment of function has shifted responsibilities among the sub-national levels of governments and the ownership of those facilities is one of main concerns for regional and local authorities); and the introduction of educational districts as a tool for increased service delivery efficiency. Much of the discussion was focused in new ways to organize service provision in order to have clearer accountability lines. 

The second session focused its attention on issues arising from the new expenditure responsibilities at the regional and local levels. The presentations addressed some aspects of these assignments for health, education, and social welfare programs. The discussion after the presentation was mainly focused on this later aspect. Concerns were raised about the regional inequalities caused but the assignment of several welfare programs to the regions, and regarding the monetization of benefits. The monetization of benefits was at the center of the discussion, particularly highlighting the issues of possible under-funding of programs with this scheme at the regional levels, lack of targeting of these benefits, and the social unrest this is causing at the regional level.

The third session was devoted to the issues of financing local governments’ service provision. Two themes were at the core of the discussion: the regional-local equalization grants and the sectoral grants. The session was kicked-off with presentations on the lessons from international experience in Brazil and Germany, and the application of these experiences to the Russian context. Later the presentations went directly to address the options and issues arising from the implementation of regional-local equalization transfers in Russia.

Three main issues were observed throughout the discussion on this session. First, inequalities across local governments within regions in Russia are so large (i.e., in some cases  per capita public expenditures is 10 times larger in some municipalities compared to others)  that equalization transfers (of any kind) are necessary. Second, there are disagreements regarding the feasibility of the so called “negative transfers” (that is, wealthier local government passing revenues to poorer local governments). On this issue, there is the fear that efforts for revenue mobilization would decline significantly with the application of this type of equalization transfers, but not all participants agreed with this argument. And third, there is regional experience demonstrating that formula based equalization transfers are not only feasible to be implemented but also they are already bringing positive results improving equity without reducing revenue mobilization. Regional experiences (e.g., Tverskaya) showed that some regions are way ahead in their intergovernmental fiscal reforms, but some others are still at the very early stage of thinking and learning about their options.

Something similar transcended on the discussions on the sector transfers, as some regional are ahead of the rest (e.g., Samara). It was also clear that there are more concrete ideas regarding the transfers in education sector. In Samara, the per-capita transfers to school districts as opposed to small local governments, is opening the window for a more efficient way of providing this service, specially considering the over supply of infrastructure and staff existing in this sector. The situation on the health sector is more complex as the positive option of upgrading a mandatory health insurance system is being discussed.                  

The last session covered the issues of monitoring performance and performance-based budgeting at the sub-national level. The general concepts of PBB and specifics of its regional level application were covered. A great deal of time was devoted to the issue of performance measurements in health and education, particularly thinking about the policy objectives pursued. Yet again, regional experience proved to be forward thinking when a regional case (e.g., Vologda) of early experiences in the health sector was presented.