Resources and Capacities

9.5.1 Financing

Welfare programs are operated from budget allocations that are fixed in advance. When the slogan is to cut costs at any price—which is frequently the case due to the economic situation or to ideological considerations—money is often taken away from the budgetary allocation of welfare systems.

Not only the declaration of social rights but also the restrictive regulation of public institutions may set limits on the autonomy of decentralized organizations. Restrictive regulations, in our experience, relate only to finance. The basic regulatory principle is quite simple: welfare spending must not exceed the budget. It is worth mentioning that budgetary limits are far “harder” or more defined in the Ukraine, where the welfare ad-ministration is more bureaucratic and hierarchical than in Latvia and Hungary. In the latter two countries, municipalities react to the lack of resources with more flexible

“spending behavior.” One cannot be fully satisfied with this flexibility, however, for instead of (or in addition to) improving the efficiency and targeting, it indicates a decrease

in the quality of services and a restriction in the number of beneficiaries thereby resulting in the social exclusion of certain groups.

Often the rules for using funds compel the managers who oversee spending to follow courses of action that divert from the proclaimed social policy principles. In such cases the proclamation of the social policy priorities is nothing more than lip service, while the rules and incentives that enable spending are the actual “law.” We are convinced that those financial arrangements are welcomed that encourage providers to stick to the declared social policy principles.

Ii is problematic if a welfare program allows scope for squandering. It is better if a program can accomplish the same outputs by spending less, both in absolute and relative terms. It is beneficial, in addition, if it lends room for innovative techniques that cut costs. However, it is unacceptable if expenditure is cut at the cost of corrupting the quality of provision or if provision is confined to clients who can be assisted at a lower cost, while problematic cases requiring more expensive care go without cover.

In all three countries, the representatives of every local authority we visited complained about the inadequacy of funding in relation to delegated responsibilities. This corresponds with our opinion that decentralization of social policy in this region tends to aim more at shifting the responsibility for problems and responsibilities than at the decentralization of resources and capacities. Unfortunately, decentralization can work only when substantial responsibilities, tasks and powers are transferred from the center with staff and financial means to match.

Without exception, in all three countries it would not be problematic to set up closer links between municipal budgets (resource allocation) and performance. The system is mainly based on inputs instead of outputs and outcomes.

The rural-urban divide and regional economic inequalities create special financial difficulties. In Latvia (Equalization Fund) and in Hungry (“social normative”) there exist some mechanisms that react to the diverse financial situations of the municipalities. The efficiency of these financial systems, however, does not guarantee an appropriate level equal access to social services. Some mechanisms that react to the diverse financial situations of the municipalities ought to be instituted in Ukraine as well.

In Latvia it would be advisable to revise the very complicated cash flow path to make the financial system more effective and transparent. According to the local research team:

“One of the problems of decentralization is the fact that it creates a very complicated cash flow path that is difficult to supervise. It is almost impossible to follow the cash flow. Each separate local government is financed from several sources. These sources are the central funding by the government (which constitutes 71.4% of personal income tax), and funding from the national special budget and the national general budget as special purpose grants.

Additionally, local governments receive funds from the Local Government Finance Equalization Fund, which was instituted to reduce the gap between local governments with different levels of basic funding. The funding of local governments is made up of

local fees, real estate tax, and payments for services. Local governments may also receive state-guaranteed loans or gifts/donations. This diverse structure of funding sources makes difficult the observation of the cash flow. As such, the possibility of wasting money without due process cannot be eliminated.”

Hungary is exhibiting some signs of “re-centralization”: this is evident from the cut-backs in the financing of local self-governments in that their share in locally collected personal income tax is continuously shrinking.

9.5.2Human Resources and Professional Standards

We consider it very harmful and demoralizing if a considerable part of the budget of a welfare program is allocated for the salaries of the administrators and staff members while a relatively small amount is allocated for the direct costs of the program itself. By contrast, we see it a fine accomplishment if the highest possible percentage of expenditure is supplied to the group to be supported. Complicated means-testing procedures together with the unnecessarily wide range of services are responsible for increasing the relative costs of administration.

In Central Eastern Europe a civil servant traditionally acts as a civil patron rather than a servant of the public. In order that the social policy programs might keep the domineering behavior of bureaucrats within limits, it is essential that the rules of eligibility and procedure should be uniform for all members of society. If that cannot be ensured, which is quite frequently the case in the three countries, fundamental constitutional and human rights may be violated by public offices venting the subjective views and tempera-ment and prejudices of officials.

In the area of social services, there are hardly any regulations (and those mainly in residential care) or mechanisms outlining the content of the services. The Latvian and Hungarian regulations at least make a list of the services to be provided by the residential care centers, but these lists do not contain any information on the professional standards and quality of the services. The Hungarian regulatory system produces relatively detailed information regarding, for example, minimum space requirements for the rooms of residents, the number of bathrooms, and the professional qualifications of the staff. These preconditions have to be met in order for the institution to be granted a license. Clear national standards, however, are essential for safeguarding equity and quality.

The standardization of the content of the services does not necessarily result in uniform services. As one author wrote: “A focus on quality, linked with equality, does not mean that services have to be the same for all those receiving them (‘one size fits all’), rather the opposite.

Flexibility and responsiveness are needed, requiring staff to use their initiative and judge-ment when making decisions. Different quality systems, including managejudge-ment training and development, are needed to support such an approach” (Gaster 1999, p. 43).

Another important factor determining the quality of services is the professional quali-fication of the staff in the social policy sector. University-level and college-based education of social workers and social policy experts began in the middle of the 1980s in Hungary, and a system of further education has recently been introduced. In Latvia, huge efforts have been made to compensate for the shortage in properly trained social workers. Ukraine, however, is just beginning this process.

The value and the prestige of a profession may be expressed by the position of the representatives of that profession in the income hierarchy. We have no data on this issue from Latvia or Ukraine. So far as Hungary is concerned, social sector employees are at the bottom of the hierarchy. As an example, even the average wage of textile workers is higher than the average salary of social workers.

It is a matter of urgency in all three countries that efforts be made to increase the number of highly qualified professionals, to decrease the rapid fluctuation of the workforce in this sector, and to improve the financial recognition as well as the moral support of the social professions.