Finnish Administration and its modernisation
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1 1.2.6 Performance Management and Performance Based Budgeting Day 2 Finnish Administration and its modernisation Mr Heikki Joustie
2 Section I Finnish Administration
3 Parliamentary Government Parliamentary election every 4. year Government based on the parliamentary majority coalitions ***** President of the Republic elected every 6. year ***** Municipal councils elected every 4. year (on diffrenent years than parliamentary elections)
4 12 ministries Ministries and agencies Appr 5000 employees, average size (two bigger ones) Central government agencies Some with regional and local activities Total number of Government officials: (April 2010) ***** Autonomous municipalities 342 municipalities with total of employees (June 2010) Biggest muncipality (Helsinki) has and the smallest ones 200 ihabitants (few muncipalities in archipelago region)
5 Basic responsibilities of the Central Government Strategic political decision making: Parliament Government as collegium Individual ministers Public service delivery: Government Agencies
6 Performance management Performance agreements between respective ministry and every agency in it s domain Agencies have a far reaching autonomy in their decision making when fulfilling the result targets Yearly performance reports from agencies to the ministries and from government as a whole to the Parliament
7 The managerial pattern of public service delivery Ministries as politically responsible actors define the societal result targets and budgetary frames for agencies strategic steering on outcome level Agency agrees with respective ministry upon operational results targets output level Desire of clear role definitions for politicians and front line managers
8 Section II Modernisation of the Finnish Central Administration Performance Management
9 Evaluation late 80s: The Old Machinery poor efficiency decreasing productivity poor service orientation poor accountability
10 Reason for disease The adopted concept to decide upon details centrally on the very top of the power pyramide detailed legislation and rules detailed budgets with huge number of input oriented appropriations
11 Plans for results orientation New values: cost-effectiveness quality of services client orientation accountability transparency BETTER VALUE FOR MONEY via DEVOLUTION OF DECISION MAKING AUTHORITY TOWARDS FRONT LINE MANAGERS
12 Key features of the reform Framework type lump sum budgeting Devolution of the resource authority and result responsibility towards the front line Giving the clear strategic role to Parliament, Government and Ministries Agency level as operative actors (central, regional and local)
13 Accountability Annual fiscal accounts and result reports from agencies to Ministries operative outputs Annual reports (13) from Ministries to Government on social impacts outcomes Annual report from Government to Parliament on achievments
14 Budget as key document Showing the role of every level: Parliament as highest steerer Government as guardian of main strategies Ministry as strategically responsible actor (outcomes) and negotiator towards agencies Agency (+ regional and local units) as operative actor with output responsibilities
15 Performance agreements The key management tool: Agreement between the Ministry and the operative actor on: Money available for the whole fiscal year Result targets to be achieved Rules for monitoring and reporting
16 Marketised part of public service production Creation of Public Enterprise formula late 80s Chargeable services to be removed to market circumstances; starting with internal services and continueing with public utilities post and telecom, railroads etc. 45% of state personnel have been transferred outside budget funding
17 Net budgeting for chargeable services Alloving the agencies to start commercial activities The permission of the Line Ministry is needed Chargeable services are divided on cost priced public goods and market priced goods The agency can keep incomes and only the rest needed, will be funded via budget net budget
18 Reform of the relationship between state and municipalities Abolishment of detailed cost based state subsidies and detailed ruling Lump sum aid based on population structure of the municipality Abolishment of four government agencies; these were specialised for detailed checks upon municipal spending (education, health and social services)
Targeting and reporting performance - Finnish experiences
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