EXECUTION OF THE PROGRAMME ADOPTED BY THE GENERAL CONFERENCE PART II

Transcription

1 Executive Board Two hundred and second session 202 EX/4 Part II PARIS, 22 August 2017 Original: English Item 4 of the provisional agenda EXECUTION OF THE PROGRAMME ADOPTED BY THE GENERAL CONFERENCE PART II BUDGETARY SITUATION OF THE ORGANIZATION FOR (38 C/5 APPROVED AS ADJUSTED) AS AT 30 JUNE 2017, BUDGET ADJUSTMENTS ARISING FROM DONATIONS AND SPECIAL CONTRIBUTIONS RECEIVED AND MANAGEMENT CHART FOR PROGRAMME EXECUTION IN (38 C/5 APPROVED AS ADJUSTED) STATUS AS AT 30 JUNE 2017 (No. 59) Part II of document 202 EX/4 contains: SUMMARY A. Reports by the Director-General on the budgetary situation of the Organization for (38 C/5) as at 30 June 2017, which includes: I. Report by the Director-General on budget adjustments authorized within the Appropriation Resolution for In accordance with 38 C/Resolution 103, paragraphs (b) (d) and (e), the Director-General presents to the Executive Board the reports on: (i) (ii) (iii) adjustments to the approved appropriation for from donations and special contributions received during the period 1 January to 30 June 2017 transfers between MLA appropriation lines within a major programme and transfer between the five major programmes transfers from Part V of the budget (Anticipated Cost Increases) B. The Management Chart for programme execution in based on the accounts for the regular programme and extrabudgetary funds Action expected of the Executive Board: Proposed decision in paragraph 50.

2 202 EX/4 Part II Part A REPORT BY THE DIRECTOR-GENERAL ON THE BUDGETARY SITUATION OF THE ORGANIZATION FOR (38 C/5) AS AT 30 JUNE 2017 REPORT BY THE DIRECTOR-GENERAL ON BUDGET ADJUSTMENTS AUTHORIZED WITHIN THE APPROPRIATION RESOLUTION FOR Part A provides a summary of analysis for the decision-making of the Executive Board. 2. In accordance with paragraph (b) of 38 C/Resolution 103, the Director-General is authorized to accept and add to the approved appropriation for , voluntary contributions, donations, gifts, bequests and subventions, and contributions from governments taking into account the provisions of Article 7.3 of the Financial Regulations. Information on these additional appropriations is provided to the Members of the Executive Board at the session following such action. New contributions received from donors for the period 1 January to 30 June 2017 amount to $6,409,000. New cash received from donors: $6,171,037 Transfers from General Funds or Special Accounts: $237,963 The table below provides the summary of such actions by Sector/Bureau and the details are provided in Annex II of document 202 EX/4.INF.2. Amts in USD Sectors/Bureaux New contributions received as additional appropriations to the Regular programme Weight Education 1,590, % Natural sciences including IOC 733, % Social and human sciences 833, % Culture 1,426, % Communication and information 591, % Management of Field Offices 734, % Directorate and Executive Office of the Director-General 3, % Coordination and monitoring of action to benefit Africa 12, % Coordination and monitoring of action to implement gender equality 160, % External relations and public information 322, % Total, donations and special contributions 6,409, % Additional Appropriations (AA) increased by $83,082 or 1.3% compared to the same period last biennium (1 January to 30 June 2015). The amount received was equivalent to $6,325,918 as at 30 June 2015, excluding allocations from the Emergency Fund. 3. The table below gives an overview of the adjustments to the Approved Appropriations for from donations and special contributions for the 18-month period from January 2016 to June A total of $16,951,524 has been received of which $16,555,258 (98%) represents new cash received from donors and $396,266 (2%) relates to transfers from General Funds or Funds-in Trust as authorized by donors.

3 202 EX/4 Part II page 2 Amts in USD Sectors/Bureaux New contributions received as additional appropriations to the Regular programme Weight Education 6,999, % Natural sciences including IOC 2,031, % Social and human sciences 1,659, % Culture 2,865, % Communication and information 1,107, % Management of Field Offices 1,555, % Directorate and Executive Office of the Director-General 3, % Coordination and monitoring of action to benefit Africa 126, % Coordination and monitoring of action to implement gender equality 165, % External relations and public information 437, % Total, donations and special contributions 16,951, % TRANSFERS BETWEEN APPROPRIATION LINES 4. Paragraph (e) of the Appropriation Resolution for states that For the five major programmes, the Director-General may make budget transfers between MLA appropriation lines within a major programme up to an amount of 2% of the initial appropriation for the relevant major programme, informing the Members of the Executive Board in writing, at the session following such action, of the details and reasons for these transfers. Accordingly, the Director-General informs the Executive Board of the following transfer: Major Programmes: transfers between Main Lines of Actions (MLAs) From Part II. A - Programmes Funds Transferred Amts in US D Major Programme I - Education MLA 1 - Supporting Member States to develop education systems to foster high-quality and inclusive lifelong learning for all (200,000) To Part II. A - Programmes Major Programme I - Education MLA 3 - Leading and coordinating the education 2030 agenda through partnerships, monitoring and research 200,000 Net Change 0 5. The above transfer from MLA 1 to MLA 3 was to reinforce UNESCO s capacity in fulfilling the mandate to lead and coordinate the ambitious Education 2030 Agenda, which is about ensuring inclusive and equitable quality education and lifelong learning opportunities for all and captured under MLA 3 through integrating national policy and planning with global education agenda, in particular in effective teaching and learning processes and outcomes. This transfer to MLA 3 will be used toward the implementation of the OECD-UNESCO Joint Initiative: Survey of Teachers in Preprimary Education (STEPP). This transfer is within the 2% of the Major Programmes initial appropriation. 6. The details of this budget transfer by appropriation line (net impact $0) is indicated in the revised Appropriation Table in Annex I of document 202 EX/4.INF.2 and the table above present the summary.

4 202 EX/4 Part II page 3 PROPOSED TRANSFERS FROM PART V OF THE BUDGET 7. Paragraph (d) of the Appropriation Resolution for states that the Director-General is authorized to make budget transfers from Part V of the budget (Anticipated Cost Increases) to the relevant appropriation lines in Parts I-IV of the budget, for the purpose of meeting increases in staff costs, in the costs of goods and services and technical adjustments. Furthermore, in 38 C/Resolution 88, the General Conference authorizes the Director-General (para. 2) to continue to apply to UNESCO staff, measures affecting salaries, allowances and benefits of United Nations common system staff that might be adopted by the United Nations General Assembly or the International Civil Service Commission (ICSC). Accordingly, the Director-General proposes the transfer of funds from Part V to other parts of the budget to cover increases in staff cost and in cost of goods and services arising from statutory and inflationary factors. 8. Salary and allowance adjustment for staff in the General Service (GS) and National Professional Officers (NPO) category in the field (38 C/Resolution 88): The salary scales for locally recruited staff members in the field duty stations are updated regularly in line with the methodology established by ICSC for surveys of prevailing conditions of employment at duty stations other than headquarters (by comprehensive surveys normally taking place every five years or through an interim adjustment mechanism). The adjustments related to salary scales and family allowances (DSDA) of GS and NPO for 25 field offices 1 is estimated to be around $424,000 for the period January to December The Director General therefore proposes that the Executive Board authorizes the use of the remaining available balance of Part V ($296,795) and takes note that the balance of statutory increases that have arisen ($127,205) and may further arise through the remaining six months of the biennium will be managed through the use of budgets against vacant posts. 9. With the above transfer, the entire budget of Part V ($4,819,300) earmarked in the $518M expenditure plan would be transferred from Part V to respective Parts I-III. The details of the requirement (by appropriation lines) proposed for transfer from Part V are indicated in the revised Appropriation Table in Annex I of document 202 EX/4.INF.2. 1 Addis Ababa, Antananarivo, Apia, Bamako, Beijing, Beirut, Cairo, Dhaka, Harare, Islamabad, Juba, Khartoum, Kingston, Lima, Luanda, Mexico City, Montevideo, Nairobi, New York, Phnom Penh, Port-au-Prince, San Jose, Santiago, Tashkent and Venice.

5 202 EX/4 Part II page 4 Part B REPORT BY THE DIRECTOR-GENERAL ON THE EXECUTION OF THE PROGRAMME ADOPTED BY THE GENERAL CONFERENCE MANAGEMENT CHART Programme execution as at 30 June The Management Chart provides the overall budget and expenditure situation for regular budget and extrabudgetary resources. OVERALL BUDGET as at 30 June 2017 STATUS OF RESOURCES BY FUNDING SOURCE AND RESULTS OF OPERATIONS (Ref: 202 EX/4 INF.2 Table 1) A. TOTAL RESOURCES ($1,005.4M) AS AT 30 JUNE 2017 COMPRISED AS FOLLOWS: (a) (b) Regular Programme (RP): $518M based on an expenditure plan approved by the General Conference. Additional Appropriations (AAs) of $16.95M. This is an increase of $0.49M or 3% in relation to the same period last biennium (excluding allocations from the Emergency Fund in the 37 C/5). (c) Extrabudgetary resources (XB): Allotment of $270.4M as of 30 June (d) Extrabudgetary expenditures (XB) of $200M for (Amounts in USD 000s) Extrabudgetary Allotments Jan - Jun 2017, 270,389, 26.9% Extrabudgetary Expenditures 2016, 200,014, 19.9% AAs, 16,952, 1.7% RP, 518,000, 51.5% B. REGULAR PROGRAMME RESOURCES AND EXPENDITURES 11. The $518M expenditure plan is $149M or 22.3% lower than the 38 C/5 Approved budget of $667M. The comparison of the trends in expenditures from 2008 through mid-2017 by parts of the budget shows reductions of 1.2% in Part I (General Policy and Direction), 12.7% for Part II.A (Programmes and Field Network), 35.3% for Part II.B (Programme Support), 29% for Part II.C (Participation and Fellowships) and 29.3% for Part III (Corporate Services). Decreases in Part I and Part III have been a significant challenge given the need to cover fixed charges and increasing dues for the United Nations joint machinery (including field security), Medical Benefits Fund contributions for retirees and the need to support increased levels and complex modalities relating to extrabudgetary projects.

6 202 EX/4 Part II page At end of June 2017, global expenditure stood at 75.3% (including AAs) and in line with the target rate of 75%. The actual rate for the same period last biennium was 73.6% (74% excluding Emergency Fund expenditures). The table below (in thousands of US Dollars) provides a comparison of expenditures as of 30 June 2017 against the 38 C/5 Expenditure Plan as adjusted. 13. The analysis below refers to document 202 EX/4.INF.2, which sets the accompanying tables to this text. 14. Table 1: presents the overall implementation by principal appropriation line, in line with the Appropriation Resolution. Decisions 160 EX/Decision and 164 EX/Decision invited the Director-General to identify and explain, those activities that vary from expected expenditures by a rate of more than 15%. Expenditures rates for appropriation lines above 90% include Participation

7 202 EX/4 Part II page 6 Programme and Fellowships (92.1%) and Reserve for After-Service Health Insurance (100%). The former is due to a streamlined approval process, which allowed the expedited release of funds for project implementation, and the latter is due to the transfer made at the start of the year resulting in full consumption of the budget. On the other hand, appropriation lines at 60% or below include Ethics Office (60%) and UNESCO s response to post-conflict and post-disaster situations (49.4%). Their execution rate is due to the timeframe of major activities which were planned for the second semester of 2017, but which will be affected by the contingency plan. 15. Table 2: provides information on the programme execution by expected results and MLAs for Regular Programme and extrabudgetary resources for the five Major Programmes. 16. Table 3: presents the field office situation of Regular Programme for Major Programmes as at 30 June The expenditure rate of decentralized funds under the five Major Programmes (including AAs) stands at 79.2% (slightly higher than the target of 75%). Regarding implementation by region, Latin American and the Caribbean (LAC) and Europe and North America (EUR) regions have the highest expenditure rate (86%), followed by Africa (80%) and Asia and the Pacific (APA) and Arab States (ARB) both at 72%. High expenditure rate for LAC region is due to the high level of additional appropriations mobilized and implemented, particularly by Chile. The AAs for LAC represent 44% of the total AAs mobilized ($16.95M) with 86.3% expenditure rate. 17. Tables 4 and 5: show the allotments and expenditures of extrabudgetary projects by funding source and the execution of extrabudgetary resources by donor and by region. The latter table shows that, excluding interregional and global projects, the Arab States region is the main beneficiary of extrabudgetary resources in terms of allotments due notably to the large scale of European Unionfunded projects in the region. C. REGULAR PROGRAMME REVISED EXPENDITURE PLAN $534.9M (INCLUDING AA) BY BUDGET COMPONENT 18. The major budget recipients, as shown in the graph below, are Education (17%), Management of the Field Network (15.5%), Natural Sciences (9.5%) and Culture (8.8%). In terms of fixed costs, 2.6% of total expenditures relate to the loan repayments, 2.7% to the Medical Benefit Fund (MBF) management and contributions for retirees, 3.3% for the Joint United Nations System, and 3.9% for common service charges, and maintenance and security at Headquarters. Total Revised Expenditure Plan $534.9M (with AAs) by Sector/bureaux: CLT % SHS % CI % SC % Management of Field Offices % UIS % ED % Direction % Anticipated Cost increases % Governing bodies % UN dues incl field security 17.6 PP & Felowships 3.3% % AFR, BSP, Gender, ERI & PCPD % ASHI % MBF Contr & Management % Human Resources % Financial Management % Know Mgmt, Inf Systems & Com % Conf, Lang & Docs % in million of USD Common services, maint & security % Loan Repayment %

8 202 EX/4 Part II page 7 D. POST SITUATION (EVOLUTION OF VACANCY RATE RP ONLY) 19. Between January and June 2017, the vacancy rate of Regular Programme posts decreased by 2 percentage points (from 11% to 9%). In the field, the vacancy rate also decreased by 2 percentage points since January 2017 (from 13% to 11%). While over the same period, the vacancy rate decreased at Headquarters by 1 percentage point, from 9% to 8%. E. UNFUNDED RISKS 20. As of 30 June 2017, the Organization faces an unfunded risk of around $25M, including the 5% lapse factor 2 ($17M) foreseen within the 38 C/5 budget. These included $1M for the security and safety action plan based on decision 199 EX/Decision 17, the updating of the telephone system ($0.6M), the implementation of the ICSC compensation package ($0.3M), maternity leave (past estimate around $1.6M), actual separation costs to date ($3.5M), and $0.7M US taxes payable to US citizens staff members or permanent residents, and other staff related costs not budgeted. 21. The $25M unfunded risks exclude $0.6M additional potential risks relating to costs estimated for the forthcoming sessions of the Executive Board and the General Conference (GBS) due to the fact that the allocation for interpretation, translation and documentation services remained roughly unchanged in the 38 C/5 while the volume of the activities has not decreased. In addition, the costs of the inter-sessional meetings and meetings of the Working Group on governance were not funded in the 38 C/5. It may be noted that these additional costs ($0.6M) could have been partially offset by savings achieved by GBS amounting to $240K. However, $113K of this saving has been directed towards the contingency plan leaving only $127K available to partially mitigate the deficit. GBS is in 2 The lapse factor represents the percentage of the full cost of the proposed structures that have not been funded in the approved budget and therefore give rise to a deficit, if those posts were fully occupied during the whole biennium.

9 202 EX/4 Part II page 8 the process of identifying additional cost mitigation measures and any amount not covered will increase the unfunded risks. 22. Of the total unfunded risks, $18.5M has been absorbed by partial retention of budgets against vacant post to June The remainder of others unfunded risks relating mainly to the Safety and Security Plan, maternity leave and separation costs remain to be funded through staff cost saving in The vacancy rate as of June 2017 has fallen from 11% in December 2016 to 9% and in line with the rate anticipated in the lapse factor. However, in sectors where the vacancy rate is low, the margin to contribute to meet the 5% lapse factor applied to all posts is also low. This along with variances due to higher actual staff cost vs standard cost and the absorption of unfunded risks may show expenditure in excess of the approved expenditure plan in some sectors/bureaux. F. ANALYSIS OF EXTRABUDGETARY RESOURCES 24. Extrabudgetary (XB) resources generally finance multi-year projects. The following analysis presents allotments and expenditures for the period January 2017 to June Budget allotments are made on an annual basis but may not reflect a full 12 months of operations. Therefore, XB expenditure rates are not fully comparable with RP expenditure rates, which are against a 24-month allotment. 25. Allotments up to June 2017 ($270.4M) against work plans submitted show a decrease of 6.2% compared to $288.3M in June 2016 (June 2015 $300.6M). This overall decrease is due to combination of the decrease in Self-Benefiting Trust Fund modality (decreased by 41.3 % mainly related to Brazil, Peru and Iraq projects) and increase in Special Account (10%) and Associate Experts (35%) while Fund-in Trusts modality remained stable. 26. Expenditure increased by 3.0% or $3.4M from $113.4M in June 2016 to $116.8M in June The overall implementation rate of extrabudgetary resources by June 2017 (43.2%) shows an increase of 3.9 percentage points compared to the same period in 2016 (39.3%). Measures taken to accelerate expenditure rates include strengthened monitoring of key financial areas through a monthly dashboard, a quarterly sector alert mechanism as well as training to programme and administrative staff on the establishment of realistic annual work plan requirements. Chart 1 Extrabudgetary Work Plan Allotments by Major Programme as at 30 June 2017: Total: $270.4M

10 202 EX/4 Part II page As shown in Chart 1 above, the allotments of extrabudgetary resources under the five Major Programmes ($259.7M as at June 2017) constitutes 96% of total allotment ($270.4M), with the ratio remaining constant compared to 2015 and The Education Sector accounts for 49% of allotments, followed by Culture with 20%, Natural Sciences with 14%, Social and Human Sciences with 7% and finally Communication and Information with 6%. Chart 2 Comparison of levels of Expenditure for the period 2013 to 2017 by Major Programme Amts in USD 000's ED SC SHS CLT CI Others 28. Chart 2 above compares the expenditure level over the last five years. In the case of the Education Sector, after relatively similar expenditures for comparable periods in 2014 and 2015 and a decrease for 2016 expenditure, the expenditure in 2017 show an increase of $2.7M or 5.1% as compared to June In terms of funding sources of the expenditures for the Sector, Funds-in- Trust shows an overall increase of $4.5M compared to the same period last year and $1.1M for Special Account while Self-Benefiting Trust Fund decreased by $2.9M (mainly projects in Peru). 29. The expenditures for the Culture Sector show a marginal increase of $0.6M over June This increase is the net result of increased expenditures related to funds-in-trust ($2.1M) and Special Account ($0.7M) offset by decrease in expenditures related to Self-benefiting Trust Funds for $2.2M (mainly projects in Iraq and Brazil). 30. For Natural Sciences, a marginal decrease of $0.5M is noted. In terms of funding sources for the Sector, Funds-in-Trust show a decrease of $0.3M as well as Special Account ($0.2M) while expenditure related to Self-Benefiting remained stable. 31. For SHS, a marginal decrease of $0.4M is noted. This decrease is due to Self-Benefiting Trust Fund modality ($1.5M decrease for projects funded by Qatar and Brazil), offset by an increase of $0.8M for Funds-in-Trust (mainly due to projects funded by EU) and Special Accounts ($0.3M). 32. Lastly, for CI, the overall decrease in expenditure is $0.3M. In terms of funding sources of the expenditures for the Sector, expenditure related to Self-Benefiting Trust Fund has decreased by $0.6M (mainly due to projects funded by Brazil) Funds-in-Trust have increased by $0.4M while Special Accounts remain stable with a slight decrease of $0.06M. 33. Others comprised of programme-related services and support services (which accounts for 4% of total expenditures), increased since June 2016 by $1.2M mainly due to Special Account related to Invest for Efficient Delivery.

11 202 EX/4 Part II page The chart 3 below compares the allotments of $270.4M and expenditures of $116.8M by Major Programme for the reporting period corresponding to an expenditure rate of 43%. Chart 3 Allotment and Expenditure as at 30 June 2017 by Major Programme Amts in USD 000's Allotment Expenditure 35. Chart 4 below show the distribution according to the funding modalities and type of donors. Funds-in-trust represents the largest funding modality (60%) followed by Special Accounts (26%), Self-Benefiting Funds-in-Trust (13%), and Associate Experts (1%). In terms of types of donors, government funds represent almost half of the voluntary contributions (46%), followed by multidonors (27%), European Union (13%), private donors (7%), United Nations programmes and agencies 5% and development banks 2%. Chart 4 Portfolio of Extrabudgetary projects by Funding Modality and Type of Donor (Allotments as at 30 June 2017) Funding Modality Type of Donors (Multi-donor refers mainly to Special Accounts ) 36. Extrabudgetary Funds-in-Trust (FIT) projects above or equal to $1.0M represent about 22% of the total FIT portfolio (excluding Brasilia Office). The number of high-value projects (above $1.0M) has increased as compared to the past, especially in the Education Sector (47% of total high-value overall portfolio), followed by Culture (25%) and Sciences (16%). 37. About 43% of the total number of extrabudgetary projects under the Funds-in-Trust modality (excluding Brasilia Office) is composed of projects with values below $250,000, while providing 5% of the value of total allocations. This represents a significant improvement over 2011 where 53% of FIT number of projects in 2011 were below $250,000 and represented 8% in terms of the total value

12 202 EX/4 Part II page 11 of the portfolio. Small-value projects have a proportionally higher transaction and support costs and have a limited capacity for recovery of staff time. G. ANALYSIS OF GLOBAL EXPENDITURES (RP AND XB) 38. The table below shows the weight of the main cost categories, based on IPSAS cost categories, within the RP and XB sources of funds. Programme support cost and the recovery of RP staff time constitutes 9.4% of the total extrabudgetary expenditures. It should be noted that other direct costs recovered (such as communication costs) have not been valued in this category since they are directly charged to the projects. Amts in USD millions Regular Programme and Extrabudgetary Expenditures 1 January 2016 to 30 June 2017 RP Weight % XB Weight % Staff costs % % Temporary Assistance, Consultants and other personnel contracts % % Travel on staff mission % % Travel - Delegates & external individual missions % % Financial contributions, Grants, External training & seminars % % Contracted Services % % Supplies, consumables & other expenses and running costs % % PSC & Cost Recovery - 0.0% % Total % % 39. The following graph (in US$ millions) shows information on global (RP and XB) expenditures based on elaborated IPSAS (International Public Sector Accounting Standards) cost categories as defined for the presentation of the financial statements of the Organization for analytical purposes. 3 Compared to same period last biennium that recorded expenditures of $719.8M, the expenditures for the period January 2016 to June 2017 ($719.6M) dropped marginally by 0.03%. Other Supplies, 9.7, 1.3% External Training & Seminars, 28.3, 3.9% Grants and Fellowships, 4.8, 0.7% Financial Contributions, 40.9, 5.7% Maintenance & Repair, 10.0, 1.4% Utilities, 6.4, 0.9% Leases, 7.0, 1.0% Equipment, 24.5, 3.4% Communications, 5.2, 0.7% Contracted Services including research, seminars and documentation, 171.1, 23.8% PSC & Cost Recovery, 29.6, 4.1% ASHI & Other Expenses, 4.0, 0.6% Other personnel costs & contracts, 16.3, 2.3% Travel - Delegates & ext. Missions, 1.2, 0.2% Consultants, 45.8, 6.4% Staff Mission Costs, 16.1, 2.2% Temporary Staff, 37.8, 5.2% International & National Staff, 260.9, 36.3% 3 The graph includes PSC & Cost recovery for additional information although not an IPSAS category. In addition, equipment includes loan repayment of $10.5M.

13 202 EX/4 Part II page The two largest cost categories, namely Staff Cost and Contracted Services, show a decrease over comparative period. Staff Cost, which accounts for 36.3% of total costs decreased by 3 percentage points whereas Contracted Services, at 23.8% of total costs, decreased by 2 percentage points. Contracted Services include contracted research, publications, field security, translation, documentation and other United Nations dues. 41. On the other hand, Financial Contributions increased by 1 percentage point due in part to the additional costs in Joint United Nations Machinery related to the United Nations Resident Coordinator and higher ED category 1 institute allocations. In addition, consultants, temporary assistance and other personnel costs and contracts increased by 3.6 percentage points while other categories such as supplies, running costs, staff missions and external training and seminars show minimal or no variance. It may be noted that supplies and running costs at Headquarters and field network including communication, leases, equipment amount to 8.7% of total costs. 42. The total recovery of RP staff time for the period January 2016 to June 2017 amounted to $4.03M compared to $2.6M for the same period last biennium. The recovery amount of $4.03M is a significant improvement as compared to last biennium where the staff cost recovery for the entire biennium was $3.9M. As compared to the target rate of 2% of the total staff cost, the recovery amount up to June 2017 represents 1.2% of the total biennial staff costs allocation (1.7% as compared to staff cost for January 2016 to June 2017). H. ANALYSIS OF SPECIAL ACCOUNT FOR MANAGEMENT COSTS 43. An update on the Special Account for Management Costs regarding its application and use was presented to the Executive Board at its 197th session. The General Conference decision at its 38th session (38 C/Resolution 86, paragraph 8) requests the Director-General to provide the Executive Board with an annual report on the use of Special Account for Management Costs through which she shall seek guidance, noting that this report may be part of other routine report to the Executive Board. Accordingly, the section below reports on the status of this account Budget and 2016 Financials 44. The 2017 Special Account for Management Costs budget approved by the Director-General is $14.7M (compared to $14.5M for the year 2016), including $3.8M for Brasilia office. The 2017 budget includes $2.4M of allocation to field offices based on a detailed calculation of Management Costs generated by field office in for projects with no derogation and $123K for mainly External Audit fees. The 2017 budget is tabled below: 2017 Special Account for Management Costs Budget (Expressed in 000's US) Financed posts 8,447 Field Offices (incl. Liaison) and Institutes Allocations 2,358 General Activities 133 Brasilia Office 3,761 Total 14,699 4 Shared with field offices in line with the External Auditor s recommendation (recommendation 9, 200 EX/20.INF).

14 202 EX/4 Part II page Budgeted staff costs in 2017 amount to $8.4M as compared to $8.6 in 2016 a reduction of 2.3% due to the reduction in number of posts from 58.5 in 2016 to 57.8 in The details of posts by sectors/bureau is tabled below. Details of 2017 Special Account for Management Costs Estimated Staff cost and Posts Establishment (in Million USD) Sector / Bureau Number of Posts 2016 Number of Posts Estimated Costs Part I - General Policy and Direction Total Part I Part II-A Programmes Education Natural Sciences Social and Human Sciences Culture Communication Management of Field Offices Total Part II - A Part II B Porgramme Related Services Gender Equality BSP FSC OKM Total Part II B Part III Corporate Services HRM BFM MISC Total Part III Total Parts I, II, III

15 202 EX/4 Part II page The table below gives the details of expenditures for 2016: 2016 FINANCIALS Financial Status Report Expressed in 000's USD P rogramme s upport c os t 15,793 Interest earned 3,984 O ther 435 Total Income 20,212 S taff c os ts 11,296 C ons ultants, contracted services, missions, ext. 1,490 T raining Goods, s upplies and other expenses 600 P rovis ion for ULO S 71 Total Expenditure 13,457 E xces s of Income over expenditure C urrency R evaluation (B ras ilia) R es erve and fund balance as at 1 J anuary 2016 R es erves and fund balances (General) R es erves and fund balances (B ras ilia) Total Reserves and fund balances as at 31 December 2016 dis tributed between : R es erves and fund balances (General) R es erves and fund balances (B ras ilia) 6, ,745 6, ,138 35,684 4, At its 201st session, the Executive Board Approved the cost recovery principles as presented in document 201 EX/5 Part III (C), including the proposed average management rate of 8% to be applied to all eligible extrabudgetary funding, including revenue-generating accounts. The revised cost recovery policy addressed most of the External Auditor recommendations of reforming the policy, while avoiding the risk of overcharging projects by making a clear distinction between indirect variable costs (now management cost) recovered from projects through a management rate and direct costs recovered by charging the budget, clarifying the issue of field costs 5 and FITOCA distribution, and allowing carry over of available balances until the implementation of the policy. 5 The revised Cost Recovery Policy identifies field office costs as direct costs.

16 202 EX/4 Part II page The financial regulations of the Special Account for Management Cost approved by the Executive Board (200 EX/19, Annex XI) has the following clauses on treatment of reserves: (i) (ii) (iii) The Special Account shall hold reserves equal to at least 18 months of the Management Cost that is expected to be funded from all extrabudgetary sources. In case of reserves being higher than this threshold, such increase will first go towards building and maintaining a reserve equal to 1% of the extrabudgetary funding in order to mitigate risks related to extrabudgetary program implementation. Any residual balance will then be applied based on the guidance provided by the Executive Board and approved by the General Conference. 49. Accordingly, the residual balance as of December 2016 was reported at $6.4M (201 EX/5 Part III (C)). As of June 2017, the reserve in the general account of the Special Account for Management Costs (previously FITOCA), increased by approx. $3.1M compared to December Based on the increase in reserves in first semester 2017, the residual balance will be in line with the earlier projection provided in 201 EX/5 Part III (C) and $11M will be available for the General Conference to apply in support of the 39 C/5.

17 202 EX/4 Part II page 16 Proposed decision 50. The Executive Board may wish to adopt a decision along the following lines: The Executive Board, 1. Having examined the Director-General s report on donations and special contributions received during the period January-June 2017 and appropriated to the regular budget and the transfers made between appropriation lines, in accordance with the terms of the Appropriation Resolution approved by the General Conference at its 38th session (38 C/Resolution 103, para. (b), (d) and (e)), in document 202 EX/4 Part II, 2. Takes note that the Director-General has, as a consequence of these donations and special contributions, increased the appropriations to the regular budget by a total amount of $6,409,000 for period January to June 2017 as detailed in Annex II of 202 EX/4.INF.2 and summarized as follows: $ Part I.B - Directorate and Executive Office of the Director-General 3,712 Part II.A - Education 1,590,747 Part II.A - Natural sciences 733,289 Part II.A - Social and human sciences 833,209 Part II.A - Culture 1,426,781 Part II.A - Communication and information 591,756 Part II.A - Management of field offices 734,996 Part II.B - Coordination and monitoring of action to benefit Africa 12,010 Part II.B - Coordination and monitoring of action to implement gender equality 160,086 Part II.B - External relations and public information 322,414 Total 6,409, Expresses its appreciation to the donors listed in Annex II of document 202 EX/4.INF.2; 4. Takes note of the revised 38 C/5 Appropriation Table in Annex I of 202 EX/4.INF.2; 5. Takes note that the Director-General has made transfers between appropriation lines for reallocation of regular programme resources for period January-June 2017 (net impact $0), as detailed in paragraph 4 of document 202 EX/4 Part II.A; 6. Approves the transfer of $296,795 from Part V to Parts I-III of the budget to cover increases in staff costs due to statutory and other factors as detailed in paragraph 8 of document 202 EX/4 Part II; 7. Takes note of the remaining balance of statutory increases that have arisen as stated in paragraph 8 and may further arise through the remaining six months of the biennium will be managed through the use of budgets against vacant posts Printed on recycled paper