CAFRAD/ACBF Workshop on Performance Measurement and Enhancement in the Public Sector

Transcription

1 African Training and Research Centre in Administration for Development بيردتلل يقيرفإلا زكرملا ءامنإلل يرادإلا ثحبلا و Centre Africain de Formation et de Recherche Administratives pour le Développement CAFRAD/ACBF Workshop on Performance Measurement and Enhancement in the Public Sector Banjul The Gambia May 2003 Managing change; the monitoring and evaluation system of the European Union Structural Funds and the role of ICTs as a tool for regional development: the case of Italy Paper by Gianluca Misuraca Associate Expert UNDESA/DPADM UNPAN-ORC-CAFRAD Original: English Bd. Mohammed V, Pavillon International P.O. Box 310, Tangier, Morocco Tel: (212) Fax: (212) cafrad@cafrad.org Web Site: Bd. Mohammed V, Pavillon International B.P. 310 Tanger, Maroc

2 Managing change; the monitoring and evaluation system of the European Union Structural Funds, TABLE OF CONTENTS AUTHOR S PROFILE...3 ABSTRACT BACKGROUND AN OVERVIEW OF THE EUROPEAN UNION REGIONAL POLICY OBJECTIVES AND PRIORITIES OF THE EU STRUCTURAL FUNDS MANAGEMENT AND CONTROL OF THE EU STRUCTURAL FUNDS DECENTRALISED MANAGEMENT AND CO-FINANCING MONITORING, EVALUATION AND FINANCIAL CONTROL THE CASE OF ITALY THE REFORM OF THE PUBLIC ADMINISTRATION AND THE NEW ASSESSMENT AND CONTROL SYSTEM IN ITALY THE IMPACT OF THE INTRODUCTION OF THE EU STRUCTURAL FUNDS MONITORING AND EVALUATION SYSTEM IN THE ITALIAN ADMINISTRATION THE ROLE OF ICTS AS A TOOL FOR REGIONAL DEVELOPMENT THE COMPUTERISED MONITORING SYSTEM OF THE EU STRUCTURAL FUNDS IN ITALY CONCLUSIONS: SOME CONSIDERATIONS ON LESSONS FROM THE EXPERIENCE...36 BIBLIOGRAPHY...40 Research paper by Gianluca Misuraca 2

3 Author s profile Gianluca Carlo Misuraca was born in Milan, Italy, in He graduated in Economics at the University of Rome La Sapienza, researching a thesis on Structural funds and economic and social cohesion in the European Union, (1996). He specialised at the School of Specialisation in European Union Economics and Law of the University of Rome La Sapienza, researching a thesis on The management of European Union co-financed programmes in relation to Public Administration process reengineering, focusing on the role of Information Technology for Public Administration Computerisation (2000). He also attended a specialisation course at the SPACE Centre (Security and Protection Against Crime and Emergencies) of the University of Milan Bocconi (1997), focusing on information technology applications for e-security, researching a thesis on Software Management: security policies and auditing, co-operating with the Department of Electronic and Information Theory of the Polytechnic of Milan. He is currently working as Associate Expert in Networking and Information Technology for the Office of the Director of the Division for Public Administration and Development Management of the Department of Economic and Social Affairs of the United Nations (UNDESA/DPADM), within the framework of the United Nations Public Administration Global online Network (UNPAN). He is seconded to the African Training and Research Centre in Administration for Development (CAFRAD), based in Tangier (Morocco), acting as liaison with UNDESA/DPADM and supporting activities in the area of ICT and e-governance with the aim of building institutional capacity in Africa. This role involves giving technical assistance to CAFRAD, with particular responsibility for facilitating the rapid development, correct configuration and smooth operation of the computerised on-line interactive data bases that form part of the virtual Global Network of On-line Regional Centres (ORC) of UNPAN. These centres are engaged in capacity-building in Public Administration and finance, as well as the collection of relevant data and the processing and dissemination of information. In the year 2002, the main results achieved include the improvement of the CAFRAD e-information System and the organisation, as Project Manager for CAFRAD, of the e-africa First Regional Workshop on Building e-governance Capacity in Africa (Johannesburg, South Africa, October 2002), in partnership with UNDESA and NEPAD. He also supported the management of the International Conference: e- government for development, Palermo (Italy), organised by the Italian Government in partnership with UNDESA, and participated, as Rapporteur, in the 4 th Interregional Consultative Meeting of UNPAN. He was also member of the Technical Committee for the organisation of the IV th Global Forum on Reinventing Government, Marrakech (Morocco), organised by the Kingdom of Morocco and UNDESA, in partnership with the World Bank and with the support of the Italian Government. His professional experience includes working for Ernst & Young International Financial and Business Advisors Market Unit: Public Administration, as Senior Expert in consultancy, technical assistance, monitoring, evaluation and financial control of programmes of public investment for Central and Local Administrations and the European Union ( ). His main activities were focused on strategic planning, on the development and implementation of management and control systems and on the evaluation of transnational, national, regional and local Programmes co-financed by the E.U.. He also supported the activities of reorganisation and computerisation of the Italian administration, being also member of the Italian National Committee for the co-ordination of monitoring and evaluation activities. He also worked, as an intern, in the European Commission - General Directorate VIII, External relations, Development and Co-operation with Africa, the Caribbean and the Pacific ( ) where he assisted the Head of Unit for programming and managing financial aid in the Indian Ocean region. Previously (1997), he supported the person responsible for the International Centre for Industrial Co-operation Apri SpA in giving technical assistance to the Italian Public Administration. He was particularly concerned with consultancy and assistance to SMEs to stimulate and facilitate technology transfer, being responsible for the Central Italy Innovation Relay Centre (CIRCE). He was also member of the Task Force Innovation at the Ministry of Research and Technological Development to co-ordinate the E.U. Innovation Relay Centre Network, and Italian Focal Point for the E.U. Programme CRAFT (Stimulation Initiatives for SMEs) Standard Measurement and Testing, on behalf of the E.U. General Directorate XII, Innovation, Research and Technological Development. Research paper by Gianluca Misuraca 3

4 Abstract The present paper intends to contribute to the debate on how to improve the Performance Measurement and Enhancement in the Public Sector, within the framework of CAFRAD/ACBF activities of training and capacity.building in Africa 1. The capacity of benchmarking experiences and taking advantage of best practices shall improve and speedup the current process of public administration re-invention that is set up as a priority in the agenda of most developed and developing countries, as underlined by the process of promotion of good governance within the framework of the Millennium Development Goals of the United Nations. The critical criterion for success in a world in rapid flux is the ability to manage change. The paper provides an overview of the European Union (E.U.) regional policy and focus on the objectives and priorities of E.U. Structural Funds. In particular, it analyses the functioning, monitoring and evaluation system of the interventions co-financed by the E.U. for regional development, including the mechanism of financial control and the performance assessment mechaniusm introduced with the regulations for the programming period Then presented -in summary- are the main elements of the Public Administration reform in Italy. The Italian administrative system over the last decade has been profoundly modified. The reform is of interest both in terms of scope and methodological approach. In particular, it presents the new assessment and control system which for the general judgement is very positive. The principles underpinning this system are in fact consistent with Italian administrative reform and in line with the best developed assessment systems in industrialised countries and the E.U. regulations. The concrete implementation of the reform that does however have some flaws and some delays- is also analysed in consistency with the innovation introduced by the management of the EU Structural Funds in Italy. In fact, the new assessment system introduced by the reform of the public administration and the new procedures of monitoring, evaluation and control defined by the new regulations of the EU in relation to the management of the Structural Funds, has been introduced almost at the same time in Italy. This has provoked a widespread positive impact in the Italian public administration in the latest years 2. 1 This paper has been prepared as background paper for the first CAFRAD/ACBF Workshop on Performance Measurement and Enhancement in the Public Sector, Banjul, The Gambia, May The views expressed in this paper are those of the author and do not imply any expression of opinion on the part of the United Nations, CAFRAD or ACBF. The author takes responsibility for both the content and form of the paper. Enquiries concerning this paper may be directed to: Dr. Gianluca Misuraca - Associate Expert UNDESA /DPADM United Nations Online Network in Public Administration and Finance - African Online Regional Centre CAFRAD misuraca@un.org 2 The analysis carried out in the context of the Mid-Term Evaluation of the Communisty Structural Framework for the Objective 1 regions in Italy, for the period has identified that the two systems can be analysed in a combined manner, and shows the strong impact that they had on performance management measurement and public sector enhancement. Research paper by Gianluca Misuraca 4

5 The reform of public administration in Italy, in addition to legal and administrative innovation, has produced strong organizational and behavioural changes. All this procces, has been moreover accompanied by a consistent innovation of the technological support systems of the public sector, both in terms of Public Administration internal network, and in relation to the establishment of on-line facilities aimed to improve the performance and quality of the public service delivery to citizens. At the same time, with respect to the regulations of the EU on the management of the Structural Funds, the European Commission has introduced the need to implement a computerized monitoring system and electronic data exchange both internally in each Member State, and to communicate data with the Commission services as well. Within this framework, the Italian Government established a Monitoring Information system based on the possibility to include both the aspects connected to the EU regulations procedures, and the need to set up an internal control of the investments of public expenditure. The paper presents an overview of the architecture and main elements followed in the establishment of the Italian computerised monitoring information system (MONIT 2000) for the programming period 2000/2006. From the overview of the functioning of the EU structural funds, and some implications of its application to the Italian context, in consistency with the implementation of the Public Administration reform, it is possible to indicate that, despite any theoretical categorisation of performance management, in the way to enhance the public sector management, there is the need to focus on managing organisational performance enhancement and the improvement of the capacity to manage change. In conclusion, it is discussed how a typical model of performance management can enormously benefit of the use of ICTs for its effective implementation. In addition to a faster management and analysis of the execution of decisions, ICTs can especially support, at best, how each public administration intends to implement its activities, in relation to budget allocation, and how it thinks it ought to manage performance. The role of ICTs can not only support in a better way the descriptions of how policies and activities can be planned and executed, but can also assist in the redefinition or reengineering- of formal organisational processes and systems. To do this, it is necessary that the design of an integrated computerised system contains reference to all the specific characteristics of organisational life that are fundamental to the way the performance of the specific public administration is really managed, including, in addition to the complete information systems, both soft and hard, that are needed to underpin the process, institutional, political cultural and expectations. Research paper by Gianluca Misuraca 5

6 1. Background 1.1. An overview of the European Union Regional Policy Despite being one of the most prosperous regions of the world, there are still striking disparities of income and opportunity between the 250 regions of the European Union (EU). These may be due to the underdevelopment of some regions, economic decline or location at the periphery of the Union. Regional Policy is both an instrument of financial solidarity and a powerful force for economic integration and social cohesion. The solidarity and the cohesion are the concepts which the EU Regional Policy is based upon. Solidarity, because the policy aims at benefiting citizens and regions that are in some way economically and socially deprived compared to EU averages. Cohesion, recognizes that there are positive benefits for all in narrowing the gaps of income and wealth between the poorer countries and regions. In fact, there are important disparities between and within Member States. Traditionally, the heartlands of the Union - the Benelux and parts of France, Germany and northern Italy - have always enjoyed higher per capita incomes and superior infrastructures. To assess these disparities, it is needed to measure and compare the levels of wealth generated by each country, as determined by their gross domestic product (GDP). For instance, in Greece, Portugal and Spain, average per capita GDP is only 80% of the Community average. Luxembourg exceeds this average by over 60 percentage points. The ten most dynamic regions in the Union have a GDP almost three times higher than the ten least developed regions. In other words, not all Europeans have the same advantages and chances of success when faced with the challenges of globalisation. All depends on whether they live in a prosperous or a poorer region, in an area which is dynamic or in decline, in a city or in the country, on the Union s periphery or in one of its economic heartlands.access to employment, the competitiveness of firms and investments in e-economy technologies are the responsibility of economic operators and national and regional authorities. But not theirs alone. Since its establishment in , the European Economic Community (EEC) introduced financial mechanisms to equalise these disparities through supporting regional development. Solidarity, economic, social progress and reinforced cohesion were objectives all written in the preamble of 1997 s Treaty of Amsterdam. Article 158 of the Treaty reads... the Community shall aim at reducing disparities between the development of various regions and the backwardness of the least favoured regions or islands, including rural areas. That is why the Member States are implementing a European regional policy financed by the European Structural Funds which reflects this solidarity between the citizens of the Union. The European Social Fund (ESF) was set up in 1957 and was followed by the EAGGF (European Agricultural Guidance and Guarantee Fund). The European Regional Development Fund (ERDF) followed in Expenditure on structural operations doubled between 1988 and 1993, supporting the solidarity priority emphasised by Member States when they adopted the Single European Act in Treaty of Rome, 27 March 1957 establishing the European Economic Community (EEC). Research paper by Gianluca Misuraca 6

7 The Cohesion Fund was created as a consequence of the Maastricht Treaty with its requirement for tight controls on public deficits and debt as a qualification for Economic and Monetary Union. The Fund has helped Greece, Spain, Portugal and Ireland to enter EMU by bringing their economies closer into line with the majority of Member States. The role of the European Union is not merely limited to financial contributions. Through its regional policy, the Community support development activities planned at the local level. Where necessary, it complements the internal market and economic and monetary union. The following table summarises the main steps of the EU Regional Policy The countries signing the Treaty of Rome refer in its preamble to the need «to strengthen the unity of their economies and to ensure their harmonious development by reducing the differences existing between the various regions and the backwardness of the less favoured regions» Setting-up of two sector-based Funds: the European Social Fund (ESF) and the European Agricultural Guidance and Guarantee Fund (EAGGF) Creation of the European Regional Development Fund (ERDF) to redistribute part of the Member States budget contributions to the poorest regions The Single European Act lays the basis for a genuine cohesion policy designed to offset the burden of the single market for southern countries and other less favoured regions The European Council in Brussels in February 1988 overhauls the operation of the solidarity Funds (now referred to as the Structural Funds) and allocates ECU 68 billion to them (at 1997 prices) The Treaty on European Union, which came into force in 1993, designates cohesion as one of the main objectives of the Union, alongside economic and monetary union and the single market. It also provides for the creation of the Cohesion Fund to support projects in the fields of the environment and transport in the least prosperous Member States The Edinburgh European Council (December 1993) decides to allocate almost ECU 177 billion (at 1999 prices), one third of the Community budget, to cohesion policy. Alongside the Structural Funds, a new Financial Instrument for Fisheries Guidance (FIFG) is created The Treaty of Amsterdam confirms the importance of cohesion and also includes a Title on Employment which stresses the need to work together to reduce unemployment The Berlin European Council (March 1999) reforms the Structural Funds and adjusts the operation of the Cohesion Fund. These Funds will receive over 30 billion per year between 2000 and 2006, i.e. 213 billion over seven years. The Instrument for Structural Policies for Pre-accession (ISPA) and the Special Accession Programme for Agriculture and Rural Development (SAPARD) complements the PHARE programme to promote the economic and social development of applicant countries in Central and Eastern Europe. Source: Research paper by Gianluca Misuraca 7

8 1.2. Objectives and priorities of the EU Structural Funds Europe s regional policy is a genuine shared policy based on financial solidarity. It permits the transfer of over 35% of the Union s budget, which comes mainly from the richest Member States, to the least favoured regions. This approach not only helps the beneficiary countries but also those which are net contributors to the Community budget, as their enterprises profit in return from major investment opportunities and of economic and technological know-how transfers, particularly in regions where various types of economic activities have not yet really taken off. Regional policy enables all regions to help make the Union more competitive. These days, thanks to the EU s structural policies, prosperity and its products are much more widely distributed around the Union. But many existent inequalities have not yet been eradicated. And new ones will be added shortly with the accession of ten new Member States from Eastern Europe and the Mediterranean. They may be caused by longstanding handicaps imposed by geographic remoteness or by more recent social and economic change, or a combination of both. The impact of these disadvantages is frequently evident in social deprivation, poor quality schools, higher unemployment and inadequate infrastructures. The European Union s regional policy is based on financial solidarity inasmuch as part of Member States contributions to the Community budget goes to the less prosperous regions and social groups. Policy is built on four Structural Funds that do not constitute a single source of finance within the Union budget. Each has its own specific thematic area although all work hand in hand. The European Regional Development Fund (ERDF) finances infrastructure, jobcreating investments, local development projects and aid for small firms. The European Social Fund (ESF) promotes the return of the unemployed and disadvantaged groups to the work force, mainly by financing training measures and systems of recruitment aid. The Financial Instrument for Fisheries Guidance (FIFG) helps adapt and modernise the fishing industry. The «Guidance» Section of the European Agricultural Guidance and Guarantee Fund (EAGGF - Guidance) finances rural development measures and aid for farmers, mainly in regions lagging in development The «Guarantee» Section of this Fund also supports rural development under the Common Agricultural Policy in all other areas of the Union. The Structural Funds do not finance separate individual projects but multiannual regional development programmes drawn up together by the regions, the Member States and the Commission. They take into account the guidelines proposed by the Commission for the Union as a whole. Moreover, the Cohesion Fund, set up in 1993 to finance infrastructure in Member States with a GDP less than 90 % of the Union average (Greece, Ireland, Spain and Portugal) provides direct finance for individual projects to improve the environment and develop transport networks. Between 1988 and 1998, average Gross Domestic Product (GDP) in the least prosperous Member States rose from 67.6% of the EU average to 78.8%. Ireland is a particular and heartening example: on accession in 1973, its GDP was 63.8 % of the EU average. Now it is around 107 %. Research paper by Gianluca Misuraca 8

9 For the period, these transfers will account for one third of the Community budget, or 213 billion, or roughly one third of the total EU spending between : 195 billion will be spent by the four Structural Funds (the European Regional Development Fund, the European Social Fund, the Financial Instrument for Fisheries Guidance and the Guidance Section of the European Agricultural Guidance and Guarantee Fund); A further 18 billion is allocated to the Cohesion Fund. Annual resources of the Structural funds and the Cohesion Fund ( million, at 1999 prices ) Source: To enhance its impact and secure the best possible results, 94% of structural funding is concentrated on three objectives defined as priorities: Objective 1: 70% of funding goes to regions who are lagging behind with a GDP less than 75% of the EU average. Some 22% of the Union population live in 50 regions benefiting from these funds which go to improving basic infrastructure and encouraging business investment. An example is a project in Burgenland, Austria, receiving 272m from the Structural Funds to modernise and prepare for enlargement and boost economic performance and competitiveness; Objective 2: 11.5% of the budget assist economic and social conversion in areas experiencing structural difficulties. Some 18% of the population live in such areas. An Objective 2 programme in Denmark, receiving 162m from the Structural Funds, has succeeded in improving transport and telecommunications in small islands and costal communities with limited land access and fresh water; Objective 3: 12.3% of funding goes towards the adaptation and modernisation of education and training systems and also those for promoting employment outside Objective 1 regions. The contribution of the three main Structural Funds to each objective is presented in the table below: Objective 1 ERDF ESF EAGGF - FIFG Guidance Objective 2 ERDF ESF Objective 3 ESF Research paper by Gianluca Misuraca 9

10 There are also four Community Initiatives seeking common solutions to specific problems. They spend 5.35% of the funding from the Structural Funds on: cross-border, transnational and interregional cooperation (Interreg III); sustainable development of cities and declining urban areas (Urban II); rural development through local initiatives (Leader +); combating inequalities and discrimination in access to the labour market (Equal). Moreover, there is a special allocation of funds for the adjustment of fisheries structures outside the Objective 1 regions (0.5%), and there are also provisions for innovative actions to promote and experiment with new ideas on development (0.51%). Budget allocation ( ) for Structural Funds and Cohesion Funds: (at 1999 prices) Source: The Structural Funds exercise a multiplier effect on the economic and social factors likely to stimulate a region s economy in all the Member States. The Funds contributions have grown from 8 billion per year in 1989 to 32 billion per year in They will remain at about 28 billion per year from 2000 to 2006, or 195 billion over seven years (at 1999 prices). In Objective 1 regions, the Structural Funds contributed significantly to growth between 1989 and 1999, cumulatively adding around 10% to GDP in Greece, Ireland and Portugal and over 4% in Spain. This meant they were responsible for closing the gap by a third or more between these countries and their partners. Between , in all the assisted regions of the Union, some 2.2 million jobs were maintained or created thanks to the Structural Funds. In 1999, the Member States provided the European Union with fresh financial resources to deepen and expand its work from 2000 to Alongside these Community financial perspectives, known as Agenda 2000, a number of reforms affecting the Union s main policies were adopted. The guiding principle of regional policy reform is to concentrate further on assistance to regions whose development is lagging behind, that is those with the most serious problems in terms of infrastructure, creation of economic activity and training. Implementation of this policy has been simplified by reducing the range of assistance measures. Substantial changes have also been made to the way in which Union funds are managed. It was essential for Member States and regions to recognise that it was in their interest to take their future into their own hands and manage themselves the funds provided by the Union. Research paper by Gianluca Misuraca 10

11 Now the main responsibility for the management and supervision of expenditure will be theirs; the Commission will intervene only to check that effective audit systems are in place. The countries applying for Union membership have not been forgotten, as they will receive supplementary pre-accession aid to improve environmental protection and their transport systems. As soon as they join, they will receive further structural assistance already conceived for this purpose. As soon as the rules governing regional assistance in were adopted, the Commission presented its priorities for new economic and social development strategies. The proposals from the Member States and regions are based on these Community guidelines, which enhance the priorities laid down at the national level or on the ground by providing the experiences and practices which have had the greatest impact throughout the Union. Acting together and promoting the European model of regional development should not be seen as a hindrance for the citizens of the Union, but rather as providing opportunities in an ever increasingly globalised world But, at the dawn of the third millennium, the Union s regional policy is facing three major new challenges. The Union is preparing to take in new countries where the economic and social conditions are often worse than in the least developed regions of the 15 existing Member States. That is why pre-accession aid is needed. The Union has created tailor-made financial programmes for the period to help the candidate countries prepare for EU membership: ISPA (the Instrument for Structural Policies for Pre-accession) finances environment and transport projects with a budget of 7.28 billion. Sapard (Special Accession Programme for Agriculture and Rural Development) concentrates on agricultural development with a 3.64 billion budget. These join the existing Phare programme. The objectives of these programmes are to: Strengthen the administrative and institutional capacity of accession countries. This accounts for 30% of its budget. Finance investment projects - which absorb the remaining 70%. After accession, the Structural Funds and the Cohesion Fund will replace such assistance. Meeting in Brussels in October 2002, the European Council set aside an additional 23 billion for structural spending in the new Member States for the period Moreover, competition among firms has grown greatly in the wake of world trade liberalisation. Firms establish themselves wherever they find the best conditions to increase their competitiveness (high-quality infrastructure and services, skilled workers). The least prepared regions must be helped to secure infrastructure and modern and efficient services which can make them more attractive. The EU must adapt to an increasingly global marketplace. If regions are to attract business investment and the jobs it brings, they must be able to compete with what the rest of the world can offer in infrastructures, services and workforce skills. Finally, the technological revolution and the information society require businesses and citizens in the Union to very rapidly adapt to a constantly changing situation. If they are to do so, the inhabitants of all the regions must be able to access the most advanced know-how through telecommunications networks, innovation and high-quality training. Creating the structures for upgrading peoples skills and enabling them to participate in the information society is a particular challenge for regional policy. Developing and maintaining such skills is no longer optional. It is a vital prerequisite for competing in the global economy. Research paper by Gianluca Misuraca 11

12 2. Management and control of the EU Structural Funds 2.1. Decentralised management and co-financing The Structural Funds are not directly allocated to projects chosen by the Commission. While the main priorities of a development programme are defined in cooperation with the Commission, the choice of projects and their management are solely the responsibility of the national and regional authorities. This greater decentralisation is one of the main innovations in this new programming period. Once projects have been selected, they are financed from both national and Community funds, since programme budgets are always comprised of Union funds as well as national sources (public or private). Union funding is always added to national funding so that the country may overcome the limits imposed by its own financial capacity. However, Community funding is not provided as a means for countries to make savings in their own national budgets. The Member States bear the main responsibility for the development of areas in difficulty. The Union helps them achieve more and obtain better results than they could when acting on their own. That is the real added value of the Structural Funds. In fact, although the Structural Funds are part of the Community budget, the way in which they are spent is based on a system of shared responsibility between the European Commission and Member States governments: the Commission negotiates and approves the development programmes proposed by the Member States and allocates resources. the Member States and their regions manage the programmes, implement them by selecting projects, control and assess them. the Commission is involved in programme monitoring, commits and pays out approved expenditure and verifies the control systems which have been put in place. This Community funds management system is based on the principles of subsidiarity and partnership with a view to delivering prompt and efficient assistance. It nevertheless requires all parties involved to play their part and take their share of responsibility in the implementation of programmes up to Structural Fund expenditure is programmed in three types of document. The term «programme» generally relates to Single Programming Documents (SPDs) and Operational Programmes (OPs) drawn up by the national and regional authorities and approved by the Commission. An OP can, however, be considered only in connection with a Community Support Framework (CSF). Here, briefly, are the two programming systems: The CSFs and OPs generally relate to a country, or a group of regions within a country, which is eligible under Objective 1. The CSFs describe the social and economic context of the country or regions covered by the Structural Funds, set out development priorities and targets to be attained, and provide for financial management, monitoring, evaluation and control systems. The OPs list the various priorities of a CSF for a particular region or a particular development sector (transport, training, business support, etc.). The SPDs feature aspects of both a CSF and an OP. In most cases they involve assistance cofinanced by the Structural Funds amounting to less than a billion euro in an Objective 1 region, assistance in Objective 2 regions or national assistance under Objective 3 and in the fisheries sector. Research paper by Gianluca Misuraca 12

13 The Structural Funds only supplement national or regional financing. This means that no programmes are ever totally covered by the European budget, and that there is always national cofinancing from either the public or the private sector. Each programme is made up of priority themes and measures, although the latter are not described in detail. Taken together, these elements form the development strategy to be implemented throughout the life of the programme. To be eligible for financing under a programme, projects must fit within this strategy. Complete management of any programme financed by the Structural Funds is always the responsibility of the Member State. For each programme, the State designates a «managing authority». It is this authority which, first of all, adopts the programme complement and then, if necessary, amends it. It also handles the selection of projects, for example through calls for proposals. Consequently, this is the authority that organisations (local authorities, firms, associations, etc.) wishing to receive support from the Structural Funds must approach. The managing authority is the hub of the programming system. For instance, it is responsible for organising the collection of financial and statistical data on the programme being managed. This information is crucial in monitoring the smooth running of operations. The managing authority also deals with publicising the assistance. This means that it must notify potential beneficiaries - and the general public - of the possibilities offered by the programme. As part of its management responsibilities, one of the duties of the managing authority is to prepare, each year, the programme s annual implementation report. This document is of fundamental importance in ensuring that the assistance is unfolding smoothly and making progress in achieving its targets. Each year s document is forwarded to the European Commission, which can examine the main outcomes of the previous year and monitor the programme s progress. The Commission can, moreover, make observations or request certain changes to the programme. The implementation reports play a significant part in ensuring sound programming. Their content is precisely laid down in the regulations. They must set out: the financial implementation of assistance (with, for each measure, a record of expenditure paid and a record of payments received from the Commission); the progress in the implementation of priorities and measures in relation to their specific targets; indications of any change in the general conditions which may be of relevance to the implementation of the assistance (socio-economic trends; changes in national, regional or sectoral policies, etc.); the steps taken to ensure the effectiveness of implementation (monitoring, financial control and evaluation measures, any adjustments in management, the use made of technical assistance, etc.); the steps taken to ensure compatibility with Community policies (notably rules on competition, the award of public contracts, environmental protection, the promotion of equality between men and women, etc.). Together with the managing authority, the Member States also set up a «monitoring committee» for each programme. The committee s task is to ensure the quality and effectiveness of the implementation of assistance. The monitoring committee is in close contact with the European Commission - which participates in its discussions on a Research paper by Gianluca Misuraca 13

14 consultative basis - and is thus in a position to guarantee the smooth running of the programming. This role is reflected in its specific responsibilities: It confirms the programme complement and any adjustment made to it by the managing authority; it may also request an adjustment. It approves criteria for selecting the operations financed. It periodically assesses the progress made towards achieving the specific objectives of the assistance. It examines the results of implementation and, in particular, the results of the midterm evaluation before it is forwarded to the Commission. It approves the annual and final implementation reports before they are forwarded to the Commission. It approves any proposal to amend the contents of the decision on the contribution of the Funds. Generally speaking, it may suggest to the managing authority any adjustment it deems necessary to improve the management of assistance. Financing of the programmes is based on a system of budgetary commitments and payments. The commitments actually correspond to a «financial contract» between the Commission and the Member State, for the allocation of European funds to the programmes. At this stage, there is therefore no «physical movement» of funds. The commitments are paid in annual instalments, and the first instalment is made when the Commission approves the assistance. Subsequent instalments are made, at the latest, on 30 April of each year. The beneficiaries of assistance receive no funds directly from the Commission. They deal with a «payment authority» designated by the Member State. A three-tier system is therefore established, between the Commission, the payment authority and the ultimate beneficiaries. In practice, as soon as a programme is adopted, the Commission makes a payment on account, amounting to 7% of the total contribution from the Funds, to the payment authority. This «advance payment» is designed to enable the programme to get under way (but must be repaid if no expenditure has been declared within 18 months). Subsequent payments are made in the form of a reimbursement of actual expenditure certified by invoices. In principle, the payment authority forwards the evidence of expenditure to the Commission in batches, three times a year. The Commission makes the corresponding payments within two months of the request being received. Expenditure declarations to the Commission must be submitted in euro. In the countries outside the euro zone, the amounts must therefore be converted by using the exchange rate on the penultimate working day of the month preceding that in which the expenditure was calculated by the payment authority. The tasks of the payment authorities or bodies are distinct from those of the managing authorities. Their role is to check that the expenditure complies with Community rules, to submit requests for payment to the European Commission, and to receive those payments. They carry out their operations in batches, three times a year. In practice, the managing and payment authorities can be part of the same governmental body, but the principle of separating functions implies that they must belong to distinct departments. The payment authorities play a central role in the new financial procedure, which is based on reimbursing expenditure carried out and on checking the eligibility of this expenditure, before payment is made. In this respect, the payment authorities are an essential component of the new mechanism set up to ensure sound financial management of the assistance. Research paper by Gianluca Misuraca 14

15 To the extent that they must certify all expenditure included in requests for payment, they assume a large part of the State s responsibility to ensure that the payments are legal and correct. They should therefore even be empowered to undertake whatever verification measures may be necessary vis-à-vis the managing authority. Similarly, they must keep accounts of expenditure and verifiable evidence. The Commission will not normally approve expenditure to reimburse operations that have not been declared eligible for Community assistance since they began, as it is difficult in such cases to check the accuracy of the request. In order for assistance to proceed effectively, the payment authorities must ensure that the ultimate beneficiary receives the Community funds as quickly as possible. As regards budgets, Commission commitments in respect of the allocation of assistance shall be carried out on an annual basis throughout the financing period. If the commitment in question, «n», is not subject to an acceptable payment application by the Member State by the end of the second year following the year of commitment («n+2»), the assistance is automatically decommitted, and cannot usually be recommitted 4. The figure below sets the management process of the EU Structural Funds: The Management Process of the EU Structural Funds Planning Programmazione Adoption Definizione CSFQCS Adoption OP Definizione PO Adoption Definizione SDP Docup Evaluation Valutazione Rimodulation/ Rimodulazione/ Riprogramming Riprogrammazione -CSF/OP -QCS/PO -SDP -Docup Monitoring Monitoraggio Output/process Fisico/proced. Financial Finanziario Fin. Controllo Control Financial Recupero finanziamenti correction Payment Pagamento national contributo funds nazionale Implementation Gestione Gestione OP/SDP PO/Docup Project/Operation Gestione progetti Payment Pagamento EU contributo Funds comunitario Source: G.C. Misuraca The management of European Union co-financed programmes in relation to Public Administration process reengineering Specialisation thesis, School of Specialisation in European Union Economics and Law (SDECE)- University of Rome La Sapienza, 2000 Some circumstances justify adjusting the programming documents. Implementing a programme can, for instance, reveal certain defects which should be remedied, such as a measure which is poorly targeted or too restrictive, a financial appropriation which is badly distributed between «successful» measures and other less popular ones, the omission of some types of beneficiaries, etc. More simply, it should not be forgotten that the programmes are spread over seven years. During this period, major changes could occur in the social and economic situation or in the labour market. Such situations can make it necessary to amend the programme. 4. See the Commission Regulation: (EC) No 643/2000 Research paper by Gianluca Misuraca 15

16 Depending on the type of adjustment necessary, the body responsible will be either the managing authority - which will modify the programme complement - or the Commission, which will act in agreement with the Member State. Any adjustment of a programme by the managing authority cannot affect the total amount of Structural Fund assistance; any such adjustment, if necessary, must be decided by the Commission in agreement with the Member State. The same is true for the specific targets set for a priority. Decisions on adjustments are generally taken at meetings of the programme monitoring committees, which are usually held once or twice a year. Essential parts of the preparation of Structural Fund programmes are the setting of objectives and the allocation of funding between operations in order to best achieve the objectives. There is a logical relationship between the allocation decisions and the objectives. This relationship can be visualised from the top down or from the bottom up, as presented in the figure below: The intervention logic of a programme Source: Indicators for Monitoring and Evaluation: and indicative methodology, The New Programming Period , Methodological Working Papers, European Commission DG Regional Policy In practice, programming involves alternating between the two perspectives: from the top down: all assistance is programmed in a specific context relative to a defining global objective. This latter informs the strategy for assistance and gives rise to a certain number of specific objectives, broadly corresponding to the priority areas. Each specific objective is, in turn, implemented via measures. These permit the operational objectives to be achieved. from the bottom up: measures are implemented by administrations, agencies or operators using various (financial, human, technical or organizational) means or resources (inputs). Research paper by Gianluca Misuraca 16

17 Actual expenditure gives rise to a series of physical outputs (for example, kilometres of road built, number of training places provided, etc.) which demonstrate the progress made in implementing the measure. Results are the (immediate) effects on the direct beneficiaries of the actions financed (e.g., reduced journey times, transport costs or number of successful trainees). These results can be expressed in terms of their impacts on achieving the programme s global or specific objectives and are the principal bases for assessing the success or failure of the assistance in question. Specific impacts might include, for example, increased traffic of goods or a better match of skills to labour market requirements. Global impacts relate to the ultimate aim of assistance such as the creation of net jobs. Here, programme inputs are linked both to its outputs and, subsequently, to the achievement of its results and impacts. The means by which the programme achieves its operational, specific and global objectives are also shown. In summary: Operational objectives are expressed in terms of outputs (e.g. the provision of training courses to the long-term unemployed); Specific objectives are expressed in terms of results (e.g. the improvement, through training, of the employability of the long term unemployed); Global objectives are expressed in terms of impacts (e.g. a reduction in unemployment among the previously long term unemployed). Research paper by Gianluca Misuraca 17

18 2.2. Monitoring, Evaluation and Financial Control One consequence of the increased decentralisation in programme management was the strengthening of existing control arrangements in order to allow verification of the sound management of operations at any time. A range of mechanisms - including on-the-spot verification - has therefore been established. These make it possible to ensure proper use of funds and to certify that the expenditure made is legal and correct. They also enable the necessary corrections to be made in the event of irregularities. The basic principle is that the Member State is generally responsible for controlling and correcting irregularities. To do this, it relies on the two «pillars» represented by the managing and payment authorities. These check that financial flows are transparent and operations are correct. The State must, furthermore, take the necessary measures to check that these two authorities actually do fulfil their duties in this area by, for example, requiring them to establish internal audit departments, or resort to some equivalent procedure, with a view to securing the required assurance regarding the effectiveness of their financial systems and procedures. Alternatively, it could appoint auditors who are independent of each authority and who could give the State the same assurance and confirm the legality of the requests submitted to the Commission. This is the only means for the State to give the European Commission effective assurance that the requests for funds are justified. On completion of an assistance measure, a person or department independent of the managing authority - the auditor, for example - must assess the validity of the final payment request. Also, in all cases, the responsible authorities must keep available for the Commission, for three years following payment of the balance, all the supporting documents relating to expenditure and control of assistance implementation. This information must be comprehensive and readily available. The responsibility of the Commission is, above all, to verify the effectiveness of the control systems. To this end, it may carry out on-the-spot checks, in collaboration with the relevant State, or request the State to carry out these checks. In either case, at least once a year, the Commission and the State jointly examine the results from the checks carried out, the financial impact of the irregularities noted, the corrective measures already taken or still outstanding and, if relevant, changes to the management and control systems. Commission Regulation (EC) No 2355/2002 of 27 December 2002 amending Commission Regulation (EC) No 438/2001 laying down detailed rules for the implementation of Council Regulation (EC) No 1260/1999 as regards the management and control systems for assistance granted under the Structural Funds. In fact, when only limited resources are available, it is essential to ensure that the best use is made of them. Evaluation is a fundamental principle to ensure good decision-making, sound management of assistance, and therefore good use of the available resources. Evaluation exercises take place throughout the programming, to check both that the measures are running smoothly and that they are yielding results. Notwithstanding additional evaluations, in particular «thematic» exercises focusing on specific issues, they take place at mid-term and at the end of the programming period. The managing authority is responsible for establishing a reliable system for collecting statistical and financial data for evaluation purposes. The mid-term evaluation - which must be completed before 31 December is primarily the responsibility of the Member States. The evaluation must be organised by the managing authority but is carried out by an independent assessor. It is designed to examine the initial results of the assistance, the use of financial resources and the operation of monitoring and implementation. Research paper by Gianluca Misuraca 18