MINISTRY OF LOCAL GOVERNMENT, RURAL DEVELOPMENT AND ENVIRONMENT - DRAFT OPERATIONAL MANUAL FOR THE IMPLEMENTATION AND ADMINISTRATION OF THE

Transcription

1 'j! MNSTRY OF LOCAL GOVERNMENT, RURAL DEVELOPMENT AND ENVRONMENT - DRAFT OPERATONAL MANUAL FOR THE MPLEMENTATON AND ADMNSTRATON OF THE FUNCTONAL & ORGANSATONAL ASSESSMENT TOOL \ \ AND THE DSTRCT DEVELOPMENT FUND June, 2007

2 t MLGRDE al Manua f '-'" Table of Contents. ntroducton. Background...,2 Lnks Between the FOAT, the DDF and Capacty Buldng Support.3 mportant Provson.4 The Purpose of ths Manual.5 The Structure of the Manual 2 The FOAT and the Assessment Process 2. Objectves 2.2 Key Characterstcs of the FOAT and the Assessment Process 2.2. Gudng Prncples The Assessment Process 3. Management and Admnstraton of the Annual FOAT Process,. 3. Natonal Level Arrangements 3..2 Operatonal Detals.. mplementaton of the FOAT at MMDA level, 4. Steps n the mplementaton Process... DDF Fnancal Management Gudelnes 5. ntroducton 5.2 Governance and Management of the DDF 5.2. The Legal and Regulatory Framework for Fnancal Management and Admnstraton The nvestment Menu for the DDF expendtures 5.3 Roles and Responsbltes of Natonal nsttutons Mnstry of Fnance and Economc Plannng (MoFEP) Mnstry of Local Government, Rural Development and Envronment... The Local Government Servce Offce of the Dstrct Assembles Common Fund (DACF) Ghana Audt Servce (GAS) Regonal Plannng and Coordnatng Unt (RPCU) 5.4. Roles and Responsbltes at the Dstrct Level 5.5. Flow of Funds 5.6 Reportng, Montorng and Evaluaton 5.6. Reportng Schedule Montorng and Evaluaton 6. Management of the Capacty Buldng Component 6. ntroducton 6.2 Dervaton of Capacty Buldng Needs 6.3 Management of the Capacty Buldng Grant 6.4 Fnancng Capacty Buldng Support Annex Annex 2 Annex 3 Annex 4 Annex 5 Annex 6 Consoldated Annual Plan of Operatons Lst of Mnmum Condtons Lst of Performance Measures Reportng Formats Legal and Regulatory Framework The DDF Allocaton Model v x... xxv, xxv \ L

3 !! MLGRDE - Operatonal Manual for FOAT and DDF (June 2007).. ntroducton Background Under the Government's decentralsaton and local government reform ntatve, the Metropoltan, Muncpal and Dstrct Assembles (MMDAs) have been assgned a wde range of responsbltes, ncludng the provson of basc socal servces and nfrastructure. n addton, the MMDAs are responsble for the coordnaton of local economc development. The MMDAs thus have a crtcal role n addressng natonal poverty reducton objectves and, as such, n achevng the Mllennum Development Goals. Although over the years, there has been a gradual ncrease n the volume of fscal transfers to local government, ths ncrease has not always been n lne wth the growng demand for servces. At the same tme, the potental for nternally generated funds (GF) as a source to fnance servce delvery has also not been fully exploted. Fnally, the ncrease n nvestment flows has not always been met wth adequate reservatons for mantenance. MMDAs are thus faced wth a fnancng gap that hampers ther overall performance and the mplementaton of ther development plans n partcular. n response, MMDAs have been regularly agtatng for an ncrease n the resources transferred to them. The performance of the MMDAs s further constraned by the excess of admnstratve, reportng and mplementaton arrangements assocated wth "projectsed" fnancal and/or capacty buldng support from Development Partners. Ths stuaton poses ncreasng concerns about the fnancal management capacty of MMDAs and the judcous and effcent use of resources at the dstrct level. These concerns have affected the grantng of greater budget autonomy to local governments. n ths respect, the lack of lnkage between performance assessments and addtonal fundng s of specal concern to the central government and development partners. n order to brdge the fnancng gap and to mprove the performance of the MMDAs, the Government s ntroducng a performance based grant (the Dstrct Development Fundng modalty) whereby access to addtonal dscretonary nvestment funds s lnked to regular performance assessment under the Functonal and Organsatonal Assessment Tool (FOAT). The government and ts key development partners supportng decentralsaton ntend to earmark part of ther support for the mplementaton of the performance based fundng to local governments. Under ths system, good performance gets rewarded wth addtonal fnancal resources, whle weak performance s responded to by talor-made capacty buldng support. Moreover, all three components of the system (performance assessment, fundng and capacty buldng) are desgned as harmonsed modaltes, fully operatng wthn Government's exstng legal, regulatory and polcy frameworks. The dsbursements to the MMDAs under the DDF are based on the outcome of an annual assessment process (FOAT). The performance of the MMDAs wll be measured aganst a number of performance ndcators agreed upon by GoG and Development Partners. At ts ntroducton, the DDF wll be a separate fundng stream for MMDAs, n the long term, t s ntended to make all grants to the MMDAs performance based. The objectves of the DDF-FOAT system are to:

4 MLGRDE - Operatonal Manual for FOAT and DDF (June 2007) promote MMDAs complance wth natonal polces and the legal and regulatory framework n the fulflment of ther mandates; harmonse the current overabundance of projectsed fundng modaltes nto one coherent framework for the transfer of development funds n a manner that s effectve, transparent, equtable and responsve to the ncreasng demand for servces n socal nfrastructure (water and santaton, educaton, health); ntroduce a performance element n the way these resources get allocated to MMDAs and to provde ncentves to comply wth exstng regulatory frameworks and natonal development polces..2 Lnks Between the FOAT, the DDF and Capacty Buldng Support The FOAT s 'part of a performance based grant system (PBGS) that has been developed to provde well-coordnated nsttutonal and fnancal support to the MMDAs. The system s comprsed of three nterlnked components:. Performance Assessment (FOAT) 2. Fundng (DDF) 3. Capacty Buldng n ths system, the performance assessment has a dual functon: t nforms the annual allocaton under the DDF and t dentfes capacty buldng needs for ndvdual MMDAs. ntally, the MMDAs wll be assessed n the followng broad areas:. Management and Organsaton : 2. Human Resource Development 3. Plannng and Budgetng 4. Fnancal Management and Admnstraton, Accountng and Audtng. : ff Because the assessment takes place aganst a common set of ndcators, t generates a systematc body of data that allows for a comparson of performance amongst the MMDAs. The avalablty of ths type of data wll also provde an opportunty to strengthen the polcy dalogue on decentralsaton and local government reform by gvng t a more factual bass. The focus and thematc coverage of the FOAT wll evolve n lne wth developments n the ongong process of decentralsaton and the performance leverage of the PBGS, n lne wth the process of functonal ntegraton and the pendng fscal reforms, t s expected that the FOAT wll get a more specfc servce delvery focus. n order to respond adequately to capacty gaps at the MMDA level, the nsttute of Local Government Studes (LGS) has developed tranng modules for all areas covered by the FOAT. Each module comes wth a more detaled menu of tranng optons so as to accommodate dstrct specfc needs. The actual tranng wll be suppled by certfed servce provders. The ncentves approach s reflected n the structure of the grant, whch has three components:.. A condtonal enttlement component; 2. A performance component; *

5 /! MLGRDE - Operatonal Manual for FOAT and DDF (June 2007) 3. A capacty buldng component. : The condtonal enttlement component wll be allocated on the bass of a smple formula, comprsng an equal share factor, a populaton factor and a land area factor (the sze of the MMDA terrtory). The performance component wll be allocated on the bass of the annual performance assessment, as an adjustment to the enttlement component. The FOAT assesses performance n four generc areas: management and organsaton; human resource development; plannng and budgetng, fnancal management and admnstraton. The capacty buldng component wll be used to fnance capacty buldng support as well as the performance assessment tself. MMDAs wll thus be gven the opportunty to address nsttutonal weaknesses n ther operatons n a regularsed and well-coordnated manner. Tranng modules addressng the four areas covered by the FOAT wll be avalable at the ntroducton of the system. A crucal feature of the FOAT s the dfference between Mnmum Condtons (MC) and Performance Measures (PM). The mnmum condtons consttute the basc prerequstes that must be met by MMDAs n order to partcpate n the assessment n a gven year. t s an on-off swtch and must be fully satsfed by an MMDA n order to be assessed. Any MMDA that fals to meet any of the mnmum condtons wll not receve any funds, but wll r e c ej v e capacty buldng support. All MMDAs that meet the MC are elgble to receve the condtonal enttlement component. The scorng on the performance measures determnes whether they wll receve a deducton or a reward vs-a-vs the condtonal enttlement component. Ten percent (0%) of the annual overall resource pool wll be rng fenced to fnance the annual assessment and the capacty buldng support under the system. t s mportant to note that the actual allocatons made under the DDF are dependent on the sze of the overall pool. The management of the system s anchored n well-worked out nsttutonal arrangements at both the natonal and dstrct level (dscussed n more detal n Secton 3)..3 mportant Provson An mportant provson must be made wth regard to the Capacty Buldng component of the system. Although some elements of ths component have been addressed (notably the development of Tranng Modules for all the areas covered by the FOAT), the operatonal detals of ths component are left to the responsble nsttuton, the Local Government Servce. Key ssues for the consderaton of the LGS nclude: The development of an accredtaton system for servce provders. Ths should take nto account the thematc areas of the FOAT and the Tranng Modules, but also effcency concerns relatng to the use of servce provders across the country; Cf. MLGRDE / Decentralsaton Secretarat, Functonal and Organsatonal Assessment Tool (FOAT) and Process for Local Government and mplementaton Manual for the Applcaton of the FOAT Tool and Process, Aprl 2006 (hereafter: FOAT Desgn).

6 MLGRDE - Operatonal Manual for FOAT and DDF (June 2007) A costng of the delvery of the dfferent Tranng Modules across the country. Allowng for regonal dfferences, the costs of the beneftng from the varous Tranng Modules should be standardsed; The development of a transparent system to allocate the capacty buldng grant to the MMDAs. The allocaton of the Capacty Buldng grant from the outcome of the FOAT, but n a less straght forward manner than the allocaton of the nvestment funds. Three prncples could gude the allocaton. Frst, the amount of capacty buldng support should nversely correlated to the FOAT score: poor performng MMDAs are elgble to more capacty buldng support. Second, the allocaton of the Capacty Buldng grant should correspond drectly to the areas that have been dentfed as weak under the FOAT. And thrd, although the translaton of the FOAT nto capacty buldng support cannot be as precse as the nvestment fund allocaton, the decson makng process should be fully transparent and mnmse dscreton. A basc framework for the capacty buldng component of the system s provded n Secton 6 of the Operatonal Manual..4 The Purpose of ths Manual The purpose of ths Manual s to provde operatonal gudance for the management, mplementaton and admnstraton of the FOAT and the DDF. More specfcally, the objectves of the manual are to spell out the: Natonal level arrangements for the management and coordnaton of the annual FOAT exercse; Arrangements for the annual mplementaton of the FOAT at the MMDA level; and Summarse the procedures for the fnancal management and admnstraton of the DDF at both the natonal and dstrct level. L f fa f.5 The Structure of the Manual The remander of the Manual s structured as follows: Secton 2 Secton 3 Secton 4 Sectons Objectves and Key Characterstcs of the FOAT ntroduces the desgn prncples for the FOAT and ts objectves. Ths secton also presents an overvew of the assessment process and explans the role of Mnmum Condtons and Performance Measures n the system. FOAT mplementaton at the Natonal Level dentfes the key responsble actors at the central level and descrbes ther roles and responsbltes n the process. FOAT mplementaton at MMDA Level Descrbes the varous steps n the actual assessment process at the dstrct level. Management and Admnstraton of the DDF Dscusses the management and admnstraton of the DDF at both the natonal and MMDA level. Snce the DDF wll be managed and admnstered fully wthn the exstng legal and regulatory framework for

7 MLGRDE - Operatonal Manual for F : 'OAT ;;nd DDF j;n,r 2007) j ' Secton 6 \ n addton to the man text, the Manual also ncludes the followng Annexes: Annex Annex 2 Annex 3 Annex 4 Annex 5 publc fnancal management, ths secton manly provdes a summary of relevant establshed procedures Management of the Capacty Buldng Component Provdes a suggested framework for the management and admnstraton of the capacty buldng component Snce ths component falls wthn the legal mandate of the Local Government Servce (LGS), ths nsttuton wll need to take the framework set n ths secton further. Consoldated Annual Plan of Operatons for the FOAT Dsplays all actvtes by all responsble actors aganst the calendar of the Fscal Year. Lst of Mnmum Condtons Lsts the Mnmum Condtons that need to be met by MMDAs n order to partcpate n the assessment process n a gven year. Lst of Performance Measures Lsts the ndcators that are used to measure the performance of the MMDAs n a gven year. Reportng Formats Presents all reportng formats that are requred for the proper admnstraton of the annual assessment process. DDF Allocaton Model and Explanatory Notes Brefly dscusses the constructon of the model and ncludes a smulaton for a sample of MMDAs.

8 MLGRDE -Operatonal Manual for FOAT and DDF (June 2007) 2. The FOAT and the Assessment Process 2. Objectves The objectves of the FOAT and the assessment process are to: Verfy the complance of MMDAs wth exstng provsons n laws, regulatons and natonal bndng gudelnes; an overvew of the legal and regulatory framework s presented n Annex 5;. " nform the DDF allocaton to a specfc MMDA; dentfy the capacty buldng needs n MMDAs through dentfcaton of the major functonal and organsatonal gaps; Strengthenng nsttutonal performance of MMDAs; Harmonsaton of dsjonted approaches to mplementaton (systems development) Systematcally mprovng dstrct level servce delvery and the qualty of local governance (MDGs, GPRS ). 2.2 Key Characterstcs of the FOAT and the Assessment Process 2.2. Gudng Prncples The followng prncples apply to the FOAT and the Assessment Process: The MMDAs are strctly assessed aganst ther legal oblgatons and aganst ssues that fall wthn ther drect span of control; 2 Consequently, all ndcators are anchored n exstng legal, regulatory and polcy frameworks; n order to mnmse dscreton n the assessment process, the ndcators are objectvely verfable and smple to assess; The ndcators acknowledge the specfc legal, poltcal-admnstratve and fscal envronment n whch MMDAs operate; 3 The ndcators capture both the admnstrators and the elected representatves n the MMDA structure; The assessment process establshes a clear lnk between dentfed capacty buldng needs and the objectves lad down n annual and medum term development plans; The assessment process facltates a clear translaton of dentfed capacty buldng needs nto correspondng nsttutonal strengthenng strateges; The assessment process ensures that capacty buldng s fully ntegrated nto the budgetng cycle of the beneftng MMDAs. A fnal tenet of the assessment s the aforementoned dstncton between Mnmum Condtons (MC) and Performance Measures (PM). n the actual assessment of the mnmum condtons and the performance measures, the broad thematc areas have been broken down further nto sub-themes. Mnmum Condtons: The mnmum condtons have been classfed under the followng fve sub-themes: ; 2 As confrmed by nternatonal experences wth smlar tools, ths s a fundamental prerequste for the credblty of the assessment process and the performance based fundng system as a whole. 3 Methodologcally ths s mportant, because a number of well-documented constrants at the MMDA level fall wthn the scope of responsblty of the central government.

9 MLGRDE - Operatonal Manual for FOAT and DDF (June 2007) Development Plannng Fnancal Management and Accountng Publc Procurement mplementaton Capacty Functonng of the Assembly The MCs have been dvded nto prmary and secondary mnmum condtons. n case an MMDA s not able to meet prmary mnmum condtons, t s dsqualfed to further engage n the assessment process, though t wll reman elgble to receve capacty buldng support. Where an MMDA does not meet secondary mnmum condtons, t wll be gven a perod of 2 months to rectfy the stuaton for an assessment to be carred out. n such cases, the MMDA wll bear the cost of the (reassessment. Annex 2 ncludes a comprehensve lst of the prmary and secondary MCs. Performance Measures: The performance measures whch consttute the second segment of the FOAT have detaled ndcators to measure performance, sources of nformaton, bass of assessment and a scorng system for each ndcator rangng from zero (0) to two (2). The scorng system lmts the degree of subjectvty snce assessment teams are requred to gve exact scores for each ndcator. The performance measures have also been classfed under eght sub-themes: Management and Organsaton Transparency, Openness and Accountablty Plannng System. Human Resource Management. : ' Relatonshp wth sub-dstrct structures Fnancal Management and Audtng ' Fscal Capacty Procurement. ;... ;.. A summary of the thematc areas and the maxmum scores that can be obtaned s presented n Table. Table : Summary of Scores for each Thematc Area Performance Measures Management and organzaton Transparency, openness and accountablty Plannng system Human resource management Relatonshp wth sub-dstrct structures Fnancal management and Audtng Fscal capacty Procurement Total Annex 3 presents a comprehensve lst of the performance measures. Maxmum Score

10 MLGRDE - Operatonal Manual for FOAT and DDF (June 2007) The Assessment Process The FOAT assessment wll be managed by the Local Government Servce Secretarat Ths management role wll nvolve coordnatng and ensurng the ntegrty of the actvtes of the FOAT Assessment. Actual mplementaton at MMDA level has to take place n Aprl- May each year. The actual assessment of the MMDAs wll be contracted out to the prvate sector on the bass of a compettve bdng process 4. Detals on the steps n the assessment process are provded n Sectons 3 and 4. A consoldated Annual Plan of Operatons, capturng the actvtes of all actors at the natonal and dstrct level, s provded n Annex. ' Procurement wll be done wthn the framework of the Publc Procurement Act, 2003 (Act 663).

11 MGRDE - Operatonal Manual for FOAT and DDF (June 2007) 3. Management and Admnstraton of the Annual FOAT Process 3. Natonal Level Arrangements The overall set-up for the management of the DDF-FOAT system s depcted n the dagram below: Dagram 3. ; Steerng Commttee (Chared by the Mnster - MLGRDE) Fund Management Unt DACF FOAT Management Unt LGS/MLGRDE Capacty Buldng Management Unt LGS/MLGRDE The Steerng Commttee The Steerng Commttee wll be made up of representatves of relevant mnstres, departments and agences. The Mnster of Local Government, Rural Development and Envronment wll char the Commttee. The membershp of the Steerng Commttee wll be as follows:. Mnster-MLGRDE as charperson ; 2. Representatve of MLGRDE 3. Representatve of Mnstry of Fnance and Economc Plannng 4. Representatve of Natonal Development Plannng Commsson 5. Head of the Local Government Servce 6. The Admnstrator of the Dstrct Assembles'Common Fund 7. Representatve of Natonal Assocaton of Local Authortes n Ghana 8. Representatve of Ghana Audt Servce ; 9. Representatve of Ghana Statstcal Servce 0. Coordnatng Development Partner for decentralsaton and local government reform. Representatves of DPs that are party to the co-fnancng agreement The prncple responsbltes of the Steerng Commttee are to coordnate the annual mplementaton of the system and to safeguard the system's ntegrty. The Steerng Commttee s expected to have one regular meetng per year, whch wll take place n the frst half of August. The expected outputs of ths meetng nclude: The endorsement of the fnancal reports on the operatons of the DACF and the LGS n the prevous year;

12 MLGRDE - Operatonal Manual for FOAT and DDF (June 2007) The endorsement of the Work Plan and budgets for the management and mplementaton of the DDF-FOAT system n the comng year, The endorsement of the FOAT results and the correspondng DDF allocatons that wll nform the plannng and budgetng process for the comng year; ' B The endorsement of any adjustments to the FOAT ndcators, the DDF allocaton formula or other aspects of the system; Clearance of a DDF transfer request to MoFEP.. * 3.. Man Actvtes over the Year _ ; The Local Government Servce Secretarat wll manage the mplementaton of the FOAT J on behalf of MLGRDE. Ths management role ncludes the followng man tasks: ,, :! : _ Orentaton of the NAT; Qualty control of the assessment process through spot-checks n selected dstrcts; : Recept and valdaton of the MMDA assessment reports; Perodcal revew of the FOAT ndcators, the assessment process and the admnstratve requrements; and ; Determnaton of the capacty buldng support requrements. ; Plannng of the Annual Assessment There. Pre-assessment are three man actvtes actvty blocks n the annual plan of. operatons for the assessment: 2. The actual assessment 3. Post-assessment actvtes - * Key actvtes that are to be executed under each of the above headngs are dscussed below. Further operatonal detals are provded n secton Pre-assessment actvtes Management and coordnaton of the procurement process. The steps and tmng of the procurement process s dctated by the requrements of the Publc Procurement Act, 2003 (Act 663). Standard Government RFP formats are avalable. (6 month perod; contracts should be awarded by February). s Letter to MMDAs nformng them about the tmng of the assessment, the specfc documents that need to be avalable when the NAT arrves as well as an overvew of * the Mnmum Condtons and Performance Measures (February); Consultatve meetng between the LGS and the NAT to dscuss and respond to any operatonal bottlenecks and/or FOAT desgn ssues dentfed durng the last round of mplementaton (March); Provson of the necessary logstcs to the NAT (March). 5 Ths partcular actvty wll only be requred every thrd year. G MLGRDE has already prepared a RFP for the mplementaton of the FOAT. 0

13 l'! MLGRDE - Operatonal Manual for FOAT and DDF (June 2007) The actual assessment (Aprl-May) Qualty assurance of the assessment process through the conduct of one spot check per Regon. n case a representatve of the LGS vsts an on-gong assessment process, he/she has to do so strctly n an observant capacty. He/she shall not nterfere nor engage n any other way n the proceedngs of the assessment process. Any relevant observatons made can be tabled at the Steerng Commttee meetng. Post-assessment actvtes Processng of complants from MMDAs (July); Valdaton of the consoldated Annual Assessment Report (July)] Forwardng of the consoldated Annual Assessment Report to the Admnstrator of the DACF (July); ' Calculaton of DDF allocatons (July) Submsson of the consoldated Annual Assessment Report to the Steerng Commttee (July); DACF and LGS preparaton of the comng year's Work Plan and Budget for submsson to the Steerng Commttee (July); Annual Steerng Commttee meetng (August);,. Dssemnaton of the endorsed FOAT results and the correspondng DDF allocatons to the partcpatng MMDAs (December-January); «Publc dssemnaton of the FOAT results and correspondng DDF allocatons (December-January).. Transfer of DDF allocatons to MMDAs [January) 3..2 Operatonal Detals Procurement of Servce of Consultants to consttute the Natonal Assessment Team The Natonal Assessment Team s to be fully contracted from the prvate sector; procurement s to be done wthn the establshed framework of the Publc Procurement Act. To facltate a smooth mplementaton process, the MLGRDE has dentfed fve geographcal zones, as follows: Zone One: Zone Two; All MMDAs n the Upper East and Northern Regons (26 n total) All MMDAs n Brong Ahafo and the Upper West Regon (27 n total) t Zone Three; Zone Four: Zone Fve: All MMDAs n the Ashant and Eastern Regons (38 n total) All MMDAs n the Central and Western Regons (26 n total) All MMDAs n Greater Accra and the Volta Regon (2 n total) Separate contracts are to be awarded for each ndvdual zone, but there wll be a jont responsblty to prepare the consoldated report for submsson to the LGS. The consultng frms wll be gven a contract to conduct three annual assessments; n the thrd year ther performance wll be revewed and re-tenderng ntated.

14 2» MLGRDE - Operatonal Manual for FOAT and DDF (June 2007) The Natonal Assessment Team wll be broken down nto smaller Assessment Teams of four (4) persons, ncludng one desgnated Team Leader. Each of the assessment teams should represent expertse n the varous thematc areas ncluded n the assessment. The selecton and composton o{ the ndvdual assessment teams must ensure that team members are mpartal and ndependent. No member of the team(s) should for nstance, be allowed to assess an MMDA located n hs/her geographcal area of servce delvery or place of permanent resdence. J ' g Orentaton of the Natonal Assessment Team- Pror to the commencement of an annual assessment, the LGS s to facltate a two-day ' orentaton sesson for the Natonal Assessment Team. The purpose of ths orentaton s to dscuss n detal the FOAT manual and the assessment process, ncludng the workng, modaltes durng feld work, the reportng procedures, the role of the team leaders and members, the workng relatonshp among team members as well as a dscusson on how to overcome possble challenges. _ The logstcs arrangements for the NAT are also to be outlned durng ths 2 day sesson. ;J: n advance of the Orentaton Sesson, the NAT should be provded wth copes of relevant legslaton and offcal documents that consttute the bass for the applcaton" of the performance ndcators. The documents requred for the assessment nclude the followng; - Fnancal Memoranda ssued by the MLGRDE (Gazette Number 35, 2004); - Local Government Act, 993, Act 462; : Natonal Development Plannng Commsson Gudelnes for the preparaton of Medum ' Term Development Plan; - Publc Procurement Act, 2003, Act 663; - Procurement of Works, Small Contracts (Small Value, Short Duraton and Low Rsk), Publc Procurement Board - October 2003; - Fnancal Admnstraton Regulaton, 2004 (L 802); : Fnancal Admnstraton Act, 2003, Act 654;. - nternal Audt Agency Act, 2003, Act 658; : _ - Audt Servce Act, 2000, Act 584; - Publc Records Archves and Admnstraton Department (PRAAD) Gudelnes on flng and documentaton; ;. The Local Government (Urban, Zonal, Area, Town Councls and Unt Commttees); - Establshment nstrument, 994 (L 589); Offce of the Head of Cvl Servce Gudelnes on flng of vacances, staff performance assessment and staff development. _ - Gudelnes for Operatonalsaton of the Dstrct and Regonal Plannng Coordnatng Unts, November : ' The assessment team s requred to make reference to the relevant sectons of the : documents for clarty and objectvty n the assessment process. Valdaton of the Consoldated Annual Assessment Report A On the bass of the ndvdual assessment reports from the consultancy frms, the LGS wll supervse the preparaton of the Consoldated Annual Assessment Report. The LGS wll Relevant n the frst contract year only.

15 MLGRDE - Operatonal Manual for FOAT and DDF (June 2007) - then valdate the report and submt t, together wth the ndvdual Assessment Reports, to the Mnster for Local Government, Rural Development and Envronment? :[ Fnal approval of the natonal assessment report and the ndvdual MMDA reports s to be done by the Steerng Commttee. Examnaton of Complants The examnaton of the complant should lead to one of the followng results: a) correcton of errors; b) re-assessment n case of neglgence by the assessment team; c) rejecton. f the correctons or re-assessment wll lead to changes n the allocaton of fnancal funds, the changes shall be effected n the frst followng quarterly transfer. Rankng of the MMDAs The outcome of the FOAT wll be used to rank the MMDAs n fve clusters:. Very good performers 2. Good performers, 3. Average performers 4. Poor performers 5. Very poor performers To nfuse a strong sense of competton n the local government system, rankng the MMDAs s done by lookng how well they have performed relatve to each other. The steps n the rankng are the followng:! Collate and consoldate the FOAT results; dentfy the hghest and lowest scores and determne the dfference; Dvde ths dfference by 5 (clusters), whch gves the range per cluster; Cluster the MMDAs accordngly. As an example, assume the hghest score s 80 and the lowest score s 30. The dfference s thus 50, Dvdng by 5 gves 0, whch wll be range for each cluster: Very good performers: Good performers: Average performers: Poor performers: Very poor performers: all scores between 7 and 80 all scores between 6-70 all scores between 5-60 all scores between 4-50 all scores between 40-30, The fnal step s to translate the clusters nto correspondng allocatons under the DDF, usng the allocaton model ncluded n Annex 6. Dssemnaton To ensure full transparency and accountablty n the system, the wde publc dssemnaton of the FOAT results and the correspondng DDF allocatons s crucal. t s foreseen that ths wll be done through publcaton of the results n natonal dales and other means of communcaton. Each of the assessed MMDAs s to receve a valdated copy of ther Assembly specfc report, whch should be tabled before the Assembly for dscusson. 3

16 MLGRDE - Operatonal Manual for FOAT and DDF (June 2007) 4. mplementaton of the FOAT at MMDA level 4. Steps n the mplementaton Process The F OAT and Process entals the followng sx (6) steps: Step ; Preparaton of the necessary nformaton at MMDA level Step 2: mplementaton of the Assessment Step 3: Overall Ratng of Performance Assessment Step 4: dentfcaton of capacty buldng needs Step 5: Complant Procedures nformaton on the ndcators should be receved from the chef admnstratve offcer of the MMDA, who s the Dstrct Coordnatng Drector (DCD). The DCD s to subsequently drect the Assessment Team to the relevant offcers n the MMDA. t s of key mportance that the assessment s undertaken n an nteractve and frendly atmosphere. The exercse should NOT be experenced as an nquston. Step - Preparaton of the necessary nformaton at MMDA level As per the letter ssued by the LGS, the MMDAs are requred to have a range of documents ready by the tme the Assessment Team arrves n ther respectve dstrcts. The MMDAs must also be provded wth an overvew of the Mnmum Condtons and the Performance Measures. Ths s to gve them the opportunty to properly prepare for the actual assessment. Step 2 - mplementaton of the Assessment Perod of the Assessment The assessment should be conducted between Aprl and May. Snce audt results of the prevous year wll nt be avalable, the audt of 2 years prevously wll be assessed. As a general rule, the MMDAs must ensure full cooperaton wth the Assessment Team. Falure to do so wll result n dsqualfcaton. ntroductory Sesson n the MMDAs There wll be an ntroductory meetng between the Assessment Team and key dstrct offcals ncludng at least the Presdng Member, the Chef Executve and the Dstrct Coordnatng Drector. The purpose of the meetng s to set the agenda and agree on tme schedules for the assessment. As a follow up to ths ntroductory sesson, the Dstrct Coordnator Drector s requred to facltate subsequent meetngs and the provson of requred documentaton. Kndly refer to Annex 3 for detals on the nformaton requrements. t 4

17 !! MLGRDE - Operatonal Manual for F-OAT and DDF (Junc» 2007) MMDAs that provde false nformaton or refuse to provde the requred nformaton wll be dsqualfed from the assessment for the year and treated as f they had faled to meet the Mnmum Condtons Assessment of Mnmum Condtons The frst pont of reference for the NAT s to focus on the Mnmum Condtons. Where an MMDA does not meet any of the Prmary Condton, the Team should meet wth the DOE, DCD and Presdng Member to explan to them why the assessment cannot be contnued. Hence, any MMDA that fals to meet any of the PruTary,.M.Cs s nelgble to partcpate n the assessment process for the year and s not elgble to receve funds under the DDF. Even n such cases, however, an MMDA remans elgble to receve capacty buldng support. n case an MMDA s not able to meet one (or more) of the Secondary MCs, the Assessment Team s to meet the DCE, DCD and PM and make them understand that the assessment wll be done but the Assembly has a maxmum of two (2) months to rectfy the stuaton. The Assessment Team s to make the Assembly leadershp to understand that when they have met the Condton they are to communcate t to the head of the LGS. Upon the notfcaton by the MMDA, the LGS wll send a representatve of the NAT to the MMDA for verfcaton of the nformaton. The full costs of ths verfcaton wll be borne by the MMDA. f the MMDA stll fals to fulfl any of the secondary condtons at the end of the two months perod, the results of the prelmnary assessment wll be annulled and the MMDA wll be dened access to nvestment funds but wll have access to the capacty buldng grant. Assessment of Performance Measures The scorng on the Performance Measures determnes the upward or downward adjustment to an MMDA's basc allocaton under the DDF. The next secton wll elaborate on ths. The Assessment Team s expected to go through the ndcators for the PM wth the respectve offcers as drected by the DCD and score approprately accordng to the scheme. Under no crcumstance s an Assessment Team member expected to use dscreton for the scorng apart from that outlned by the scheme for the PM n Annex 3. Team work At the end of each workng day, the Assessment Team Leader has to call for an nternal wrap up meetng wth hs/her team to reconcle the varous peces of nformaton-receved from dfferent sources and consoldate fndngs on each of the specfc ndcators (MC, PM). The meetng wll also outlne mssng nformaton and data to be collected the followng day(s). Duraton of Assessment Each Assessment Team s expected to spend about 3 days n each MMDA conductng ntervews and revewng documentaton. The LGS may allocate more or less tme for the dfferent types of MMDAs (Metropoltan, Muncpal and Dstrct Assembles). Reportng At the end of the feld assessment, the Assessment Team wll meet the MMDA top management to present the ntal fndngs and to check factual accuracy. 5

18 MLGRDE - Operatonal Manual for FOAT and DDF (June 2007) The Assessment Team Leader should prepare and submt a report on each of the assgned MMDAs to the LGS. The report must be sgned by the DCE, the DCD, the Team Leader and all members of the assessment team. The report must be submtted to the LGS two weeks after the completon of the assessment. Techncal Note The Assessment Team must vst at least 20% of sub dstrct structures (on a random bass) to verfy the degree of functonalty of these structures. n assessng the ndcator on "Lnkage Between Plannng and Budgetng" the assessment team must obtan nformaton on projects and programmes that were mposed by central government 'but funded wth proceeds of the MMDA. Where central government had mposed a programme on a MMDA, the cost of the MMDA component for undertakng the programme should be deducted from the MMDAs expendture. Ths wll provde a far pcture of the MMDAs expendture as aganst ts planned nvestment budgetary estmates. On the collecton cost of nternally Generated Funds (GF), the Assessment Team should observe the followng and sum up to arrve at the cost of revenue collecton: Salares of revenue staff on central government payroll. Commsson receved by revenue collectors Transport cost Vouchers, recepts and other statonery. Step 4 - Complant Procedures f an MMDA does not agree wth the outcome of the assessment on the bass of factual naccuraces or omssons, t should submt ts complant to the Head of the LGS not later than one month after the assessment. When submttng the complant, the MMDA must enclose any relevant documentaton n support of ther case. The evdence submtted wll be examned and the necessary acton taken by the LGS wthn one month after recept of the complant. n case of a dsagreement on the outcome of the assessment, the assessment report wll stll be sgned by the Assessment Team Leader and the DCE. The assessment report wll nclude an explct reference to the nature and substance of the dspute. Step 5 - Overall Ratng of Performance Assessment The PM ndcators have been gven a score and a total maxmum score for each thematc area beng assessed s determned. The table below contans the scheme to be appled n the assessment to determne the sze of the grant to be receved by a prospectve MMDA n the next fnancal year. The table below contans the scheme to be appled n the assessment to determne the sze of the grant to be receved n the next fnancal year. 6 j T f

19 MLGRDE - Operatonal Manual for FOAT and DDF (June 2007) Performance "ratng" Fulflment of Mnmum Condtons Very Good performance Good performance Average performance Poor performance Very poor performance Non fulflment of the Mnmum Condtons Non fulflment of Mnmum Condtons for access to the grant Reward/Sancton (Condtonal enttlement + average per capta performance allocaton) + 50% bonus (Condtonal enttlement + average per capta performance allocaton) + 35% bonus (Condtonal enttlement + average per capta performance allocaton) (Condtonal enttlement + average per capta performance allocaton) - 35% sancton (Condtonal enttlement + average per capta performance allocaton) - 50% sancton No nvestment funds wll be allocated but the MMDA retans access to capacty buldng support Assumng an average allocaton of USD,25 per capta (or a total pool of USD 30 mllon 8 ), the model below provdes further llustraton of the allocaton mechansm 9 Scenaro: Condtonal Enttlement equal share land area per person Capacty buldng fxed sum dscretonary amount Ptrfstmanc average very good performer good performer poor performer very poor performer per dstrct por km2 per person per dstrct tbd per capta per capta per capta per capta per capta Scenaro $, SG.00 $0.50 $5, , $0 50 $0 75 $070 $0.30 $025 Model (allocaton) $0,885.8 se.ja $0.50 $5, $6, SO $0.75 $0 5B $0.33 $0 25 Modol (% share) Because the MMDAs wll be scored aganst each other, t wll only be possble to determne n whch performance category an ndvdual MMDA wll be classfed after the results form all MMDAs are known. The collaton of the results and the subsequent classfcaton s the responsblty of the MLGRDE / LGS, Reflectng ongong co-fnancng dscussons between Government and Development Partners. ' Further detals on the constructon of the allocaton model are provded n Annex 6. 50% 0% 0% 80% 0% 40% 50% 35% 35% 50% 7

20 MLGRDE - Operatonal Manual for FOAT and DDF (June 2007) 5. DDF Fnancal Management Gudelnes 5. ntroducton Ths secton presents an overvew of the publc fnancal management arrangements pertanng to the DDF. t s mportant to emphasse that the DDF s to operate fully wthn the exstng legal and regulatory framework for publc fnancal management and admnstraton. Consequently, the actvtes and processes dscussed n the overvew below are not DDF-specfc, but are relevant to all funds that are charged to the Consoldated Fund as well. The gudelnes are based on the actvtes and tme-table presented n the consoldated Annual Plan of Operatons for the DDF-FOAT system {ncluded as Annex ) and draws on gudelnes from ntatves anchored on the legal and regulatory framework such as the Dstrct Wde Assstance Project (DWAP) and the Communty ntated Food Securty (CFS) project. At ts ntroducton n FY 2008, the DDF wll operate as a separate fundng stream to MMDAs, n addton to the DACF, as government explores possbltes of ntegratng the two streams n the comng years. Each Dstrct wll receve funds from DDF each year dependng on how the dstrct performs and the sze of nvestment funds determned for dsbursement for any partcular year. DDF wll operate on an annual programmng cycle that wll! algn wth the cycle of plannng at the dstrct level to the maxmum extent possble. 5.2 Governance and Management of the DDF 5.2. The Legal and Regulatory Framework for Fnancal Management and Admnstraton The current publc fnancal accountablty arrangements, namely accountng, reportng and audtng derve from the 992 Consttuton and are also specfcally covered under the Fnancal Admnstraton Act (FAA), Act 654 of 2003; Fnancal Admnstraton Regulatons (FAR), L of 2004; Fnancal Memorandum for Muncpal and Urban Councls of 96 and update n 2004; The Local Government Act, 993, Act 462; the Audt Servce Act of 2000 and the nternal Audt Agency Act 658 of The Fnancal Admnstraton Regulaton (FAR), L detals out matters such as the responsbltes of government offcers, budget process, vrement authorty, government accounts, supples and stores, expendture control, and fnancal and accountng records. These legal and admnstratve regulatons create a framework for assessment of accountablty and transparency n fnancal management. For downward accountablty and transparency, benefcares are challenged to partcpate n the dentfcaton of local prortes for plannng, budgetng, and project montorng. n addton to presentng the plan and budget at the meetng of the General Assembly, the Dstrct Assembles are requred to publsh the fnancal nformaton (the budget the recept of fund and fnancal statements) ether on notce boards or through publc hearng.

21 - MLGRDE - Operatonal Manual for FOAT and DDF (June 2007) The nvestment Menu for the DDF expendtures The Development Menu for the DDF defnes for whch types of expendture the grant can be accessed. t s mportant to emphasse that the DDF does not come wth sector specfc condtonaltes to mplement nvestment prortes wthn MTDPs and Annual Plans and Budgets and thereby promote budget autonomy at the dstrct level. The basc frame of reference for the Development Menu therefore s the exstng classfcaton of the Medum Term Expendture Framework (MTEF). Snce the DDF s ntroduced as a performance based development grant, t can used for expendtures under MTEF tems V. The allowable and non-allowable expendtures are outlned below: Allowable Expendture to be fnanced from DDF Generally socal nfrastructure constructon such as for educaton, health, water and santaton qualfy for fundng. Such nfrastructure should be completed wthn 2 months of commencement and wthn the calendar year of release of the fund. Constructon works: Constructon Works; Consultancy fees; Contractors fees; Ste Preparaton; Compensaton for land; Permts and legal fees; Constructon materals; Water System; Access roads; New buldng, etc Property Purchase/Rehabltaton: Purchase of plant and equpment; vehcle; furnture; motor bkes; computers and accessores; other captal expendture. Gven the celng for dstrct level nvestments, not all of the specfed expenses are relevant for MMDAs Mantenance: MMDAs wll use 0% of the annual DDF allocaton for mantenance purposes, provded that ths use s backed up by a mantenance plan and budget. Capacty Buldng Component: wll be manly on tems lsted under MTEF tem - Servces and should be justfed by the FOAT exercse. Dsallowable Expendture tems that cannot be fnanced from the DDF nclude:. nvestments outsde of the MDTPs and Annual Plans; 2. nvestments of a prvate nature; and 3. purchase of luxury cars and smlar consumpton expendture. 4. Offce equpment unless otherwse justfed by the FOAT exercse. 5.3 Roles and Responsbltes of Natonal nsttutons The roles and responsbltes of GoG nsttutons nvolved n DDF mplementaton ncludng the MLGRDE, MoFEP, the Dstrct Assembles Common Fund (DACF). the Ghana Audt Servce (GAS), the Regonal Plannng and Coordnaton Unt (RPCU) are outlned, 5.3. Mnstry of Fnance and Economc Plannng (MoFEP) MoFEP s the prncple sgnatory to the DDF Co-fundng arrangement and s responsble for the flow of funds through the GoG system. MoFEP wll also play a major polcy- 9

22 MLGRDE - Operatonal Manual for FOAT and DDF (June 2007) makng role as a member of the Steerng Commttee. MoFEP's operatonal dutes wll comprse: Ongong polcy and operatonal dalogue wth partcpatng DPs and MLGRDE; Ensurng a tmely transfer to the DACF; Confrmaton of the processes and controls for the funds transferred under DDF; Ensure tmely flow of DDF through the GoG systems through the Controller and Accountant General's Department (CAGD); ensure approprate fnancal systems are n place for the accountng of funds, whch meets both GoG and DPs requrements; Ensurng that audt reports are produced annually Mnstry of Local Government, Rural Development and Envronment On behalf of the GoG, MLGRDE has overall responsblty for DDF mplementaton and the accountable and effectve utlzaton of DDF, ncludng management mechansms for the dsbursement and effectve management of the DDF at the dstrct level. MLGRDE has operatonal responsblty to coordnate the actvtes of all DDF partcpatng agences to take whatever measures necessary to ensure that the DDF operates wthn establshed legal and regulatory procedures. MLGRDE has the mandate to oversee the work of the regons and dstrcts n collaboraton wth the LGS. n ths role, MLGRDE wll play an overall montorng role for DDF n order to dentfy and resolve mplementaton problems. MLGRDE key responsbltes nclude: Establsh and char the Steerng Commttee; Revew the structure of the DACF outft on an on-gong bass to ensure that t operates effcently at all tmes; Ensure that the Local Government Servce (LGS) s well resourced to delver on ts mandate; nform all mplementng Partners, ncludng the DACF, the Regonal Plannng Coordnatng Unts and the Ghana Audt Servce, of ther roles and responsbltes wth respect to the mplementaton of DDF, To confrm that fnancal systems are n place, whch wll allow the accountng for the funds (DDF) to be done n a manner that conforms to GoG requrements. Lase wth MoFEP to ensure that DPs receve any nformaton from the GoG relatng to fnancal polces and procedures that could mpact on the DDF. Lase wth other GoG nsttutons to ensure that DDF remans complant wth GoG polces and procedures. Wth DPs and MoFEP, through the SC assess DDF mplementaton performance and whether adjustments to polces and procedures are requred Co-operate wth other stakeholders n any actvtes relatng to montorng and evaluaton of DDF mplementaton actvtes. Both MoFEP and MLCRDE wll ensure that GAS delvers the requred audt reports regularly to enable FOAT-DDF be effectvely and effcently assessed annually.

23 MLGRDE - Operatonal Manual for FOAT and DDF (June 2007) The Local Government Servce The Local Government Servce Act (Act 656) establshes the Local Government Servce and provdes for the objects, functons, admnstraton of the Servce and related concerns. The functons of the Servce nclude the provson of techncal assstance to the DAs and RCCs to enable them to effectvely perform ther functons and dscharge ther dutes; conduct organsatonal and job analyss; desgn and coordnate management systems and processes. Others nclude the executon of management audts of RCCs and the MMDAs to mprove overall performance of the Servce and assst the RCCs and MMDAs to perform ther statutory as well as related responsbltes The Local Government Servce s responsble for: forwardng the results of the FOAT based on the fve scorng categores to the DACF for the determnaton of allocaton for the MMDAs; preparng the capacty buldng grants to be receved by each MMDAs; preparng the budget for tranng to be delvered to the MMDAs by the LGS and the cost of the subsequent year FOAT assessment Offce of the Dstrct Assembles Common Fund (DACF) The offce of the Dstrct Assembles Common Fund (DACF) allocates and dsburses fund to each MMDA annually based on a formula approved by Parlament. t s desgned to be dsbursed to MMDAs on a quarterly bass, but a quarter n arrears. The DACF s avalable to the MMDAs for nvestment and other expendtures as drected by the utlsaton gudelnes. Utlsaton of the funds s nformed by gudelnes approved yearly by Parlament. The MMDAs gan access to ther allocaton only subsequent to the submsson of Annual Acton Plans and Budgets to the Offce of the Admnstrator of the Dstrct Assembles Common Fund. Accordngly the MMDAs are requred to forward returns on utlsaton of the fund to the Offce of the Common Fund Admnstrator monthly. The Admnstrator of the DACF wll be responsble for; a. managng the DDF by settng up a small but effcent secretarat. The DACF receve DDF resources from MoFEP on behalf of the MMDAs dsbursement n lne wth exstng reportng requrements by MMDAs, t wll receve fnancal reports from the dstrcts, b. Ensurng that there s an effectve nformaton management system n place. The nformaton management system s to ensure effectve data management by trackng populaton, land sze, poverty ndcators, assessment results, yearly allocatons, projects mplemented and fnancal data on a contnuous bass; c. Revewng reports from the MMDAs and preparng yearly fnancal report related to the DDF for the attenton of the SC. DACF nsttutonal Readness: The DDF Secretarat requres personnel, equpment and funds to operate. Readness actvtes to make the DDF secretarat functonal wll nclude: a. Staff recrutment; b. Refurbshment of offce and procurement of offce equpment; c. Orentaton of DDF/DACF team on the DDF modaltes; d. Establshng the fnancal management and M&E system; 2