Aligning Sector Policies with the Medium-Term Budget Framework
Victor Zafra
Almaty, Kazakhstan
May, 2011
Aligning Sector Policies with the Medium-Term Budget Framework
Introduction
This presentation:
• reviews what is meant by “policy” and its derivation from alternatives;
• describes different levels of policy statements;
• stresses the important role of detailed program policy that can be reviewed and
related to the medium-term budget framework and a strategic plan through
program budgets;
• sets out examples of program budgets – design based on organization,
meaningful sector policy descriptions, alternative program targets under a
ministry plan and an MTBF ; and
• presents an “issue” paper that demonstrates how policy issues may be analyzed
and presented for resolution.
Aligning Sector Policies with the Medium-Term Budget Framework
What Do We Mean by “Policy?”
Webster’s Dictionary defines policy:
“1 a : prudence or wisdom in the management of
affairs b : management or procedure based primarily
on material interest”
“2 a : a definite course or method of action selected
from among alternatives and in light of given
conditions to guide and determine present and future
decisions b : a high-level overall plan embracing the
general goals and acceptable procedures especially
of a governmental body”
Aligning Sector Policies with the Medium-Term Budget Framework
Where Can Policy Be Found?
Policy can be found in many locations:
---- the key policy document is the annual national budget -- resources are committed
to public purposes.
---- other important statements of policy;:
•
the national strategic plan;
•
individual ministries’ strategic plans and policy statements; and
•
various other budget documents, e.g., a transmittal message that
accompanies the submission of the budget to the legislature.
---- most importantly, individual budget programs themselves
at the most specific level, performance indicators
---- compatibility, consistency, and specificity
Aligning Sector Policies with the Medium-Term Budget Framework
Some Observations about Policy Statements
National policy can often be too general, e.g., “to promote the well-being of the
citizenry” or “to permit every citizen to realize his or her full potential through
assuring equal opportunity.”
-----
important statements of national purpose.
-----
limited use in designing a program budget and activities.
Other danger of national policy: being unnecessarily specific and restrictive.
----- describing the precise mechanism (s) that will be used to implement a policy
discourages the development of alternative ways of achieving national goals.
Program budgets and alternative ways of achieving government purposes.
Aligning Sector Policies with the Medium-Term Budget Framework
Some Observations about Policy Statements
• sector or program policies can be at a high level of generalization:
--“Assure universal access to quality health care at affordable costs to patients”
--“Assure equal access to a high quality basic education for all our citizens.”
• detailed descriptions of policies in individual program budgets provide the greatest utility:
--- funding levels in the medium term expenditure framework reflect the costs of
continuing specific policies adopted in the budget; and
--- estimates in the following year’s medium term budget framework capture funding for a
specified sets of policies, programs, and activities.
Aligning Sector Policies with the Medium-Term Budget Framework
Some Observations about Policy
• inherent disconnect between broad government policy objectives and
budget program design and management – level of specificity
• program activities
• bridging the “disconnect”
--- program budget narratives
--- program performance indicators (the “devil in the details”)
Aligning Sector Policies with the Medium-Term Budget Framework
Medium-Term Budget Framework and Policy
• ideally – as set out in a Government of Pakistan approach -- a mediumterm budget framework has two components designed to enhance the
alignment of sector (ministry) policies over the medium-term:
--- a strategic (‘top down’) component that sets the overall budgetary
framework over the medium term with ceilings for each ministry at the
start of the annual budget process; and
--- a line ministry (‘bottom up’) component that reforms the budget
preparation process within line ministries and helps build the capacity for
line ministries to prepare and manage their budgets in a strategic way.
• importance of the “bottom up” component.
• policy and the medium-term budget framework alignment.
• the utility of program budgets as policy documents.
Aligning Sector Policies with the Medium-Term Budget Framework
Specific Program Policies and the Medium-Term Budget Framework
• relationship of MTBF, MTFF, and MTEF
• effective management and decision-making tool
• two mechanisms that can enhance the utility of MTBF:
--- specific program policies
--- analytical process that develops a responsible range of alternatives and
related costs.
Aligning Sector Policies with the Medium-Term Budget Framework
Program Budgets and Policy -- Components of a Program Budget
----- a statement of the program’s goal and/or objective.
----- a program narrative section in which the program proposals can be outlined
at a high level of specificity and justified in terms of stated national goals
and sector strategic plans;
----- the principal activities conducted by the program and the amount of funds
devoted to each activity;
---- performance indicators – identified by the managers of the individual
activities – that capture targets and results; and
---- economic classification (to permit financial audits) and employment (to
complete the picture of resources devoted to the program).
---- simplicity and comprehensiveness -- key objectives in program budgets
Aligning Sector Policies with the Medium-Term Budget Framework
Program Budgets and Policy – Designing a Program Budget
• programs already exist
• program budgets -- just another way to present budget information:
--- specific activities that permit consideration of different ways
to address problems); and
--- program narratives to connect broad statements of policy and
performance indicators.
--- detailed program policies set out.
• align organizations and programs -- management accountability
Aligning Sector Policies with the Medium-Term Budget Framework
Program Budgets and Policy – Designing a Program Budget
Director General for Organization Chart
Aligning Sector Policies with the Medium-Term Budget Framework
Program Budgets and Policy
Illustrative 2011 Performance Based Program Presentation -- Programs and Activities, Funding Levels, and Program Objectives and Performance Indicators
Ministry of Industry and Trade
Name of Program: Support and Advancement of Trade, Craft, and Agricultural Cooperatives
Program Objective: To assistance in the establishment, register and regulate trade, craft and agriculture cooperatives.
Summary of Program Proposals in the 2011 Budget: (This section would highlight program initiatives, e.g., management improvements, funding levels, and policies proposed in the 2011 Budget and include references to
projected targets over the medium term as expressed in performance indicators, etc.).
Program Activities
1.
2.
3.
4.
2008
Actual
2009
Estimate
2008
Actual
2009
Estimate
Expenditures (Turkish Lira, in millions)
Medium Term Expenditure Framework
2010
Projections
2011 Budget
Current
Request
Budget
2012
2013
Estimate
Establishment, registration, and regulation of trade and craft cooperatives
Conduct of audits and complaint resolution
Establishment, registration, and regulation of agricultural cooperatives
Program management and direction
Total, Program Activities
Total Number of Program Employees
Economic Classification Summary
Personnel
Social Security Payments
Goods and Services
Interest Payments
Current Transfers
Capital
Capital Transfers
Lending
Total, by Economic Classification
2010
Performance Indicators, by Program Activity
1. Establishment, registration, and regulation of trade and craft cooperatives
PI 1: Number of trade and craft cooperatives regulated
PI 2: Number of new trade and craft cooperatives registered
PI 3: Number of trade and craft cooperatives found out of compliance
2. Conduct of audits and complaint resolution
PI 1: Number of complaints received
PI 2: Number of complaints resolved within 30 days
PI 3: Number of preliminary examinations conducted
3. Establishment, registration, and regulation of agricultural cooperatives
PI 1: Number of agicultural sales departments audited
PI 2: Percent of of agicultural sales departments audited
PI 3: Number of agricultual sales departments found out of compliance
4. Program management and direction
PI: Percent of all program PIs achieved
Budget
Current
Estimate
Medium Term Expenditure Framework
Projections
2011
Budget Request
2012
2013
Aligning Sector Policies with the Medium-Term Budget Framework
Program Budgets and Policy
Attachment A
Budget Request for 2012
Administrator of the Budget Program: Ministry of Health
Budget Program: Secondary Health Care/Hospitals
Goal of the Budget Program: Contribute to improving the health status of the citizenry
Objective of the Budget Program: To improve health services provided through the 100 ministry hosptials throughout the Republic, obtain accreditation for Ministry
hospitals, improve emergency and first aid services, and reformulate and computerize procedudres related to work systems in the hospitals.
Program Narrative: The manner in which this program will contribute to the realization of strategic directions and goals can be set out here. This section
should also highlight 2012 funding level changes and requests and identify how those changes will enhance the program goal and objective. In effect, this section
represents the first draft of the detailed policies and funding levels to implement general health policy with respect to the activities included in this program as part of the
budget submission to Parliament.
Program Activities
1.
2.
3.
4.
5.
6.
7.
8.
9.
Delivery of inpatient care
Delivery of outpatient and emergency care services
Provision of clinical pharmacy services
Provision of nursing services
Conduct of laboratory tests
Provision of radiology and ultrasonography services
Blood bank management and blood distribution
Hospital management
Program management and direction
Total, Program Activities
Expenditures (in thousands of tenge)
Medium Term
2011
2010
Actual
Budget
Current
Estimate
2012 Budget
C
Request
u
2013
Indicative
2014
Indicative
Aligning Sector Policies with the Medium-Term Budget Framework
Budget Programs and Policy
Page 2
Budget Request for 2012 (continued)
Ministry of Health
Program: Secondary Health Care/Hospitals (continued)
Program Performance Indicators (PIs),
Program Activity
1. Delivery of outpatient and emergency care services
PI 1: Number of outpatient visits
PI 2: Number of ambulance calls answered
2. Management of medical specialties
PI: Percentage of medical specialty vacancies
3. Provision of clinical pharmacy services
PI 1: Number of clinical pharmacologists vacancies
PI 2: Number of prescriptions filled
PI 3: Number of prescriptions filled per pharmacist
4. Provision of nursing services
PI 1: Number of nurse vacancies
PI 2: Number of nurses per hospital bed
5. Conduct of laboratory tests
PI 1: Number of laboratory tests performed
PI 2: Number of laboratory tests per lab employee
6. Provision of radiology services
PI 1: Number of MRI machines
PI 2: Number of MRIs conducted per machine
PI 3: Number of CAT Scanners
PI 4: Number of CAT scans conducted per machine
PI 5: Number of x-ray machines
PI 6: Number of x-rays conducted per machine
PI 7: Number of results read by radiologists
7. Blood bank management and blood distribution
PI 1: Number of blood and blood products collected
PI 2: Number of blood and blood products purchased
8. Conduct of quality assessments
PI 1: Number of discharge interviews conducted
PI 2: Percent of discharge interviews rated "excellent"
9. Program management and direction
KPI 1: Average occupancy rate in MoH hosptials
KPI 2: Average length of stay in MoH hospitals
KPI 3: Number of MoH hospitals accredited
KPI 4: Nosocomial infection rate in MoH hospitals
KPI 5: Number of specialized MoH dialysis units
operating on three shifts
PI 6: Percentage of PIs achieved
by
2011
Medium Term
2013
Indicative
2010
Actual
Budget
Current
Estimate
68.6%
3.2
2
10.4%
69.0%
3.2
4
9.0%
69.0%
3.2
4
8.0%
69.0%
3.1
6
8.0%
70.0%
3.0
8
8.0%
2
3
3
4
4
75%
78%
81%
85%
85%
2012 Budget
C
Request
u
2014
Indicative
Aligning Sector Policies with the Medium-Term Budget Framework
Program Budgets and Policy
Page 3
Budget Request for 2012 (continued)
Ministry of Health
Program: Secondary Health Care/Hospitals (continued)
Employee Categories
Permanent Employees
General Administration and Local Administration
Educators and Trainers
Engineers
Programmers and Technicians
Administrators and Financial Staff
Other Technicians
Support Staff (Third Category)
Subtotal, Permanent Employees
Other Employees
Total, All Employees
Code
2111
2121
2211
2511
2631
2632
2721
2821
3111
3112
3113
3122
3141`
Program, by Summary Economic Classification
Salaries, wages, and alowances
Social Security contributions
Use of goods and services
Subsidies to public corporations
Subsidies to public government units
Subsidies to other public government units/capital
Social assistance benefits
Other current expenses
Buildings and construction
Machinery and equipment
Other fixed assets
Inventories
Land
Total Program, by Summary Economic Classification
2010
Actual
2011
Budget
Current
Estimate
Medium Term
2012 Budget
2013
C
Request
Indicative
u
Expenditures (in thousands of tenge)
2014
Indicative
Aligning Sector Policies with the Medium-Term Budget Framework
Program Budgets and Policy – Setting Out Specific Policy in a Program Narrative
Attachment A
Budget Request for 2012
Administrator of the Budget Program: Ministry of Health
Budget Program: Secondary Health Care/Hospitals
Goal of the Budget Program: Contribute to improving the health status of the citizenry
Objective of the Budget Program: To improve health services provided through the 100 ministry hosptials throughout the Republic, obtain accreditation for Ministry
hospitals, improve emergency and first aid services, and reformulate and computerize procedudres related to work systems in the hospitals.
Program Narrative: The manner in which this program will contribute to the realization of strategic directions and goals can be set out here. This section
should also highlight 2012 funding level changes and requests and identify how those changes will enhance the program goal and objective. In effect, this section
represents the first draft of the detailed policies and funding levels to implement general health policy with respect to the activities included in this program as part of the
budget submission to Parliament.
Aligning Sector Policies with the Medium-Term Budget Framework
Program Budgets and Policy – Setting Out Specific Policy in a Program Narrative
Budget Request for 2012
Administrator of the Budget Program: Ministry of Social Protection
Budget Program: Pensions
Goal of the Budget Program: Assure the economic well-being of retired citizens
Objective of the Budget Program: To provide income support to retirees to enable them in meeting the costs associated with their retirement years, in maintaining a
dignified life style.
Program Narrative: In order to assure the long term viablility of the the pension progam and to achieve gender equity in the program, three reforms are being proposed
in the 2012 budget. These include:
* the annual cost of living adjustment formula for those retired will be revised to reflect more accurately the costs of living for retirees. This revised formula
will weigh food and housing costs more heavily and reduce the weight in the formula for transportation and clothing;
* in order to assure the long-term financial viability, the retirement age will be raised from the current eligibility of 55 for women and 60 for men to age 65 for
both men and women. Recognizing the expectations of those approaching retirement and their anticipated retirement age, the minimum retirement will be
gradually phased in over a 5-year period, beginning in 2017. For individuals within 5 years of the current minimum retirement age will retain their eligibility
to retire, when they reach age 55 and 60, respectively. The increase in the retirement age will affect an estimated 4 milliom workers, currently under the ages
of 50;
* National policy is to achieve gender equity and the identical treatment of men and women. Under the pension reform, that goal will be realized by 2017,
consistent with the stated policies; and
* in order to cover the normal costs of pension benefits and address the unfunded liability of the pension fund, contributions from both employers and
employees will be increased from the current 5% of payroll to 8%. This increase in pension contributions well be phased in over 3 years, starting in 2012.
Even with these reforms, pension expenditures for the estimated 2.8 million retirees will rise from $250 million in 2010 to an estimated $300 million by 2014.
Aligning Sector Policies with the Medium-Term Budget Framework
Program Budgets and Policy – Explicit and Detailed Policy
• detailed and relevant policy in the context of results oriented budgeting.
• policies, resources, activities, and program targets and results are presented
together.
• the income and expenditure related to the pension reforms would be reflected in the
indicative years of the medium term expenditure framework and also serve as the
starting point in developing the medium-term budget framework ceilings for the
pension program in the following year:
-- updated for changes in inflation, etc.; and
-- assuming, of course, that the legislature adopts the budget.
Aligning Sector Policies with the Medium-Term Budget Framework
Program Budgets and Policy – Setting Out Alternative Policies
• program budgets formats and alternative performance
indicators for MTBF decision-making
• detailed performance indicators
• priorities revealed
Aligning Sector Policies with the Medium-Term Budget Framework
Program Budgets and Policy – Setting Out Alternative Policies
MoF Form 2
May 20, 2011
MTEF/PBB – Baseline (FEs) and National Plan Implementation Estimates, and Key Performance Indicators (KPI), by Program
Ministry of Religious Affairs
Program: Madrasah Education
Program Objective: To enhance the quality of education provided in Madrasah schools
Expenditures (IDR in 000s)
Medium-Term Estimates
2011
2012
Activities
1. PAUD (Pre-school Education)
2. Wajar Dikdas (Basic Education)
3. Program Pendidikan Menengah (Senior Secondary Education)
4. Peningkatan Mutu Pendidikan dan Tenaga Kependidikan (Teacher
Development)
5. Peningkatan Mutu Pendidikan Agama dan Keagamaan (Madrasah
Quality Education)
6. Program management and direction (Direktur Pendidikan Pada
Madrasah)
Total, Program by Activities
Total Number of Program Employees
2007
Actual
5,410,000
579,310,000
277,750,000
2009
Estimate
5,788,700
339,634,882
276,589,050
2010
Budget
5,015,050
308,279,007
118,114,293
---
285,758,872
---
Baseline FEs
Plan
Baseline FEs
Plan
5,015,050
308,279,007
118,114,293
6,000,000
3,536,000,000
920,000,000
5,015,050
308,279,007
118,114,293
7,000,000
4,350,000,000
950,000,000
103,604,104
103,604,104
127,000,000
103,604,104
150,000,000
4,064,917
16,300,500
16,300,500
20,000,000
16,300,500
25,000,000
2,396,976
2,663,127
102,322,532
102,322,532
115,000,000
102,322,532
120,000,000
864,866,976
105
914,499,548
105
653,635,486
105
653,635,486
105
4,724,000,000
150
653,635,486
105
5,602,000,000
175
3,844,765
40,274,851
218,844,360
19,876,392
218,150,911
62,018,579
14,206,584
155,922,632
44,327,571
14,206,584
155,922,632
44,327,571
20,435,686
2,800,000,000
327,458,097
14,206,584
155,922,632
44,327,571
20,435,686
3,300,000,000
342,458,097
601,903,000
614,453,666
439,178,698
439,178,698
1,576,106,217
439,178,698
1,939,106,217
864,866,976
914,499,548
653,635,485
653,635,485
4,724,000,000
653,635,485
5,602,000,000
Economic Classification
Personnel
Goods
Capital
Interest Payments
Subsidies and Transfers
Social Support
Other
Total, Program by Economic Classification
Aligning Sector Policies with the Medium-Term Budget Framework
Program Budgets and Policy – Setting Out Alternative Policies
Page 2
MTEF/PBB Key Performance Indicators (KPI), by Program and Activity
Medium-Term Estimates
2009
Key Performance Indicators,
2006
2007
by Program Activity
Actual
Estimate
1. PAUD (Pre-school education)
KPI 1: Number of children enrolled
750,295
772,804
KPI 2: Percentage of children continuing into elementary schools
100.0%
100.0%
KPI 3: Number of PAUD RA/BA receiving grants
500
540
2. Wajar Dikdas (Basic Education)
KPI 1: Average composite scores on national examinations:
----all primary schools
----all junior secondary schools
6.92
6.92
KPI 2: Percentage of students completing school:
----primary school (within 6 years)
98%
98%
junior secondary school (within 3 years)
93%
94%
KPI 3: Average Student Teachers Ratios (STRs):
----elementary schools
15
15
junior secondary schools
9
9
KPI 4: Number of schools receiving student activity grants
1,100
833
KPI 5: Square meters of classroom or library space newly constructed or
65
95
renovated (in thousands)
KPI 6: Number of schools receiving IDR 100 million for equiping
81
100
computer learning laboratories
KPI 7: Number of new kontrak prestasi primary schools
----KPI 8: Number of new kontrak prestasi junior secondary schools
----3. Program Pendidikan Menengah (Senior Secondary Education)
KPI 1: Percentage of senior secondary school students graduating within
91.0%
92.2%
3 years
KPI 2: Average composite score on national examinations -- all senior
5.6
5.6
secondary schools
KPI 3: Square meters of classroom or library space newly constructed or
512
728
renovated (in thousands)
KPI 4: Number of schools receiving IDR100 million for equiping
100
100
computer learning laboratories
KPI 5: Number of kontrak prestasi schools
25
19
4. Mutu Pendidikan dan Tenaga Kependidikan (Teacher Development)
KPI 1: Number of scholarships awarded
925
2,300
KPI 2: Number of teachers participating in continuing professional
673
1,963
development (CPD)
5. Peningkatan Mutu Pendidikan Agama dan Keagamaan (Madrasah Quality Education)
KPI 1: Number of computers and printers delivered to madrasah schools
2010
2008
Budget
Baseline FEs
Plan
Baseline FEs
Plan
760,000
100.0%
360
760,000
100.0%
345
780,000
100.0%
2,100
760,000
100.0%
310
800,000
100.0%
2,500
----6.92
--98%
97%
--15
9
500
----6.95
--100%
97%
--14
9
475
----6.95
--100%
98%
--14
9
5,500
----7.00
--100%
97%
--13
9
450
----7.00
--100%
98%
--13
9
6,000
60
55
100
50
110
65
65
150
60
200
71
60
71
90
212
180
141
120
282
240
93.0%
94.0%
95.0%
96.0%
97.0%
5.6
5.6
5.8
5.6
6.0
480
450
3,000
400
3,600
66
60
420
55
500
70
94
188
70
188
2,300
2,300
15,000
2,400
18,000
1,296
1,200
10,000
1,150
12,000
140
100
66
60
400
55
480
KPI 2: Number of participants in coordination meetings
990
6. Program management and direction (Direktur Pendidikan Pada Madrasah)
KPI: Percent of foregoing KPIs achieved
---
800
528
500
3,500
450
4,200
---
70%
70%
75%
70%
77%
Aligning Sector Policies with the Medium-Term Budget Framework
Family Cost of Living Allowances – Policy and Practice Alignment
2012 Budget
Issue Paper -- Family Cost of Living Allowances
Issue
What, if anything, should be done to harmonize the family cost of living allowance
compensation practices with the National Agenda?
Background and Discussion
Currently, family cost of living allowances are paid to all married male public service employees
of up to 20 JD a month (240 JD a year) for those employees who have a wife (15 JD a month)
and at least one minor child (5 JD a month).
The 2006 - 2015 National Agenda addresses two policy aspects that bear on this practice and
warrant its reconsideration. The Agenda’s public health care key performance indicators include
a reduction in fertility from the current level of 3.3 in to 2.5 by 2017:
Table 1: Selected Performance Indicators for Public Health Care
Key Performance Indicators
*
Fertility Rate
*
Current
*
3.3
*
Target
(2012)
*
2.9
*
Target
(2017)
*
2.5
*
It is very unlikely that male public employees decide to have children based on the opportunity
of increasing their income by 60 JD a year. Nevertheless, the practice of paying an additional
subsidy for children may be perceived as inconsistent with the objective of slowing population
growth.
A more obvious inconsistency is the different treatment of male and female public employees
who are married with minor children. The National Agenda addresses gender neutrality and
states, in part:
“To empower women to become active players in the development process,
the National Agenda includes the following main principles:
1. Ensure equality and remove all forms of discrimination against women in
Jordanian laws and legislation.
2. Eliminate all wrongful social practices against women and correct negative
stereotyping that undermine their rights.
*
*
*
*
*
6. Reconfirm the principle of equal opportunity regardless of gender.”
The following options and arguments for and against each option have been developed as
alternative ways in which the 2012 Budget Law could make the National Agenda and family cost
of living allowance practices congruent.
Aligning Sector Policies with the Medium-Term Budget Framework
Family Cost of Living Allowances – Policy and Practice Alignment
Options and Arguments for and Against the Options
Option 1: Make no changes in current practices.
Arguments for:

the 240 JD a year is a relatively small amount in terms of overall
employee compensation.

eliminating a benefit to which employees have become accustomed will
harm morale and will be resisted by employee associations.

public employee compensation is already too low. An elimination of
family cost of living allowances will only make the situation worse.

in Jordan, most women are presumed to be dependent on the incomes of
their husbands, not the other way around.
Arguments against:

if the amount is relatively small from the individual’s point
of view, its elimination should not “hurt.”

failure to take action will continue a practice inconsistent with the
National Agenda objectives of reducing the fertility rate and
achieving gender equality, e.g., “equal pay for equal work.”

the amounts per individual are small, but the total of 18 million JDs is a
significant amount.—larger than the current expenditure budgets of some
ministries.

The presumption that women are dependent on a man’s income is no
longer considered a valid assumption for payment of fringe benefits.
Option 2: Eliminate all family cost of living allowances in the 2012 Budget Law
(savings: 18.3 million JD in 2012).
Arguments for:

same as the arguments against Option 1.
Arguments against:

same as the arguments for Option 1. In addition,

announcing the elimination of an employee benefit at the end of October
to take effect January 1 is too short a notice and does not give employees
sufficient time to adjust expectations.
Option 3: Reduce family cost of living allowances by 5 JD a year, eliminating them altogether
over a 4-year period (savings: 4.6 million JD in 2012, rising to 20.1 million JD in
2014).
Arguments for:

same as the arguments against Option 1. In addition,

this will result in significant budget savings over time and conform
practice to the National Agenda objectives of reducing the fertility rate
and achieving gender equality by 2016.

the 5 JD is a small amount compared to likely annual salary adjustments.
Arguments against:

same as the arguments for Option 1. In addition,

4 years is too long for perpetuating the inequitable treatment of women
public employees.

even if it is reduced gradually, it is still a reduction in benefits.
Aligning Sector Policies with the Medium-Term Budget Framework
Family Cost of Living Allowances – Policy and Practice Alignment
Option 4: Eliminate family cost of living allowances for all new employees, effective with the
2012 Budget Law (savings: 500,000 JD in 2012, rising to 1.5 million JD by 2014).
Arguments for:
 same as the arguments against Option 1. In addition,
 this will achieve congruency with the National Agenda without averse
effects on the morale of current male public employees.
Arguments against:
 same as the arguments for Option 1. In addition, while this will eventually
bring the practice in line with the National Agenda objectives, it will take
a very long time.
 no savings will be realized for a long time.
 new employees will feel unfairly treated for relatively small amounts of
money in the near term.
Option 5: Eliminate only the monthly 5 JD family cost of living allowances for minor children
and provide the monthly spousal amount of 15 JD for married women whose
husbands are not public employees in the 2012 Budget Law (net savings: 1.8 million
JD in 2012).
Same as the arguments for and against Option 2. In addition,
this will benefit an estimated married 21,000 women public employees.
This relatively small budget reduction is possible because 3.3 million JD
in 2012 savings will be realized from eliminating the minor child
subsidy for married male public employees.
Option 6: Do not change current practice, but provide the current all family cost of living
allowances for married women with children whose husbands are not public
employees (costs: 1.7 million JD over Option 1).
Same as the arguments for and against Option 5. In addition,
this will provide an additional benefit to 4,100 women public
employees for a relatively small amount.
Attachment A is a table that estimates the number of public service employees that would be
affected by the various options and the costs or savings from each of the options. The
assumptions used to calculate the estimates at the bottom of the table.
Recommendation
Option 5. Both Option 5 and Option 6 would achieve equity in public employment. Option 5 is
recommended because it would also eliminate the small subsidy for minor children that appears
to be inconsistent with the National Agenda. It is also slightly less expensive than Option 6.
Aligning Sector Policies with the Medium-Term Budget Framework
Family Cost of Living Allowances – Policy and Practice Alignment
Decision
Option 1
Option 4
Option 2
Option 5
Option 3
Option 6
See Me
(signed)
(date)
Aligning Sector Policies with the Medium-Term Budget Framework
Family Cost of Living Allowances – Policy and Practice Alignment
Attachment A
Illustrative Table -- Family Cost of Living Allowances**
Expenditures (JDs in 000s)
2011
2010 Actual
Budget
Current Estimate
2012 Budget
Options
Option 1: Make no change in current practices (Base)
Total number of public employees
Number of
Public
Employees
Affected
82,031
Estimated
Expenditures
Number of
Public
Employees
Affected
16,098
82,031
Estimated
Expenditures
Number of
Public
Employees
Affected
17,459
82,031
Estimated
Expenditures
Number of
Public
Employees
Affected
17,459
82,031
2013 Indicative
Estimated
Expenditures
(Savings)
Number of
Public
Employees
Affected
18,296
82,031
205,078
2014 Indicative
Estimated
Expenditures
(Savings)
Number of
Public
Employees
Affected
Estimated
Expenditures
(Savings)
19,174
82,031
20,095
Expenditure amounts are changes to the Base
Option 2: Eliminate all family cost of living allowances in the 2012
Budget Law
---
---
---
---
---
---
82,031
(18,296)
82,031
(19,174)
82,031
(20,095)
Option 3: Reduce family cost of living allowances, by 5 JD a year,
eliminating them over a 4-year period starting with the 2012 Budget
Law.
---
---
---
---
---
---
82,031
(4,574)
82,031
(9,587)
82,031
(15,071)
Option 4: Eliminate family cost of living allowances for all new
employees, effective with the 2012 Budget Law
---
---
---
---
---
---
8,203
(1,830)
16,406
(3,835)
24,609
(6,028)
Option 5: Eliminate only the 5 JD family cost of living allowance for
minor children of male public employees in the 2012 Budget Law and
provide the spousal amount of 15 JD for married women not married to
public employees
---
---
---
---
---
---
49,219
(984)
49,219
(1,013)
49,219
(1,044)
41,016
8,203
(2,461)
1,477
41,016
8,203
(2,535)
1,521
41,016
8,203
(2,611)
1,567
8,203
1,723
8,203
1,775
8,203
1,828
4,102
253
4,102
261
Male married public employees with children
Female married public employees not married to public employees
Option 6: Do not change current practice for male public employees, but
provide both the spousal and minor child family cost of living
allowances for married women with children (additional costs over
Option 5).
---
---
---
---
---
---
492187.2
Public employee women receiving the minor child benefit
246
4,102
** assumptions used in preparing this illustrative table:
-- the table assumes that the ratios of male and female public employees does not change over the period.
-- 2013 and 2014 costs for Option 1 increase by the same amount as 2011 indicative to 2012 indicative in the 2010 Budget Law.
-- of the estimated 205,100 public employees, 80 % are male and 20 % are female. The calculations assume 50 % of the male public employess are married and 20 %of the female
employees are married, but not to husbands who are also public employees. Of those married, 50% have a minor child.
-- the table also assumes that the total number of employees does not change over the period of the table.
-- new employee growth is assumed to be 10%.
-- no effort was made to adjust assumptions for minor children reaching the age of majority during the period or for new, first-time babies born to female public employees.
-- total employment remains the same with new employees replacing those quitting, dying, or retiriung.
-- 3% annual growth in the family cost of liviing allowances is assumed.
Aligning Sector Policies with the Medium-Term Budget Framework
Summary
By way of summary, this presentation has:
• set out a dictionary definition “policy” that stresses that it is derived from
consideration of alternatives;
• described different levels of policy statements;
• reviewed the nature of the medium-term budget framework and its purposes;
• stressed the important role of detailed program policy that can be reviewed and
related to the medium-term budget framework and a strategic plan through
program budgets;
• set out examples of how program budgets can provide meaningful sector
policy descriptions; and
• shared an “issue” paper that demonstrates how policy issues may be analyzed
and presented for resolution. The issue paper format is an analytical tool for
budget analysis and decision-making. As a general rule, policy should
result from a consideration of alternatives (options).
Aligning Sector Policies with the Medium-Term Budget Framework
Thank you!