Czech Republic's Regional Operational Programs: Enhancing Management Efficiency

1. Regional Operational Programmes in the Czech RepublicZagreb, June 2008 Jiří Blažek Dept. of Social Geography and Regional Development, Faculty of Science, Charles University in Prague, e-mail: blazek@natur.cuni.cz

2. Introduction (1) • The whole implementation structure for the new programming period differs significantly from the one that was used for period 2004-2006 • First of all, the number of operational programmes increased several times • This is a result of not only involving larger number of state departments in managing EU SFs money but also due to decentralization of significant financial resources and esp. responsibilities to 7 cohesion regions (NUTS II) consisting of 1-3 self-governing regions at NUTS III level • The second main impetus for changes of institutional structure stems from new EU requirements on paying, auditing and control authorities

3. Introduction (2) • Thirdly, profound changes are designed in the sphere of financial management to streamline and speed up the absorption of EU SFs financial resources as a result of extensive evaluation effort of previous programming period • On the other hand, all institutions which have been already involved in managing programmes from programming period 2004-2006 are in more or less identical manner involved also in managing of the new set of programmes • To sum up, there is a lot of change but also significant continuity or more precisely of institutional inertia

4. National Implementation Framework (1) • Main coordinator: Ministry for Regional Development (MRD), in conjunction with the Ministry of Finance which is responsible for the system of financial flows • Key institutions: • National Co-ordination Authority • Monitoring Committee: Management and Co-ordination Committee • Paying and Certifying Authority: National Fund • Audit Authority: Central Harmonisation Unit for Financial Control

5. National Implementation Framework (2) • For the overallco-ordination of NSRF is responsible National Co-ordination Authorityof the NSRF (NCA)and is the official partner for the EC on NSRF issues • A specific department within MRD has been appointed to perform the competence for National Coordinating Authority of the NSRF • The role of the Monitoring CommitteeofNSRF is fulfilled by the Management and Co-ordination Committee (MCC), established by MRD under Act No. 248/2000 on Regional Development Support • The NCA supports the Monitoring and Co-ordination Committee in its tasks and provides for secretarial assistance

6. Subcommittees of MCC • As the coordination among operational programmes (including ROPs) often concerns specific sectors like RD&I, environment, transport, urban issues, rural development, the NSRF Coordinating Authorityorganizes besides the regular meetings of the Monitoring Committee of the NSRF, meetings focused on the four strategic objectives of the NSRF • For this purpose the following co-ordination committees have been established under the MCC: - Competitive Czech Economy - Open, Flexible and Cohesive Society - Attractive Environment - Balanced Territorial Development

7. National Implementation Framework • The overall coordination rests in 3 pillars: - Coordination and methodological role of National framework for Cohesion Policy chaired by Ministry for Regional Development - Development of integrated central information system for programming period (responsibility: Ministry for Regional Development (MSSF) - Role of central paying, certification and auditing body in responsibility of Ministry of Finance • Important tool for overall coordination, management, evaluation and publicity is the newly established OP Technical Assistance

8. National Implementation Framework • The following bodies on national and regional levels were charged by the government with responsibility of managing authorities (MA) for operational programmes: - Ministry for Regional Development - Ministry of Trade and Industry - Ministry of Labour and Social Affairs - Ministry of Education, Youth and Sport - inistry of Environment - Ministry of Transport - Cohesion regions at NUTS II level

9. System of financial flows • In previous programming period (2004-2006), the system of financial flows operated in the way that from SFs were cover only expenditures which were already executed by final beneficiary and which were subsequently certified by Paying Authority of respective operational programme • This was a lengthy procedure in addition representing significant financial burden on final beneficiaries • Motivation: anti–fraud measure • In the new programming period all financial resources from SFs and CF are integrated into state budget • Final beneficiaries will receive an advance from Czech state budget PCA then manages transfer of money from EC accounts back to state budget • This system should significantly speed up the absorption of EU financial resources

10. ROPs - context • Czech Republic established in 2001 14 self-governing regions • However, negotiation with EC/Eurostat ----only 8 cohesion regions (NUTS II) • Accession expected sooner (around year 2002) --- regions new and therefore considered weak (esp. by EC) ---- therefore for period 2004-2006 Joint Regional Operational Programme was prepared covering all Czech regions eligible for support under Obj. 1. (except Prague). • MA – department of MRD • However – part of responsibilities concerning selection of projects and day to day implementation MRD transfered to Regional Councils established at NUTS II level (single purpose bodies and units) • (7 regional councils – each consisting from 10 elected regional representatives of each region, i.e. 20 or 30 members )

11. Self-government units (NUTS III) versus „cohesion regions (NUTS II)

12. Conflict over Intermediary Bodies (1) • Intermediary Bodies (IB) – management of the project cycle. • Firstly, MRD established a network of regional branches of its subordinate institution of Centre for Regional Development (CRD) expecting these bodies would play a role of IB. • However, self-governing regions were aware of the fact that these bodies would play a key role in implementation so they established their own network of secretariats of Regional councils. • After difficult negotiation between MRD and regions a „compromise“ solution was found that both subjects will be involved.

13. Conflict over Intermediary Bodies (2) • Therefore, regional councils played all roles of Intermediary Bodies untill contract signature (i.e. preparation and management of call for proposals, evaluation of projects proposals, selection and preparation of individual contracts) • Then, Regional Branches of CRD came into the scene – signature of the contracts, monitoring, on spot checks, payments. • Management od JROP oversees the Monitoring committee, and in each of NUTS II regions implementation oversees „Committee for Regional Development“ (i.e. monitoring subcommittees) – composition reflects the principle of partnership.

14. To sum up, the role of Managing authority for each ROP is assigned to a single purpose Regional Council which is assisted by administrative and managerial support from the Office of Regional Council. This Office is legally independent from self-government bodies but its director is appointed by Regional Council. In cases when the cohesion region consist of more than one self-governing region, the Office of Regional Council will have a branch in each of self-governing region to smooth up the implementation in particular region by being closer to potential applicants. In addition, each Regional Council also establishes also Board of Regional Council to be more operational and a standard Monitoring Committee to respect the principle of partnership and to monitor implementation of ROP in line with EC regulations. The role of Paying and Certification Body as well as the role of Audit Authority would fulfil The Ministry of Finance. Therefore, the key responsibilities of The Office of Regional Council are information provision to potential project applicants, administration of evaluation procedure, contracting, and control of projects. Regional Council as a Managing Authority is responsible for transparent ROP preparation and negotiation with the EC, monitoring data collection, reporting, project selection, monitoring of projects, provision of co-financing from national public resources, chairing of Monitoring Committee, and for publicity on a programme level. Regional operational programmes2007-2013 • Introduction of 7 Regional operational programmes (i.e. one in each of 8 Czech cohesion regions except for Prague which is not eligible for support within the Convergence objective) is one of fundamental changes of the overall implementation structure for cohesion policy in the Czech Republic. • Due to significant pressure form self-governing regions and due to sympathetic attitude of the EC the Czech Republic authorities reached an agreement that instead of Joint Regional Operational Programme a set of ROPs will be prepared under the responsibility of regions. • Namely, in all cohesion regions single purpose Offices of Regional Councils were established and charged with a role of Managing Authority for each of the ROPs.

15. Regional operational programmes2007-2013 • In addittion these former „Secretariats of Regional Councils“ continue to play a role of IBs. • In cases when self-governing region is both NUTS III and NUTS II region, the preparations were quite straightforward. • In case that the particular cohesion region consists of more than one self-governing region (and this is more common in the Czech Republic than previous case) special groups were set up to coordinate preparations for new EU programming period in the sphere of cohesion policy (e.g. group for programming).

16. Figure 1: Scheme of ROP implementation (Adapted from ROP of Central Moravia)Managing Authority of ROP Branches of Regional Council in each of self-governing regionsFinal Beneficiaries Financial Dept. ROP Managerial and information flowsFinancial flowsPCA (Ministry of Finance) European CommissionMRD Figure 2: Implementation structure within the NUTS II regions (Adapted from ROP Central Bohemia) Board of Regional CouncilChairman of Regional CouncilMonitoring Committee of ROPFinancial dept.Dept. of internal audit Director of Office of Regional CouncilDept. of programme management System of financial flows in ROPs As a general rule, the payments form EC will be transferred on the account of PCA which will transfer the financial resources to special account of state budget. Within the ROP financial flows will be organized as follows. Justified financial claims of project applicants will be covered by financial resources of Regional Council, which received resources from the budget of Ministry for Regional Development (MRD). In the same time MRD provides along with EU money also the part of national co-financing (the remaining part of co-financing is provided by respective self-governing regions). Finally, financial resources from EU SFs are paid back to MRD by PCO of Ministry of Finance. The involvement of MRD (which might be easily considered as artificial and unnecessary step) is a consequence of budgetary rules of the Czech Republic which do not allow for direct financial transfers from state budget (i.e. from Ministry of Finance) to non-governmental bodies (e.g. to Office of Regional Council). Payments to final beneficiaries are proceeding either in the form of ex-post payments or (still rather seldom) in the form of advance payments (this system is currently used for financing of project managed by NGOs as their financial situation usually does not allow for pre- financing from their own resources. Procedure of financial flows Final beneficiary (on the basis of actually committed expenditures) issues payment request (in CZK) to Regional Council. The request is submitted to control and approval to Managing Authority. Managing Authority approves the request and issues an order to financial dept. of the Office of Regional Council to manage the payment on account of final beneficiary. Financial dept. of the Office of Regional Council executes the payment on account of the final beneficiary. Managing Authority on the basis of confirmation from Financial dept. of the Office of Regional Council issues overall request for payment of EU SFs financial resources from account of Paying and Certification Authority to respective budgetary line of state budget. This overall request is forwarded to body responsible for relevant budgetary line which is MRD. MRD confirms the payment request. PCA checks the overall payment request and then transfers the requested amount of money to budgetary line of MRD. After the certification PCA requests EC to transfer requested amount of money on the account of PCA. EC approves the request and transfers financial means on account of PCA. Control system In line with EC regulations, the Ministry of Finance established the Audit Authority (AA) which is Central Harmonization Unit. This unit is responsible for audit of readiness of implementation and control bodies within the whole implementation system, for designing the audit strategy, audit reporting to EC and for other tasks as they are specified in relevant EC Regulations. AA is independent from both MA of individual operational programmes as well as from PCA. Internal audit Dept. of internal audit will be established within each Office of Regional Council as an independent unit responsible for control of transparency of project selection and for control of management of financial flows as well as for control of financial reporting including adequate audit trail. In addition, the Supreme Audit Office of the Czech Republic is authorized to pursue independent audit activity in line with national audit legislation. Obviously, the relevant EC bodies are also authorized to independent audit activity. Table 1: Financial allocations for operational programmes for the new programming period  Convergence ObjectiveGovernmental proposal to EC shareMEUROP Environment19,00%4 917,9OP Transport22,25%5 759,1OP Enterprise and Innovation11,75%3 041,3OP Research, development and Innovation8,00%2 070,7OP Human Resources and Employment 7,00%1 811,8OP Education for competitiveness 7,00%1 811,8Integrated OP6,00%1 553,07 Regional OPs18,00%4 659,0OP Technical assistance1,00%258,8 Source: Adapted from NSRR (January 2007) Implementation system for ROPs • The role of Managing authority for each ROP is assigned to a single purpose Regional Council which is assisted by administrative and managerial support from the Office of Regional Council. • This Office is legally independent from self-government bodies but its director is appointed by Regional Assembly. • In cases when the cohesion region consist of more than one self-governing region, the Office of Regional Council has a branch in each of self-governing region to smooth up the implementation in particular region by being closer to potential applicants. • In addition, each Regional Council also establishes also Board of Regional Council to be more operational • and • a standard Monitoring Committee to respect the principle of partnership and to monitor implementation of ROP in line with EC regulations.

17. Implementation system for ROPs • The role of Paying and Certification Body as well as the role of Audit Authority is fulfilled by The Ministry of Finance. • Therefore, the key responsibilities of The Office of Regional Council are information provision to potential project applicants, administration of evaluation procedure, contracting, and control of projects. • Regional Council as a Managing Authority is responsible for transparent ROP preparation and negotiation with the EC, monitoring data collection, reporting, project selection, monitoring of projects, provision of co-financing from national public resources, chairing of Monitoring Committee, and for publicity on a programme level.

18. Example of structure of selected ROPs. • ROP NUTS II Southwest • Priority Axis 1 – Accessibility of transport • Priority Axis 2 – Development of sustainable tourism • Priority Axis 3 – Sustainable development of towns and rural settlements • Priority Axis 4 – Technical assistance • ROP NUTS II Southeast • Priority Axis 1 – Transport • Priority Axis 2 – Integrated development and renewal of the region • Priority Axis 3 – Tourism • Priority Axis 4 – Technical assistance • ROP NUTS II Central Moravia • Priority Axis 1 – Urban regeneration and development • Priority Axis 2 – Integrated support of local development • Priority Axis 3 – Transport accessibility and services • Priority Axis 4 – Sustainable development of tourism • Priority Axis 5 – Technical assistance

19. Organization structure of Office of Regional Council Director Internal audit Directors´ office Dept. of ROP management Financial department Communication and publicity Technical assistance and absorption cap. Methodological support Monitoring and evaluation Project administration Implem. of projects and payments

20. Description of tasks of the departments Methodological support Drafting and up-dating of methodogies for administrative proceedures of the Office employees Drafting and up-dating of guidance for project applicants Monitoring and evaluation Monitoring of implementation of the programme (data collection, analyses, reporting) Evaluation of progress of ROP (analyses, regular reports for EC) Proposals for enhancement of absorption capacity Dealing with MSSF Internal audit - Implementation of internal audit Cooperation with external auditors Reporting of irregularities outside ROP structure

21. Support to project applicants Communication and publicity – drafting and implementation of communication plan - ensuring publicity and marketing of ROP (workshops, web pages, information leaflets and publications, mass media etc.) Technical assistance and absorption capacity – drafting of plan of TA preparation and implementation of TA projects implementation of measures for strenghtenning the absoprption capacity Project administration Consultation with potential project applicants (!!! – consistency, highly demanding – each project is different) Checks of formal criteria of submitted applications Evaluation Preparation of materials for decision of Regional Council 21

22. Financial management and projects checks Financial department Transfer of fin. resources from Regional Council (RC) budget on account of FB Management of RC budget Cooperation with MRD and MoF Implem. of projects and payments signing of contracts wit projects applicants ex-ante, interim and ex-post checks checks of monitoring reports of individual projects autorization of payment requests 22 R E G I O N Á L N Í R A D A R E G I O N U S O U D R Ž N O S T I S T Ř E D N Í Č E C H Y WWW.ROPSTREDNICECHY.CZ

23. Director´s office personnal agenda education of employees material and technical operation of the Office 23

24. Project cycle Consultation + application submission Check of formal criteria + of eligibility + evaluation of project application Project approval + signing of contract On-going check of project implemen. Financial reporting Transfer of financial resources to Final B. Check of sustainability of projects outputs (5 ys.) Publicity, monitoring and evaluation; technical assistance 24

25. The role of European integration department of Regional Office • Regional Office = self-government body • „the other side“ of implementation of SFs in regions • Organization structure • Unit of grant schemes • Unit of grants in the sphere of life-long learning • Unit for preparation and implementation projects from EU funds

26. Dept. of EUROPEAN INTEGRATION Administration of fin. resources (Unit of grant schemes, Unit of grants in the sphere of life-long learning) Region is not beneficiary of grants, but reallocates resources to other subjects in the region. Coordination of of projects co/financed by SFs (Unit of prep. and management of projects) Region is implementing the projects and is beneficiary of grants. JROP (308 mil. Kč) OP HRD (58 mil. Kč) OP VK (GG) (1 800 mil.Kč) JROP Abcap (34 mil. Kč) ROP OP VK (IP) OP HR & Empl. IOP OP International cooperation (INTERREG) OP TA PROCURE E-Ten ?

27. Structure of Dept. of European Integration

28. Unit of grant schemes • 7 project managers, 2 financial managers each responsible for particular sphere or priority within given OP • Redistribution of fin. resources applicants, check of eligibility of expenditure • 138 projects (most of them active). • Also contact point for Norwegian funds for Central Bohemia • Preparation of global grant in the sphere of retraining

29. Unit of grants in the sphere of life-long learning • 3 project managers, 2 financial managers each responsible for particular sphere or priority within given OP, 1 Manager of TA, 1 manager of publicity • Projects in the sphere of: • knowledge society and strenghtenning of competitiveness, • modernization of system od elementary, secondary and tertiary education • Improvement of conditions for R&D • but also respect to children with special needs

30. Unit for preparation and implem. projects from EU funds • 6 project managers • Tasks: • projects in the sphere of absorption capacity • preparation and implem. projects from EU funds in the sphere of international cooperation including Procure • Preparation of procedure of project management • Management of Regional Fund for advance financing of EU projects • Project pipeline

31. Main problems: • Personal dimension: • Inadequate number of employees with regard to scale of agenda • Finding a suitable personnel (high demands). • High fluctuation of staff (high demands vs. Public sector pay vs. fees for consultants ---- benefits for staff) • Communication: • External – among different units of implementation strucuture • Internal – among different units of Regional Office (a lot of documents has to be approved by the elected regional representatives). • Political influences

32. And perhaps final remark… • In programming period 2004-6 the share of JROP on total allocation within Obj. 1 was about 38% in new programming period „only“ 18%. • But total amount annually available from EU SFs more than trippled. • Regions can also apply and gain support via TOPs.

33. Thank you for your attention • and • many thanks • to Mgr. Marek Kupsa (Director of Office of Regional Council) • and to • Mgr. Ivo Říha (Director of European Integration Department of Central Bohemia region).