Study of LGA Fiscal Inequities

1. Study of LGA Fiscal Inequities Presentation of Draft Report Workshop 25 March 2014

2. Overview of presentation • Objective of Assignment • Approach and Methodology • Key Findings and Conclusions • Patterns of inter LGA disparities (inequities and inequalities) • Intra LGA disparities (within LGAs), • Drivers of inequity • The impact on service delivery, • Recommendations • Local Strategies for staff attraction, retention and motivation, • Greater attention to HTRS LGAs in central staff allocation, • Improve transparency, LG OC funding and explore alternative approaches

3. 1. Objective of Assignment • The analytical objective of the assignment is to analyzeprogress, achievements and challenges of the current strategies for addressing inequalities of recurrent grant allocations across LGAs. • The ultimate aim of the assignment is to provide guidance on how the declared Government policy of more equitable LGA staff and fund allocations(for the purpose of achieving more equitable service delivery), can be supported through the LGA grant system (both recurrent and development grant systems) and other relevant measures.

4. 2. Overall Approach • Documentary review, • Analysis of patterns of resource allocation across LGAs • Fiscal (and selected HR) data last 5 years. • General trends + sector analyses, • Fieldwork in 11 LGAs • Focus group discussions with LGA management teams, • Data on LGA internal resource allocation and service delivery in all wards/facilities • Interviews and site visits to 117 facilities in 36 wards • Questionnaire survey data from 625 public servants . • Exploration of possible strategies • Consultations with national and LG officials and DPs • Review of experiences of previous strategies

5. 2.1 Team Coffey/Overseas Development Institute has with Dege Consult been contracted by DfID to undertake the assignment. The team reports to an inter-ministerial task force composed by: PMO-RALG, MOF, PO-PSM, invited sectors and DP representations.

6. 2.2 Overall work schedule • October 2013 – launch of study, draft IR November • Discussion of Inception Report 23 January • Field work preparation (testing, letters, travel booking etc) – up to 7th February, • Fieldwork in selected LGAs: 10 - 28 February • Draft Final report: 20 March • Presentation of report to Government: 25 - 26 March • Final report: 7 April (for ODI final QA) – submission 14 April to Coffey 18 /22 April  to Client/DFID

7. 3. Key Findings • Definition of key concepts, • General patterns of Financing services in LGAs • Patterns of inter LGA disparities (inequities and inequalities) • Intra LGA disparities (within LGAs), • What are the drivers of inequity? • What is the impact on service delivery? • What has been done to improve the situation?

8. 3.1 Definition of key Concepts Definitions: • Inequity = “fairness” – need based formula is a proxy, • Inequality = variation in distribution (per capita), • Disparity an overarching term to cover both of the above. • “disadvantaged LGA” – relative underfunded/- under staffed compared to average per capita or formula • HRTS = Hard to Reach and Stay (LGA)

9. Transfers financing recurrent expenditures Capital Development Grants Own Source Revenue 3.2 LGA Finances – the importance of recurrent “block grants” PE - Sector Subve-ntions Recurrent Block Grants National LGDG & Sector Development Grants OC - Sector Subv & Baskets PE – General Purp OC – General Purpose Regions LGAs OC – General Purpose LGA OSR OC Facility User Fees Localfacilities,providers Capitation Grant Citizens

10. 3.2 Fiscal transfers are mainly for PE

11. OC is decreasing in real terms(per capita allocations in 2013/14 prices – analysis of sector recurrent)

12. 3.2 Inequalities in Sector Block Transfers

13. 3.2 Inequalities in recurrent transfers over time(deviation from mean per capita)

14. 3.2 Patterns of Inequality and Inequity have across LGAs remained fairly constant • Patterns of Inequalities across major sectors tend to reinforce each other, • PE drives inequities – because of its size • Analyses of Inequity (index of fit to allocation formula) shows that: • Health and Education sectors are in relative terms most aligned with formula – but because of their total size they drive the patterns of total inequity, • The best fit to formula is found for health sector basket, • Over the last five years there have been no major improvements in terms of greater alignment with formula based allocations

15. 3.3 Inequities Within LGAs – PTR Primary Education

16. 3.3 Inequities Within LGAs – PTR Primary Education

17. 3.3 Inequities within LGAs – Other sectors and general observations • Secondary PTR also display significant variation within all LGAs – but not as substantive as for primary. However ranging from 42-149 in Uvinzaand 7-34 in Bukoba, • Health sector staff in dispensaries ranges 1-10 in most districts, OPD per staff variation is enormous e,g, 225-2640 in Kigoma, • Agriculture extension staff distribution more difficult to compare but e.g ranging from average of 0.1 to 0.7 per village in Sumbawanga – outreach limited as rarely with transport, • Generally: Most variation within the LGAs that generally can be classified as HRTS.

18. 3.4 Drivers of Inequities • PE allocations (in particular education and health) is the key determining factor for overall patterns of fiscal inequities • Some workers will not and do not report to work if posted to certain LGAs; • Staff resist postings to remote areas within LGAs, even if they report to work in a given LGA – especially challenge for health sector • It is difficult to retain staff in remote areas even if they do report.

19. 3.4 Primary Education Staff Allocations MoE started specific targeting of most needy LGAs in 2009, Improvements in equity – except for last year – as LGAs split (indicate LGA internal inequities) Improvements eased because of overall Norm almost achieved

21. 3.5 Inequities lead to inefficiencies!

22. 3.5 Significant potential for more effective use of staff • World Bank TZ Economic Update 2012 concludes that geographical re-allocations could lead to TZS 240 billion in efficiency savings • In health sector SDI data: 18% of staff conduct more than 50% of out patient consultations in dispensaries • Fieldwork: • many secondary teachers teach only 1-2 hours a day, • Many health facilities with very low OPD/health worker, • Management focus on (unaffordable) “staffing norms” rather than most effective use of existing resources, • Some local strategies (e.g. Kigoma) have achieved results in favour of improved staff allocations

23. 4. Main Conclusions & Recommendations • Main Conclusions • Two Main Strategies: • Support local strategies for staff retention and motivation, • Central (re) allocation of staff to most needy areas, • Complimentary Actions • Draft Action Plan

24. 4.1 Main Conclusions • The inequalities and inequities in resource allocations across LGAs are without any doubt: • Very substantive, • have persisted over many years • Mainly driven by PE allocations and HRM practices • In addition, there are very significant inequities in resource allocations within LGAs – the problems are most significant in HTRS LGAs, • The inequities are unfair and lead to substantive inefficiencies in service delivery • Some solutions have proved effective: • Targeting ofstaff allocations by the central government, • Local schemes for staff attraction, retention and motivation, • Local HRM practices

25. 4.2 Main Recommendations • Support localstrategies for staff retention, motivationand service delivery • TA for development and M&E of plans, • Funding of the plans through a special budget allocation of approx 4 bn TZS per LGA • Target initially 30 most needy LGAs, • Central (Re) Allocation of staff to most needy LGAs • Allocate additional new staff strictly according to relative needs: (rather than only sector norms) LGAs that are above average staffed should not receive additional staff, • Consider reallocation of staff away from LGAs that are staffed significantly above average, • Establish a transparent system for monitoring of staff allocations, retention, and transfers

26. Recommended Guidance for “Local Strategies”(Conditional for funding) • A situational analysis: • Relative use and effectiveness of staff/facilities/units to deliver services • The key factors that define specific areas within the LGA as HTRS • Proposed incentive structure for retention and motivation of staff in HTRS: • Targeted support for staff housing with indication of maintenance plans • Transport, Training scheme targeting staff in HTRS • Fiscal incentives for “settling in”, Fiscal incentives for staff attendance in HTRS • HRM Plans, • Plans for staff transfers • Plans for staff supervision and support • Contracting out of services • Use of contract staff (teachers etc.) • Outsourcing services • Monitoring the impact of the scheme through: • Staff attendanceand Staff work load • Service delivery overall in the LGA, by facility and in local HTRS • Benchmarking unit costs

27. Complimentary Recommendations • Increased and more equitable allocation of OC, • Improved Transparency of LGA resource allocations and use, • Improved HRM and Performance Management • Strengthen Demand Side of Accountability, • Explore further use of market based approaches

28. Draft Action Plan • Indicative outline page 59 • Proposed institutional arrangements: • A steering committee – composed of MOF, PO-PSM, PMO-RALG, MoE, MoHSW, MAFS, ALAT and selected LGA representatives, • In the event of some DPs being willing to finance the activities, they should also be included in the steering committee • The steering committee is chaired by PS PMO-RALG • A secretariat is established with senior representatives from the above institutions and possibly supported by TA

29. End of Presentation