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Part II. The Budget Execution Process

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 3. The Budget Execution Process

This chapter presents an overview of the basic procedures followed by any government in executing its budget and describes the documents that governments typically maintain to record the budget’s execution.

1. The Budget Execution Process

The budget execution process generally follows five steps (refer to Chart 3):

• monies are released to various line ministries (or departments/agencies) as per the approved budget;
• agencies initiate expenditures directly or by procuring goods and services;
• payments are made for these expenditures;
• expenditure transactions are recorded in accounting books; and
• in-year reports are produced throughout the year, culminating at the end of the year with the closure of the accounting books and the production of year-end reports.

Chart 3: The Budget Execution Process

Release of Funding to Ministries, Departments, and Agencies

The implementation phase of the budget process starts when the national treasury releases funding to the relevant ministry, department, or agency. Such releases generally occur once the legislature has passed the budget into law. The transfers, which can be made in quarterly or monthly payments from a central revenue fund, may be made by means of formal warrants (government authorization forms) that sanction the release of funds and specify the budget line items against which the agency may incur expenditures.

In some countries – such as Portugal, Italy, and their former colonies – the supreme audit institution (SAI) is responsible for approving certain types of public expenditures. Under this system, the SAI performs detailed checks prior to the fund transfers. By contrast, in the Westminster system, comptrollers (offices that combine auditing and fund management responsibilities) typically approve transfers from the finance ministry to individual departments. These systems are examined in Part Five.

Initiation of Spending

After funding is released to ministries and departments, designated officers propose specific expenditures. The chief accounting officer from the ministry or department (or his/her delegated official, often the chief financial officer) reviews these proposals to ensure that they fall within the budget and that the appropriate procedures have been followed. Once a proposal has been approved, the ministry or department signs a contract or places an order for the goods and services needed to implement the expenditure. (This process is discussed in greater detail in Part Three.) Similarly, the government utilizes its payroll management system to make salary payments and its debt management systems to service debt obligations.

Payment

Actual payments for expenditures are generally made by the accounts department of the ministry, department, or agency by check or bank transfer. (In some countries, the central treasury makes all payments.) In many francophone countries, the person making the payment (“le comptable”) is legally protected against undue influence from the person who made the spending decision (“l’ordonnateur”).

In many small developing countries, the government sometimes makes cash payment transactions. Such transactions encourage corruption and should be replaced by formal banking transactions.

Recording of Transaction

Nearly all developing countries use cash accounting systems, under which expenditures are recorded once payment has been made, immediately following the issuance of a payment order. While this makes intuitive sense, such a system makes it difficult to form a comprehensive picture of the government’s financial situation at any point in time. For example, if the government has entered into a contract to procure an expensive good or service, its financial statements under the cash system of accounting will make no reference to this purchase until payment is actually made, which could be months later.

Under an accrual system, in contrast, financial transactions are registered when the activities that generate them occur. Thus, expenditures are accounted for when goods and services are delivered (even if the payment has not yet been made) and revenues are accounted for when a tax falls due or goods and services are sold (even if the revenues have not been received). Such a system provides a more accurate picture of a country’s financial situation. Unfortunately, it is much more complicated to use, and few developing countries have the resources to implement it.

Production of Accounting and Budgeting Reports

The 12-month period during which a budget is in effect is called the financial year; it does not necessarily coincide with the calendar year. During the course of the financial year, accounting officers or their delegated staff members record all of the outstanding revenue and expenditure transactions effected during the year, and these recorded transactions form the basis for in-year budget and accounting reports. At the end of the year, once all transactions are recorded, the accounting officer prepares final accounts of the entity’s financial operations for the year. These final accounts are included in the annual report, which is forwarded to the SAI for auditing.

2. Government Documents That Can Help Monitor Budget Execution

Four kinds of government reports can help monitor budget execution: the enacted budget, in-year reports, supplementary budgets, and year-end reports.

Enacted Budget

After debating the executive’s budget, the legislature typically votes it into law. (It is then called the “enacted budget.”) In some countries, the enacted budget must specify allocations to individual spending agencies and even programs within them; in others, the budget only provides overall expenditure levels. The enacted budget is the only budget document that has a legal status. The level of detail in it thus delineates the extent to which government can change the budget during the year without returning to the legislature for authorization to change spending plans. For this reason, the enacted budget is critical for monitoring purposes: it definitively states what government is supposed to spend in the coming financial year.

In-Year Reports

In the budget execution phase, governments traditionally monitor expenditures, revenue, and debt levels.⁵ Many governments produce monthly, quarterly, and mid-year reports that compare the actual budget results with the approved budget in order to show whether the budget’s expenditure, revenue, and debt provisions are being adhered to during the execution phase.

These in-year reports, however, generally do not show whether the government is delivering the services that the budget was meant to support. Very few countries monitor service delivery and performance. As the examples of civil society budget work show (refer to Part Four), the best way for civil society to accomplish these tasks is by direct observation of the delivery of projects and services, rather than reliance on the government’s budget tracking documents.

In-year reports can be issued for the entire government as a whole or for individual agencies. In some countries, revenue collection agencies issue their own reports. In other countries, the central bank rather than the executive issues reports on the status of the government’s bank accounts; such reports can be used as in-year reports as long as they describe what has actually been spent rather than the monthly sums transferred to administrative units.

The Organization for Economic Cooperation and Development’s Best Practices for Budget Transparency recommends that monthly reports be publicly released within four weeks of the end of the reporting period (OECD, 2001). The report should present the revenues received and expenditures made in each month and for the year to date and should compare the forecast amounts of monthly revenue and expenditures for the reporting period. The report should also include a brief analysis of (and explanation for) any significant divergence between actual and forecast revenues and expenditures.

Some countries report in minute detail on individual program expenditures and revenue from individual taxes; others report only on total revenue and expenditures for the government as a whole. In some countries, the reports are issued individually by each administrative unit, while in others the information is consolidated into one report, typically issued by the treasury.

Supplementary Budgets

A supplementary budget allows a government to revise its original budget proposal in response to unanticipated needs that arise during the year, such as a natural disaster or a lack of funds for certain programs resulting from poor budget planning. Although supplementary budgets are not uncommon in most countries, the habitual use of large supplemental budgets can indicate poor budgeting practices. Routine supplemental requests undermine planning within ministries and agencies. They also interfere with open debate on the allocation of resources, since this debate should occur as the legislature reviews the executive’s entire budget proposal for the coming year.

Good budgetary practice also requires that supplementary budgets be approved by the legislature. This facilitates external oversight of the supplementary budgets, which is important to ensure that checks are placed on the executive’s use of public funds.

Table 1, based on an IBP survey of 59 countries, shows that in 35 of them the executive either does not propose supplemental budgets or must seek legislative approval before using the money appropriated in such budgets.⁶ However, in 22 countries, the legislature is consulted only after the funds are spent – or not at all.

Table 1: Timing of Legislative Approval of Supplemental Budgets in 59 Countries

Year-End Reports

A year-end report consolidates information on the actual expenditures of administrative units, revenue collections, and debt. In some countries, this report is a single document for all of government, while in other countries, individual administrative units issue their own year-end reports. Similarly, year-end reports may be stand-alone documents or may be included in larger documents, such as the subsequent year’s budget proposal.

The OECD recommends that a year-end report be publicly released within six months of the end of the fiscal year. It should cover all of the major items presented in the budget, explaining differences between the original estimates (as amended by the legislature during the year) and actual expenditures, revenue, debts, and macroeconomic assumptions. It should also include non-financial performance information, which can be used to measure progress toward the budget’s policy goals.

In-year and year-end reports are important for monitoring purposes because they indicate the extent to which the government adhered to the content of the enacted budget. As Table 2 shows, the large majority of countries surveyed by the IBP make these documents publicly available.

Table 2: Production and Publication of Budget Execution Documents in 59 Countries ⁷

⁵ This section draws on Friedman and Gomez, 2005
⁶ The 59 countries include the following: Albania, Algeria, Angola, Argentina, Azerbaijan, Bangladesh, Bolivia, Botswana, Brazil, Bulgaria, Burkina Faso, Cameroon, Chad, Colombia, Costa Rica, Croatia, Czech Republic, Ecuador, Egypt, El Salvador, France, Georgia, Ghana, Guatemala, Honduras, India, Indonesia, Jordan, Kazakhstan, Kenya, Malawi, Mexico, Mongolia, Morocco, Namibia, Nepal, New Zealand, Nicaragua, Nigeria, Norway, Pakistan, Papua New Guinea, Peru, Philippines, Poland, Romania, Russia, Slovenia, South Africa, South Korea, Sri Lanka, Sweden, Tanzania, Turkey, Uganda, US, United Kingdom, Vietnam, and Zambia.
⁷ In three countries, in-year reports are not produced. In another five countries, year-end reports are not produced.

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4. Case Studies of Successful Civil Society Initiatives to Monitor Budget Execution

This chapter examines the participatory methodology employed by a social movement in India called the Mazdoor Kisan Shakti Sangathan (MKSS) to analyze government expenditures at the community level and hold government agencies accountable for them. It then discusses a Malawian civil society coalition, the Civil Society Coalition for Quality Basic Education (CSCQBE), which uses surveys to measure the quality of education and the extent of “leakages” in education budgets as funds are transferred from one level of government to another.

1. MKSS Undertakes Social Audits in India

Organizational Profile The grassroots organization MKSS was formed in India in 1991 after a land struggle between a feudal landlord and peasants and workers in the rural state of Rajasthan. More recently, it has focused on the government’s failure to pay the legally required minimum wages to workers employed on public works programs. Since the denial of wages was directly linked to government secrecy (which allowed government officials to misappropriate funds meant for wage payments), MKSS launched a successful mass campaign to demand the enactment of a right to information law, as well as a law to protect the rights of poor workers. MKSS is governed by a central committee and supported by ten full-time and two part-time staff. It draws its membership from thousands of peasants and workers in rural Rajasthan who donate their time, money, and food to MKSS campaigns.

a. Introduction

In April 2006, MKSS joined with other Indian non-governmental organizations to organize a social audit in the Dungarpur district of Rajasthan. (Social audits are participatory processes through which community members monitor the implementation of government programs in their community.) Approximately 800 people from a variety of backgrounds participated. The audit focused on program funds spent in Dungarpur under India’s recently enacted National Rural Employment Guarantee Act (NREGA), which entitles every rural household to 100 days of government employment at the minimum wage.

At the start of the project, all participants received a two-day orientation, which included information on the NREGA’s management, the government documents that record payments made under NREGA programs, and techniques of social auditing. The orientation also helped participants develop communication skills that could be used during the social audit, including the use of songs, puppet shows, and street plays.

Participants were then divided into 31 groups of approximately 20-25 people apiece and provided with a “social audit kit.” Wearing multi-colored turbans, brandishing puppets and banners, armed with megaphones, and carrying bags full of labor rolls listing workers’ names and the payments made to them, the participants spread out across the district.

Over the next seven days, participants visited every village and work site where NREGA programs were operational. They met with many of the approximately 140,000 workers helping build roads, dams, wells, etc. under the NREGA, discussed the operation of the program with them, and checked whether the program was being run according to NREGA standards. Among other things, NREGA requires regular payment of minimum wages, provision of first aid kits and drinking water at the work site, and the organization of day care services for working mothers. By law, program records must also be available at the work site to enable citizens to conduct spot checks of a program while it is being implemented.

The social audit in Dungarpur identified many infringements, such as non-payment of minimum wages, late wage payments, and poor work site facilities. The pattern of wage payments also raised serious concern: in most of the work sites, laborers were paid much less than the statutory state minimum wage of 73 Indian rupees (approximately 1.8 US dollars) per day because wages were instead calculated on the basis of tasks performed. This practice violated the NREGA guidelines issued by the central government, which explicitly state that under no circumstances may laborers be paid less than the minimum wage rate fixed by the state government for agricultural labourers. All of these issues were raised in a public forum with the district administration, which promised corrective action.

b. Methodology

While a social audit may benefit from the involvement of a non-governmental organization, such third-party participation is not always necessary; an empowered community can undertake social audits by itself. However, non-governmental organizations can provide important assistance to a community undertaking a social audit by (1) training community members on the social audit process, (2) accessing information required to conduct the social audit, (3) helping collate and disseminate information to the community, and (4) documenting the social audit findings and following up with public officials to demand action. Regardless of who undertakes the social audit, the following seven steps are integral to the process.

Step 1: Identify the Scope of the Audit

In a given community, several government agencies may be executing different programs concurrently. The first step in a social audit is to identify the specific programs and agencies that will be selected for audit, along with the period (number of years) that will be under consideration.

The following questions can help establish the scope of the social audit:

1. How difficult is it to obtain information about programs from government agencies, and is the information available for the entire time period to be covered by the audit?
2. What level of involvement can the community provide? The more involved a community, the more potential there is for an expansive audit to be conducted.
3. What resources are available from the organization coordinating the audit? Ideally, the organization should seek resources from within the community where the audit will be conducted. Such resources could include office space as well as volunteers who can assist with logistics.
4. What is the relationship between government officials and the organization coordinating the audit? Sympathetic officials can play an important role when the organization seeks corrective action based on the audit’s results.
5. What is the strategic focus of the group undertaking the audit? Depending on its focus, a group may seek to audit specific agencies/programs.

Step 2: Develop a Clear Understanding of the Management of Programs

The programs to be audited may be administered by the central government through local offices, by state/provincial government agencies, directly by a local government, or by some combination of these agencies.

Any organization coordinating a social audit should examine the administrative structure under which the programs to be audited are managed. The organization may benefit from preparing a simple guidebook that maps the different agencies involved in administering the programs, their accountability and managerial structures, and the flow of program funds. This information makes it possible to pinpoint the agency (and perhaps the official) ultimately responsible for the project – and, if necessary, to go over the head of an official who is reluctant to provide information.

The organization coordinating the audit should also identify individuals in the community who may have worked on the government projects. They will likely be good sources of information on the documents typically maintained by project managers, such as documents that relate to labor payments and material purchases.

Step 3: Obtain Information on Programs Under Audit

The organization coordinating the audit will require access to a large number of documents, including accounting records (such as cash books, wage rolls, and bills for materials purchased), technical project records (such as the project engineer’s measurement books and contract specifications), and managerial records (such as fund utilization certificates, which the program manager issues when the project is completed). It is important to document the types of records the government maintains when executing a project.

While access to every detailed record is not essential, access to records on expenses that are shown to have been incurred is critical. These records may include the following:

accounting records, including cash books for the previous three years that provide information on all monies received from the national government, state/provincial governments, and international donors – as well as all monies spent;

bills showing materials purchased by the local government and bills from contractors documenting payments made at all stages of the project period (it is especially important to obtain the final settlement bill that lists all costs incurred by the contractor);

• stock registers on materials procured by other agencies and sent to the local government for use in construction projects;
• receipts with signatures/thumb imprints of program beneficiaries acknowledging receipt of direct cash transfers made to them;
• engineering records, including measurement books that show the construction specifications for public works projects (such as the amount of cement required for the project, labor estimates, and project designs); and
• labor rolls listing each laborer employed at the project site, the number of days worked, the wage rate, the total amount paid to the laborer, and signatures/thumb imprints of laborers acknowledging the receipt of wages.

A demand for information is likely to meet with strong resistance from local officials if they feel threatened by the consequences of disclosing the information. The officials can be expected to threaten, cajole, plead with, or ignore people seeking information. To build ownership of the social audit process – and to help make the process sustainable – it is critical that volunteers from the community be centrally involved in what may be a long struggle to obtain information. Often, a long and successful information-gathering campaign that involves local communities can be as empowering to the community as the audit itself.

Step 4: Collate Information

Once information is obtained, the coordinating organization must work with local volunteers to sort through it and prepare individual project files presenting pertinent information in an accessible format.

MKSS collated project information into matrices that clearly summarized the different kinds of information obtained from project records. One matrix, for example, was based on information from labor rolls that identified cases of fraud in which workers were recorded as working on two different project sites on the same day.

The coordinating organization could also prepare simple charts that illustrate the amount of construction materials that might be required to construct typical infrastructure projects in a community. These charts would enable “back of the envelope” calculations to be made to compare the amount of construction material booked for a construction project against industry benchmarks for such projects.

Step 5: Distribute Information

Next, the coordinating organization should make copies of the project documents and matrices and take them into the villages in which public hearings are to be held. Several teams of volunteers should go from house to house, sharing information from the project files.

Meetings with residents who have worked on, or live next to, a particular project can be especially illuminating. During MKSS audits, copies of labor rolls have proved a source of excitement as residents identified names of dead or fictitious people. Similarly, bills from local companies for expenses incurred in a project can be identified as false by residents who state that no such firm exists in their community.

The social audit team should visit each project site and physically verify the completion of all steps anticipated in the construction plans. Similarly, it should visit beneficiaries of social programs to verify that they received funds as shown in the expenditure records. Local volunteers can help identify project sites and program beneficiaries and facilitate visits with these beneficiaries.

All information collected from the community should be recorded in the relevant project files. Anyone providing information should be told about the forthcoming public hearing and encouraged to speak out at it.

The information distribution process can take from a week to a couple of months. It offers an opportunity to build momentum within communities as the public hearing approaches.

Step 6: Hold Public Hearings

Public hearings should be carried out with much fanfare to make them interesting for local communities. If the information collection and distribution stages have been effective, the hearing may already be well-publicized among the community, which will have high expectations for it.

Special efforts should be made to ensure that the hearing location is accessible to all residents. The hearing will take most of a day, so seating, water, and other supplies for attendees will be needed. An extravagant meeting space should be avoided, however, as a forum that appears elitist or “bureaucratic” can discourage participation.

Five sets of people play an important role in the hearing:

• The organization coordinating the social audit – with local volunteers – must decide the agenda.
• A panel of eminent citizens (and, if possible, senior government officials) should chair the meeting. They can announce the rules that will govern the proceedings, such as a ban on abusive language.
• Members from the local media should be invited to attend the public hearing and to report on the often explosive findings that may be uncovered regarding corruption in public projects.
• The local officials responsible for managing the projects should be invited to attend. It should be made clear to them that the hearing is not a finger-pointing exercise but an opportunity for the community to offer feedback. Officials who are not used to public accountability may not be pleased by the prospect of a hearing, but curiosity and moral indignation may motivate them to attend. (In some cases, it may be useful to ask senior officials to direct local officials to attend the hearing.)
• Finally, the community has the most important role at the hearing. A large and active audience can make the difference between a successful and an unsuccessful social audit.

After community members have provided testimonies, the relevant officials should be given a full opportunity to explain their actions or counter any allegations against them. This stage of the hearing can very easily turn combative; it must be managed in a manner that ensures that the voices of all participants are heard and recorded.

During the MKSS social audits, speaker after speaker described instances of corruption, inefficiency in the use of public funds, and poor planning within public agencies. Discussions became especially animated when public officials tried to defend their projects and village residents quickly pointed out any inconsistencies in their statements. In some of the audits, public officials even admitted wrongdoing and handed over the funds they had stolen to the panel adjudicating the hearing.

Step 7: Follow-up to the Hearing

The findings of the public hearing must be transformed into an effective advocacy campaign that can address both specific instances of mismanagement and broader policy considerations regarding transparency and accountability.

A formal report on the social audit should be prepared after the hearing, and copies should be sent to relevant senior government officials, the media, and other groups engaged in the campaign. The report should also recommend specific steps against errant officials and policy changes to improve the delivery of government services.

The coordinating organization should then try to ensure that action is taken on the audit findings. Government agencies can be slow to respond to an audit’s results and may require external pressure.

c. Results Achieved

Successes

Between 1995 and 2005, MKSS organized numerous hearings to build momentum around a right to information campaign in India at both the state (Rajasthan) and national levels. These hearings received a tremendous response, as thousands of demonstrators joined MKSS in demanding that Rajasthan enact a law giving citizens the right to information. The legislature passed such a law in 2000. The right to information campaign then turned its attention to the national government, and five years later India’s parliament passed a national right to information law.

The right to information is a potent weapon for a wide variety of civic groups. For example, a 2004 convention organized by the National Campaign for People’s Right to Information presented 39 workshops on the impact of the right to information on issues such as maintaining essential food supplies, corruption, the adverse impacts of economic globalization, and the disappearance of citizens as a result of state security actions. The conference attracted 400 participants from all over India.

In addition, MKSS and several other civil society groups used the momentum from the right to information campaign to demand an employment entitlement program for the rural poor. The campaign succeeded when the government enacted the NREGA (described above), which entitles every rural household to 100 days of minimum wage employment from the government. A unique feature of the NREGA is that state governments are encouraged to organize social audits, using the techniques adopted by MKSS, to monitor the program’s implementation.

As of 2007, civil society organizations in approximately half a dozen Indian states were using the right to information law to obtain government documents on NREGA implementation and organize social audits of NREGA-funded activities in their communities. These audits have been successful in uncovering results similar to those revealed by the Dungarpur audit described above.

In a significant development, the government of the state of Andhra Pradesh has recognized the importance of social audits in curbing corruption in the implementation of NREGA programs. It is collaborating with a number of civil society groups to expand the use of the social audit methodology.

Challenges

MKSS faces a number of challenges in implementing social audits. For example, despite the right to information law, access to information remains a challenge in India. Government officials who are guilty of financial mismanagement are loath to give information that may incriminate them, and may refuse to respond to requests made under the right to information law or may obfuscate, delay, or hide information.

Even when MKSS can obtain records, in some cases they are badly maintained and difficult to decipher. Poor record keeping practices in government offices can significantly delay the audit and reduce its impact.

In addition, government officials sometimes intimidate and even threaten villagers to prevent them from testifying in public forums. In such situations, residents may hesitate to air their grievances about government programs.

Finally, the social audit process must be incorporated within the government budget process if is to realize its full potential. Only then will local residents have a regular opportunity to hold the government accountable for its implementation of public programs.

Information on MKSS can be obtained by emailing mkssrajasthan@gmail.com. MKSS does not operate a website, but extensive literature on the organization can be accessed using any Internet search engine.

2. Civil Society Coalition for Quality Basic Education Carries Out Public Expenditure Tracking Surveys in Malawi

Organizational Profile The Civil Society Coalition for Quality Basic Education (CSCQBE), created in 2000, consists of 67 civil society groups in Malawi, including non-governmental organizations, community-based organizations, teachers’ unions, religious-based organizations, and district networks. CSCQBE brings these organizations together in the common pursuit of the right to quality basic education. CSCQBE has made a long-term commitment to monitor Malawi’s progress toward achievement of the Education For All goals agreed upon at the April 2000 Dakar Conference, as well as the Millennium Development Goals. (In 2000, the UN adopted a resolution recognizing eight Millennium Development Goals that are to be achieved by every country. They range from halving extreme poverty to halting the spread of HIV/AIDS and providing universal primary education by 2015.)

a. Introduction

From 1994, when Malawi introduced free primary education, through 2001, increased government funding for education did not translate into improved quality of education. Many citizens suspected that government corruption and mismanagement were the cause. In a widely reported 1999 case, for example, the Ministry of Education was defrauded of 187 million Malawian Kwacha (approximately US $1.3 million) meant for school construction. Civil society groups believed that by closely monitoring government budgets and spending, they could help prevent corruption and encourage better management of public funds.

For this reason, CSCQBE decided to focus its attention on the education sector. Basic education funds approved by Malawi’s parliament are disbursed from the national treasury directly to district accounts, where they are allocated at the discretion of the district assemblies. This decentralized system provides only limited accountability, as the national and district governments provide little information on the use of funds. CSCQBE tracking surveys, however, provide independent data on the use of education funds, which civil society can use to advocate for greater and more effective education funding.

CSCQBE also seeks to enhance public understanding of education and budget policies and the need for accountability. To that end, it has set up 13 district networks to decentralize the monitoring of education budgets. The networks support school budget monitoring by school-based or community-based groups, such as the school board or a parent-teacher association. CSCQBE, in turn, provides these networks with technical assistance to strengthen their capacity to support local efforts. It is hoped that once these district networks are fully operational, they will encourage member organizations to engage in budget monitoring in other spheres besides education.

b. Methodology

The Public Expenditure Tracking System (PETS) is a methodology for tracking public expenditures that presents revenues and expenditures in a format that enables users to reconcile budgetary flows. Using PETS, an organization can track the flow of resources through various levels of government to the end users and identify leakages. For example, PETS can be used to track education funds sanctioned by the central government for school repair as the money flows through the district administration to the school itself. First employed by the World Bank in Uganda (see Box 1), PETS has since been used by other multilateral organizations and national donor agencies in dozens of countries around the world.

Box 1: PETS – The Ugandan Experience In the mid-1990s, the World Bank – a major donor to the Ugandan government – observed that despite a significant increase in Uganda’s budgetary allocations for primary schools for more than a decade, enrollment in primary schools remained stagnant. It was suspected that leakages or diversion of funds might be causing less funding to reach primary schools than was budgeted to support them. To uncover the truth, the World Bank conducted the first public expenditure tracking survey. Its findings confirmed officials’ worst fears: between 1991 and 1995, only 13 percent of the annual per-student grants reached primary schools, on average. The rest was either misappropriated or used for purposes not directly related to education. The survey also showed that larger schools and schools with pupils from wealthier families benefited more from the grants than smaller and poorer schools did. In fact, half of the schools did not receive any funds. These shocking findings prompted authorities to undertake a number of initiatives to enhance transparency and accountability. The central government began publicizing all fund transfers to districts and required schools and district offices to post information on the transfers they received. School committees also received training on how to use such information to hold authorities accountable. The effect of these efforts was dramatic: when the school survey was repeated in 1999, it found that schools received more than 90 percent of the funding budgeted for them (Sundet, 2004).

CSCQBE has used PETS three times between 2002 and 2007 to survey education expenditures, improving its methodology in each round.

As part of the PETS process, community-based members of CSCQBE administer a series of standardized questionnaires to teachers and education officials around the country. Questionnaires administered to the head teachers in a number of schools obtain information on students (enrollment, exam pass rates, drop-out rates, etc.), teachers (qualifications, teacher shortages, housing, etc.), salary pickup (teachers’ salaries are often made in cash, especially in rural areas), availability of teaching and learning materials, facilities, and supervision and accountability. CSCQBE selects a representative sample of 500 schools (roughly one-tenth of those in the country) for its surveys, including both rural and urban schools.

School-level questionnaires collect data on student enrollment, staff levels, student and teacher housing, and teacher qualifications. These questionnaires include questions on the school’s proposed recurring expenditure budget sent to the Finance Ministry, actual funds received from the ministry, and actual recurrent expenditures in three sample months. Other questions address the adequacy of classrooms and learning materials.

CSCQBE also collects data from district assemblies, district education offices, division offices, the Education Supplies Unit, and teacher training colleges. District commissioners are given a questionnaire that seeks information on the amount of funding requested from the Finance Ministry for recurrent expenditures, the amounts subsequently allocated to the district, and the actual amounts the district received and spent on a monthly basis (including the purposes for which they were spent). Other questions ask about primary education projects that are planned in the current budget and projects that have recently been implemented, as well as their cost.

Similarly, district education managers are asked about recurrent expenditures in three sample months and monthly allocations in the primary education budget (as compared to funds received and expenditures). Also requested are data on enrollment, staffing, salary distribution, and transportation and facilities.

The supplies unit is surveyed to ascertain budget requirements versus actual funding allocations for teaching and learning materials, to assess the procurement and delivery processes, and to obtain information on the quantities of materials received.

The CSCQBE secretariat collects the questionnaires, enters the data into electronic spreadsheets, and analyzes it to produce its annual report. Particular attention is paid to:

• any increases in budget allocations;
• differences between the budgets for different levels of education;
• the amount of teaching and learning materials received by schools and colleges;
• the amount and timeliness of teachers’ salaries;
• the number of teachers who were recruited and trained;
• the distribution of teachers across geographic areas;
• enrollment of pupils in each school, particularly with regard to gender; and
• enrollment of children with special needs and the availability of teaching materials for them.

A draft report is circulated among CSCQBE organizations and discussed at a special meeting for adoption. Subsequently, a final report is produced.

CSCQBE unveils the report during a public meeting with ministry officials, parliamentarians, development partners, and the media during the annual parliamentary budget deliberation. It then holds district meetings during which district assembly officials, district education officials, non-governmental organizations, and school officials can discuss the results and, if necessary, formulate action plans to address problems. The report receives news coverage in newspapers and on radio and television. CSCQBE also gives copies of the report to key stakeholders such as ministers, the office of the president, and donors and seeks commitments on how they will respond to the issues it raises. CSCQBE takes note of these commitments and then monitors their implementation.

c. Results Achieved

Successes

CSCQBE has achieved important successes through PETS. In 2002, for example, when the government closed teacher training colleges due to a lack of funding, civil society groups mounted a three-month campaign that compelled the government to reopen them. The coalition argued that closing the colleges violated the government’s commitment to train 6,000 new teachers a year.

In 2003, it was discovered that a number of teachers received their salaries late or not at all. Civil society groups pressed a parliamentary committee to look into the issue. The committee returned a report to the National Assembly.

In 2004, the government undertook its own expenditure tracking survey after observing CSCQBE’s successful work. Civil society was involved in planning and monitoring the survey.

Civil society groups have also pressured the government into making budget allocations aimed specifically at children with special needs, to purchase specialized materials for teachers who focus on these students.

In addition, the government is now seeking to address the educational disparities between rural and urban areas. It plans to introduce incentives to attract teachers to rural areas and construct housing for rural teachers.

In its activities, CSCQBE has worked closely with international organizations such as the World Bank, UNESCO, the Global Campaign for Education, and the Africa Network Campaign for Education For All. It also has been invited to participate in government meetings and working groups on education. The coalition has used these experiences to help widen civil society’s space and influence in Malawian society and enhance its capacity for monitoring and evaluation.

Challenges

CSCQBE faces several challenges in implementing the public expenditure tracking surveys. First, government officials do not always fully release budget and expenditure data, which makes it more difficult to track expenditures and determine the extent to which the government is working to improve the educational system.

Second, in many instances officials provide information that is incomplete or refuse to provide it, claiming they are still compiling the information.

Third, many coalition members have only limited technical capacity to analyze education budget data.

Fourth, coalition members are busy with multiple commitments and can invest only limited time in the PETS process. In some cases, this affects the quality of the reports submitted by those who are collecting information for the survey.

Finally, as a nation, Malawi faces many challenges that it must overcome before it can meet the Education For All and Millennium Development Goals. Education constituted just 13 percent of the country’s budget in the 2005/6 fiscal year – down from 28 percent in the 1990s. This falls well short of the internationally recommended 26 percent needed to achieve the Education For All goals by 2015. In spite of CSCQBE’s important successes through its expenditure tracking surveys, the coalition faces a significant challenge in convincing the government to increase the education budget. Such an increase will likely be key to achieving the needed improvements in Malawi’s education system.

Information on CSCQBE can be obtained by emailing cscqbe@sdnp.org.mw. The coalition does not operate a website.

d. Additional Resources on PETS

Additional information on PETS is available in publications from the World Bank, the International Institute for Educational Planning, and the United Nations Educational Scientific and Cultural Organization. These institutions have developed detailed instructions that can help organizations undertake PETS.

The following two documents are also helpful:

• Reinikka, R. and Svensson, J. “Assessing Frontline Service Delivery.” World Bank, Washington D.C. 2002. Retrieved on April 20, 2007 <http://www.worldbank.org/wbi/governance/assessing/pdf/reinikka.pdf>

Public spending data tends to be a poor proxy for actual service delivery. Micro-level tools are needed to understand the translation of public spending into services. This paper presents a new survey tool and describes its first application to document service delivery from public, private not-for-profit, and private for-profit providers. This tool has two variants: a diagnostic public expenditure tracking survey and a more comprehensive facility-based quantitative service delivery survey.

• “Sub-regional Course on Public Expenditure Tracking Surveys in Education” (Accra: 22-26 May 2006) http://www.unesco.org/iiep/eng/focus/etico/pdfs/ghana.pdf

The International Institute for Educational Planning and the World Bank Institute conducted a course on public expenditure tracking surveys in education in March 2006 in Accra, Ghana. The course introduced participants to PETS, allowing them to implement a PETS in a fictional country and then discuss how to apply this methodology to their own countries. This report includes the materials that were used for the course; the appendices contain the list of participants as well as bibliographical references.

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5. Other Successful Initiatives to Monitor Budget Execution

The MKSS and CSCQBE experiences are just two success stories in civil society efforts to monitor expenditures. Below are short descriptions of two other examples. The first examines the steps taken by the Uganda Debt Network (UDN) to establish a community based monitoring and evaluation system to monitor school construction. The second showcases the success of the Mexican group Fundar in ensuring that funding intended for HIV/AIDS programs was expended for that purpose.

1. Uganda Debt Network Establishes a Community Based Monitoring and Evaluation System

UDN was established in 1996, when a coalition of advocacy and lobbying organizations and individuals united to coordinate a national debt relief campaign.⁸ After achieving success in that campaign, UDN expanded its activities to include monitoring expenditures incurred by the government from the savings it realized from debt relief.

To monitor government programs from the district level down to the village level, UDN established a Community Based Monitoring and Evaluation System (CBMES). UDN is using the system in eight districts and approximately 47 sub-counties. The CBMES is implemented though the following steps:

1. Select target districts and sub-counties.
2. Hold preliminary meetings at the district level to build support for CBMES among district authorities and mobilize key organizations and individuals.
3. Meet with local communities to introduce the CBMES concept, elicit community responses, and mobilize participants.
4. Select monitors (about 80–100) from local communities.
5. Train selected monitors.
6. Develop community indicators and an information management and action system, and formulate proposals on the use of monitoring to demand action at different governmental levels.
7. Monitor community-level projects and activities.
8. Compile findings gathered by monitors at the sub-county level.
9. Hold a sub-county debriefing with local authorities, identify issues to be brought to higher level authorities, and appoint representatives to the district-level committee.
10. Compile findings gathered by monitors at the district level.
11. Hold a one-day district feedback workshop facilitated by UDN to discuss the outcomes of the monitoring effort, current challenges, and followup activities. Senior district officials typically attend this workshop.

Using the CBMES, UDN has successfully monitored several government programs at the local level and used the information it generated to conduct advocacy at the national level. One of the best examples of this is the case of the School Facilities Grant (SFG), which the government introduced in 1998 to fund improvements in education infrastructure (classrooms, toilets, teacher housing, etc.) in poor communities.

In April 2002, UDN and its partners in the Teso region of eastern Uganda published a report documenting the misuse of SFG funds in the Katakwi district. UDN also produced a documentary on this misuse of funds, which received wide media coverage. The report drew the attention of the prime minister’s office, which ordered an official investigation. The investigation confirmed many of UDN’s findings and resulted in the dismissal of the district tender board and the appointment of a new district engineer to oversee SFG projects in the district. Further, the contractors responsible for the poor construction of school buildings were ordered to rebuild the classrooms that did not meet construction standards.

In addition, the government revised the SFG guidelines to help improve the quality of future projects funded by the grants. Contractors are now required to submit performance guarantees declaring that they will do quality work and deliver all projects on time. Further, contractors are required to submit bank guarantees that cover any advances released to them for project costs. In this way, if a contractor fails to meet the terms of the contract, the government can recover the advance directly from the contractor’s bank.

Information on UDN can be obtained from the organization’s website at www.udn.or.ug.

2. Fundar Monitors HIV/AIDS Programs in Mexico

Each year since 2003, Fundar – a research and advocacy organization – has analyzed the Mexican government’s spending on HIV/AIDS.⁹ In its analysis of the 2005 federal budget, Fundar identified a new allocation scheme for HIV/AIDS funds. For the first time, the Seguro Popular (the country’s health care program) was given resources to combat HIV/AIDS; in fact, it received more such funding than any other institution, including the National HIV/AIDS Center (CENSIDA). In addition, some national hospitals – not all of which specialize in treating the epidemic – received funds for HIV/AIDS treatment.

Fundar decided to follow up this analysis by monitoring the use of the budgeted HIV/AIDS funds. Using the electronic system established by Mexico’s Federal Institute of Access to Public Information (IFAI), Fundar submitted more than 200 formal requests for information to the Finance Department, Federal Health Department, CENSIDA, the National Commission for the Seguro Popular, and national hospitals over the course of the year. The requests aimed to obtain the information necessary to determine what criteria were used to allocate HIV/AIDS funds and how the hospitals and other institutions that received the funds used them.

Fundar’s investigation uncovered some troubling findings. First, the information provided by government agencies was of low quality. Fundar received contradictory responses from different institutions regarding their role in the distribution of funds, the level of resources spent by mid-year, and the reallocation of resources among different objectives.

Second, institutions exercised wide discretion over how they would spend their HIV/AIDS funds. Three of them reclassified those funds under “General Services” and spent them on banking and financial services, cleaning, surveillance, and building and vehicle maintenance.

Finally, accountability was lacking. Since hospitals and institutions are autonomous in Mexico, the Health Department could not specify how HIV/AIDS funds were to be spent. In addition, even though CENSIDA is responsible for overseeing the national HIV/AIDS strategy, it did not have a mandate to coordinate the use of these funds. Further, the Finance Department considered the resources spent as soon as they were transferred to the recipient institution – regardless of how they were actually used. As a result, money that may eventually have been spent on cleaning, maintenance, and banking services was recorded as having been spent on HIV/AIDS programs.

Working with a group of HIV/AIDS patients, Fundar initiated a four-part advocacy strategy:

1. Fundar and the IFAI held a successful press conference to explain Fundar’s findings and demand action.
2. As a result of the press conference, Fundar held a number of meetings with the directors of CENSIDA and the financial-administrative head of the Health Department, where Fundar received explicit commitments regarding accountability for earmarked funds. The Health Department agreed to determine, along with other government health institutions, the maximum percentage of resources that could be reassigned to non-HIV/AIDS expenditures and to investigate how the resources had been spent in 2005. CENSIDA, meanwhile, promised to implement mechanisms to better control spending on HIV/AIDS by the autonomous institutions.
3. The case was presented to the internal comptroller, who agreed to inquire into possible modifications to prevent the “unregistered” reclassification of line items and spending objectives.
4. Fundar met with two congressional committees, the Health Committee and the Gender Committee, to present its research results and its proposals regarding Congress’ role in overseeing the uses of earmarked resources. Fundar also discussed the need to increase HIV/AIDS funding and to make additional allocations to the main hospitals that treat HIV/AIDS patients.

As a result of these discussions, the House of Representatives approved as part of the 2006 budget a substantial increase in funding for two of the most important institutions working on HIV/AIDS, as well as a considerable increase in funding for CENSIDA. The latter funds are earmarked for prevention. Fundar and other civil society organizations had emphasized the need to take such a step in order to make HIV/AIDS prevention a national priority.

Information on Fundar can be obtained from the organization’s website at http://www.fundar.org.mx.

⁸ This case study draws on De Renzio et al., 2006.
⁹ This case study draws on Athie, 2005

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