14th Annual Meeting of the OECD Network on Fiscal Relations Across Levels of Government, 19-20 November 2018

1. 1
Special session on conditional grants
-- a city perspective --
OECD Network on Fiscal Relations
Paris – 20 Nov. 2018
Ulrich Hörning
Deputy Mayor for General Services
City of Leipzig
Member of the State of Saxony Grant Management Reform Commission

2. Stadt Leipzig -
Germany  State of Saxony  Leipzig
2General Administration
State of Saxony
 4m population
 EUR 40bn – total 2019/20 plan budget
 EUR 28.9k GDP/capita
(Germany: EUR 38.4k)
City of Leipzig – General Services
OECD Network on Fiscal Relations – 19/20 Nov. 2018
 traditional industrial centre - strongest
economic performance in new Länder
 solid fiscal framework
 demographic challenges outside cities

3. Stadt Leipzig -
City of Leipzig  from decline to growth
3
City of Leipzig
 590k population
 EUR 3.8bn – total 2019/20 plan budget
(45% grants / 36% tax / 19% fees/other)
 EUR 35k GDP/capita
 EUR 34m in conditional grant payout
(13 funding directives, €10m institutional / €24m project)
 City of music (Bach, Mendelssohn, …)
 Trade fair – window to the world
 1989 GDR peaceful revolution
 100k population loss between 95-05
 today: fastest population growth in
Germany
City of Leipzig – General Services
OECD Network on Fiscal Relations – 19/20 Nov. 2018

4. Stadt Leipzig -
State of Saxony: Grant Management Reform Commission
4
City of Leipzig – General Services
OECD Network on Fiscal Relations – 19/20 Nov. 2018
Challenge:
grant application and management processes perceived as overly bureaucratic
by citizens, businesses and beneficiary institutions
Grant Management Reform Commission
mandated by State Cabinet decision in May 2018
 deliver actionable reform proposals by May 2019
Members
Former State Auditor General of Mecklenburg-Vorpommern (Lead)
General Manager of Saxony Cities Association
General Manager of Saxony Counties Association
Member of State Parliament / former Minister of Interior
Head of Economic Research Institute Dresden
Deputy Mayor of Leipzig
Deputy State Auditor General of Saxony (advising member)

5. Stadt Leipzig -
Grant management: a simplified view and current issues
6
Create
• Design decision in line ministry
• Political economy: Program officer ↔ interest groups ↔ recipients
• Ex-ante fiscal control logic
Apply
• Application for grant funding by citizens, associations, businesses (paper!)
• Diverse set of grant management agencies (e.g. state development bank)
• Positive experience with CDD-approach in LEADER funding
Disburse
• Micro-management of grant recipients, especially when project changes
• Prevalence of deficit-funding instead of block grants
• Risk-control logic amplifies across administrative levels (error culture?)
Control
• Proof of correct use via fiscal input and process control
• Limited use of output or outcome indicators
• 10+ years of documentation, original paper invoices, etc.
City of Leipzig – General Services
OECD Network on Fiscal Relations – 19/20 Nov. 2018

6. Stadt Leipzig -
Working questions / focus areas of the commission (selection)
 Political economy between program officers in ministries, recipients and grant
management institutions  how to force simplification of programs into the system?
 Reduce fragmentation of programs
 Shift to „automated“ formula grants instead of application-based categorical grants?
 Shift of application and management procedures to e-processes?
 Review parallel use of over four grant management institutions (state administrative
agency, state development bank, line ministry executive agencies, ministry-direct, etc.)
 Review overly strong emphasis on input and process logic instead of results logic
 Mandatory ex-ante role of state audit institution. Necessary?
 Seemingly „random“ co-financing ratios for different matching grants. Reform path?
 …
7
City of Leipzig – General Services
OECD Network on Fiscal Relations – 19/20 Nov. 2018

7. Stadt Leipzig -
Next steps / timeline
 Nov 2018: Summary and synthesis of fact-finding phase (Sep-Oct 2018)
 Dec 2018: Preliminary report delivered to Minister President’s office
 Jan-Mar 2019: Development of recommendations
 April / May 2019: Delivery of final report
 May / June 2019:
– Presentation of final report / recommendations to State Government in Dresden
(format tbd)
– Discussion of results with Saxony policy community and German / international
best practice partners
NB: Sep 2019: State elections
8
City of Leipzig – General Services
OECD Network on Fiscal Relations – 19/20 Nov. 2018

8. Stadt Leipzig -
City of Leipzig.
Thank you for your attention.

9. 10
Ulrich Hörning
City of Leipzig
Deputy Mayor for General Services
Martin-Luther-Ring 4-6
04109 Leipzig
+49 341 123 2200
ulrich.hoerning@leipzig.de