Implementing cohesion policy, Peter Heil and Tibor Polgar presentation, Podgorica 23-24 June 2015

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AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
IMPLEMENTING COHESION
POLICY
A SIGMA Workshop on Cohesion Policy
Podgorica, 23-24th June 2015.
Dr. Peter Heil, Tibor Polgár

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9:45 – 11:15 Legislative Framework
Key areas of national legislation affected by Cohesion Policy. Main elements of a
successful preparation strategy
11:30 – 12:30 Programming I. - The strategic level
Policy – Strategy – Programme – general types of programming documents. The
programming process. The content of the Common Strategic Framework,
Partnership Agreements, Operational and Co-operation Programmes.
13:30 – 14:30 Programming II – from the PA to projects, and back
Main types of measures – major projects; competitive selection; financial
instruments. Territorial instruments (ITI, CLLD, SUD, etc.). Programmes in regions
with permanent natural handicaps. Connections to rural development and
fisheries policy
14:30 – 16:00 Institutional and human capacity
Key institutions and bodies required to operate cohesion policy. Options practiced
by member states. The recruitment, training, and retention of staff. Central and
Local level, the cross-border and inter-regional context.
DAY 1

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9.15-9.30 Recap of Day 1
9:30 – 10:45 What is money being spent on? – Examples from Member States
Cohesion policy investment in practice. The role of EU funds for national
development. Thematic objectives, investment priorities, and the content of
programmes. Sectoral vs. territorial approaches.
11:15 – 12.30 Efficiency and effectiveness
Focus on results. Monitoring and evaluation. Regularity of spending and
administrative burden. How to ensure transparency? How to minimise
bureaucracy? Irregularities, controls and audits. IT support for management and
implementation.
Péter Heil
12.30 - Discussion on topics of the greatest interest
DAY 2

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LEGISLATIVE
FRAMEWORK

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Pillars of Chapter 22
• Legal Framework
• Institutional Framework
• Administrative Capacity
• Programming
• Monitoring and Evaluation
• Financial Management and Control

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Cohesion Policy Legal Framework
 Key EP & Council Regulations:
• 1303/2014 – „Common Provisions”
• 1301/2014 – EU Regional Development Fund
• 1304/2014 – EU Social Fund
• 1305/2014 – EAFRD (Rural Development)
• 508/2014 – EMFF (Maritime, Fisheries)
• 1299/2014 – European Territorial Co-operation
 Key Commission Regulations
• 288/2014 – Programme Models
• 184 and 215 / 2014 – methodologies regarding
milestones, targets, performance framework (…)
• 1011/2015 – Detailed rules for implemting Reg. 1303
Implementing the C.P. regulations is just half of the task

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Key areas of national legislation
 Socio-economic planning
 Budget and co-financing
 Horizontal principles
 „Technical” legislation on development projects
 (State Aid)
 (Public Procurement)

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Budget and co-financing
 Co-financing requirements
• Minimum national financing as per type of region
– Art. 120 – general rules: 50 to 80%
– Art. 120 – +10 % for PAX by FI (100% for SME initiative)
– Art. 24 – for MS with temporary difficulties + 10%
– Art. 121 – modulation (EU 2020; Environment; mobilisation of private capital;
regions with permanent handicaps
• Co-financing ability of final beneficiaries
– Flexible financing at measure level
– Practice of addiontal „co-financing funds”

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 Additionality requirements
• Art. 95 and Annex X
• Support from the Funds for the Investment for growth and
jobs goal shall not replace public or equivalent structural
expenditure by a Member State
• take into account the general macroeconomic conditions
and specific or exceptional circumstances, such as
privatisations, an exceptional level of public or equivalent
structural expenditure … and the evolution of other public
investment indicators
• If it is established by the Commission … that a Member
State has not maintained the reference level … the
Commission may, in relation to the degree of non-
compliance, carry out a financial correction

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 Technically:
• Multi-annual budget planning
• „programme budgeting”
 IPA 2 requirements largely cover the needs for
cohesion policy
• Establish sector budgets
• Design investment programmes with reference to all funds
available

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Horizontal principles
 (Ref.: Art. 5,7,8 and Common Strategic Framework)
 TYPES
• Partnership
• Multi-level governance
• Sustainable development,
• Equality between men and women and non-discrimination
• Accessibility,
• Addressing demographic change,
• Climate change mitigation (esp. TO4-5).
 How to take them into account
• Minimum requirements (avoid negative impact; favour most beneficial
options, etc.)
• Specific actions (incl. TA; ring-fencing)
• Prioritising
• Mainstreaming

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Technical Legislation
  Anything needed to design, authorise and implement
development projects, especially construction:
• Areas
– Technical designs and permits
– Environmental permitting and public consultations
– Expropriation of land
– Archeological excavations
– Budget
– Taxation and Customs
• Aspects
– Decision-making and co-operation of licensing authorities
– Clear decision-making rules
– Capacity
– Linking up state databases
– Danger of corruption at all levels
– Court proceedings related to the above
Never ending story of simplifcation

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PROGRAMMING I.
STRATEGIC LEVEL

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Socio-economic planning
 Types
• Spatial vs. socio-economic development
• Cross-sectoral vs. sectoral planning
• National vs. territorial approaches
 Levels
• Policy – vision, values, principles
• Plans / Strategies – objectives, funds, responsibilities
• Programmes – measures, timetables
• Measures – calls, major projects, financial instruments,
territorial
• Operations – („project” / action level)
Legislation should regulate hierarchy, content, linkages;
Preparation, implementation, monitoring, evaluation;
Responsibilities, timetables

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Programming Documents, 2007
 Community Strategic Guidelines
• Lisbon
 National Strategic Reference Frameworks
• Situation Analysis
• SWOT
• Strategy and Objectives
• Operational Programmes
• Budget and Additionality
• Implementation arrangements
• Links to other programme documents (CSG, NRP, NRDP)
• Ex-ante evaluation

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Programming Documents, 2007
 Operational programmes
• Analysis
• Strategy
• Priority Axes
– Objectives
– Indicative description of main measures
• Budget
• Demarcation vs. other Ops
• Implementation framework
• (…)
 Action planning

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Programming Framework 2014
 Community Strategic Framework (1303, Annex I)
 Partnership Agreement
 Operational and Co-operation Programmes

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Common Strategic Framework
 Contribution of ESI Funds to EU 2020
 Integrated use of funds
 Co-ordination and Synergies with other EU
instruments
• CAP, Fisheries policy, Horizon 2020, Life, Erasmus…
• IPA, ENI, including the potential to use EGTCs
 Horizontal Principles
 Addressing Territorial Challenges
 Co-operation activities (ETC)

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Partnership Agreement
 I. Alignment with EU 2020
• Analysis of disparities, needs, growth potentials
• Summary of ex-ante evaluations
• Selection of Thematic Objectives, reasoning
• Indicative allocation of support by TO
• Application of horizontal principles
• List of programmes (incl. financial table)
• Transfers of funds btw. regions / goals
• Performance reserve

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Partnership Agreement
 II. Effective Implementation of the Funds
• Co-ordination between funds and with other Union policies and
instruments
• Additionality
• Summary of fulfilment of ex-ante conditionalities
• Ensuring consistency with the performance framework
• Reinforcing the administrative capacity of the authorities
• Reducing the administrative burden for beneficiaries
 III. Integrated Approach to Territorial Development
• Arrangements: CLLD, ITI, SUD, Co-operation, poor regions and
discrimination, demographic challenges
 IV. Efficient Implementaiton of the ESI Funds
• Systems for electronic data exchange

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Programmes
 I. Contribution to EU 2020 and Cohesion
• Strategy
• Justification for the choice of thematic objectives and investment priorities
• Justification for the allocation (EU 2020, acquis, private sources, CEC position)
 II. Priority Axes
• Description
• Use of financial instruments and SME initiative
• Justification for the use of combination axes (several regions, Funds, or TO)
• Investment priorities – corresponding specific objectives and results
• Indicators (programme specific and common – result level)
• Types and examples of actions and their contribution to objectives, results
• Guiding principles for selecting operations
• Planned use of financial instruments
• Planned use of major projects
• Indicators – by IP and type of region – output level
• Social innovation
• Transnational co-operation
• Performance Framework – milestones and targets 2018, 2023; steps
• Use of TA

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Programmes
 III. Financing Plan
• Financial appropriations by fund
• Financial appropriations by fund and national co-financing
• YEI, Climate Change
 IV. Integrated Approach to Territorial Development
• Community-let Local Development (CLLD)
• Sustainable urban Development (SUD)
• Integrated Territorial Development
• Interregional and Transnational Actions
 V. Geographical Areas affected by Poverty
 VI. Geographical Areas with Permanent Handicaps

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Programmes
 VII. Authorities and Partners
 VIII. Co-ordination of Funds
 IX. Ex-ante conditionalities
 X. Reduction of the Administrative Burden
 XI. Horizontal Principles
 XII. Separate elements
• Major Projects
• OP-level performance framework
• Role of partners
 Annexes
• Summary of ex-ante evaluation
• Documentation on fulfiment of ex-ante conditionalities
• Opinion of national equality bodies
• Citizens’ Summary

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Ex-ante conditionalities
 General – „arrangements” and „capacity”
• Anti-discrimination
• Gender equality
• Disability
• Public Procurement
• State Aid
• Environmental legislation / EIA / SEA
• Statistical system
 Thematic
• Strategies – e.g. smart specialisation, inv. plans
• Budgetary arrangements and specific investment actions
• Risk assessments (e.g. disaster management)

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Conclusions on Programming
 IPA Sector Approach points the way
 National Development Planning to progress
• Define methodologies
• Time horizons to align with EU
• Need for cross-sectoral strategy - algin with EU 2020
• Harmonise sectoral (evtl. Territorial) strategies and plans
• Harmonisation of existing strategies
• Partnership
• Approximation to EU 2020 and EU policies
 When to address planning?
• National development – when possible
• IPA mid-term evaluation 2017-2018
• Accession agenda: start 2 years before entry

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PROGRAMMING II.
FROM THE PA TO PROJECTS, AND BACK

Agenda
• Main types of measures – major projects,
financial instruments, competitive selection
• Territorial instruments (ITI, CLLD, SUD),
programmes in regions with permanent
natural handicaps
• Connections to rural development and
fisheries policy

Main types of measures – major
projects
Major Projects are usually large-scale infrastructure
projects in
• transport,
• environment and
• other sectors (culture, education, R&D, energy or ICT).
A major project can be an infrastructure project or even
productive investment (2014-20)
more than € 50 ERDF and/or Cohesion Fund, they are
subject to an assessment and approved by a specific
decision by the European Commission.
A single major project can be co-financed by more
than one operational programme!

A major project comprises a series of works,
procurement, or services to accomplish
• an indivisible task
• of a precise economic or technical nature
which
• has clearly identified goals;
(MPs cannot be programmes)
Financial instruments are not considered to be
major projects
Main types of measures – major
projects

Major projects 2007-13
Source: EC,
Witold Willak,
2014

Information necessary for the approval
of major projects 2014-2020
• the body to be responsible for implementation of the major project, and its capacity;
• a description of investment and its location;
• total cost and total eligible cost, taking account of the requirements set out in Article 61;
• feasibility studies carried out, including the options analysis, and the results;
• a cost-benefit analysis, including an economic and a financial analysis, and a risk
assessment;
• an analysis of the environmental impact, taking into account climate change adaptation
and mitigation needs, and disaster resilience;
• the consistency with the relevant priority axes of the operational programme or
operational programmes concerned, and its expected contribution to achieving the
specific objectives of those priority axes and the expected contribution to socio-
economic development;
• the financing plan showing the total planned financial resources and the planned
support from the Funds, the EIB, and all other sources of financing, together with
physical and financial indicators for monitoring progress, taking account of the
identified risks;
• the timetable for implementing the major project and, where the implementation period
is expected to be longer than the programming period, the phases for which support
from the Funds is requested during the 2014 to 2020 programming period.

Information necessary for the approval
of major projects 2014-2020
Cost-Benefit Analysis for major projects
• Required for all major projects;
• An objective method to assess the project from the
point of view of society and the project promoter;
Two basic questions:
• is the project worth financing (economic analysis)?
• does the project need EU financing (financial
analysis)?
It should be done ex ante, not ex post;
Challenging tool for the public administration

Major projects - during implementation
• The follow-up of implementation of major projects will
be made on the basis of the description of the physical
object included in the Commission decision.
• Monitoring Committees review it periodically
• Annual reports of Ops have to present progress made
Key challenges for major projects
• Timely implementation, management of changes
• Procurement procedures;
• Environmental Impact Assessment needed;
• State Aid aspects (ceilings for public contribution);
• Consistency with the programme(s)
• Use of the Euro for relevant countries

• Specific provisions on financial instruments are set out
in Regulation (EU) No 1303/2013
• + Fund specific rules apply
• Managing authorities shall consider the use of
financial instruments as an option wherever suitable,
but not for reasons of absorption (Financial
instruments cannot be considered as a way of
frontloading expenditure or for avoidance of automatic
decommitment.)
• They are a delivery mode and not a stand-alone
objective
• FIS can be used for EAFRD rural development and
EMFF maritime and fisheries programmes, too
Financial instruments - basics

Benefits linked with financial
instruments
• Leverage resources and increased impact of ESIF
programmes;
• Efficiency and effectiveness gains due to revolving
nature of funds, which stay in the programme area for
future use for similar objectives;
• Better quality of projects as investment must be
repaid;
• Access to a wider spectrum of financial tools for policy
delivery & private sector involvement and expertise;
• Move away from “grant dependency” culture; and
• Attract private sector support (and financing) to public
policy objectives

Launching FIs
A detailed ex-ante assessment is needed including:
• an analysis of market failures
• an assessment of the value added of the financial instruments
considered
• an estimate of additional public and private resources to be
potentially raised
• an assessment of lessons learnt from similar instruments
• the proposed investment strategy
• a specification of the expected results and how the financial
instrument concerned is expected to contribute to the achievement
of the specific objectives set out under the relevant priority or
measure including indicators for that contribution
The assessment can be funded by the programme's technical
assistance and
must be submitted to the programme monitoring committee for
information and its summary findings and conclusions must be
published

Four basic options for FIs:
Examination of these four basic options is a compulsory part
of the ex-ante assessment:
• Implementation under shared management through an
entrusted entity (e.g. EIB or other IFI)
• Implementation under shared management through
investment in capital of existing or newly created legal
entity
• Implementation under shared management of loans or
guarantees directly (or through an intermediate body) -
this option can be used for cases where there are a
limited number of interventions not enough to justify the
establishment of a stand-alone fund. National law has to
allow the MA/IB to issue loans and guarantees.
• Contribution of ESIF programmes' allocation to EU level

Financial management
FIs will take the form of loans, guarantees and equity/venture capital.
Standalone interest rate subsidies and guarantee fee subsidies are not FIs.
ESIF share of capital resources paid back from investments and of
gains/earnings/yields generated by investments during the eligibility period
must be used for:
• Further investments in the same or other financial instruments, in line with
the OP;
• Where applicable, preferential remuneration of investors operating under
the market economy investor principle (MEIP) and providing co-investment
at the level of financial instrument or final recipient.
• Where applicable, management costs/fees.
State aid rules should be considered at different levels:
• the fund manager (who is remunerated),
• the private investor (who is co- investing and may receive aid)
• and the final recipient.

Specific rules for reporting
• Annual and final implementation reports: MAs
need to provide specific reporting on operations
comprising financial instruments as an annex to
the annual implementation report.
• Monitoring Committee: Has to receive the ex-
ante assessment 'for information‚ the strategy
document for the financial instrument implemented
directly by managing authority or intermediate
body, should be informed of the methodology for
management costs and fees, as well as the
specific annex to the Annual Report on financial
instruments

Competitive selection processes:
definition
No specific EU-level regulation is regulating these
processes, project selection under 50 meur is fully
national responsibility
1083/2006: ‚operation’: a project or group of projects
• selected by the managing authority of the
operational programme concerned
• or under its responsibility according to
• criteria laid down by the monitoring committee and
implemented by one or more beneficiaries
allowing achievement of the goals of the priority
axis to which it relates

Pre-accession grant schemes are excellent for
learning-by-doing
When to use it?
• If there is no explicit sectoral strategy and/or
action plan selecting specific operations (e.g.
environment, education, employment)
• If there is high added value in competition of
project ideas (SMEs, NGOs, innovative
projects)
• If the expected number of project ideas is
exceeding the available budget by far
Competitive selection processes

How to use competitive selection
processes?
Application forms, project selection criteria, the selection
process and contract templates have to be designed
considering the following important aspects:
• Contribution to programme outputs, results and objectives
• Transparency - Simplicity
• Trust - Accountability
• Continuity
• Absorption - Cost effectiveness
Audits carried out by the Audit Authority, the EC and the
ECA might review the selection processes according to
similar criteria

Competitive selection methods
• Priority projects
• One step application process
• Two step application process
• Continuous application scheme with regular
decisions
• General (for an OP/priority axis) or targeted
for specific interventions
Advantages - Disadvantages

Who can be involved in preparing
project selection decisions of the MA?
• MA staff
• IB staff
• Independent assessors
• MC members or subcommittees
MA retains full responsibility – e.g. a national
government decree might be not sufficient for
the EC
Audit Authority and EC, ECA audits have to
review the selection process

Conclusions
• Different delivery mechanisms have to be
chosen consciously in order to achieve
development objectives at PA/OP level
• They have to complement each other –
coordination in the phases of planning,
implementation and monitoring/evalauation is
vital for achieving synergies – use the MC!
• Institutional and capacity issues have to be
considered in all cases

INTEGRATED TERRITORIAL
INSTRUMENTS

Integrated approaches - Integrated
Territorial Investment (ITI)
• Tailored to place-specific features and outcomes, ITI is based on
Article 36 of the CPR
• Allows EU Member States to combine investments from several
priority axes of one or more OPs for the purposes of multi-
dimensional and cross-sectoral intervention.
• ITIs can be mono-fund, they can also combine ERDF, ESF and the
Cohesion Fund, and be complemented by financial support from
the EAFRD and EMFF where complementarities exist.
• Relevant OP(s) shall describe the approach to the use of the ITI
instrument and the indicative financial allocation from each priority
axis in accordance with the Fund-specific rules.
• An ITI can include the use of non-repayable grants, repayable
assistance as well as financial instruments.
• It is possible that an ITI includes elements implemented through
communityled local development.

Key elements of an ITI
1. a designated territory (where?)
2. an integrated territorial development
strategy (why?)
3. a package of actions to be implemented;
(what? how?) and
4. governance arrangements to manage the
ITI (with whom?)

Possible types of ITI
Soto et al., 2012

Potential benefits of ITIs
• They have the potential to lead to a better
aggregate outcome for the same amount of public
investment
• The possible delegation of management tasks and
responsibilities empowers sub-regional actors
(local/urban stakeholders) by ensuring their
involvement and ownership of programme
preparation and implementation.
• As an ITI will have its funding sources secured at its
inception, there will be greater certainty regarding the
funding for integrated actions.
• ITI is an instrument designed for a place-based
approach to development that can assist in unlocking
the under-utilised potential contained at local and
regional levels.

Programming ITIs
The PA should outline the
• main territorial challenges and
• the main elements of the territorial strategy, including the means to
achieve an integrated approach at regional and sub-regional level,
identifying, inter alia, the implementation arrangements to be used,
including the arrangements for the use of ITIs
The OPs for the ESF, ERDF and the Cohesion Fund should outline:
• the approach to the use of the ITIs, whether ITIs will constitute a
significant delivery mechanism for the particular operational
programme
• types of areas where ITIs will be used, or concrete areas
• the arrangements for the management and implementation of the
ITI including the coordination between the managing authorities
• indicative financial allocations per each priority axis for all ITIs
and individual allocations for urban ITIs (SUDs)

Management of the ITI – main features
• There is no specific procedure for the assessment or
approval of ITIs by the Commission.
• The MSor the MA may designate one or more intermediate
bodies, including local authorities, regional development
bodies or non-governmental organisations in accordance with
the Fund-specific rules. Delegation of management tasks
linked to an ITI is generally not mandatory.
• Monitoring and reporting arrangements set up under an ITI
must provide for the identification of operations and
indicators by priority axis or Union priority contributing to an
ITI.
• Article 11 of the ETC Regulation specifies the management
arrangements for ITIs under the European Territorial
Cooperation – common body or EGTC can be responsible
• Budget shifts among priorities are possible within the OP
financial framework allocated for ITIs

Integrated approaches 2 – Community
Lead Local Development (CLLD)
Articles 32-35 (4) of the Common Provisions Regulation (EU) No
1303/2013, for CLLD are based on the LEADER approach and concern
four of the Funds covered by the Common Strategic Framework
• focuses on specific sub-regional areas;
• is community-led, by local action groups composed of
representatives of local public and private socio-economic interests;
• is carried out through integrated and multi-sectoral area-based
local development strategies, designed taking into consideration
local needs and potential; and
• includes innovative features in the local context, networking and,
where appropriate, co-operation (ETC, too)
• Can be used under each European Fund, compulsory 5% of each
Member State’s EAFRD allocation
• A single methodology for CLLD provided by the EC
• Incentive: in OPs where an entire priority axis is delivered through
CLLD, the maximum co-financing rate from the ERDF and/or the
ESF at the level of a priority axis will be increased by 10 %

Area and population coverage (where?)
• Should be coherent, targeted and offer
sufficient critical mass for its effective
implementation.
• It is up to the LAGs to define their areas and
population, but they must be consistent with
criteria that are laid down in Article 33(6) of
the Common Provisions Regulation.
• The population coverage should be minimum
10000 and maximum of 150000
Key elements of a CLLD

Local action group (with/by whom?)
LAGs should be made up of representatives of local
public and private socio-economic interests, such as
– entrepreneurs and their associations,
– local authorities,
– neighbourhood or rural associations,
– groups of citizens (such as minorities, senior citizens,
women/ men, youth, entrepreneurs, etc.),
– community and voluntary organisations, etc.
At least 50% of the votes in selection decisions
should be cast by partners which are not public
authorities and no single interest group should
have more than 49% of the votes.

Local development strategy (why? what? how?):
• Coherent with the relevant programmes of the ESI
Funds through which they are supported.
• Define the area and population covered by the
strategy; include an analysis of the development
needs and potential of the area, including a Strengths,
Weaknesses, Opportunities, Threats (SWOT) analysis;
and describe the objectives, as well as the integrated
and innovative features of the strategy, including
measurable targets for outputs or results.
• Include an action plan demonstrating how objectives
are translated into concrete projects, management and
monitoring arrangements, and a financial plan.

Programming CLLDs
MSs have to specify in their Partnership Agreement
• how they intend to support CLLD and
• indicate in which types of areas CLLD may be used.
CLLD is optional for the ERDF, the ESF, and the EMFF, it is compulsory
for the EAFRD.
CLLD is programmed under a single thematic priority (TO9 for ERDF
and ESF).
CLLD strategies created by LAGs may cover operations for one or
more Funds
MAs have to define criteria for the selection of local development
strategies and ensure that calls and procedures are coordinated
between the Funds.
In areas in which the Member States indicate that CLLD may be used,
Managing Authorities need to ensure capacity-building activities to
ensure that local communities, especially those in vulnerable areas with
limited capacity, are enabled to fully participate.

For a better understanding…
Differences between ITI and CLLD
• CLLD is always bottom up. ITI is more likely to be top down.
• CLLD can be part of an ITI but ITI could not be part of CLLD
• ITI is always integrated. CLLD doesn’t have to be
• ITI is public sector led, CLLD is multi sectoral and there is an inbuilt
balance between public, private and civil society actors none of which
have more than 49% of the votes
• ITI brings together funding from several priorities of a programme or of
several programmes and/or funds. CLLD is programmed under a single
priority (TO9 for ERDF and ESF).
• ITIs report back their outputs and results to the parent priorities in the
programmes from which they draw funds whereas CLLD can report all
outputs and results against a single thematic objective 9 while having the
scope of all Thematic Objectives.
• Funding for a single ITI would normally be much larger than funding for a
single CLLD local action group.
• You can have more CLLDs in one city but you would normally only have
one ITI – although the ITI could take several forms

For a better understanding…
Similar features of ITI and CLLD
• Both are territorial tools with a focus on areas (e.g. in cities, in rural
urban areas, in rural areas, in maritime and fisheries areas)
• Both require a strategy phase to prepare an action plan
• Both bring together packages of projects
• Both are driven by partnerships (but CLLD can be only bottom-up)
• Both are new in programme period 2014-20
• Both can be single fund or multi fund
• Neither are well understood (except CLLD in rural areas after 25
years of LEADER)
• Both are perceived as complicated, and even complex
• Both are being avoided by most Managing Authorities – low take-up
is predicted for both in the new programme period…

SUSTAINABLE URBAN
DEVELOPMENT (SUD)
A minimum of 5% of the ERDF resources allocated
to each Member State shall be invested in the
implementation of integrated strategies for
sustainable urban development
Projects are selected by urban authorities in line
with pre-defined integrated urban development
strategies, developed by the them.
The strategies are to be implemented:
• as Integrated Territorial Investment (ITI) or
• through a specific operational programme, or
• through a specific priority axis.

Regions with natural or demographic
handicaps
Covered by ERDF Regulation – Article 10 „particular attention shall be paid to
addressing the specific difficulties of those areas”
Types of areas (Art. 174 TFEU)
• Northernmost regions with very low population density(Art. 174 TFEU)
• Mountains (relatively high share of employment in agriculture sector, relatively
lower share in service sector; natural resources are major assets, availability of
renewable energy sources, great diversity in economic performance)
• Islands (higher share of employment in service sector due to importance of
tourism industry, small size of local markets, problems to reach larger mainland
markets, access to basic services more difficult)
• Sparsely populated regions (support for extra costs for diseconomies of scale
and for lack of critical mass)
These regions
do not present the same socioeconomic profile and
do not face the same development constraints…
Specific solutions accompanied with mutual learning from similar
areas are needed!

Tools provided by the CPR
Modulation of the co-financing rate Article 121 of CPR:
The co-financing rate from the Funds to a priority axis may be modulated in
the case of :
• island Member States eligible under the Cohesion Fund, and other
islands except those on which the capital of a Member State is situated
or which have a fixed link to the mainland;
• mountainous areas as defined by the national legislation of the Member
State;
• sparsely (less than 50 inhabitants per square kilometre) and very
sparsely (less than 8 inhabitants per square kilometre) populated areas;
• the inclusion of the outermost regions as referred to in Article 349
TFEU.
Art. 10 ERDF-regulation: Operational programmes financed by ERDF shall
pay particular attention to addressing specific difficulties of areas with
severe and permanent and natural or demographic handicaps
Use of inegrated appoaches is recommended – ITI and/or CLLD

Handicapped regions and programming
Member States have to take account of geographic or demographic features and
take steps to address the specific territorial challenges of each region to unlock
their specific development potential. Particular attention shall be paid to regions
which suffer from severe and permanent natural or demographic handicaps
Pas and Ops have to describe the approach to handicapped regions:
Partnership Agreements :
• an analysis of disparities, development needs, and growth potentials with
reference to the thematic objectives and the territorial challenges, and
• the specific development needs in regions which suffer from severe and
permanent natural or demographic handicaps such as the northernmost
regions with very low population density and island, cross- border and mountain
regions, which require integrated intervention from the ESI Funds.
Operational Programmes have to contain information on:
• how the operational programme addresses demographic challenges of
regions and the specific development needs of certain regions with severe and
permanent natural or demographic handicaps in an integrated way.

Conclusions
Territorial coordination brings added value - Mainstream
programmes, Rural development (incl. Fisheries), and ETC
programmes are financing initiatives in the the same regions
Regions with natural or demographic handicaps:
• Specific solutions accompanied with mutual learning from
similar areas are needed!
• Use of inegrated approaches is recommended – CLLD and/or
ITI
Integrated delivery mechanisms:
• Community based processes are successful in local socio-
economic development
• Choosing integrated approaches when
– added value can be achieved
– necessary capacities can be put in place in time

© OECD
INSTITUTIONAL
FRAMEWORK

© OECD
Institutional Framework – key areas
 Institutions needed
 Options practiced in member states
 Key functions and processes
 Performance management

© OECD
 COMPULSORY:
• Managing authority
• Certifying authority
• Audit Authority
• (Monitoring Committee)
 OPTIONS
• Co-ordination body MAY BE appointed by the MS
• MA/CA/AA may assume tasks for several (all) Ops
• MA may be CA as well
• one or more intermediate bodies MAY BE appointed to
– carry out certain tasks of the MA or the CA under the responsibility of that authority
– manage whole or part of an OP (Global Grant)
72
Designation of Authorities

© OECD
Functions
 Managing Authority
• Sound financial management of the OP; inform
beneficiaries, select operations, verify implementation and
expenditure, support Monitoring Committee, put in place
irregularity and anti-fraud measures; regularly report
 Certifying Authority
• Draw up and submit payment applications; draw up
accounts; ensure completeness, veracity and accuracy;
ensure that adequate information is available, keep
account of recoverable amounts.
 Audit Authority
• Audits on the functioning and management of control
systems; sample of operations; ensure internationally
accepted audit standards; draw up audit strategy – opinion
– control report

© OECD
Procedure for Designation
 Define system
• accession negotiations
• Programs
• Government Decree / decision
 Opinion by independent audit body
• logically: Audit Authority
 Notify EC prior to first interim payment application;
• Commission may make observations which will not
interrupt treatment of application

© OECD
Options by Member States
 In terms of MA vs. IB sharing tasks
• Centralised:
– No intermediate bodies at all
– … intermediate bodies with limited tasks
– … tasks executed by intermediate bodies 100% controlled by MA
• Decentralised
– MA concentrating on programme level functions, strategic management
– IB implementing measures and project
 Territorially: national vs. sub-national levels
• Sectoral vs. territorial operational programmes
• Territorial programmes managed by decentralised bodies (even
MA)
• Decentralisation at measure / operational level
– Global grants
– Territorial instruments such as CLLD and Sustainable urban development

© OECD
Institutional and Human Capacity
 Design…
• Analyse legislation
• Map existing capacities
• Assign responsibilities
• Modelling of key processes and expected workload
 Designation
• Some very high level structural issues (e.g. planning and
partnership) in legal instruments
• Tasks of government bodies in government decisions
– Appointment of IBs may require a decree for procurement reasons
 Preparation
• Basic training – general knowledge for all institutions
• Specific training and capacity building
• Design procedures – on-the-job training and mentoring

© OECD
Institutional and Human Capacity
 HR management
• Performance is key – and it should make a difference
• Clear performance targets to bodies and officials
• Regular performance management
• Performance-based remuneration systems
• Personalised career development opportunities
– Education and training opportunities
– Financial as well as material benefits
– Accountability and Responsibility for individuals
• Train managers to be ready to design and operate performance-
based systems
• Team building
 Use Technical Assistance
 Examine involvement of private sector agencies

© OECD
Key functions and processes
(rudimentary „audit trail”)
 Programming
 Financial Management
 Monitoring
 Financial Control and Audit
 Management of Irregularities

© OECD
Programming processes
 Drafting of OP
• May or may not be the task of the Managing Authority)
• OP may also be modified
 Selection of operations
• Project pipeline
• Definition of selection criteria
• Drafting calls for projects
• Assessing and selecting operations (projects)
 Contracts with beneficiaries (or: grant decision)
 Implementation
• Regular monitoring of implementation at project / measure
/ programme level
– Linked to monitoring
– Linked to financial management
• N+3 as well as indicators

© OECD
Financial Management Processes
 Set-up and develop financial control procedures
 Ensure adequacy of beneficiaries’ capacity
 Check contracts financial provisions
 Verify expenditure
• Administrative verification
• On-the-spot checks
 Execute payments
 Financial reporting (and planning)
 Book-keeping and accounting
 Closure of accounts (at end of programme)

© OECD
Monitoring processes
 Set-up and build up Monitoring Committee
 Support the work of the MC
• Provide information
• Organise meetings
• Keep track of and implement MC decisions
• Involve partners in strategic monitoring and
management
 Ensure availability of information
• Includes: IT systems
 Prepare progress reports

© OECD
Financial Control and Audit
 Identify and assess risks
 Set-up „red flag” mechanisms and measures
 Ensure internal and external control
 Organise processes to treat irregularities
 Training and awareness raising
 Analyse and follow-up audit findings
 Ensure regular review of processes and tools
 Co-operation with specialised agencies
• National authorities: tax authority, police, prosecution…
• Notification of OLAF where needed
 Recovery of irregular payments
 Irregularity reporting

© OECD
What happens if…?
 Regular national and EC audits to be expected at all levels
 „Proportionality” principle
• Size of programmes
• Co-financing rate
• (does not really help „cohesion” countries
 In case irregularities are observed by the EC
• Interruption of payment process
• Suspension of payments
• Fianncial Correction
• Recovery
• Reinvestment, if the time allows

© OECD
SUBNATIONAL LEVEL
Institutional Capacities at

MA: decentralization advisable only in case of federal constitutional structures (fully legal
and financial responsibility)
Decentralizing IB tasks makes sense if :
• There is a high number of applications/projects to finance
• Beneficiaries are local municipalities/NGOs/intsitiutions that need personalized
assistance on the spot
• The content of the OP needs substantial project development efforts
IB functions/tasks that can be decentralized
• Front office: Publicity, measures info-days, helpdesk
• Project development (not compulsory IB task)
• Managing the application process
• Contract management: signature,conditionalities, changes, closure
• First level control: verification of costs, publuc procurememt, on-the-spot checks,
managing audits, investigating irregularity cases, managing vindications of unuly paid
grants
• Programme level reporting towards MC
Programme management tasks and
capacities at regional level

IB tasks not to be decentralized:
• Managing programme accounts
• Handling irregularities
• Programme level reporting towards EC
Deconcentration or decentralization?
Potential benefits:
• Learning process can be more effective (better future
calls/programmes)
• Project development (is essential to deliver programme results and
impacts) can be more effective
• Motivation/keeping of staff
• Troubleshooting / change management can be more effective leading
to better absorption
But: Take care of conflict of ineterests! Organisational culture is vital!
capacities at subnational level

What kind of people we need?
• Managers able to coomunicate with leaders (mayors, CEOs,
polititians)
• Operative team managers
• Project managers / Financial managers
• Technical expert for on-the-spot checks
• Regional development experts
• Communication managers
How manny?
• Make and review capacity plans at least every 6 months
• Possible models: „specialists” vs. „generalists” (No uniform answer)
• National legal backround and internal procedures influennce
necessary staff levels substantially: 4 eyes principle, handling
irregularities, contract changes, control of public procurement
• Keep staff numbers low, teams flexible - matrix structures prevail,
one person can cover more fields of the above
• Outsourcing is a good tool to involve specific expertise or cope with
peak periods
capacities at subnational level

Final beneficiaries and target groups of grants:
– Local municipalities and their associations
– Local branches of central bodies
– Global grant managers
– LEADER/CLLD Local Action Groups
– EGTCS
– NGOs
– SMEs
– Private persons
Training, training, training…..
Capacities at local level

Cross-border and transnational programmes
CBC: Memoranda of Understanding among National states setting up
the structure for each period, transnational programmes are based on
macro-regional strategy (E.g. Maritime Strategy for the Adriatic and
Ionian Seas for ADRION or EUSDR for Danube programme). Main
players:
• Task forces: MSs delegate experts to prepare the programme:
strategy, institutional arrangements
• Joint Monitoring Committee – adoption of the programme,
selection criteria, project selection
• Joint Managing Authority: focus on programme level tasks: chairs
MC, monitoring, evaluation, reports, programme changes
• Joint Technical Secretariat: the main operative body, manages all
tasks related to the application process, contracting, monitoring and
reporting towards EC. Share of workload with MA can be different in
tasks related to programme level - „MA thinks, JTS works”
• National first level control bodies: verify costs at partner level
• Lead partners: have to have good financial and human capacities
• Project partners

European Groupings of Territorial Cooperation -
European legal instrument designed to facilitate
and promote cross-border, transnational and
interregional cooperation
EGTCs can act without requiring a prior
international agreement to be signed and
ratified by national parliaments
EGTC members can be:
Member States
Regional or local authorities
Associations
Any other public body
EGTC – what is it?

• Can act as a broad institutional framework for
developing joint strategies and actions –
Especially useful to establish close cooperation
between two regions with a sensitive historical
and cultural identity (e.g. EGTCs Galicia-Norte
del Portugal, Arrabona, Ister Granum)
• Can take over the role of Managing Authority, JTS
(e.g. EGTC Greater Region in InterregIVA)
• Can operate project development and
implementation services for the area covered - no
further financing partners needed at project level
EGTC – what is it for?

What is money being spent
on?
Cohesion policy investment in
practice
Montenegro and the EU’s Cohesion
Policy
Podgorica, 23-24th June 2015

Agenda
• The role of EU funds for national
development
• Thematic objectives, investment priorities
• Sectoral vs. territorial approaches

ROLE OF ESI FUNDS FOR
NATIONAL DEVELOPMENT

Cohesion policy
in practice
The EU: 27 Member States, 271 regions, 493 million citizens.
Disparities
Different institutional and legal structures
Aim of CP is to improve the competitive position
• of the Union as a whole, and
• of its weakest regions
Budget of CP
2007–13 €347 billion
2014-2020 €351.8 billion
Cohesion policy makes a real difference, investing up to 4 % of
GDP in some MSs)

Impact: growth and jobs in the EU
in 2007-2012
• Increasing per capita GDP in the EU’s least developed regions –
GDP per capita in the so-called Convergence Regions increased
from 60.5 % of the EU-27 average to 62.7 % between 2007 and
2010.
• It is estimated that cohesion policy generated an additional 600 000
jobs from 2007 to 2012, at least one third of them in small and
medium sized enterprises (SMEs).
• 25 000 km of roads and 1 800 km of railways were constructed or
modernized in 2007-2012 to help establish an efficient trans-
European transport network (TEN-T).
• 200 000 SMEs received direct financial support, and cohesion policy
helped 77 800 start-ups to get up and running.
• Over 60 000 research projects were supported in the period 2007-
2012.
• 1.9 million more people now have broadband access.

Principles of Cohesion Policy in practice
Programming
– Programme cycle management: timing, capacities are important
– Common challenges – local answers
– 2009: flexibility to change,
Concentration:
• Concentration of resources: the greater part of structural fund resources (70% for 2014-
2020) are concentrated on the poorest regions and countries
• Concentration of efforts: Targeting Investments on Key Growth Priorities
– Research and Innovation
– ICT
– Enhancing competitiveness of SMEs
– Supporting the shift towards a low-carbon economy
• Concentration of spending : N+2(3) rule
Partnership
• Programmes are developed and managed through a collective process involving authorities
at European, regional and local level, social partners and organisations from civil society.
This approach help ensure that action is adapted to local and regional needs and priorities.
Additionality/co-financing
• Financing from the European structural funds may not replace national spending by a
member country.
• The MS has to contribute financially to each operation – but not necessarily the project
holders

National development from EU funding –
how to integrate it?
Integrated (IE, GB, FR) vs parallel
programme structures (SI,HU,AT)
Level of integration:
• Long-term development concepts and mid
term strategies (national, regional, local)
• Spatial plan (national, regional, local)
• Programmes (OP, regional programme,
local programme)
• Action plans

Impact and results in Hungary
2004-06:
 20 000 projects,13 000 SMEs supported,
and nearly 22 000 new jobs created.
 47 Cohesion Fund projects:
 25 environment (4 million inhabitants with
improved solid waste collection services, 2
million with improved waste water treatment and
106 000 with improved drinking water supply),
 9 transport (570 km of railway, 40 km of
motorway, 450 km of public roads rehabilitated)

2007-2013 €25.3 billion
€22.9 bn Objective 1, €2.03 bn Objective 2,
€386 million ETC (Obj3)
15 Operational programmes: 13 ERDF+CF, 2 ESF
7 regional, 8 sectoral Ops
ETC programmes with all neighbours, participation
in SEE, Central, InterregIVC

• More than €7.2 billion for transport infrastructure (e.g. 500 km of
new and reconstructed railways)
• Over €2.16 billion to be invested in R&D and innovation
• €2.98 billion for education and training, including measures to
help people adapt to the changing working environment
• €829 million to directly support SMEs
6000 meur

• Economic crisis (from 2008 on)
• lack of real regional and sectoral strategies,
focuses
• national regulatory environment (taxation, public
procurement)
– Two overall goals of CSF could not be attained -
economic growth and increased employment
– Territorial disparities did not decrease (2,8 between
strongest and weakest regions, 3,7 urban-rural gap at
NUTSIII level)
– All development funding have become co-funded by
EC
– OP modifications were good tools
But: key infrastructure bottlenecks have been removed

Conclusions
• CP principles are really useful for practical
management EU funds
• Quality and co-ordination of local, regional
and sectoral strategies behind OPs is vital
• Harmony between regulatory frameworks
and development programmes is crucial
• Quality of projects is important: motivate
and invest into project development

THEMATIC OBJECTIVES AND
IVESTMENT PRIORITIES

Thematic concentration
List of Thematic Objectives (Art 9. of CPR):
• 1. research, technological development and innovation;
• 2. access to, and use and quality of, ICT;
• 3. competitiveness of SMEs
• 4. shift towards a low-carbon economy in all sectors;
• 5. climate change adaptation, risk prevention and management;
• 6. environment and promoting resource efficiency;
• 7. sustainable transport, key network infrastructures;
• 8. sustainable and quality employment, labour mobility;
• 9. social inclusion, combating poverty and any discrimination;
• 10. education, training and vocational training for skills and lifelong
learning;
• 11. capacity of public authorities and stakeholders, efficient public
administration

Each thematic objective is broken down into 2-6
investment priorities in Fund specific regulations
• Investment from the ERDF supports all 11
objectives, but 1-4 are the main priorities for
investment.
• Main priorities for the ESF are 8-11 (Art3, a-d in
ESF Regulation), though the Fund also supports
1-4.
• The Cohesion Fund supports objectives 4-7 and
11.

• New „menue approach”
• 11 Thematic objectives with Investment Priorities
• ERDF – concentration (50-60-80%) on…
• innovation and research,
• the digital agenda,
• support for SMEs and
• the low-carbon economy (12-15-20%)
• ESF
• Concentration on up to 5 inv. priorities (60-70-80%)
• 20% on social inclusion, vs. poverty, discrimination
• ETC
• 80% concentrated on max. 4 Thematic Objectives

TO1 strengthening research, technological
development and innovation
• enhancing research and innovation (R&I) infrastructure and
capacities to develop R&I excellence
• promoting business investment in R&I,
• developing links and synergies between enterprises,
research and development centres and the higher
education sector, in particular (product and service
development, technology transfer, social innovation, eco-
innovation, public service applications, demand stimulation,
networking, clusters and open innovation through smart
specialisation),
• supporting technological and applied research, pilot lines,
early product validation actions, advanced manufacturing
capabilities and first production, in particular in key enabling
technologies and diffusion of general purpose technologies;

Examples TO1
Smaller and bigger innovation centres:
Győr: automotive sector
SMEs with high adde value
Geolit, Jaén, Spain: Innovation centre, industrial
park cluster and museum in topic of
processing of olive seeds and oil
500.000 - 15.000.000 eur

TO2 Enhancing access to, and use and quality
of, ICT
• extending broadband deployment and the
roll-out of high-speed networks and
supporting the adoption of emerging
technologies and networks for the digital
economy;
• developing ICT products and services, e-
commerce, and enhancing demand for ICT;
• strengthening ICT applications for e-
government, e-learning, e-inclusion, e-culture
and e-health;

TO2 examples
Public administration online –
Hungary
Smart work centres
in rural areas with broadband internet - incubation, co-working, e-
learning and meeting points for local community
Examples TO2

TO3 enhancing the competitiveness of SMEs
• promoting entrepreneurship, in particular by facilitating
the economic exploitation of new ideas and fostering
the creation of new firms, including through
business incubators;
• developing and implementing new business models
for SMEs, in particular with regard to
internationalisation;
• supporting the creation and the extension of
advanced capacities for product and service
development;
• supporting the capacity of SMEs to grow in regional,
national and international markets, and to engage in
innovation processes;

Site development of Szintézis-net Ltd, HU
Example TO3
Approved Funding:
132.280 Eur
intensity of support:
40%
Szintézis-NET Ltd. is
a well established
software engineering
company in Cental
Europe which also
operates in the U.S.
Size of established spaces : 1238 m2
Number of jobs retained: 33,87
Number of created new jobs: 32,6

TO4 supporting the shift towards a low-carbon
economy in all sectors
• promoting the production and distribution of energy derived
from renewable sources;
• promoting energy efficiency and renewable energy use in
enterprises;
• supporting energy efficiency, smart energy management and
renewable energy use in public infrastructure, including in
public buildings, and in the housing sector;
• developing and implementing smart distribution systems
that operate at low and medium voltage levels;
• promoting low-carbon strategies for all types of territories, in
particular for urban areas, including the promotion of
sustainable multimodal urban mobility and mitigation-
relevant adaptation measures;
• promoting research and innovation in, and adoption of, low-
carbon technologies;
• promoting the use of high-efficiency co-generation of heat
and power based on useful heat demand;

Examples TO4
B+R facilities in Cohesion
Fund projects of GYSEV,
Hungary

Examples TO4
Community
biomass
heating plants
in rural areas
Wind powerplants
Energy and heating from biomass in
indsutrial parks

TO5 promoting climate change adaptation, risk
prevention and management
• supporting investment for adaptation to
climate change, including ecosystem-
based approaches;
• promoting investment to address specific
risks, ensuring disaster resilience and
developing disaster management
systems;

Examples TO5
Flood protection
facilities protecting
bigger agglomerations
Complex ecosystem preservation and
renewal projects in national parks
Visitor/educational
centres

TO6 preserving and protecting the environment
and promoting resource efficiency
• waste sector
• water sector
• (conserving, protecting, promoting and developing natural
and cultural heritage;
• protecting and restoring biodiversity and soil and
promoting ecosystem services, including through Natura
2000, and green infrastructure;
• improve the urban environment, regenerate brownfield sites
reduce air pollution and promote noise-reduction measures;
• promoting innovative technologies in the above sectors
• supporting industrial transition towards a resource efficient
economy, promoting green growth, eco-innovation and
environmental performance management in the public and
private sectors;

Examples TO6
Sewage treatment plants with biogas
production
Solid waste deposits with
selective waste collection and
biogas production

Development of world heritage sites, Archabbeys of Tihany
and Pannonhalma, Hungary
Examples TO6
Tihany:
• Renovation of heritage sites, visitor centre
• Renewal of inner city
• Cycling and public transport friendly
developments
Pannonhalma
• Renovation of heritage sites
• New visitor centre
• Renewal of botanic garden
• Winery
• Accomodations

TO7 Promoting sustainable transport and removing
bottlenecks in key network infrastructures
• investing in the TEN-T;
• enhancing regional mobility by connecting
secondary and tertiary nodes to TEN-T infrastructure,
including multimodal nodes;
• developing and improving environmentally-friendly
(including low-noise) and low-carbon transport
systems, including inland waterways and maritime
transport, ports, multimodal links and airport
infrastructure, in order to promote sustainable
regional and local mobility;
• developing and rehabilitating comprehensive, high
quality and interoperable railway systems, and
promoting noise-reduction measures;

198 million euros for upgrading the Hungarian
section of single track Vienna- Graz
Example TO7
• Extension two two tracks
• Flyovers and underpasses in big
cities
• Cargo platforms
• New passenger trains suitable for
daily commuting
Improved safety, reduced air and noise
pollution
Passenger numbers had risen by 20-26
% since completion
Follow-up projects: railway - tourism

TO8 promoting sustainable and quality employment
and
supporting labour mobility
• supporting the development of business incubators and
investment support for self-employment, micro-
enterprises and business creation;
• supporting employment-friendly growth through the
development of endogenous potential as part of a
territorial strategy for specific areas, including the
conversion of declining industrial regions and
enhancement of accessibility to, and development of,
specific natural and cultural resources;
• supporting local development initiatives
• investing in infrastructure for employment services;

Health Centre in Kőszeg, 700.00 eur, 100% financing
Municipality of Kőszeg also serving 15 settlements in the area
• Number of new or renovated doctor’s surgery: 11
• Number of new or renovated premises: 25
• Number of persons involved in quality outpatient care: 17350
Examples TO8

TO9 promoting social inclusion, combating poverty
and discrimination
• investing in health and social infrastructure which
contributes to national, regional and local
development, reducing inequalities in terms of
health status, promoting social inclusion through
improved access to social, cultural and
recreational services and the transition from
institutional to community-based services;
• providing support for physical, economic and
social regeneration of deprived communities in
urban and rural areas;
• providing support for social enterprises;
• undertaking investment in the context of
community led local development strategies;

Supporting Roma integration in Hungary
Health
Training and screening projects for healthy lifestylles and preventive. 10 NGOs
reaching out to 2 000 Roma people in 33 micro-regions.
Employment
Training, consulting and total quality management (TQM) services for SMEs and
micro-businesses in regions of high long-term unemployment is contributing greatly
to job creation.
Education
300 school buildings and pre-school facilities have been renovated and the
teachers have been re-trained for more inclusive, cooperative instruction methods.
Over 1 300 Roma students are now receiving support annually from special tuition
and mentoring networks.
know-how from the ‘Sure Start’ programme in the UK has been used to implement
a similar programme for young children (the ‘Biztos Kezdet’ programme).
Examples TO9

Housing
Project preparation a complex housing intervention that will de-segregate 100
ghetto-like shanty towns
Pilot programme in the micro-region of Szécsény
Hungarian Academy of Sciences as project leader
The micro-region is located in the deprived north-east of Hungary and is
characterised by high unemployment, a high percentage of Roma population
settlements and social disadvantages
• early development of skills;
• improvement of nutrition and health care for children;
• modernisation of social and children’s services
• improvement of housing conditions
• employment opportunities for parents
• education
Supporting Roma integration in Hungary

Social settlement rehabilitation in
SOPRON
Approved Funding: 1.815.740 Eur
The intensity of the support: 100%
Housing functions: energy efficient complex renovation of 4 buildings,
equipping 40 flats owned 100% by the municipality
Community functions:
• energy efficient renovation of Halász Miklós Sports hall
• development of public premises: renewal and expansion of the 1200
m2 playground in Kuruc street
Public service soft activites:
life skills-social-child welfare services,
Summer Vacation for all age groups
Number of inhabitants in the rehabilitated parts of settlements: 479
Size of area concerned with settlement rehabilitation interventions: 10,8
ha
Number of buildings concerned with the development: 5
Number of renovated flats: 40

Social settlement rehabilitation in
SOPRON
•

• TO10 investing in education, training and
vocational training for skills and lifelong
learning by developing education and
training infrastructure
• TO11 enhancing institutional capacity of
public authorities and stakeholders and
efficient public administration
TO10 and 11

Examples TO 10
Kindergarten and school projects
1. Infrastructure:
2. Soft measures (ESF) are important:
• Improving teachers skills
• Improving curricula
• Equal opportunity trainings
Including
barrier free arcitecture
Energy saving equipent, renewaable energy
Leisure/sport facilities – community
functions

Cohesion Fund investment priorities
Art. 4 of CF Regulation (1300/2013)
• (d) promoting sustainable transport and removing
bottlenecks in key network infrastructures by:
– supporting a multimodal Single European Transport Area
by investing in the TEN-T;
– developing and improving environmentally-friendly
(including low-noise) and low-carbon transport systems,
including inland waterways and maritime transport, ports,
multimodal links and airport infrastructure, in order to
promote sustainable regional and local mobility;
– developing and rehabilitating comprehensive, high quality
and interoperable railway systems, and promoting noise-
reduction measures;

Intervention logic
– Outputs are the direct products of programmes;
they are intended to contribute to results.
– „Results” – new definition: the specific dimension
of well-being and progress for people3 that
motivates policy action, i.e. what is intended to be
changed
Change in result indicator ═ contribution of
intervention + contribution of other factors (former
impact indicator)
– Impact is the change that can be credibly
attributed to an intervention.

Conclusions
• OPs are financing documents: they should be
few in number and they should be simple
• Multi-fund programmes allow flexibility in what
types of actions an OP finances
• EU funding has to be more targeted – set
realistic targets in mainstream OPs and support
these targets with
– ETC and other European Funds
– National funding schemes
– Regulatory measures

Sectoral vs territorial approaches
Example of Hungary:
2004-06: 1 RDOP (359 meur of ESF, ERDF) through one single call, regional
sub-committees
• Tourism
• regional infrastructure and the communal environment (local roads, schools,
PT)
• human resource development
2007-13: 7 ROPs (460- 900 meur of ERDF), priority projects + more than 300
calls, 1 monitoring committee, uniform structure
• Economic development (SMEs, Industrial parks, incubators, clusters)
• Tourism attractions, accommodations and destination management
• Urban development
• Environmental protection and transport infrastructure
• Development of local and regional public services (schools, kindergarten,
crèches, hospitals)
2014-20: 1 Territorial and Settlement Development OP (ESF, ERDF), priority
projects form NUTSIII level+ calls
• Local economic development
• Urban development
• Environment and resource efficiency, Low-carbon economy measures

• Distribution of tasks among levels of public administration
– local,
– regional (NUTSIII or II)
– and central
Note: EU funding can not be expected change existing state structures
• Nature of challenges: local, regional, multiregional
• Size of regions or other territorial actors
• Type of potential beneficiaries: SME, NGO, local/regional public
body, central public body
• Added value of local initiatives
• Co-financing capacities and decisions
• Project generation, development and project selection have to
reflect the partnership principle (subsidiarity)
• Decentralization / deconcentration
• MA and IB functions are not the only way to empower regional/local
level - global grants, experimental projects, LEADER, EGTC, CLLD,
ITIs
Sectoral vs territorial approaches:
Important factors, conclusions

© OECD
Efficiency aspects
 Programming
• Ensure buy-in of stakeholders vs. useless „talking shops”
• Consultation useful at any stage of progr. + selection
 Selection of operations
• Do not ask for more than necessary
• Limit quantity of documents / information
• Ask for details only from „winners”
• Ensure fast flow of information
• Slow administration creates additional problems
– (e.g. expiry of permits)
• Do not duplicate selection processes

© OECD
Efficiency aspects
 Financial management
• Use certified copies vs. originals
• Use summaries vs. full documentation
• Use e-administration (and on-the-spot checks)
• Rely on regular tax debt recovery procedures, if possible
• Delegate but do not duplicate procedures
• MA-level verifications to be based on sample checks
rather than 100% ex-post controls
• „4-eyes” better than „40-eyes”

© OECD
Focus on Results
 Traditional debate in cohesion policy
• Solidarity
• European added value
• „Friends of cohesion” vs. „Friends of good spending”
• Contradictory results from evaluations
– Model-based studies
– Empirical research (evaluations)
– Methodolocial uncertainties: new counterfactual methods
 Conclusions of recent political debates
• Cohesion Policy to contribute to EU 2020
• Measureable results required to maintain consensus
• Output indicators may be a basis for financial corrections!

© OECD
Performance framework: Milestones
 realistic, achievable, relevant, capturing essential
information on the progress of a priority;
 consistent with the nature and character of the
specific objectives of the priority;
 transparent, with objectively verifiable targets and
the source data identified and, where possible,
publicly available;
 verifiable, without imposing a disproportionate
administrative burden;
 consistent across programmes, where appropriate.

© OECD
Monitoring
 Monitoring
• Use of indicators
– Ensure statistical base (including „common indicators”)
– Alternatively: use indicators where data are available
– Do not use more indicators than necessary
– Note: very specific indicator requirements in PA / OP
• Partnership in monitoring
– Use expertise of partners
– MC capacity building
– Working groups within monitoring committees
• Data availabiliity
– Management IT system rather than ex-post monitoring systems…

© OECD
Evaluation
 „Culture of evaluation”
• External capacity yes – but not sufficient
• Introduce ex-ante, mid-term and ex-post evaluations in
national investment programmes
• Make evaluation results transparent – available to debates
by stakeholders

Implementing cohesion policy, Peter Heil and Tibor Polgar presentation, Podgorica 23-24 June 2015

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Implementing cohesion policy, Peter Heil and Tibor Polgar presentation, Podgorica 23-24 June 2015