An audit by the State Audit Office (SAO) in six municipalities has found that the benefits granted by municipalities – such as allowances, compensations, discounts, and co-financing – are highly diverse and costly, the SAO reports.
According to the SAO, benefits are often insufficiently justified, fail to achieve their intended goals, or are disproportionate to administrative costs. It is also not always clear whether a specific benefit is genuinely necessary.
The mandatory Unified Benefits Information System (AVIS), introduced by the Ministry of Smart Administration and Regional Development (VARAM) as a tool for managing benefits and informing residents, is currently not fully usable, the SAO believes. Its implementation requires technical solutions that demand financial investments from municipalities, which they currently lack. Moreover, the system is not adapted to the diversity of benefits or the different administrative practices across municipalities.
The SAO notes that in the municipalities audited, 39 unique benefits were identified, costing these municipalities 66.2 million euros annually – on average 5% of their budgets.
SHORTCOMINGS IN CALCULATING ADMINISTRATIVE COSTS AND LACK OF CLEARLY EXPECTED RESULTS, THE SAO STATES.
A total of 2.7 million euros has already been spent on developing AVIS, with an additional 2.9 million euros to come from the Recovery and Resilience Facility (RRF). Its maintenance will require at least 460,000 euros annually from the state budget.
However, due to lack of technical solutions and funding, municipalities are not using AVIS. This creates significant risks for further development of the system and for the lawful and effective use of the additional 2.9 million euros from RRF funds.
“Various benefits can be an important tool for municipalities to achieve key objectives. However, it is crucial that municipalities act responsibly – clearly defining the goal of each benefit, evaluating whether administrative costs outweigh the gains and do not create bureaucratic burdens for recipients, and regularly checking whether the support still provides the intended public benefit and aligns with municipal development plans,” said SAO council member Oskars Erdmanis.
THE AUDIT FOUND THAT MUNICIPALITIES OFTEN DO NOT DEFINE WHAT THEY WANT TO ACHIEVE WITH A PARTICULAR BENEFIT OR WHY THE AMOUNT IS SET AS IT IS.
Furthermore, municipalities lack the prerequisites for responsible planning of benefits – funding is often based solely on the previous year’s execution, rather than on the actual needs of the current year or changes in the target population, Erdmanis explained.
The audit was carried out in six municipalities – Tukums, Olaine, Ropaži, Bauska, as well as Rēzekne and Jūrmala.
In total, 39 unique types of benefits were identified, such as discounts on transport fares and meal fees, allowances for newborn care, life milestones, and national holidays, various fee reductions, discounts on sports facility use, and marriage ceremony fees.
The audit concluded that between 2022 and 2024, these municipalities spent 66.2 million euros on 149 different benefits, amounting to an average of 5% of their annual budgets.
However, only 13 benefits (9%) had clearly defined results, such as an increase in declared residents, a higher proportion of students, or reduced emissions, according to the SAO.
For 51% of benefits, the actual size of the target group was identified, even though this is the key basis for allocating support and planning funding.
To ensure transparent spending, municipalities should define not only an economically justified amount of benefits but also assess administrative costs. Yet the audit found that in 124 cases (83%) it was unclear why the specific benefit amount was set, making it impossible for municipalities to adjust amounts in a timely manner according to economic conditions.
In 147 cases (99%), administrative costs were not identified, preventing municipalities from assessing their proportionality.
The SAO made two recommendations. Municipalities should assess the justification for granting benefits to specific target groups so that spending is purposeful, with a clear impact on municipal goals. They should also identify benefits that can be standardized and managed through AVIS.
Meanwhile, the Ministry of Smart Administration and Regional Development, together with municipalities, should develop a long-term plan for AVIS, setting specific deadlines for its full implementation.
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