The Ministry of Welfare has requested unreasonably large funding for the disbursement of the guaranteed minimum income (GMI) benefit in budget planning over a period of several years, the State Audit (VK) concluded in its report.
As Gunta Krevica, head of the Public Relations and Internal Communication Department of VK, informed LETA that during the focused compliance audit, VK concluded that the additional funding requested by the ministry to be paid to municipalities for the payment of the GMI benefit in 2023 and 2024 was unreasonably high.
Those discrepancies are due both to the incorrectly determined number of beneficiaries and to the calculation approach used. As a result, both local governments have generally used the allocated funding in accordance with regulatory enactments, VK concluded.
Although already in 2022, compared to 2021, GMI benefit was received by 10% fewer persons, at the beginning of 2023, when developing the state budget request for 2023-2025, without taking into account the actual trends, the number of GMI benefit recipients was planned with a significantly increasing trend for each subsequent year. Moreover, although the increase in funding was planned taking into account the already planned increase in GMI thresholds, the estimated funding was increased further by the Ministry of Finance’s consumer price index forecasts for 2022 and 2023 – by a total of 25.8%, the auditors have found.
The request for funding also included support for Ukrainian civilians, assuming that 531 persons (1.33% of the planned number of Ukrainian civilians – 40 000) would have to provide assistance, although funding for the payment of the GMI benefit to this target group was also planned in the budget of the Ministry of Smart Administration and Regional Development, the audit found.
Also in July 2023, when developing the State budget for 2024-2026, the same approach was used in the calculation of the financing necessary for the co-financing of the GMI benefit expenditures of the LM, updating it with the GMI thresholds planned for 2024 and subsequent years and the consumer price index planned for the respective year. This time, the support needed by Ukrainian civilians was no longer included in the calculation of funding.
According to Maija Āboliņa, member of the council of the State Audit, at a time when the state budget funds available for development expenditure are limited, the VK urges the Ministry of Welfare and other state administration institutions to more responsibly follow the justification and use of each additional euro development expenditure requested.
“The welfare sector has many needs. During the development of the State budget for 2023, the Ministry of Welfare prepared 27 applications for priority measures for the sector, but the Cabinet of Ministers supported only eight, including the State budget earmarked grant to local governments for the disbursement of the GMI benefit in an increased amount from the 1st of July 2023. During the audit, we found that the Ministry of Welfare has calculated the additional financing necessary for co-financing the GMI benefit for 2023 by 58% or EUR 1.38 million more than was actually necessary. However, only in the first half of 2024, the non-execution of the financing is already 56% or EUR 1.70 million,” said Āboliņa. The non-execution of funding is mainly due to the erroneously estimated number of GMI beneficiaries.
The State Audit emphasizes that if the approach used so far in the planning of funding is not changed, for 2025 and 2026 the funding for the disbursement of the earmarked grant to local governments for the co-financing of GMI benefit expenditures will be allocated at least EUR 7.8 million more than is actually necessary.
The audit provided two recommendations to the ministry. It is recommended to change the approach to the calculation of GMI benefit expenditures, i.e. take into account actual performance, thus making it possible to finance other pressing needs. The introduction of the recommendations would also inform and train municipal social services specialists in a more timely manner about changes in the legal framework and work with the SOPA application, thus eliminating the discrepancies found in the audit in the granting of the GMI benefit, which were not significant compared to the total funding allocated.
GMI benefit is one of the basic social assistance benefits provided for by law – material support in monetary terms for the payment of minimum daily expenses granted by the municipal social service office to low-income households.