Use of data from ministerial management programmes

The National Audit Office auditors' assessment Use of data from ministerial management programmes revealed a systemic problem: while the state is striving to make savings, it is impossible today to calculate exactly how much is spent on management.

In their management programmes, ministries are required to indicate how much of the state budget they use to run their activities. However, this obligation is not foreseen for the bodies subordinate to the ministries, and it is not clear which expenditure is to be attributed to these programmes, so it is not possible to compare which of them and how much they have spent on certain activities.

"From 2022, ministries are obliged to show the money they spend on management in their management programmes. The aim of measuring how much money is spent on management and where we can make savings is the right thing to do, but the way we have chosen to do it does not help. It is not clear which particular data from bodies are to be attributed to management expenditure only, so ministries are left to their own discretion. This means that they are wasting their resources by collecting data that is not comparable between different ministries," says Auditor General Irena Segalovičienė.

Of the 414 bodies that receive budget allocations, only 41 are obliged to provide information in their management programmes on how much money they spend on their activities, giving us only a fragmented and often misleading picture of the cost of administration. The information collected by only some of the bodies is insufficient to assess the efficiency of administration at public sector level.

In 2024 EUR 240 million, or 2% of the total appropriations used by ministries, were included in management programmes. However, this is not all management expenditure: expenditure corresponding to the purpose of management is also included in other programmes, i.e. for the implementation of functions. Moreover, this figure only reflects the expenditure incurred by the institutions for their own administration, excluding subordinate bodies. This gives a false impression of the high efficiency of public administration.

The Strategic Management Methodology defines the attribution of expenditure to management programmes in abstract terms. The management activities of the Ministries are similar, but the institutions differ in the way they attribute expenditure to management programmes. For example, there are differences in the allocation of salaries and social security, and in the purchase of utilities. Some ministries allocate all expenditure to the management programme, while others allocate the same expenditure to the functional programmes. For this reason, the reporting on how much public money has been spent in the previous year may be misleading when reporting on the cost of management.

According to the Auditor General, without a comprehensive, comparable and reliable picture, we cannot assess the efficiency of public sector management and ensure that money spent on administration is used rationally. If ministry staff are being burdened with extra work but the benefits are not clear, then another way of measuring the efficiency of the public sector should be found.

"I see a clear solution: for decision-makers to act without delay, to step up efforts and to define a single and precise procedure for all appropriation managers for calculating management costs and assessing the efficiency of their use. Only then can we know exactly how much management really costs, where we can make savings, and what efficiency strategies and tactics to adopt. This would not only allow for a more efficient use of taxpayers' money, but also increase transparency and accountability in the public sector. This work is particularly relevant at a time when everyone's expectation to save on management costs has increased", suggests the Auditor General.

In order to improve long-term strategic management, the Organisation for Economic Co-operation and Development (OECD), together with Lithuanian institutions, has been working on a standardised performance evaluation system for public administrations for the period 2022-2024. The OECD has pointed out that not only the size of expenditure that needs to be assessed, but also its efficiency. To measure this, common indicators should be developed for all institutions. The results and recommendations of the project have been forwarded to the Public Management Agency for analysis, and the head of the Agency has been given the task of preparing and submitting to the Ministry of the Interior for 2025 proposals on management indicators for budgetary institutions and public bodies that could be monitored at national level.