Workers are building steps or seats in a Stadium and look up to a man in a nice suit who is talking and gesticulating
Photo: Machakos County Facebook 2014

Plans and Reality: Proposed and Supplementary Budgets

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Plans are being made – but – as in the preceding years – they may partly remain plans and are not put into reality. In May is the time of  year where the proposed budgets for the next financial year are ready and subjected to the public for input. This is worth reporting – see below. But at the same time don’t disregard that the plans for the running financial year ending June 30 are being changed by the final supplementary budgets which are also in County Assemblies. And sometimes the changes are radical – or even illegal.

Analyzing the Reallocations for this Financial Year

A journalist with a keen eye may look at the approved budget, the initial supplementary budgets (the ones that were decided earlier) and the sector work plans if they are to analyze the current supplementary budget – which is the final one before the year closes.

No Shifts from one Department to the other allowed

Section 154(1) of the Public Finance Management Act (PFMA) prohibits the reallocation of money to other government entities other than the one in which the funds were initially. For example, you can’t use the supplementary budget to move money from the Department of Roads to the Department of Youth and Sports or from the County Assembly to the Office of the Governor.

But, in contradiction to this, many County Assemblies use supplementary budgets to move funds to non-core areas so that they later access the same.

Shifting from Development to Recurrent is prohibited

The same section of the law prohibits the reallocation of funds meant for development to recurrent. In sum, this means: Money allocated for development can only be utilized within the same department for development.

Don’t take away Funds from Wages

The PFM Act also outlaws the reallocation of money meant for wages to non-wage expenditures. An Assembly cannot reallocate money meant for salaries and wages to other projects.

Permitted Reason for Allocation

The funds in the supplementary budget can only be moved between programs and subprograms if the budgeted amounts are unlikely to be used at the end of the financial year. The total of all reallocations made to and from a program or sub-vote should not exceed ten percent of the total expenditure approved.

Example: Unlawful Proposals in Bungoma

For example, in the supplementary budget for the County Assembly of Bungoma, the budget committee is illegally proposing the reallocation of Sh100million meant for the construction of an administration block, Sh17million meant for the purchase of the Hansard system and Sh3.8million for the Internal Audit Software.

The above is against the law. Hence the Assembly at plenary moved to reject the proposal citing violation of the law.

Analyzing the new Proposed Budgets

Counties have also finalized the formulation of budgets for FY 2019/2020. The documents are currently being subjected to the public for input before being tabled in the County Assemblies.

Budgets are rich grounds for exclusive stories on County priorities, the misses and deliberate intentions to hide funds in projects and later siphon the same.

Find and read the Quarterly Reports

But before analyzing the proposed budgets, it’s important to look at the quarterly reports to check on how funds in the current budget are being spent. The COB quarterly reports give an accurate picture on absorption of the allocated monies.

The law dictates that the budgets should be approved in the County Assembly latest on 30th June. (Refer to the County Budget cycle on RoGGKenya).

Have the older Budgets ready

For a better understanding of the budgets, one needs to look at previous years budgets when analyzing proposed budgets. This enables one to

  • pick out the changing priorities
  • also check if ongoing projects have been allocated money or have been abandoned altogether.

What exactly are members of the public and journalists supposed to be looking at in the proposed budgets at this point?

A journalist while interrogating proposed budgets is supposed to check whether the total budget complies with the set ratios of 70 percent for recurrent and 30 percent for development. This is very important since some budgets in the past have not been adhering to the provision. The Controller of Budget is supposed to reject any budget that does not comply with the rule above.

In the end: too little for Development

At the end of the year, the majority of the counties did not adhere to the 70/30 rule and spent – in the end – less than 30 percent for development.The Controller of Budget report showed that in the Financial Year 2017/2018 only 9 counties spent above 30 percent of their budgets on development. The average expenditure was 22 percent, which is way below the budgeted and legal minimum. You may check in the chapter about your county to see where its problems were in the last financial year. (Refer to COB report for FY 2017/2018)

The media can flag out this anomaly where it exists and put the relevant County CEC and Chief Executive Officer for Finance to task.

Was the Ceiling of the CFSP followed?

Secondly, the public and journalists are supposed to vigilant to check if the ceilings that were set in the Country Fiscal Strategy Paper (CSFP) for the various sectors have been followed. The amount allocated to each sector is usually set in the CFSP and this cannot be changed. The budget is supposed to strictly adhere to the set ceilings.

Any changes in the ceilings for sectors after the CFSP is approved by the County Assembly is not allowed, (Refer to RoGGKenya pages on the County budgets-CFSP)

What are the County’s Priorities?

Also look at the sectors the County wants to prioritize. This is usually determined by the allocation. Sectors with higher allocations in development are the main focus areas. Some sectors like health could lead in total allocations but a huge percentage of the money ends up on recurrent use, because the expenses for staff and current expenditures are high in health. (Refer to RoGGKenya pages on County budgets for an understanding of Development Vs Recurrent expenditure.)

What are the financial Sources?

The budget also contains information on financing. It gives detailed information on the revenue share from national government, grants, loans, local revenue collection and any other funding.

… and what the Programmes and Projects?

The programme-based-budget also outlines the projects that will be undertaken, the cost of those projects, the total number and the areas that they will be implemented. For example if the County intents to drill boreholes, the budget will show the cost of drilling each, the administrative ward and sub county where it will be undertaken and how many boreholes in total will be drilled across the County.

From the budget estimates, one can also pick out the county flagship projects. These are huge projects that cost substantive amounts of money that are usually implemented in more than one financial year.

By Erick Nakitare