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TRANSCRIPT
BUDGET PREPARATIONMODULE
October 2014
P A R T I C I P A N T B O O K
Public Financial Management
KENYA SCHOOL OF GOVERNMENTNATIONAL TREASURY MINISTRY OF DEVOLUTION AND PLANNINGREPUBLIC OF KENYA REPUBLIC OF KENYA
Table of Contents
Foreword .................................................................................................................................... i
Acknowledgements .................................................................................................................... ii
Abbreviations .............................................................................................................................. iii
Introduction ................................................................................................................................... 1
Aims and Objectives of the training ........................................................................................... 1
Public Finance Management Curriculum—Summary ................................................................. 2
Target Participant Group ............................................................................................................ 4
Glossary and Resources ................................................................................................... 4
Timings and Methodology .......................................................................................................... 4
Training Overview—Budget Preparation .................................................................................... 5
Getting Started ............................................................................................................................. 6
History of Budgeting in Kenya ........................................................................................................ 7
County Budget Cycle, Calendar and Conceptual Overview of Budgeting ...................................... 10
1. Key legislation, documents, roles and responsibilities in county budgeting ........................... 11
2. County Budget Cycle and Calendar ......................................................................................... 22
3. Legislative Approval Process ................................................................................................... 28
4. Strategic vs. Operational Phases of budget preparation ........................................................ 36
5. Introduction to Medium Term Expenditure Framework ......................................................... 39
6. Introduction to Programme Based Budgeting ........................................................................ 41
7. Introduction to the Chart of Accounts (CoA) .......................................................................... 44
8. Public Participation in Budget Preparation ............................................................................. 46
Strategic Phase of Budgeting ......................................................................................................... 48
1. County Budget Circular ........................................................................................................... 50
2. County Integrated Development Plan .................................................................................... 51
3. County Budget Review and Outlook Paper (C-BROP) ............................................................. 54
4. Sector Working Groups and Resource Allocation ................................................................... 64
5. County Fiscal Strategy Paper (C-FSP) ...................................................................................... 66
Operational Phase of Budgeting .................................................................................................... 68
1. County Budget Circular/Budget call circular (budget estimates) ............................................ 70
2. Department Budget Estimates prepared ................................................................................ 71
A. Preparing the County Recurrent Budget ............................................................................ 72
B. Preparing the County Development Budget ...................................................................... 73
C. Budgeting for Appropriations-in-Aid (A-in-A) ..................................................................... 74
D. Budget Preparation Tools – The Chart of Accounts and Programme Based Budgeting format .... 75
3. Review, consolidate and submit Budget Estimates .................................................................... 83
Conclusion ..................................................................................................................................... 86
Summary .................................................................................................................................... 86
Assessment & Evaluation ............................................................................................................ 86
Glossary ......................................................................................................................................... 87
Resources ...................................................................................................................................... 89
Assessment .................................................................................................................................... 90
Annexes ......................................................................................................................................... 91
Annex 1: Example Revenue Forecast Format, Example Sector Ceilings ...................................... 92
Annex 2: C-FSP Format ............................................................................................................... 95
Annex 3: Sector Working Group Report Format ......................................................................... 96
Annex 4a: Estimates of Recurrent Expenditure .......................................................................... 99
Annex 4b: Estimates of Development Expenditure .................................................................... 100
Annex 5: FORMAT FOR PRESENTATION OF PROGRAMME BASED BUDGETS (PBB) .................... 101
Annex 6: Departmental/Sectoral Committees ........................................................................... 104
Annex 7: County Integrated Development Plan Chapter Outlines ............................................. 106
Annex 8: Template for costing of programs and activities ......................................................... 110
Foreword
The Fourth Schedule of the Constitution of Kenya assigns the National Government the function of capacity building of counties. This mandate of the National Government
has also been recognised and elaborated in the National Government Capacity Building Framework for County Governments. With regard to county public finance management (PFM) capacity building, this responsibility has been placed on the National Treasury.
In order to effectively deliver on its mandate of building the capacity of county governments in PFM, the National Treasury developed a County PFM Training Curriculum and has in partnership with development partners embarked on the development of a number of County PFM Training Modules. The National Treasury intends to roll out training on PFM and make these modules accessible to all county governments.
In this respect, the National Treasury will partner with the Kenya School of Government (KSG) to roll out the training of county State and public officers using the County PFM Modules as the primary training toolkit. These modules, besides standardizing the County PFM Training, will also ensure that those trained will also have reference material for use in their day-to-day operations.
At the outset, training will be delivered by a pool of staff drawn from the National Treasury. In the medium and long-term, the National Treasury, in partnership with the Kenya School of Government will identify and train a pool of professionals, through scheduled training of trainers. This pool of professionals will then conduct future training of county PFM staff. For this purpose, each module includes a ‘Training of Trainers’ guide in addition, to the participants guide.
This Budget Preparation module, is among the first to be developed and is specifically designed to equip the county officials with the necessary skills and information, to help improve and strengthen their capacity in the preparation of county budgets. The module will be used to train officials drawn from the county executives as well as county legislatures and emphasizes the use of participatory and practical approaches to learning.
I have no doubt that this county PFM Training modules will help to strengthen the capacity of county governments in public finance management and contribute towards enhancing prudent, accountable and transparent management of public resources.
Henry K. Rotich,Cabinet SecretaryNational Treasury
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Budget Preparation Module – Participant Book, October 2014
Acknowledgements
This Budget Preparation module has been developed through the concerted effort of various institutions and professionals. We wish to express our gratitude to all those
persons and institutions that contributed towards the development of this manual.
In particular, I wish to acknowledge the role of the Budgetary Supply Department and the newly created Intergovernmental Fiscal Relations Department of the National Treasury in coordinating and providing technical guidance in the development of this Module.
Much thanks to the Kenya School of Government (KSG) who provided quality control during the development of the module and for their commitment to include the Budget Preparation module as the main toolkit for county PFM training at the Kenya School of Government.
We are equally grateful to World Bank through its Kenya Accountable Devolution Programme, for its support towards the development of this module. Special thanks to the pool of experts from the World Bank who worked tireless to ensure successful delivery of this module.
Dr. Kamau Thugge, EBSPrincipal SecretaryNational Treasury
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Budget Preparation Module – Participant Book, October 2014
Abbreviations
AOs Accounting Officers
BROP Budget Review and Outlook Paper
CA County Assembly
C-BEF County Budget and Economic Forum
CEC County Executive Committee
CEC-MF County Executive Committee Member for Finance
CEC-MP County Executive Committee Member for Planning
CoB Controller of Budget
CoK Constitution of Kenya (2010)
CFPG County Fiscal Planning Group
CRA Commission for Revenue Allocation
CT County Treasury
GDP Gross Domestic Product
IBEC Inter-governmental Budget and Economic Council
MTEF Medium Term Expenditure Framework
NT National Treasury
PBB Programme Based Budgeting
PEM Public Expenditure Management
PFM Public Finance Management
PFMA Public Finance Management Act (2012)
SWGs Sector Working Groups
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Budget Preparation Module – Participant Book, October 2014
1
Introduction Aims and Objectives of the training This Budget Preparation training is one component of the Public Finance Management Module. It aims to enhance general understanding of public financial management, and for the technical county staff empower them, the participants, to prepare timely, accurate and effective county budgets which address some key weaknesses encountered through the 2014/15 budget preparation period. The training will achieve this by increasing participants’ understanding of the budget preparation process and its related concepts, as well as the specific ‘how to’ elements of budget preparation. Specific Objectives
By the end of this training, participants should be able to better perform their roles and: • Identify the different elements of the budget cycle and calendar, and plan work
accordingly to ensure that they can comply with deadlines. • Identify areas of challenges and what improvements may be necessary in their own
county’s budget preparation process and explore ways to achieve this. • Clearly explain the different components of the budget preparation process,
including key legislation, players and documents. • Effectively manage the county budget preparation process for a smooth process of
legislative approval. • Identify specific places in budget preparation where public participation is
needed,and explore and incorporate different mechanisms for public participation. • Carry out the tasks associated with the ‘Strategic Phase’ of budgeting, including
revenue forecasting and ceiling setting, through the preparation of C-BROP and C-FSP documents and Sector Working Group Reports.
• Carry out the tasks associated with the ‘Operational Phase’ of budgeting, including the preparation of detailed department budget estimates.
• For the officers, use the Chart of Accounts to code expenditure as part of preparing budget estimates.
• Identify how thecounty budget will incorporate the programme based budget for 2014/15.
!It is important that each county/organization/entity using this manual ensures
modifications are made in the delivery of the training to take account of local dynamics, to meet specific needs in public financial operations and applications in the target unit.
Budget Preparation Module – Participant Book, October 2014
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Budget Preparation Module – Participant Book, October 2014
Specific training outcomes
As an outcome, it is anticipated that participants will feel more confident in the budget preparation process, as a result of addressing weaknesses identified in the preparation of the 2014/15 budget, and will be motivated to implement what they have learned into their preparation of their county budget for 2014/15. Public Finance Management Curriculum—Summary Component What is covered?
i) Constitutional and Legal Framework for PFM
• Overview of the Constitutional and legal framework for PFM, including the Constitution of Kenya, 2010;PFM Act, 2012; CRA Act, 2011 among others
• Roles and responsibilities of national and county government PFM institutions
• Process/Role of County Assembly in approval and oversight of County Government’s (CG) budget
ii) Budget Preparation
• History of budgeting in Kenya • Budget Cycle, Calendar and Conceptual
Overview • Strategic Phase of budget preparation • Operational Phase of budget preparation
iii) Budget Execution • Cash and Treasury Management: • Revenue Management (Tax, non-tax): sources and modalities for
optimizing capacity for raising revenue • Grants and Donations Management • Expenditure Management, including losses and write-offs • Debt Management • Procurement • County Assets and Liabilities Management • Role of the Controller of Budget
iv) Financial Accounting, Recording and Reporting
• Role of Accounting Officers • Financial Reports: types, content and timelines • Standard Chart of Accounts and relationship with COFOG and GFS • Integrated Financial Management Information System (IFMIS)
!Budget Preparation is the focus of this Participant Book.
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Budget Preparation Module – Participant Book, October 2014
v) PFM in AGAs and SAGAs / Audit and Risk Management (Autonomous and Semi-Autonomous Government Agencies)
• Internal Audit • External Audit
vi) Inter- and Intra-governmental Fiscal Relations
• Process of Revenue Sharing – Division of Revenue Bill and the County Allocation of Revenue Bill
• IGFR Institutions – IBEC and Joint Technical Committee • Stoppage of Funds • Inter-governmental Reporting • Budget Policy Statement
vii) Monitoring and Evaluation
• Public Expenditure Review (PER) • Public Expenditure Tracking Survey (PETS) • Parliamentary and County Assembly oversight • Performance measurement • PFM and performance contracting • Public participation • Tools for public participation
viii) Leadership and Integrity
• Chapter Six (Constitution of Kenya 2010) • Ethics and Anti-corruption Act provisions • Leadership and Integrity Act provisions • Public Officer and Ethics Act provisions
ix) Gender and Youth in Development
• Understanding gender, youth and persons with disabilities in development
• Government policies on gender, youth and persons with disabilities
• Preferences and Reservations for Women, Youth and Persons with Disabilities on public procurement
• Strategies for gender and youth mainstreaming
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Budget Preparation Module – Participant Book, October 2014
Target Participant Group This Budget Preparation training is designed for the following target groups:
• County Executive Committee Members for Finance • Chief Officers/Accounting Officers of County Governments • Staff of the department or departments of the County Treasury • Clerks of the County Assemblies • Members of County Assemblies • Staff of city and municipal boards involved in public finance management • Audit committee members • Staff of County Departments and county government entities involved in public
finance
! Note that Sessions I and II of the trainingare targeted at all the above participants.
Session III is largely targeted at County Assembly, County Treasury, and County Executive Committee. Session IV is largely targeted at county departments in preparing their budgets. Glossary and Resources
• There is a Glossary of relevant terms and their meanings included at the end of this Participant Book.
• You will find a list of useful Resources for further information at the end of this Participant Book.
Timings and Methodology This Budget Preparation training has been designed as three (3) day training, but can be extended to four (4) days or more depending on the target audience (i.e. for different levels the time table can be adjusted). A timetable will be provided by your trainer. This training in Budget Preparation aims to be interactive and participatory. In addition to lecture/presentations, the following will be used: • Group and plenary discussions • Group exercises • Brainstorm questions • Example-based questions • Written exercises
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Budget Preparation Module – Participant Book, October 2014
Training Overview—Budget Preparation Session What is covered?
Getting Started • Welcomes, Introductions • Aims, Objectives • Expectations, Ground Rules • Understanding the emerging challenges in the budget
process
Session I: History of Budgeting in Kenya
• Overview of Key Budgeting Reforms in Kenya • Key legislation in budgeting • Exercise: Impact of Budget Reforms • Questions for Discussion
Session II: Budget Cycle, Calendar and Conceptual Overview
• Overview of key players, documents, responsibilities • Outline of budget cycle, budget calendar, legislative
approval process • Introducing MTEF and Programme Based Budgeting • Introduction to Chart of Accounts • Role of Public Participation in budgeting
Session III: Strategic Phase of Budgeting
• The County Integrated Development Plan • Preparing the C-BROP • Resource Envelope, Ceilings, Medium Term Budget
Strategy • Sector Working Groups and Sectoral Resource Allocation • Preparing the C-FSP
Session IV: Operational Phase of Budgeting
• Preparing Detailed Budget Estimates—recurrent and development budgets
• Preparing budget estimates according to Programme Based Budgeting formats
• Using the CoA to code expenditure.
Module Conclusion • Module Summary • Assessment Exercise • Evaluation
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Budget Preparation Module – Participant Book, October 2014
Introductory Session
Getting Started Here are some topics your trainer is likely to cover in this session:
• Welcome, Introductionsand ‘Housekeeping’
• Aims and Objectives of the training
• Training Overview and Timetable
• Relevant Documents
• Expectations and Ground Rules
• Understanding the challenges in the budget process
‘Icebreaker’Questions:
Session Objectives: • To create a comfortable and encouraging learning environment. • To provide an overview of the training, including aims and objectives. • To understand participants’ expectations of the training. • To set some agreed ground rules for the training.
Briefly discuss the following with your neighbour: • What are your expectations of this training? • What do you think you can contribute to this training?
Discuss the following quote:
If we all did the things we are capable of, we would astound ourselves.
Thomas Edison,American inventor What do you think this quote is saying? How might it apply to this training?
!In this session you will get to know your trainer/s and the other participants. You will
find out what the training involves and what you are expected to do.
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Budget Preparation Module – Participant Book, October 2014
Session I History of Budgeting in Kenya
Session Objectives: By the end of this session participants will be able to: • Identify how key budget reforms in Kenya since independence have influenced the
current budgeting process at a national and local level. • Discuss areas for improvement from their own county’s budget for 2013/14 and
identify possible ways ahead for 2014/15 and beyond.
Concepts Box 1: Budgeting in Kenya • Executive Branch, through the Minister for Finance, had total authority over
budget and overall PFM for many years.
• Parliament debated budget proposals each year, but constitutionally could not increase any fiscal measures. Also, the budget could not be rejected, as this would lead to a ‘vote of no confidence’ and hence require new elections.
• Such restrictions led to ineffective legislative budget oversight, and over time the need for a robust PFM system was recognized by government.
• For example, prior to the budget reforms, two separate budgets were prepared for each fiscal year; a recurrent and a development (or capital) budget. As the economy grew and became more complex, the need arose to change how resources were mobilized and allocated.
• Since independence, the budget process has gone through many reforms in an effort to improve PEM for better delivery of services to the citizens (see Table 1).
• In some cases, the need for reform was not locally driven, but came from external sources such as development partners, who had been providing Kenya with financial support.
• In addition, on the revenue side, since 1990 Kenya has carried out a wide-ranging tax modernisation program which has enabled Kenya to sustain a ‘revenue to GDP’ ratio well above the sub-Saharan average. This has been important for reducing dependency on aid to a manageable level.
Source: PFM training curriculum document
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Budget Preparation Module – Participant Book, October 2014
Table 1: Key Budget Reforms since Independence Budget Reform Period Objective of Reform Success of reform and
impact on today’s budget process?
Programme Review and Forward Budgeting (PRFB)
1970s Achieving a linkage between the development agenda and the budget through a medium-term oriented budget process.
Budget Rationalization Programme(BRP)
1986 Introducing a mechanism of prioritization consistent with available recourses to priority programmes (address resource constraints).
Public Investment Programme (PIP)
1990s Linking the capital budget to future recurrent budgets through a mechanism of prioritizing project implementation.
Kenya Tax Modernization Programme
Since 1990
• Modernize tax policy and administration.
• Shift emphasized on revenue mobilization to consumption.
• Simplify tax administration to lower cost of compliance and enforcement.
• Reduce excessive protection of local producers that was based on import substitution to encourage efficiency, innovation and competitiveness of local goods and services.
• Introduce computer-based enforcement and compliance.
The Medium Term Expenditure Framework Process (MTEF)
2000 Provide a link between policy, planning and budgeting through a coherent multi-year budgeting process.
Programme Based Budgeting
2013 Aims to deepen the MTEF approach by moving decision-making on resource allocation from line item to expected outputs. From line item to program and sub-program and outputs and performance targets.
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Budget Preparation Module – Participant Book, October 2014
Exercise 1: Impact of Budget Reforms
Questions for Discussion
The above exercise has given us an idea of why it can be useful to ‘look backward to go forward’. In the context of your own county, think about the 2013/14 budget currently being executed. In terms of the process of preparing this budget:
• What elements of the process worked well, and what could be improved for the preparation of the 2014/15 budget?
• What areas or elements of budget preparation for 2013/14 were most troublesome, and how could these issues be addressed for 2014/15?
The aim of the exercise is for you to think about the budget reforms which have been implemented in Kenya, and identify any impacts of these reforums that apply to today’s budgeting process. 1. Work in groups of 4, as identified by your trainer. 2. Using information in Concepts Box 1, Table 1, Table 2, and any other relevant resource documents provided by your trainers, have a discussion around the budget reforms you have just learned about. You can jot down notes in the right-hand column of Table 1. 3. Some questions to guide your group discussion:
• How successful were these reforms in terms of improving the budgeting process in Kenya?
• Can you identify any examples from your experience and knowledge of today’s budgeting process, that demonstrates an impact of these budget reforms?
• Are these impacts at the national level only, or do they also apply at the county level?
4. Report back to the wider group on 1 of the reforms that you discussed.
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Budget Preparation Module – Participant Book, October 2014
Session II County Budget Cycle, Calendar and Conceptual Overview of Budgeting At the outset, it is important to understand that the county budgeting process fits within a wider Public Expenditure Management (PEM) cycle, as shown in Diagram 1 below: Diagram 1: The PEM Cycle and budget preparation
Source: Adopted from http://blog-pfm.imf.org/pfmblog/2008/08/public-expendit.html
Session Objectives: By the end of this session participants will be able to: • Identify the stages in the county budget cycle and calendar, including key
calendar targets and the legislative approval process. • Demonstrate an understanding of the concepts of MTEF, Programme Based
Budget and the Chart of Accounts. • Explain the importance of public participation in the budget preparation process
and identify key opportunities for public input in this process.
Formulate plans andbudgets
Execute budgets
Account and report
Audit and scrutinise budgets
and reports
• Prepare , present and review:• National development plan• Budget policy statement• Medium-term expenditure
framework• Annual budget
• Release funds • Procure goods, works and
services• Manage the wage bill • Manage debts
• Undertake internal audit• Conduct procurement reviews,
public expenditure reviews, service delivery surveys etc.
• Carry-out external audit• Parliament provides oversight
and scrutiny
• Account for expenditure • Reconcile of accounting records• Generate in-year and end of year
financial and other reports
In this training, we focus on this section of the PEM cycle.
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Budget Preparation Module – Participant Book, October 2014
1. Key legislation, documents, roles and responsibilities in county budgeting Table 2: Quick Reference—Key legislation for budget preparation
Legislation
Relevant Sections
Constitution of Kenya (2010)
Articles 201, 202, 203 on revenue sharing Article 207 County Revenue Fund Article 209 and Article 210 on tax allocation and taxation Article 212 (County Borrowing) Articles 215–219 (Revenue Allocation) Articles 220,224, 227 (Budgets and Spending) Article 225 (Financial Control) Article 226 Accounts and audits Article 228, Controller Budget Article 229, Auditor-General
Public Finance Management Act (2012)
Sections 25–27 (Responsibilities of the National Treasury with respect to the budget process) Sections 35–45 (NationalGovernment BudgetProcess) Sections 102-116, 117–118 (Responsibilities of county governments with respect to the county budget process, principles of PFM) Sections 147–149 (Roles, responsibilities of Accounting Officers Sections 157–162 Receivers and collectors of revenue Sections 125–137 (The County Government Budget Process) Sections 189–191 (The Process of Sharing Revenue)
County Government Act (2012)
Part VIII – Citizen Participation Section 91 (c) Budget preparation and validation fora
!You will learn more about relevant legislation in the training module:
i) Constitutional and Legal Framework for PFM
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Budget Preparation Module – Participant Book, October 2014
Tab
le 3
: Qu
ick
Ref
eren
ce—
Key
pla
yer
s in
the
cou
nty
bu
dg
etin
g p
roce
ss (
in a
lpha
beti
cal
ord
er)
Initi
als
Body
Wha
t is t
heir
role
?
Coun
ty L
evel
Inst
itutio
ns
AOs
Acco
untin
g O
ffice
rs
•Le
ad th
e va
rious
Cou
nty
Sect
or W
orki
ng G
roup
s.
•Ar
e de
signa
ted
by th
e CE
C-M
F an
d ar
e ac
coun
tabl
e to
theC
ount
y As
sem
bly
(CA)
for f
inan
cial
man
agem
ent.
•Ar
e re
spon
sible
for a
ccou
ntin
g fo
r mon
eyap
prop
riate
d by
Cou
nty
Asse
mbl
y.
•Ha
ve p
ower
s to
exec
ute
loan
doc
umen
ts, m
anag
e as
sets
and
liab
ilitie
s of C
G an
d re
allo
cate
fund
ssub
ject
to
cert
ain
cond
ition
s.
•En
sure
pub
lic re
sour
ces a
re u
sed
in a
way
that
is la
wfu
l and
aut
horis
ed a
nd in
an
effe
ctiv
e an
d ef
ficie
nt m
anne
r. •
Mus
t ens
ure
prop
er fi
nanc
ial m
anag
emen
tof t
he re
spec
tive
Coun
ty G
over
nmen
t ent
ity.
•Le
ad ro
le in
pre
parin
g an
d su
bmitt
ing
depa
rtm
enta
l bud
gets
and
in th
e bu
dget
pre
para
tion
proc
ess.
•
Appr
oval
of r
e-al
loca
tion
of fu
nds b
etw
een
prog
ram
s, su
bjec
t to
limits
set i
n th
e re
gula
tions
. •
CEC
Fina
nce
coor
dina
tes b
udge
ting
and
PFM
for c
ities
and
urb
an a
reas
.
CA
Coun
ty
Asse
mbl
y
•Ap
prov
es/a
dopt
s key
bud
get d
ocum
ents
, inc
ludi
ng In
tegr
ated
Dev
elop
men
t Pla
n, C
-FSP
, Deb
t Man
agem
ent
Stra
tegy
, and
Bud
get E
stim
ates
. •
Prov
ides
ove
rall
over
sight
ove
r pub
lic fi
nanc
es a
t the
Cou
nty
Gove
rnm
ent l
evel
. •
Ensu
re a
dher
ence
by
CEC
and
CG to
Prin
cipl
es o
f Pub
lic F
inan
ce a
nd th
e fis
cal r
espo
nsib
ility
prin
cipl
es.
•Ap
prov
es th
e es
tabl
ishm
ent o
f oth
er c
ount
y pu
blic
fund
s.
•Ap
prov
es b
udge
t and
reve
nue
allo
catio
n fo
r citi
es a
nd u
rban
are
as.
•O
vers
ight
of a
ccou
ntab
ility
and
com
plia
nce
with
lega
l req
uire
men
ts, e
.g. a
ccou
ntin
g st
anda
rds a
nd o
ther
. •
Appr
oves
and
ove
rsee
s Cou
nty
Asse
mbl
y Bu
dget
. •
Appr
oves
Cou
nty
Debt
Str
ateg
y Pa
per w
hich
sets
bor
row
ing
limits
, det
ails
borr
owin
g ne
eds.
13
Budget Preparation Module – Participant Book, October 2014
Co
unty
As
sem
bly
Cler
k
•Su
bmits
the
budg
et o
f the
Cou
nty
Asse
mbl
y, to
the
Coun
ty A
ssem
bly
for c
onsid
erat
ion
and
appr
oval
by
30Ap
ril
as p
er P
FM A
ct 2
012,
129
(3).
Also
resp
onsib
le fo
r Cou
nty
Asse
mbl
y Bu
dget
. •
May
real
loca
te re
sour
ces w
ithin
Vot
es su
bjec
t to
10%
lim
it.
C-BE
F Co
unty
Bu
dget
and
Ec
onom
ic
Foru
m
A ne
w st
ruct
ure
at c
ount
y le
vel t
o se
rve
asa
cons
ulta
tive
foru
m o
n co
unty
pla
ns a
nd b
udge
ts. I
t inc
lude
s:
•Co
unty
Gov
erno
r as C
hair
•M
embe
rs o
f the
CEC
•
Repr
esen
tativ
es o
f a w
ide
rang
e of
gro
ups a
t cou
nty
leve
l inc
ludi
ng p
rofe
ssio
nals,
bus
ines
s, la
bour
issu
es,
wom
en, p
erso
ns w
ith d
isabi
litie
s,th
e el
derly
and
faith
bas
ed g
roup
s.
•Sp
ecifi
c re
spon
sibili
ties i
nclu
de c
onsu
ltatio
ns fo
r the
pre
para
tion
of: C
ount
y De
velo
pmen
t Pla
ns, C
-BRO
P, C
-FSP
. Se
e PF
MA
(201
2) S
ectio
n 13
7, E
stab
lishm
ent o
f For
um fo
rcon
sulta
tion
by c
ount
ygov
ernm
ents
CEC
Coun
ty
Exec
utiv
e Co
mm
ittee
•Re
spon
sible
for t
he so
cial
-pol
itica
l, po
licie
s, fi
nanc
e an
d ex
ecut
ion
aspe
cts i
n a
coun
ty.
•Co
ordi
nate
s pre
para
tion
of C
IDPS
that
gui
de b
udge
ting,
on
appr
oval
impl
emen
ts b
oth
plan
and
bud
get.
•Ap
prov
es C
-BRO
P an
d C-
FSP
docu
men
ts.
•Re
view
s the
Ann
ual B
udge
t Est
imat
esbe
fore
subm
issio
n to
the
CA fo
r app
rova
l. •
With
the
appr
oval
of C
ount
y As
sem
bly
appr
oves
, is i
n ch
arge
of e
stab
lishm
ent a
nd d
issol
utio
n of
a c
ount
y co
rpor
atio
n •
With
the
appr
oval
of C
ount
y As
sem
bly,
app
rove
s the
est
ablis
hmen
t of a
cou
nty
emer
genc
y fu
nd.
CE
C-M
F Co
unty
Ex
ecut
ive
Com
mitt
ee
Mem
ber f
or
Fina
nce
•Re
spon
sible
for p
ropo
sing
coun
ty P
FM p
olic
ies a
nd m
anag
ing
the
budg
et p
roce
ss o
f the
Cou
nty
Gove
rnm
ent.
See
PFM
A (2
012)
Sec
tions
128
–130
. •
Prop
oses
reve
nue
raisi
ngm
easu
res,
incl
udin
g bo
rrow
ing
subj
ect t
o na
tiona
l gov
ernm
ent g
uara
ntee
. •
Desig
nate
s rec
eive
rs o
f cou
nty
reve
nues
. •
Desig
nate
s cou
nty
acco
untin
g of
ficer
s.
•M
anag
es th
e Co
unty
Rev
enue
Fun
d.
14
Budget Preparation Module – Participant Book, October 2014
•Es
tabl
ishes
the
nece
ssar
y sy
stem
s for
cas
h m
anag
emen
t as p
rovi
ded
in th
e la
w.
•Pr
epar
es a
nd su
bmits
to C
ount
y As
sem
bly
the
Med
ium
Ter
m D
ebt M
anag
emen
t Str
ateg
y.
! The
CEC
-MF
mus
t ens
ure
that
the
budg
et p
roce
ss is
con
duct
ed in
a m
anne
r and
with
in a
tim
efra
me
suffi
cien
t to
perm
it th
e ot
her p
artic
ipan
ts in
the
proc
ess t
o m
eet t
he re
quire
men
ts o
f the
CoK
(201
0) a
nd P
FMA
(201
2), i
nclu
des
ensu
ring
the
C-BR
OP,
C-F
SP a
re p
repa
red
and
subm
itted
to th
e Co
unty
Ass
embl
y on
tim
e.
CE
C-M
P CE
C M
embe
r fo
r Pla
nnin
g
•Su
bmits
the
Inte
grat
ed D
evel
opm
ent P
lan
to th
e CA
for a
ppro
val e
ach
year
.
Ci
tizen
s
•Im
port
ant r
ole
to p
artic
ipat
e in
pub
lic h
earin
gs o
n th
e CI
DP, C
-BRO
P, S
ecto
r Rep
orts
and
Bud
get E
stim
ates
. •
Impo
rtan
t rol
e in
iden
tifyi
ng c
omm
unity
nee
ds a
nd p
riorit
ies,
thro
ugh
the
coun
try
deve
lopm
ent p
lans
pla
nnin
g pr
oces
s.
•Im
port
ant r
ole
in p
rovi
ding
ove
rsig
ht a
nd fe
edba
ck o
n pr
ogra
ms a
nd p
roje
cts a
nd in
par
ticul
ar o
n th
e us
e of
pu
blic
reso
urce
s.
Co
unty
SW
Gs
Coun
ty
Sect
or
Wor
king
G
roup
s
•Co
unty
Dep
artm
ents
are
gro
uped
into
rela
ted
sect
ors,
(bas
ed o
n st
ruct
ure
of C
ount
y Go
vern
men
t), d
epen
ding
on
thei
r man
date
s and
func
tions
. •
Grou
ps m
ust a
gree
on:
o
Sect
oral
obj
ectiv
es, o
utpu
ts a
nd p
riorit
ies,
link
ed to
the
Coun
ty D
evel
opm
ent P
lan.
o
Activ
ities
, inc
ludi
ng th
e re
view
and
dev
elop
men
t of p
rogr
amm
es a
nd su
b-pr
ogra
mm
es, a
nd th
eir c
ostin
g.
oM
ediu
m-t
erm
out
puts
and
targ
ets f
or th
e se
ctor
and
est
imat
e re
sour
ce re
quire
men
ts fo
r the
sect
or.
•Gr
oups
nee
d to
link
shar
ing
of a
vaila
ble
reso
urce
s to
the
criti
cal p
riorit
ies o
f the
sect
or (r
efer
red
to a
s ‘se
ctor
re
sour
ce sh
arin
g pr
oces
s’).
•Th
e Se
ctor
Wor
king
gro
up is
cha
ired
by th
e co
unty
chi
ef o
ffice
rs w
ith a
con
veno
r fro
m th
e Co
unty
Tre
asur
y.
15
Budget Preparation Module – Participant Book, October 2014
CT
Coun
ty
Trea
sury
•Ha
s ove
rall
resp
onsib
ility
for m
anag
ing
the
finan
cial
and
eco
nom
ic a
ffairs
of t
he C
ount
y Go
vern
men
t. •
Prep
ares
and
subm
its th
e C-
FSP
to th
e CE
C fo
r app
rova
l. •
Subm
its C
ount
y De
bt M
anag
emen
t Str
ateg
y to
the
CA.
•Dr
ives
the
MTE
F pr
oces
s, (t
he th
ree-
year
rolli
ng p
lan)
wor
king
clo
sely
with
rele
vant
dep
artm
ents
and
in
stitu
tions
in th
e co
unty
and
the
depa
rtm
ent i
n ch
arge
of e
cono
mic
pla
nnin
g.
•Pr
epar
es A
nnua
l Bud
get E
stim
ates
for t
he C
ount
y Go
vern
men
t (CG
)and
coo
rdin
ates
the
prep
arat
ion
and
impl
emen
tatio
n of
the
CG b
udge
t. •
Enfo
rces
Fisc
al R
espo
nsib
ility
Prin
cipl
es a
t the
CG
leve
l. •
Prep
ares
bud
get,
finan
cial
and
fisc
al re
port
s and
subm
its th
em to
the
CA a
nd a
lso p
ublis
hes a
nd p
ublic
izes
them
. •
Prep
ares
bud
get,
finan
cial
and
fisc
al re
port
s and
subm
its th
em to
the
CA a
nd a
lso p
ublis
hes a
nd p
ublic
izes
them
. •
Coor
dina
tes t
he p
roce
ss o
f fin
alizi
ng th
e bu
dget
, inc
ludi
ng c
onsu
ltatio
n w
ith o
ther
stak
ehol
ders
at t
he c
ount
y.
CFPG
C
ount
y Fi
sal
Plan
ning
G
roup
•In
cha
rge
of e
stim
atio
n of
the
coun
ty re
sour
ce e
nvel
ope.
•
Resp
onsib
le fo
r dev
elop
ing
draf
t C-B
ROP
and
C-FS
P.
•M
embe
rshi
p in
clud
es C
ount
y Tr
easu
ry, t
he d
epar
tmen
t res
pons
ible
for e
cono
mic
pla
nnin
g, a
nd o
ther
rele
vant
th
ink
tank
s on
reve
nue
fore
cast
ing
and
econ
omic
issu
es.
Nat
iona
l Lev
el In
stitu
tions
Co
B Co
ntro
ller o
f Bud
get
•Ro
le is
to o
vers
ee th
e im
plem
enta
tion
of b
udge
ts o
f nat
iona
l and
cou
nty
gove
rnm
ents
by
auth
orisi
ng
with
draw
als f
rom
:The
Con
solid
ated
Fun
d; T
he E
qual
isatio
n Fu
nd; T
he C
ount
y Re
venu
e Fu
nds.
CRA
Com
mis
sion
for
Reve
nue
Allo
catio
n,
(CRA
)
•Re
com
men
ds th
e ba
sis fo
r the
equ
itabl
e sh
arin
g of
reve
nue
betw
een
natio
nal a
nd c
ount
y go
vern
men
ts
and
allo
catio
n am
ong
coun
ty g
over
nmen
ts (A
rtic
le 2
16).
16
Budget Preparation Module – Participant Book, October 2014
•Re
com
men
ds re
venu
e en
hanc
emen
t mea
sure
s for
bot
h le
vels.
•
Prop
oses
revi
sion
of re
venu
e sh
arin
g/al
loca
tion
form
ula.
IBEC
In
ter-
gove
rnm
enta
l Bu
dget
and
Ec
onom
ic C
ounc
il
•IB
EC p
rovi
des a
mea
ns fo
r con
sulta
tionb
etw
een
the
two
tiers
of g
over
nmen
t and
am
ong
CGs o
n a
broa
d ra
nge
of e
cono
mic
and
fina
ncia
l iss
ues,
incl
udin
g:bo
rrow
ing
and
guar
ante
es; b
udge
ts; d
evel
opm
ent
plan
s; c
ash
disb
urse
men
ts; r
egul
atio
ns to
PFM
Act
, 201
2; d
ivisi
on o
f rev
enue
.
NT
N
atio
nal T
reas
ury
•
Has o
vera
ll re
spon
sibili
ty fo
r mac
roec
onom
ic m
anag
emen
t, na
tiona
l eco
nom
ic p
olic
y.
•Re
spon
sible
for o
vera
ll re
venu
e m
obili
zatio
n an
d de
bt g
uara
ntee
s to
coun
ty g
over
nmen
ts.
•Pr
epar
es a
nnua
l bud
get e
stim
ates
of r
even
ues a
nd e
xpen
ditu
res o
f the
NG
and
coor
dina
tes t
he
prep
arat
ion
and
impl
emen
tatio
n of
the
NG
budg
et.
•Pr
epar
es th
e Bu
dget
Pol
icy
Stat
emen
tand
the
Budg
et R
evie
w a
nd O
utlo
ok p
aper
for t
he N
atio
nal
Gove
rnm
ent.
•En
forc
esfis
cal r
espo
nsib
ility
prin
cipl
es a
t nat
iona
l lev
el.
•Pr
epar
es th
e pr
e-an
d-po
st b
udge
t rep
orts
.
N-B
AC
Nat
iona
l Ass
embl
y Bu
dget
and
Ap
prop
riatio
n Co
mm
ittee
•Re
view
s and
app
rove
s the
BPS
that
sets
pol
icie
s and
gui
des b
udge
ting,
ver
tical
shar
ing
of th
e na
tiona
lly
Raise
d Re
venu
es, c
ount
ies n
ot to
pre
judi
ce se
t eco
nom
ic p
olic
ies.
•
Prov
ides
gen
eral
dire
ctio
n on
bud
geta
ry m
atte
rs.
•M
onito
rs a
dher
ence
to P
FM p
rinci
ples
and
acc
ount
abili
ty b
y pa
rliam
ent,
the
Judi
ciar
y an
d N
atio
nal
Gove
rnm
ent a
nd o
ther
pub
lic e
ntiti
es.
•Re
view
s mon
ey b
ills i
nclu
ding
the
Annu
al D
ivisi
on o
f Rev
enue
, ens
ures
adh
eren
ce to
PFM
Fin
anci
al
prin
cipa
ls in
the
Cons
titut
ion
and
adhe
renc
e to
app
rove
d Fi
scal
fram
ewor
k.
•Re
view
s Ann
ual B
udge
t est
imat
es o
f exp
endi
ture
and
reve
nue
and
intr
oduc
es th
e an
nual
an
dSup
plem
enta
ry A
ppro
pria
tions
.
17
Budget Preparation Module – Participant Book, October 2014
PBO
Pa
rliam
enta
ry
Budg
et O
ffic
e •
Prov
ides
pro
fess
iona
l adv
ice
on b
udge
ting
and
over
all P
FM, f
inan
ce a
nd e
cono
mic
info
rmat
ion
to
parli
amen
t (its
adv
ice
on re
venu
es a
ffect
s ove
rall
reso
urce
env
elop
e).
•Pr
ovid
es a
naly
sis o
n al
l bill
s tha
t hav
e an
eco
nom
ic a
nd fi
nanc
ial i
mpa
ct.
•Re
view
s and
adv
ices
rele
vant
com
mitt
ees o
f par
liam
ent o
nleg
islat
ivep
ropo
sals
for D
ivisi
on o
f Rev
enue
an
d Co
unty
Allo
catio
n of
Rev
enue
. •
Prov
ides
a te
chni
cal b
ridge
bet
wee
n th
e le
gisla
ture
, the
exe
cutiv
e an
d ot
her n
atio
nal a
nd in
tern
atio
nal
orga
nisa
tions
with
inte
rest
in b
udge
tary
and
soci
al e
cono
mic
mat
ters
.
PDM
O
Publ
ic D
ebt
Man
agem
ent O
ffic
e •
Advi
ses o
n m
anag
emen
t of n
atio
nal g
over
nmen
t deb
t (in
ord
er to
min
imize
risk
s).
•Ad
vise
s on
debt
sust
aina
bilit
y w
hich
impa
cts o
n gu
aran
tees
to c
ount
ies a
nd p
ublic
ent
ities
. •
Prep
ares
and
upd
ates
the
annu
al M
ediu
m T
erm
deb
t man
agem
ent s
trat
egy.
•
Carr
ies o
ut o
n a
regu
lar b
asis
a de
bt su
stai
nabi
lity
anal
ysis.
•
Proc
esse
s the
issu
ance
of l
oan
guar
ante
es in
clud
ing
asse
ssm
ent a
nd m
anag
emen
t of r
isks i
n th
e N
atio
nal G
over
nmen
t gua
rant
ee.
•M
aint
ains
and
upd
ates
nat
iona
l deb
t inc
ludi
ng g
uara
ntee
s and
any
der
ivat
ive
finan
cial
inst
rum
ent t
hat
gove
rnm
ent m
ay e
nter
into
. S-
F&BC
Se
nate
Fin
ance
and
Bu
dget
Com
mitt
ee
•Pr
opos
es to
the
sena
te th
e cr
iteria
for a
lloca
tion
of re
venu
es a
mon
g co
untie
s.
•Re
view
s the
Ann
ual D
ivisi
on o
f Rev
enue
Bill
whe
n su
bmitt
ed to
Sen
ate
by th
e N
atio
nal A
ssem
bly.
•
Revi
ews a
nd re
com
men
ds to
the
sena
te th
e An
nual
Cou
nty
Allo
catio
n of
Rev
enue
Bill
. •
Exam
ines
fina
ncia
l sta
tem
ent s
ubm
itted
to th
e se
nate
. •
Mon
itors
the
adhe
renc
e by
the
Coun
ty e
ntiti
es to
prin
cipl
es o
f pub
lic fi
nanc
e as
set o
ut in
the
cons
titut
ion.
Sour
ce: S
ome
cont
ent i
n th
is ta
ble
adap
ted
from
Pow
erPo
int p
rese
ntat
ions
dev
elop
ed b
y N
atio
nal T
reas
ury—
‘Con
stitu
tiona
l and
lega
l fra
mew
ork
for P
FM
and
impl
icat
ion
on C
ount
y PF
M’,
‘Ken
ya’s
new
bud
get p
roce
ss’ a
nd ‘I
mpl
emen
tatio
n of
the
Publ
ic F
inan
ce M
anag
emen
t Act
, 201
2’.
18
Budget Preparation Module – Participant Book, October 2014
Tab
le 4
: Qu
ick
Ref
eren
ce—
Key
doc
um
ents
in
the
cou
nty
bu
dg
et p
repa
rati
on p
roce
ss
Docu
men
t
Wha
t is i
t?
Why
is it
pro
duce
d?
Who
pro
duce
s it a
nd b
y w
hen?
Ho
w d
oes t
his d
ocum
ent
prog
ress
the
budg
et
prep
arat
ion
cycl
e?
Coun
ty
Budg
et
Circ
ular
Issu
ed e
ach
year
, it
prov
ides
initi
al in
stru
ctio
ns
to g
uide
the
budg
et p
roce
ss
for t
he c
omin
g ye
ar.
The
Budg
et C
ircul
ar is
an
impo
rtan
t co
mm
unic
atio
n to
ol fo
r gui
ding
co
untie
s in
the
budg
et p
repa
ratio
n pr
oces
s for
the
com
ing
year
. N
ote:
ther
e is
furt
her g
uida
nce
issue
d by
the
Coun
ty T
reas
uryo
n de
taile
d bu
dget
ing
once
bud
get
ceili
ngs a
re fi
rmed
up
(i.e.
afte
r the
C-
FSP)
. See
Ses
sion
IV.
It is
prod
uced
by
each
Co
unty
Tre
asur
y by
30
Augu
st e
ach
year
. N
ote
that
the
coun
ty
budg
et c
ircul
ars w
ill v
ary
both
in c
onte
nt a
nd ti
min
g,
as lo
ng a
s the
y:
•M
eet m
anda
tory
co
nstit
utio
nal a
nd le
gal
dead
lines
, and
•
Com
ply
with
gaz
ette
ac
coun
ting
stan
dard
s.
•Gi
ves g
uida
nce
on k
ey
timel
ines
, pro
cedu
res,
po
licy
area
s and
fo
rmat
s.
•O
nce
this
is iss
ued,
pr
epar
atio
n of
the
C-BR
OP
can
com
men
ce.
Coun
ty
Inte
grat
ed
Deve
lopm
ent
Plan
s An
nual
Re
visio
ns
ispar
t of
Annu
al
Thes
e ar
e pr
epar
ed e
ach
year
and
incl
ude:
•
Stra
tegi
c pr
iorit
ies f
or
the
med
ium
term
•
Prog
ram
mes
to b
e de
liver
ed
•Si
gnifi
cant
cap
ital
expe
nditu
re
The
Coun
ty In
tegr
ated
Dev
elop
men
t Pl
an is
an
impo
rtan
t doc
umen
t for
id
entif
ying
: •
the
mai
n pr
iorit
ies o
f the
cou
nty
and
thei
r obj
ectiv
es
•th
e pe
rfor
man
ce in
dica
tors
, pr
ogra
mm
es a
nd a
ctiv
ities
that
ar
e ne
eded
to m
eet t
he
•Pr
epar
ed b
y CE
C M
embe
r for
Pla
nnin
g,
with
inpu
t fro
m th
e Co
unty
Bud
get a
nd
Econ
omic
For
um(C
-BEF
) an
d de
part
men
ts.
•Su
bmitt
ed to
the
CA b
y 1
Sept
embe
r eac
h ye
ar.
Info
rmat
ion
from
the
CIDP
in
form
s the
Cou
nty
Sect
or
Wor
king
Gro
up R
epor
t an
d th
e Pr
ogra
mm
e Ba
sed
Budg
etin
g pr
oces
s. S
ee
Sess
ion
II, P
art 6
and
Se
ssio
n III
, Par
t 2.
19
Budget Preparation Module – Participant Book, October 2014
Budg
et
•Gr
ants
, tra
nsfe
rs a
nd
subs
idie
s to
be m
ade
on
beha
lf of
CGs
.
obje
ctiv
es
•th
e co
stin
gs o
f the
prio
ritize
d ac
tiviti
es.
Coun
ty
Budg
et
Revi
ew a
nd
Out
look
Pa
per (
C-BR
OP)
The
C-BR
OP
com
pare
s pr
evio
us y
ear’s
reve
nue
and
spen
ding
aga
inst
wha
t was
pl
anne
d in
the
budg
et.
The
C-BR
OP
outli
nes:
•
Actu
al fi
scal
per
form
ance
in th
e pr
evio
us y
ear
•U
pdat
ed e
cono
mic
and
fina
ncia
l fo
reca
sts (
show
ing
any
chan
ges
from
the
fore
cast
s in
the
C-FS
P fr
om th
e pr
evio
us y
ear)
•
Iden
tific
atio
n of
bro
ad p
olic
y pr
iorit
ies
•In
dica
tive
avai
labl
e re
sour
ces t
o fu
nd C
G pr
iorit
ies.
•Pr
epar
ed b
y th
e Co
unty
Tr
easu
ry (
Coun
ty F
iscal
Pl
anni
ng G
roup
). •
Subm
itted
to C
A by
30
Sept
embe
r eac
h ye
ar.
•C-
BRO
P al
low
s for
the
CEC
to e
ngag
e on
ex
pend
iture
stra
tegi
es,
as w
ell a
s brie
f the
CA
on th
e bu
dget
pro
cess
an
d ec
onom
y of
the
coun
ty.
•O
nce
indi
cativ
e av
aila
ble
reso
urce
s are
id
entif
ied
in th
e C-
BRO
P, S
ecto
r Wor
king
Gr
oups
can
mee
t to
iden
tify
prio
ritie
s for
th
e co
min
g ye
ar.
Se
ctor
W
orki
ng
Gro
up R
epor
t
A re
port
whi
ch g
ives
sect
or
Visio
n an
d M
issio
n,
Stra
tegi
c Go
als o
f the
se
ctor
. A re
view
of t
he p
ast
perf
orm
ance
of t
he se
ctor
, in
clud
ing
a m
ediu
m te
rm
prio
ritie
s and
fina
ncia
l pla
n
The
purp
ose
of th
e Se
ctor
Rep
ort i
s to
out
linin
g th
e pr
iorit
izatio
n of
(c
oste
d) p
rogr
amm
es a
nd su
b-pr
ogra
mm
es, e
xpec
ted
outc
omes
, ou
tput
s and
key
per
form
ance
in
dica
tors
. The
Cou
nty
Inte
grat
ed
Deve
lopm
ent P
lan
is an
impo
rtan
t
•De
part
men
ts c
lust
ered
in
to se
ctor
s, le
d by
Ac
coun
ting
Offi
cers
. •
Grou
ps c
onve
ned
in
Oct
ober
, fol
low
ing
prep
arat
ion
of C
-BRO
P.
The
Sect
or R
epor
ts
prov
ide
a ba
sis fo
r the
de
part
men
ts to
go
thro
ugh
a pr
oces
s of
shar
ing
or a
lloca
ting
reso
urce
s am
ong
them
selv
es, o
n th
e ba
sis
20
Budget Preparation Module – Participant Book, October 2014
for t
he M
TEF
perio
d.
The
repo
rt g
ives
det
ails
of
cont
inui
ng p
roje
cts a
nd
prog
ram
s tha
t nee
d fu
ndin
g in
com
ing
fisca
l yea
r, w
hich
sh
ould
be
allo
cate
d fu
nds
befo
re n
ew o
nes.
docu
men
t to
info
rm th
e de
velo
pmen
t of t
his r
epor
t. A
form
at fo
r the
Sec
tor W
orki
ng
Grou
p re
port
is p
rovi
ded
in A
nnex
3.
of th
e se
ctor
al re
view
. Th
is w
ill th
en fe
ed in
to th
e pr
oces
s of p
repa
ring
depa
rtm
enta
l bud
get
estim
ates
, in
the
Ope
ratio
nal P
hase
of
budg
et p
repa
ratio
n.
Co
unty
Fis
cal
Stra
tegy
Pa
per (
C-FS
P)
The
C-FS
P co
ntai
ns:
•Su
mm
ary
of re
venu
e an
d ex
pend
iture
pe
rfor
man
ce fo
r the
FY
to d
ate.
•
Asse
ssm
ent f
or th
e re
mai
nder
of t
he
curr
ent F
Y.
•Br
oad
stra
tegi
c pr
iorit
ies a
nd p
olic
y go
als (
med
ium
and
lo
ng-t
erm
). •
Fina
ncia
l out
look
on
expe
nditu
res,
reve
nues
an
d bo
rrow
ing
for t
he
med
ium
term
.
The
CFSP
gui
des t
he fo
rmat
ion
of
the
budg
et fo
r the
com
ing
finan
cial
ye
ar. I
t loo
ks a
t pro
ject
ed re
venu
e an
d ex
pend
iture
and
impo
rtan
tly,
wha
t pro
port
ion
of th
e co
unty
’s
budg
et w
ill b
e al
loca
ted
to e
ach
sect
or. T
he S
ecto
r Wor
king
Gro
up
Repo
rts w
ill in
form
this
proc
ess.
•Pr
epar
ed b
y Co
untr
y Tr
easu
ry (
Coun
ty F
iscal
Pl
anni
ng G
roup
) •
Prep
ared
in ti
me
for
revi
ew a
nd a
ppro
val b
y th
e CE
C be
fore
su
bmiss
ion
to th
e CA
by
28 F
ebru
ary.
The
subm
issio
n of
the
C-FS
P sig
nals
the
end
of th
e ‘S
trat
egic
Pha
se’ o
f bud
get
prep
arat
ion
and
the
star
t of
the
‘Ope
ratio
nal P
hase
’. Fu
rthe
r ins
truc
tions
are
pr
ovid
ed to
cou
ntie
s on
how
to p
repa
re th
e de
taile
d bu
dget
est
imat
es.
!Not
e: T
he C
-FSP
mus
t be
alig
ned
with
the
natio
nal o
bjec
tives
in th
e Bu
dget
Pol
icy
Stat
emen
t (BP
S). T
he B
PS is
subm
itted
for a
ppro
val b
y on
15 F
ebru
ary,
whi
ch g
ives
co
untie
s tw
o w
eeks
to c
onsid
er th
e na
tiona
l obj
ectiv
es in
the
BPS
and
alig
n th
eir o
wn
C-FS
P ac
cord
ingl
y, b
efor
e su
bmitt
ing
by th
e en
d of
Feb
ruar
y.
21
Budget Preparation Module – Participant Book, October 2014
Coun
ty D
ebt
Man
agem
ent
Stra
tegy
This
med
ium
-ter
m st
rate
gy
stat
es a
ctua
l and
like
ly
liabi
lity
for t
he c
ount
y an
d ho
w to
dea
l with
it.
The
debt
man
agem
ent s
trat
egy
outli
nes:
•
The
tota
l sto
ck o
f deb
t as a
t the
da
te o
f the
stat
emen
t. •
The
sour
ces o
f loa
ns m
ade
to th
e co
unty
gov
ernm
ent a
nd ri
sks
asso
ciat
ed w
ith th
ose
loan
s.
•Th
e as
sum
ptio
ns u
nder
lyin
g th
e de
bt m
anag
emen
t str
ateg
y; a
nd
an a
naly
sis o
f the
sust
aina
bilit
y of
the
amou
nt o
f deb
t, bo
th
actu
al a
nd p
oten
tial.
The
Coun
ty D
ebt
Man
agem
ent S
trat
egy
is co
mpl
eted
and
su
bmitt
ed a
t the
sam
e tim
e as
the
C-FS
P, b
y 28
Fe
brua
ry.
The
Coun
ty D
ebt
Man
agem
ent S
trat
egy
com
plem
ents
the
C-FS
P in
th
at it
out
lines
how
co
untie
s pla
n to
dea
l with
an
y in
herit
ed d
ebt.
Sour
ce: S
ome
cont
ent i
n th
is ta
ble
adap
ted
from
pre
sent
atio
ns ‘C
onst
itutio
nal a
nd le
gal f
ram
ewor
k fo
r PFM
and
impl
icat
ion
on C
ount
y PF
M’,
by A
. Mw
enda
, N
atio
nal T
reas
ury
and
‘Ken
ya’s
new
bud
get p
roce
ss’.
22
Budget Preparation Module – Participant Book, October 2014
2. County Budget Cycle and Calendar Table 5: County Budget Calendar
Target Date (annually)
Activity Relevant Legislation
30 August
• Issued by CEC-MF from each county. • Budget Circular must also outline procedures for
inviting the public to participate in the process.
PFMA (2012) Section 128 (2)
1 September
• The CEC-MP submits the Development Plan to the County Assembly (CA) for approval.
• Copy of the plan to CRA and National Treasury (NT).
!Within 7 days of submission to the CA, the CEC-MP
must publish and publicize the plan.
PFMA (2012) Section 126 (3)
County Budget Circular Issued
County Integrated Development Plan Submitted
Concepts Box: County Budget Cycle and Calendar • The imperative for a county budgeting process is set down in key legislation –
including the Constitution of Kenya (2010) and the Public Finance Management Act (2012) (see Table 2).
• The budgeting process can be seen as a cycle (See Diagram 2), whereby the results of each year feed into the process for the following year.
• Linked to this budgeting cycle is a calendar (see Table 5; Diagram 3), which identifies target dates for the submission and approval of key budget documents. Many of these target dates for counties are aligned with key dates for the national budget.
• It is important to understand that the annual budgeting process ideally takes place using a Medium Term Expenditure Framework (MTEF)approach, which will be introduced later in this session.
• The Budget Calendar also identifies timeframes within which relevant documents must be published and publicized, in the interests of public participation. More details about public participation in the budgeting process will be provided later in this session.
23
Budget Preparation Module – Participant Book, October 2014
30 September
• The County Treasury (CT) prepares and submits the
C-BROP to the CEC. • CEC must review and approve within 14 days of
submission.
!Within 7 days of approval by the CEC, the CT will
arrange for the paper to be laid before the CA and subsequently publish and publicize the paper.
PFMA (2012) Section 118 (1), (2) (a) (b) (c) (d), (3), (4)
31 December
• CRA makes recommendations on revenue sharing (vertical and horizontal).
PFMA (2012) Section 190
28 February
• The CT prepares and submits the C-FSP to the CEC,
allowing enough time for review and approval before submission to the CA by 28 February.
• The C-FSP is submitted to the CA for approval by 28 February and must be aligned to the BPS
• CA must review and adopt within 14 days of submission.
!Within 7 days of submission to the CA, the County
Treasury publishes and publicizes the C-FSP.
PFMA (2012) Section 117 (1), (6), (8)
28 February
• CT submits Debt Management Strategy of the county to the CA.
!As soon as practicable after the statement has been
submitted to the CA, the CEC-MF publishes and publicizes the statement and submits copies to the CRA and IBEC.
PFMA (2012) Section 123 (1), (3)
30 April
• CEC-MF submits the Budget Estimates to the CEC for
approval, prior to submitting to the CA by 30 April. • Budget Estimates must be submitted with all
supporting documents and draft bills. • The CEC-MF prepares and presents his/her
PFMA (2012) Section 129, (1), (2), (3), (4)
C-BROP Submitted
C-FSP Submitted
Budget Estimates Submitted
24
Budget Preparation Module – Participant Book, October 2014
comments on the budgetestimates (by 15 May).
!As soon as practicable after the budget estimates and
other document have been submitted to the CA, the CEC-MF publishes and publicizes the documents.
15 June
• CG to prepare and submit annual cash flow projections for the county to the CoB with copies to IBEC and NT.
PFMA (2012) Section 127 (1)
30 June
• CA considers budget estimates and approves with or without amendments, in time for relevant appropriation law or laws required to implement the budget – to be passed by 30 June.
PFMA (2012) Section 131 (1)
30 June
• CA approves budget estimates and passes the Appropriation Bill.
• After approval of the budget, the CEC-MF is expected to consolidate, publish and publicize the budget within 21 days.
PFM 2012, 131(5)
Within 90 days of
approval of Appropr’n
Bill
• The CEC-MF with approval from the CEC, submits the County Finance Bill to the CA, which sets out the revenue raising measures for the county government, together with a policy statement expounding on those measures.
PFMA (2012) Section 133
On an ‘as needed’
basis
• Submission of supplementary estimates by relevant County Executives to the Cabinet Secretary for Finance.
• Submission of the consolidated supplementary estimates to CA.
• Approval of supplementary estimates.
PFMA (2012) Section 135
!Details about the budget documents mentioned in the above budget calendar can be
found in Table 4.
Budget Estimates Approval
25
Budget Preparation Module – Participant Book, October 2014
New
cyc
le c
omm
ence
s
Diag
ram
2: B
udge
t Cyc
le –
Cou
nty
Budg
et P
repa
ratio
n
Esta
blis
hing
cou
nty
reso
urce
en
velo
pe,re
venu
e an
d de
bt li
mits
Se
ctor
Wor
king
G
roup
s and
Res
ourc
e Al
loca
tion
Annu
al A
udits
•Re
port
s•
Ove
rsig
ht
Prep
arat
ion
of
Depa
rtm
enta
l Bud
get
•Re
view
by
Coun
ty
Trea
sury
and
co
nsol
idat
ion
•Su
bmiss
ion
to
Coun
ty A
ssem
bly
Legi
slat
ive
Appr
oval
Pr
oces
s•
Scru
tiny
and
appr
oval
by
Asse
mbl
y•
Coun
ty F
inan
ce
Bill
•Su
pple
men
tary
Es
timat
es
Budg
et E
xecu
tion
•Ca
sh fl
ow
repo
rtin
g•
In-y
ear r
epor
ts
•Ex
ecut
ion
and
repo
rtin
g•
Acco
untin
g
Coun
ty B
udge
t Ci
rcul
ar is
sued
Deve
lopm
ent P
lans
su
bmitt
ed
C-BR
OP C-FS
P
Budg
et E
stim
ates
Su
bmitt
ed
Budg
et A
ppro
val
Stra
tegi
c Ph
ase
Ope
ratio
nal P
hase
26
Budget Preparation Module – Participant Book, October 2014
Diag
ram
3: B
udge
t Cal
enda
r– C
ount
y Bu
dget
Pre
para
tion
Coun
ty B
udge
t Ci
rcul
ar
Inte
grat
ed
Deve
lopm
ent
Plan
C-BR
OP
C-FS
P
Deve
lopm
ent P
lan
subm
itted
by
1 S
epte
mbe
r
Budg
et C
ircul
ar
issu
ed b
y 30
Aug
ust
C-BR
OP
subm
itted
by
30
Sept
embe
r
Budg
et
Appr
oval
Budg
et E
stim
ates
su
bmitt
ed b
y 30
Apr
il
Budg
et
Estim
ates
Appr
opria
tion
Bill
mus
t be
pass
ed b
y
30 Ju
neCR
A re
com
men
datio
ns
on re
venu
e sh
arin
g
C-FS
P su
bmitt
ed b
y 28
Feb
ruar
y (a
lso
Debt
Man
agem
ent S
trat
egy)
Stra
tegi
c Ph
ase
O
pera
tiona
l Ph
ase
27
Budget Preparation Module – Participant Book, October 2014
Dia
gra
m 4
: Leg
isla
tive
App
rova
l P
roce
ss—
Fro
m B
ud
get
Est
imat
es t
o A
ppro
val
1. S
ubm
it
estim
ates
to C
A by
30
April
Bu
dget
Es
timat
es
2. D
epar
tmen
t Co
mm
ittee
s re
view
and
ex
amin
e es
timat
es
Budg
et
Appr
oval
11. C
ount
y
Fina
nce
Bill
12.
Supp
lem
enta
ry
Estim
ates
3. D
epar
tmen
t Com
mitt
ees
cons
ult w
ith C
EC, A
Os a
nd
othe
r sta
keho
lder
s
6. B
AC p
repa
res a
re
port
and
re
com
men
datio
ns
and
subm
its to
CA
by
firs
t wee
k of
June
5. B
AC
hold
s pu
blic
bu
dget
he
arin
gs
4. C
omm
ittee
s sub
mit
repo
rt a
nd
reco
mm
enda
tions
to th
e Bu
dget
and
App
ropr
iatio
ns
Com
mitt
ee (B
AC).
CEC-
MF
prep
ares
and
subm
its a
mem
oran
dum
to
CA
on th
e bu
dget
of t
he C
Aand
re
com
men
datio
ns b
y 15
May
.
7. C
A ad
opts
ther
epor
t an
drec
omm
enda
tions
and
appr
oves
est
imat
es (w
ith
or w
ithou
t am
endm
ents
)
9. B
AC in
trod
uces
Ap
prop
riatio
n Bi
ll 8.
CEC
-MF
prep
ares
Ap
prop
riatio
n Bi
lland
su
bmits
to C
A
10. A
ppro
pria
tion
Bill
m
ust b
e pa
ssed
by
30
June
28
Budget Preparation Module – Participant Book, October 2014
3. Legislative Approval Process 1. Submission of Estimates See PFMA (2012) Section 129, (1)–(7); 130 (1)
• At least two months before the end of the financial year (i.e. before 30 April), the County Executive Committee Member for Finance (CEC-MF) submitsbudget estimates of the county government (and supporting documents) to the County Executive Committee (CEC).
• The CEC approves and then the CEC-MF submits estimates, supporting documents and Bills to the County Assembly (CA), by 30 April.
• At the same time, the County Assembly Clerk for the County Assembly prepares and submits the estimates of expenditure for the CA, with a copy submitted to CEC-MF.
• The budget estimates submitted should include all estimated revenue, as well as estimated expenditure, by Vote and by programme, clearly identifying both recurrent and development expenditures (See ‘Quick Reference Box—Budget Estimates’ in Session IV).
• The submission should be accompanied by supporting memorandum to justify or explain key decisions and demonstrate compliance with principles of fiscal responsibility (i.e. PFMA (2012) Section 107 (2)).
2. Departmental Committees
• Estimates stand committed to departmental committees for scrutiny and interrogation, in accordance with their respective mandates.
• See Annex 6 which gives the types of departmental committees found at the counties, based on their standing orders and their mandates.
• County Assemblies also establish PAC and PIC, which have the mandates for auditing. • Depending on special needs, a county may establish special purpose committees. • Committees are required to review and examine the estimates, prepare a report and
submit to Budget and Appropriations Committee (BAC). 3. Departmental Committees consult with stakeholders
• During the process, the departmental committees may consult with CEC members, AOs and other stakeholders, as appropriate.
4. Committees report to BAC
• Departmental committees are required to consider, discuss and review the estimates, prepare a report and recommendations and submit to Budget and Appropriations Committee (BAC) within 21 days of being submitted to the CA.
29
Budget Preparation Module – Participant Book, October 2014
• The BAC is established under the standing orders for the County Assembly. The committee consists of not more than eight members.
• The functions of the committee include: coordination and control of the county budget, review of the budget of both the County Assembly and the county executive budget, review and approval of the County Fiscal Strategy Paper, examination of any budget related legislative proposal, introduction to the assembly of appropriations bill and evaluation of tax estimates, economic and budgetary policies and programs with direct outlays.
5. BAC holds public budget hearings
• The County BAC should take a lead role and hold county public budget hearings immediately after the estimates are laid before the CA.
• The public hearings are held in an accessible venue within the county. Depending on the area covered by the county they can be held in various urban centres, or just in one centre as the BAC shall determine.
• The hearings are structured in a manner to allow the public make their recommendations and views on the budget without much of an interruption.
• The date and venue should be adequately advertised within the county. • Most hearings are one day and can be held in various centres simultaneously so long
as in each venue there is a member of BAC taking a lead role. 6. BAC prepares report and recommendations
• BAC should collate views from the public hearings, including presentations by departmental committees, and prepare a report, recommendations and table them before CA.
• The BAC review, as well as the departmental committees, should seek answers to such questions as:
i) Do the estimates comply with the PFM provisions in Constitution and the PFM Act?
ii) Is it consistent with approved CIDP on needs and priorities iii) Are the recurrent estimates fully funded? iv) If there is a deficit, if there is, is the planned borrowing factored in approved
Strategic Debt Management Strategy Paper already approved? v) Have the estimates taken into consideration the County Assembly resolutions
in C-FSP? vi) Will the estimates lead to the accomplishment of the targets set out in the C-
FSP? vii) Are critical spending areas (mandatory expenditures) taken care of? viii) Has the budget taken into consideration the previous audit
recommendations?
30
Budget Preparation Module – Participant Book, October 2014
• Based on the analysis of such questions and results of consultations with key stakeholders, and other departmental committees, The BAC prepares its report and a recommendation on budget estimates, which it tablesbefore the County Assembly.
• The report by the BAC should be laid in the County Assembly latest by the first week of June.
• This is for the purposes of ensuring the report is debated and any amendments to the budget are agreed to, in order to facilitate the preparation and approval of the County Appropriation Bill, which constitutes legal authority to spend public money.
Altering the Estimates See PFMA Section 131 (3)
• There are limitations on the power of the County Assembly to alter the estimates. The budget balance must remain the same, and any increases must be balanced by a corresponding reduction.
• According to the PFMA (2012), and also should be provided for in County Standing Orders, for the CA to make amendments and increase expenditure, this must be matched by a reduction elsewhere, as below:
• This is necessary for the BAC to safeguard the overall resource envelope, consistent with the C-FSP and to ensure that (as provided in the Constitution) there is prudence in the allocation and use of public resources.
7. County Assembly approves budget estimates See PFMA Section 131 (1), (5), (6)
• CA adopts the report and recommendations of the BAC, with or without amendments, and approves the budget estimates, in enough time for the relevant Appropriation Bill to be passed by 30 June.
• Not later than 21 days after CA has approved the budget estimates, the County Treasury shall consolidate the estimates and publish and publicize them.
• The CEC-MF shall take all reasonably practicable steps to ensure that theapproved budget estimates are prepared and published in aform that is clear and easily understood by, and readilyaccessible to, members of the public.
PFMA Section131(3) an amendment to the budget estimates may be made by the county assembly only if it is in accordance with the resolutions adopted regarding the County Fiscal Strategy Paper and if—
(a) any increase in expenditure in a proposed appropriation, is balanced by areduction in expenditure in another proposed appropriation; and (b) any proposed reduction in expenditure is used to reduce the deficit.
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Budget Preparation Module – Participant Book, October 2014
8. CEC-MF prepares the Appropriation Bill See PFMA Section 129 (7); Section 130 (2)
• Upon approval of the budget estimates by the CA, the CEC-MF shall prepare and submit a County Appropriation Bill to the CA, of the approved estimates.
• In preparing the annual Appropriation Bill to put before the CA, the CEC-MF shall ensure that the expenditure appropriations in the Bill are in a form that— (a) is accurate, precise, informative and pertinent tobudget issues; and (b) clearly identifies the appropriations by Vote andprogramme.
9. BAC introduces the Appropriation Bill
• The PFMA and County Standing Orders provide that upon approval of the budget estimates by the CA, the BAC shall introduce the Appropriation Bill.
• That Bill should be in line with the House resolutions on the Budget and the BAC report.
• The Schedules attached to this Bill cannot be amended during debate in Assembly, unless:
1. The amendments have been referred back to the BAC. 2. Or are in conflict with the resolutions of the CA on the budget and those in
the BAC report. Vote on AccountSee PFMA Section 134, (1), (2) / CoK Articles 221, 222
• A ‘Vote on Account’ is a precautionary measure intended to avert situations of county operations grinding to a halt due to delayed budget approval. It is provided for in PFMA Section 134 subsection (1) and states:
• It is important to note that the COK 222 contemplates existence of an appropriation bill, which if not assented to or unlikely to be assented justifies a Vote on Account. The appropriation bill must therefore be before the County Assembly.
• A Vote on Account can only be done under certain circumstances, as outlined in PFMA Section 134, subsection (2) (a) and (b):
If the County Appropriation Bill for a financial year has not been assented to, or is not likely to be assented to, by the beginning of that financial year [i.e. 1 July] acounty assembly may authorise the withdrawal of money from the County Revenue Fund.
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Budget Preparation Module – Participant Book, October 2014
• The above is also upheld in the Constitution of Kenya (2010), Articles 221, 222. While these two articles refer to the process at National level, the same principles apply at county level.
10. The CA passes the Appropriation Bill
• As noted previously, this Bill must be passed by 30 June. 11. County Finance Bill See PFMA Section 132 (2), 133
• The CEC-MF with approval from the CEC, submits the County Finance Bill to the CA, which sets out the revenue raising measures for the county government, together with a policy statement expounding on proposed measures.
• As part of preparing the Finance Bill CEC-MF to provide analysis of previous fiscal year performance, expected receipts and projections (see below).
• Proposed changes by the CA must ensure that total revenues remain the same as in the C-FSP, to avoid financing gaps.
• Recommendations of the CEC-MF on changes proposed by the CA are to be tabled in the CA.
• Within 90 days after the CA passes the Appropriation Bill, the CA must consider and approve the County Finance Bill (with or without amendments), otherwise it will contravene the law.
• Failure to approve Finance constitutes a serious breach since it may lead to unplanned deficit (not included in approved Debt Management Strategy).
(2) Money withdrawn under subsection (1)—(a) may be used only for the purpose of meeting expenditure necessary to carry on the services of the county government during the financial year concerned, until such time as the relevant appropriation law is passed: and(b) may not exceed, in total, one-half of the amount included in the estimates of expenditure submitted to the county assembly for that year.
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Budget Preparation Module – Participant Book, October 2014
12. Supplementary Estimates See PFMA Section 135 (1)–(7)
• The Constitution and PFMA provide leeway for the county government to prepare and submit Supplementary Estimates to the County Assembly in certain circumstances.
• The purpose of Supplementary Estimates is to: a) Regularise unforeseen and unexpected circumstances resulting in
expenditures being incurred in the course of delivery of services, for example an outbreak of disease that needs an increase in allocation of drugs to hospitals, changes in the weather that may lead to intervention by county governments. Ideally, any expenditure that cannot wait until the next financial year.
b) Finance cost escalations in ongoing services, for example an ongoing contract where the costs increase due to inflation and the project needs to be completed and all the bills paid within the financial year.
Information for preparation of Finance Bill1. A Finance Bill is based on existing revenue laws which it seeks to
change. Comprehensive and up to date information on each of the existing revenue bases identifies:
• areas of weaknesses which need legal changes to firm up• areas of potential increase of tax rate• areas where tax needs change e.g. lowering the rate• seek information from sector regulators (if necessary)• consider cost implications to both enforcement and compliance
2. Consider compliance with constitution and law3. Possible areas for taxing or levying fees/charges4. Estimate possible receipts based on proposed rate and coverage5. Review capacity to enforce/administer the changes, consider:
• possible changes in law• human resources/skills needed
Based assessed ability to enforce and collect, County Treasury seeks:• approval from CEC• on approval, the CEC-MF prepares the Bill• submits Bill to County Assembly with supporting information
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Budget Preparation Module – Participant Book, October 2014
• According to PFMA Section 135 (1), the county government may spend money that has not been appropriated if:
o The amount appropriated is insufficient, or a need has arisen for expenditure for a purpose not appropriated by the County Appropriation Act.
o Money has been withdrawn from the county government Emergency Fund. o Money set aside in approved budget could not be spent due to unavoidable
circumstances and needs to be reallocated, e.g. delays due to procurement appeals.
• Approval for additional expenditure must be sought within two months after the first withdrawal of the money.
• The county government would submit a supplementary budget in support of additional expenditure to the CA. This must describe how the additional expenditure relates to fiscal responsibility principles and financial objectives.
• If the CA approves this additional expenditure, a Supplementary Appropriation Bill is introduced for appropriation of the money.
• Importantly, in any financial year, the county government may notspend more than ten percent (10%)of the amount appropriated by the CA for that year as additional expenditure (unless that CA has, in special circumstances, approved ahigher percentage).
!For some examples of FY 2013/14 County Appropriation Bills and County
Finance Bills go to: http://kenyalaw.org/kl/index.php?id=3408
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Budget Preparation Module – Participant Book, October 2014
Exercise 2: Meeting budget calendar targets
Your role in the county budget preparation process requires you to carry out specific tasks by specific deadlines, as we have seen in budget calendar. This exercise aims to help you to think about how you and your county can be in a good position to meet the calendar budget targets. 1. Work in groups of 4 or 5 for this activity. Ideally you will work in a group with other people from your own county. 2. In your groups, look at the different stages provided in the budget calendar in Table 5 and answer the following questions:
• For our county’s budget preparation for 2013/14, how well did we meet these calendar targets?
• If we did not meet these targets, what were some of the reasons why? 3. Now, in your groups, think about the budget preparation process for 2014/15 that you have recently commenced, and ask the following questions:
• How well have we met the calendar targets so far (for example, for our county’s Budget Circular and C-BROP), and what could be improved?
4. Your task will be to create a brief work plan for the remainder of the 2014/15 budget cycle for your county, marking in key dates. Use the information provided in Tables 3, 4 and 5 and in Diagrams 2 and 3 to help you. Also refer to the key legislation if you have it available. Some guiding questions include:
• Who are the key people needed for each of the budget activities described in the budget calendar?
• Are we clear about our own roles in this budget preparation process? • If something is due by X date, when do we need to start preparing? For
example, the C-FSP must be submitted to the CA by 28 February. When should this start to be prepared? What are the possible constraints? What other activities are going on at the same time?
• What things might we need to help us meet our budget calendar targets? (For example, specific information or support).
• Is enabling law in place to enable county change tax rates/fees?
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Budget Preparation Module – Participant Book, October 2014
4. Strategic vs. Operational Phases of budget preparation
Concepts Box: Strategic vs Operational Phases • We can think of the budget preparation process as being in two phases—
‘Strategic’ and ‘Operational’ (see Diagrams 2 and 3).
• The Strategic Phase starts with the issue of the Budget Circular and concludes with the finalisation of the C-FSP (August-February). Activities include:
o County Integrated Development Plan prepared and informs: the main priorities of the county and their objectives; the performance indicators, programmes and activities that are needed to meet the objectives; and costing of the prioritised activities.
o Preliminary resource envelope and budget strategy (C-BROP) submitted to CEC and CA.
o Approval by CEC and recommendations from CRA Sector Working Groups consult and prepare Sector Reports
o Sectoral Resource Allocation process
o C-FSP prepared, submitted and approved
o Upon the CFSP is approved then the ceilings for departments are firmed up and issued to the departments.
• The Operational Phase involves the preparation of Budget Estimates (March-April) and include:
o Budget estimates prepared by departments, for recurrent and development budgets and according to programme based budgeting formats, as per requirements of PFM Act 2012 second schedule section 12.
o Budget estimates prepared by departments, which use the Chart of Accounts.
o Submission of budget estimates to the CEC and then to the CA for approval.
!Diagrams 5a and 5b below outline of who is involved in these two phases. Step
by step guidance on these two phases will be given in Sessions IIIand IV.
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Budget Preparation Module – Participant Book, October 2014
Diag
ram
5a:
Bud
get C
ycle
– S
trat
egic
Pha
se O
verv
iew
Co
unty
Fis
cal P
lann
ing
Gro
up•
Estim
ates
the
‘reso
urce
env
elop
e’.
•De
velo
ps d
raft
C-B
ROP
and
C-FS
P.•
Mem
bers
hip
from
the
Coun
ty T
reas
ury,
Dep
artm
ent o
f Ec
onom
ic P
lann
ing
and
othe
rs.
Co
unty
Sec
tor W
orki
ng G
roup
s•
Agre
e on
sect
or o
bjec
tives
and
prio
ritie
s, re
sulti
ng fr
om
the
Coun
ty D
evel
opm
ent P
lan.
•De
part
men
ts a
re g
roup
ed in
to se
ctor
s acc
ordi
ng to
m
anda
tes a
nd fu
nctio
ns.
•Al
loca
te se
ctor
reso
urce
s to
depa
rtm
ents
.
Citiz
ens
•In
volv
ed in
pub
lic h
earin
gs o
n th
e bu
dget
and
its r
elat
ed
docu
men
ts, s
uch
as C
-BRO
P an
d Co
unty
Sec
tor R
epor
ts.
•En
gage
with
the
budg
et p
repa
ratio
n pr
oces
s thr
ough
the
Coun
ty E
xecu
tive
Com
mitt
ee (C
EC).
Co
unty
Exe
cutiv
e Co
mm
ittee
•
Resp
onsib
le fo
r soc
io-p
oliti
cal a
nd fi
nanc
e as
pect
s in
a co
unty
.•
Appr
oves
the
C-BR
OP
and
C-FS
P do
cum
ents
. •
Enga
ges w
ith th
e pu
blic
on
the
budg
et p
roce
ss.
C-BR
OP
•Es
tabl
ishi
ng
coun
ty
reso
urce
en
velo
pe,
reve
nue
and
ceili
ngs.
•
Sect
or W
orki
ng
Gro
ups a
nd
Reso
urce
Al
loca
tion
C-FS
P
Stra
tegi
c Ph
ase
Co
unty
Dev
elop
men
t Pl
an
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Budget Preparation Module – Participant Book, October 2014
Diag
ram
5b:
Bud
get C
ycle
–O
pera
tiona
l Pha
se O
verv
iew
Co
unty
Dep
artm
ents
•
Prep
are
deta
iled
budg
et e
stim
ates
and
subm
it to
Cou
nty
Trea
sury
for r
evie
w a
nd c
onso
lidat
ion.
Coun
ty T
reas
ury
•Re
view
s and
con
solid
ates
dep
artm
enta
l bud
get
estim
ates
. •
Prov
ides
gui
danc
e to
cou
nty
depa
rtm
ents
on
prep
arat
ion
of e
stim
ates
, thr
ough
mea
ns o
f a B
udge
t Ci
rcul
ar sp
ecifi
cally
on
prep
arin
g bu
dget
est
imat
es.
CE
C-M
F •
Subm
its b
udge
t est
imat
es to
CEC
and
then
to C
A fo
r th
eir a
ppro
val.
Acco
untin
g O
ffic
ers
•Le
ad th
e va
rious
Cou
nty
Sect
or W
orki
ng G
roup
s.
•Le
ad ro
le in
pre
parin
g an
d su
bmitt
ing
depa
rtm
enta
l bu
dget
s.
•Im
plem
ent r
ecom
men
datio
ns o
f the
Cou
nty
Asse
mbl
y on
the
Audi
t Rep
orts
and
any
oth
er.
Prep
arat
ion
of
Depa
rtm
enta
l Bud
gets
•Re
view
by
the
Coun
ty T
reas
ury
and
cons
olid
atio
n•
Subm
issio
n to
Co
unty
Ass
embl
yOpe
ratio
nal P
hase
Budg
et A
ppro
val
Budg
et E
stim
ates
Su
bmitt
ed
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Budget Preparation Module – Participant Book, October 2014
5. Introduction to Medium Term Expenditure Framework
Concepts Box: What is an MTEF? • MTEF stands for ‘Medium Term Expenditure Framework’. It is an approach
to budgeting that seeks to link policy, planning and budgeting.
• MTEF provides a framework for evaluating and allocating available resources, based on agreed policy priorities that are consistent with the national development objectives.
• A key element of a budget developed using an MTEF approach, is that expenditure estimates are set down for a three-year period—that is, the coming budget year and the two years following. This is why it is referred to as a Medium Term Expenditure Framework.
• The MTEF approach supports a two-tier process of ‘top down’ and ‘bottom up’, as shown below:
! It is important to understand that the MTEF is not a separate process from
that outlined in the budget calendar and cycle above. Rather, the MTEF gives a framework in which to develop the county budget, in accordance with the budget calendar and cycle. Many of the activities associated with budget preparation within an MTEF are located in the ‘Strategic Phase’ of budgeting. We will identify where elements of an MTEF link into the budget preparation process as we go through the step by step processes in Session III.
MTEF
Decide on parameters and set policy goals and targets e.g. County Fiscal Planning Group
Needs identification and prioritisation e.g. citizens
!The aim is to integrate the ‘top down’ and ‘bottom up’ processes.
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Budget Preparation Module – Participant Book, October 2014
Concepts Box: Principles of MTEF The three key principles MTEF aims to achieve are the following, with the overarching goal of transparent and accountable government:
Fiscal Discipline
Allocative Efficiency
Predictability Fiscal Discipline—is about ensuring that the availability of resources drive expenditure decisions and that resource mobilisation is conducted efficiently, effectively and equitably.
In other words, ‘spend within limits’.
Allocative Efficiency—is about allocating available resources to agreed strategic priorities, both between and within sectors.
In other words, ‘spend where it is most needed’, which requires sequencing.
Predictability—is about developing consistent and realistic systems and processes for resource estimation, projection, collection and disbursement.
In other words, ‘know what is available to spend’.
Questions for Discussion • What experience have you had of developing a budget using an MTEF
approach? Share your thoughts with the group. • Based on your understanding and knowledge of MTEF, can you identify
some reasons why it might be useful to adopt an MTEF approach to budgeting—in other words, why do it?
Transparency and Accountability
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Budget Preparation Module – Participant Book, October 2014
6. Introduction to Programme Based Budgeting
Concepts Box: What is Programme Based Budgeting? • Programme Based Budgeting (PBB) is an approach to budgeting where the
expenditures are planned, authorised and executed in the form of ‘outcomes-based’ programmes. This means that the focus of the budget shifts from ‘inputs’, to the intended ‘outputs and outcomes’ of the budget.
• PBB is a new process for Kenya. FY 2013/14 was the first year of budgets prepared and presented as programme based budgets at national level. FY 2014/15 will be the first year of doing so at the county level. See PFMA (2012) Second Schedule, Section 12.
• According to PFMA (2012) Section 38, the budget formats shall include: o All expenditures by vote and by programme, clearly identifying both
recurrent and development expenditures (see (1) (b) (v)). o The appropriations by vote and by programme (see 3 (b)).
• A PBB is different from traditional ‘line item’ budgets in a few ways: o The PBB still has recurrent and development expenditures, but
these are presented under specific ‘programmes’, which aim to achieve certain outcomes. This way, we have more of an idea what the expenditure is actually trying to achieve.
o Each county department submits their budget estimates within a PBB format. A PBB must also include narrative information, which explains what a department is trying to achieve through its budget.
See Annex 5 for an example of the PBB format from Treasury Circular No. 11/13. The County Treasury should also, in its Budget Circular, outline guidelines and formats for PBB for the coming budget year. There is also an example and practical exercise on converting a line item budget to a Programme Based Budget, see Session IV, Exercise 5: Karibu County Programme Based Budget.
!The National Treasury has prepared a Programme Based Budgeting Manual
which can be downloaded from the Treasury website at www.treasury.go.keor a hard copy from the National Treasury. Participants are advised to obtain copies of the PBB Guide or Manual.
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Budget Preparation Module – Participant Book, October 2014
Concepts Box: What is Programme Based Budgeting? (continued) • Because the PBB needs to outline programme objectives, targets and
performance indicators—and link expenditure to these things—there is a need for very strong links between the planning and budgeting processes.
• In addition, the planning process helps to prioritise what is included in the budget. This is important because ‘public need’will always exceed available resources, thus a ‘trade-off’, or prioritisation process is required, which should involve public participation. Once prioritisation is done, the budget becomes a tool to implement plans that can deliver desired results.
• The Parliament will appropriate at Vote level both recurrent and Development as set out in the Constitution thus it is important for the programs to be broken down into recurrent and into development
• A sample appropriation bill is included in the annexes.
• As such, the County Integrated Development Plan (CIDP) is very important for the development of the PBB, as the plan should identify:
o the main priorities of the county and their objectives o the performance indicators, programmes and activities that are
needed to meet the objectives o costing of the prioritised activities.
See Session III, Part 2 for more information and Diagram 6 below, which illustrates the ‘Programme Based Budget Hierarchy’, showing how activities link to outputs and strategic objectives.
! Also refer to PFMA (2012) Section 126, for what the plan should include: (a) strategic priorities for the medium term that reflect the county government’s priorities and plans; (b) a description of how the county government is responding to changes in the financial and economic environment; (c) programmes to be delivered with details for each programme of—
(i) the strategic priorities to which the programme will contribute;(ii) the services or goods to be provided;(iii) measurable indicators of performance where feasible; and(iv) the budget allocated to the programme;
(d) payments to be made on behalf of the county government, including details of any grants,benefits and subsidies that are to be paid; (e) a description of significant capital developments;(f) a detailed description of proposals with respect to the development of physical,
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Budget Preparation Module – Participant Book, October 2014
Dia
gra
m 6
: Pro
gra
mm
e B
ased
Bu
dg
etin
g H
iera
rchy
Ac
tiv
itie
s
vC
os
t Av
Co
st B
vC
os
t C
Th
e h
iera
rch
ical
str
uc
ture
Str
ate
gic
o
bje
ctiv
e
Ind
ica
tors
Wh
at i
s it
?
Str
ate
gic
o
bje
ctiv
ev
Ind
icato
r 1
vIn
dic
ato
r 2
vIn
dic
ato
r 3
Ind
ica
tors
fo
r e
ac
h o
bje
cti
ve
An
ob
ject
ive
is a
bro
ad
stat
emen
t re
flec
tin
g th
e d
esir
ed
beh
avio
ura
lch
ang
e in
ser
vice
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sers
or
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inst
itu
tio
n (t
he
ben
efit
). A
sin
gle
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ay
have s
evera
l indic
ato
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l outp
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vIn
dic
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dic
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dic
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t is
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. It m
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f th
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an in
fras
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re; o
r th
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ivit
ies.
A s
ingle
outp
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ay h
ave s
evera
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rs
and s
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l activitie
s
Ac
tiv
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Ac
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n th
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em
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) a
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. Th
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the
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A S
trate
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A S
trate
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r 5
Ind
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r 6
Ind
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Pla
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Ac
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Pla
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tio
n d
ate
Imp
lem
en
tati
on
mo
nit
ori
ng
Bu
dg
etin
g b
y lin
e it
em
(an
d G
FS
co
de
) a
nd
mo
nito
rin
g o
f th
e ti
min
g o
f th
e
act
ivity
. Th
is is
the
op
era
tion
al s
ide
of
a p
lan
Go
K d
esired
o
utc
om
es in
Vis
ion
2030
Go
K d
esired
o
utc
om
es in
Vis
ion
2030
Ind
ica
tors
fo
r e
ac
h o
utc
om
e
Ind
icato
r 1
Ind
icato
r 2
Ind
icato
r 3
An o
utc
om
e is
a c
hange b
rought
about
by a
GoK
inte
rvention. It
may h
ave
severa
l indic
ato
rs a
nd s
trate
gic
obje
ctives
An o
bje
ctive is
a b
road s
tate
ment
reflecting the d
esired b
ehavio
ura
l change in
serv
ice u
sers
or
the
institu
tion. A
sin
gle
obje
ctive m
ay h
ave
severa
l indic
ato
rs a
nd o
utp
uts
An o
utp
ut
is a
deliv
era
ble
that
measure
s p
roduction o
r quantity
pro
vid
ed. It
may c
onstitu
te
infr
astr
uctu
re o
r th
e r
esult o
f a s
eries
of activitie
s
An a
ctivity is
a s
tep in the p
rocess
required t
o tra
nsfo
rm inputs
to o
utp
uts
An in
put
is a
resourc
e u
sed t
o p
erf
orm
w
ork
or pro
vid
e s
erv
ices
Sub-p
rogra
mm
es
Pro
gra
mm
es
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Budget Preparation Module – Participant Book, October 2014
7. Introduction to the Chart of Accounts (CoA)
Concepts Box: What is the Chart of Accounts?
• The Kenyan Government has been over the years restructuring its budget to suit international standards for financial management, by adopting some of the principles contained in the Government Financial Statistics Manual (GFS 2001).
• The migration to GFS 2001 was done in the 2005/06 budget. This resulted into the adoption of new classification of economic activities within the budget process.
• Further, the government has now adopted a new Chart of Accounts (COA). The COA consists of the cost centre, program, project and economic classification.
• The COA is important because it allows for consistency in all aspects of budgeting, including execution control and monitoring, accounting, comparability and reporting.
• A COA illustrates the various headings under which an organisation’s transactions are classified, analysed and recorded. Not only does it create a simple and straightforward recording of process, but a well-constructed chart of accounts also provides standard account heads for budgeting and budgetary control purposes.
• The chart of accounts is being introduced to enhance government accounting and financial reporting. It is a new system for recording of financial transactions.
• Institutions connected to IFMIS are already linked to the COAs and the codes are already uploaded in the system. Reports to be generated are customised in the system. Efforts are being made to ensure the entities not yet on IFMIS prepare and produce their financial reports using COA codes.
• The current COA has seven segments: namely: (i) Class: recurrent, development etc. (ii) Vote: appropriation entity e.g. Ministry/Department (iii) Administrative: also known as the cost centre (iv) Source of Finance (v) Program (vi) Economic: The HOW /input (vii) Geographical
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Budget Preparation Module – Participant Book, October 2014
Concepts Box: What is the Chart of Accounts? • Based on these segments, the coding structure has been shaped such that
data on government spending is captured and recorded based on each of the seven segments. The new coding structure shapes the way government expenditure is to be classified and used to generate required budget and financial reports.
• This is a sure departure from the previous fragmented and shallow coding structures which did not disclose critical information on government revenues and spending for analytical purposes .New COAs will enable government inform itself, report on a timely basis to Parliament and let citizens who are taxpayers know how their money has been used.
• The new COAs fits in the new devolved system of government, and so by extension in the Constitution and the PFM Act, 2012. Though system introduces some fundamental changes, it is not doing away with some of the current functionalities, which will be retained and used across the seven segments.
• It is sufficient to say the COAs will make the budget more credible, transparent and comprehensive which is in line with best practices of planning, budgeting, control, monitoring and evaluation. It will also provide consistency in the treatment of financial transactions and reporting across county governments and their entities.
! Importantly, there are some specific examples and exercises on using the Chart
of Accounts provided in Session IV, Part 2.
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Budget Preparation Module – Participant Book, October 2014
8. Public Participation in Budget Preparation
Concepts Box: Public Participation in Budget Preparation
Public participation is emphasised in legislation as an important element of budget preparation. For example, see the following excerpt from the (Draft) Public Finance (Administration and Management) Regulations (2013), Section 9—Openness and Accountability.
Public participation is also critical for:
• achieving public or citizen ownership and support of government programs and projects
• ensuring needs-based policy formulation and planning • efficient resource allocation and utilization • achievement of target outputs and outcomes • promoting accountable public financial management.
In budget preparation there are two key points at which public participation should be sought: 1. In the ‘Strategic Phase’, public hearings on the C-BROP and Sectoral Reports 2. In the ‘Operational Phase’, public hearings on the budget estimates.
There are several avenues for communicating engaging with the public, these includes; invite written submissions, Media (modern i.e. print, television radio and traditional), Public Meetings and Websites (county departments websites)
! Importantly, this stakeholder involvement in the budget preparation process must be
documented, (see Treasury Circular 11/2013, 29 Public Participation / Stakeholder Involvement).
Questions for Discussion
• What are some of the mechanisms you know of for effective public participation, in county government processes generally, and budget preparation specifically?
• Look at Diagram 7 below, which presents some options for public participation. Can you identify any specific examples from your county where public participation takes place according to the diagram? And what documents can be availed?
(3) Subject to sections 126 (1), 128 and 131 (2) of the Act [PFMA], Treasuries shall arrange for effective public participation during the development of their annual budget estimates, including the publication of citizens’ budgets, which explain and summarize the budget proposals.
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Budget Preparation Module – Participant Book, October 2014
Dia
gra
m 7
: Opp
ortu
nit
ies
and
Opt
ion
s fo
r P
ubl
ic P
arti
cipa
tion
in
the
pla
nn
ing
an
d b
ud
get
ing
p r
oces
s—sp
ecif
ic e
xam
ples
Polic
y se
ttin
g,
need
s id
entif
icat
ion
Anal
ysis
and
impa
ct
asse
ssm
ents
, pr
iorit
isat
ion
Deci
sion
-mak
ing
choi
ces o
n pr
iorit
ies,
in
stru
men
ts a
nd
reso
urce
allo
catio
n
Polic
y im
plem
enta
tion
whe
n re
port
s and
ou
tcom
es a
re
prep
ared
and
pu
blic
ised
Polic
y re
view
, ev
alua
tion
refo
rmul
atio
n
Nee
ds id
entif
ied
and
prio
ritise
d fo
r Cou
nty
Deve
lopm
ent P
lan
Publ
ic H
earin
gs o
n C-
BRO
P an
d Se
ctor
Rep
orts
.
Repr
esen
tatio
ns to
CA
on
the
Deve
lopm
ent P
lan.
Durin
g CR
A re
com
men
datio
ns o
n re
venu
e sh
arin
g, D
ivisi
on a
nd
Allo
catio
n of
Rev
enue
.
Whe
n pa
rliam
ent
cons
ults
citi
zens
on
le
gisla
tive
prop
osal
s fo
r div
ision
of r
even
ue
Durin
g Co
unty
Ass
embl
y Co
mm
ittee
foru
ms a
fter
Es
timat
es a
re
subm
itted
.
Durin
g bu
dget
exe
cutio
n,
mon
itorin
g an
d re
port
ing.
For
ex
ampl
e, C
oB re
port
and
PER
s w
hen
they
are
pub
lishe
d.
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Budget Preparation Module – Participant Book, October 2014
Session III Strategic Phase of Budgeting • The Strategic Phase of budget preparation starts with the issue of the Budget Circular
and concludes with the finalization of the C-FSP (August-February). Main activities of this phase include:
o County Integrated Development Plan prepared and submitted.
o Preliminary resource envelope and budget strategy (C-BROP) submitted to CEC and CA.
o Approval by CEC and recommendations from CRA (which ultimately informs revenue sharing ceilings).
o Sector Working groups consult and prepare Sector Reports.
o Sectoral Resource Allocation process.
o C-FSP prepared, submitted and approved.
o One of the critical activities of this phase is the Programme Performance Reviews/Public Expenditure Review. This should take place July – September. The reviews provide a basis for formulating the ensuing MTEF budget. Note that Programme Performance Reviews and Public Expenditure Reviews should be reflected in the Sector Working Group Reports under Chapter 2: Performance Expenditure Review. See Annex 3 for a format for the Sector Working Group Reports.
See Diagram 8below for an overview of the Strategic Phase of budget preparation, including key target dates.
Session Objectives: By the end of this session participants will be able to: • Outline the budget preparation process, from CIDP to C-FSP. • Conduct specific tasks within the Strategic Phase of budget preparation, including
preparing the C-BROP, budget strategy and C-FSP.
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Budget Preparation Module – Participant Book, October 2014
Diag
ram
8: S
trat
egic
Pha
se o
f Bud
get P
repa
ratio
n
Coun
ty B
udge
t Ci
rcul
ar
Inte
grat
ed
Deve
lopm
ent
Plan
C-BR
OP
Budg
et C
ircul
ar is
sued
by
30 A
ugus
tDe
velo
pmen
t Pla
n su
bmitt
ed b
y 1
Sept
embe
r
C-BR
OP
subm
itted
by
30 S
epte
mbe
r
C-FS
P
C-FS
P su
bmitt
ed b
y 28
Feb
ruar
y (a
lso
Debt
Man
agem
ent S
trat
egy)
Stra
tegi
c Ph
ase
Publ
ic H
earin
gs o
n C-
BRO
P an
d Se
ctor
Re
port
s (N
ov)
Sect
or W
orki
ng G
roup
s an
d Dr
aft S
ecto
r Re
port
s pre
pare
d (O
ct)
Reso
urce
env
elop
e is
‘firm
ed u
p’.
Depa
rtm
ents
und
erta
ke th
e re
venu
e al
loca
ting
proc
ess.
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Budget Preparation Module – Participant Book, October 2014
1. County Budget Circular When: Issued by 30 August each year
Who: Prepared by County Treasury
Purpose: Gives guidance on key timelines, procedures, policy areas and formats.
Note that the county budget circulars will vary both in content and timing, as long as they: • Meet mandatory constitutional and legal deadlines, and • Comply with gazette accounting standards. Below is an example of the headings for the National Budget Circular for 2014/15-2016/17 (Treasury Circular No. 11/2013) Guidelines for the preparation of the Medium Term Expenditure Framework (MTEF) Budget for the Period 2014/15-2016/17 I. PURPOSE II. BACKGROUND III. OVERVIEW OF RECENT ECONOMIC DEVELOPMENTS IV. SPECIFIC GUIDELINES (a) Medium Term Development Strategy (b) Timeframe and Reorganisation of Sector Working Groups (SWGs) (c) Programme Performance Review (PPR) (d) ProgrammeBased Budgeting (PBB) (e) Prioritization and Allocation of Resources (f) Capital Projects (g) Public Participation/Stakeholder Involvement V. SUBMISSION OF BUDGET PROPOSALS VI. CONCLUSION
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Budget Preparation Module – Participant Book, October 2014
2. County Integrated Development Plan When: Submitted to CA by 1 September each year
Who: Prepared by CEC Member for Planning, with input from C-BEF and departments
Purpose: Identifies and prioritizes citizen needs: • the main priorities of the county and their objectives. • the performance indicators, programmes and activities that are needed to
meet the objectives. • costing of the prioritized activities.
• Below are the chapter outlines for a County Integrated Development Plan, taken from
the Guidelines for preparation of County Integrated Plans, prepared by the Ministry of Devolution and Planning (May 2013).
• Annex 7 contains more detail on what is required in each of the chapters, with a particular focus on ‘Chapter 7: County Development Priority Programmes and Projects’ and ‘Chapter 8: Implementation, Monitoring and Evaluation’.
CIDP CHAPTER OUTLINES
Chapter 1: County General Information
Chapter 2: County Socio-Economic Development, Challenges and Strategies
Chapter 3: County Spatial Framework
Chapter 4: Linkage with other Plans
Chapter 5: Institutional Framework
Chapter 6: Resource Mobilization Framework
Chapter 7: County Development Priority Programmes and Projects
Chapter 8: Implementation, Monitoring and Evaluation
There are four main steps that are followed in developing the strategic plan, namely: i) Identification of the vision and mission: The county must have a medium term and long-term vision that should be closely linked to the National Vision currently documented as Vision 2030. A vision is defined as the long-term dream to attain excellence, whereas the Mission is the more or less the plan on how to accomplish the Vision.
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Budget Preparation Module – Participant Book, October 2014
ii) Situation Analysis: Here the key issue is to take stock of current status to identify the weaknesses and the strengths of county. In planning the first questions to ask include: what are the currently issues? what advantages do we have?, what do we need to do? This is the historical perspective which each county is expected to scan and identify its issues, problems or weaknesses, together with what is already in place. iii) Identification of priorities and strategies necessary to achieve the vision Focusing on what needs to be done to achieve the target goals in medium term and how to get there and achieve the set goals. iv) Identification of key performance indicators together with programs and activities necessary to deliver on the policy goals and objectives. If there are no performance targets, it is difficult to achieve the desired results, which leads to failure of the strategic plans. It is therefore necessary to identify outputs together with the necessary inputs and set the milestones and benchmarks to be achieved at each stage. v) Costing of the Plan. Whatever the county plans to do, programs, projects, must be costed using the current costing framework that is used in the budget process.
• The figure below demonstrates the relation between long-term policy strategy, the medium-term plan and the budget.
• More information on the links between planning and budgeting can also be found in Session II, Part 6.
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Budget Preparation Module – Participant Book, October 2014
Links between Policy, Planning and Budgeting
Budget Cycle
Assessment of outputs, results
& outcomesBudgeting,
allocation & approval
Annual Reporting, Accounting,
Auditing
Budget execution &Reports
Annual plan, activities, resource needs,
deliverables
Medium-term Plan – sets out
strategic outputs
Long-term Policyobjectives
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Budget Preparation Module – Participant Book, October 2014
3. County Budget Review and Outlook Paper (C-BROP) When: Submitted to CA by 30 September each year.
Who: Prepared by Country Treasury (County Fiscal Planning Group).
Purpose: Outlines: • Actual fiscal performance in the previous year, compared to what was
planned in the budget. • Updated economic and financial forecasts (showing any changes from the
forecasts in the C-FSP from the previousyear). • Identification of broad policy priorities. • Indicative available resources to fund CG priorities (indicative ceilings).
Estimating the Resource Envelope: National vs County processes
National
County
• The establishment of a comprehensive process to determine available resources is critical to decisions on setting expenditure ceilings.
• At the Macro level there are issues related to the wide economy such as the movement or the changes in prices of goods (inflation), the cost of money (interest rates) and the overall economic growth.
• The main variables that influence the budget at the national level often include: the projected/envisaged economic growth for the period under consideration; target inflation rate; exchange rate, and balance of payments; and other macro variables thatthat may affect government’s ability to mobilize resources and the impact of expenditures.
• At the county level, on the other side, the bulk of revenue resources to fund the budget are from transfers from the nationally collected revenues, with a smaller portion coming from own revenue sources which not as difficult to estimate.
• Counties can use previous years’ revenue forecasts as a starting point, but also should factor in changes to their own source revenues. For example, a widening of the tax base in the county, or more efficient revenue collection systems will have an impact on levels of own source revenue.
• These indicative levels are ‘firmed up’ as part of developing the County Fiscal Strategy Paper, which is finalized after the CRA has given recommendations forrevenue allocation for the coming year.
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Budget Preparation Module – Participant Book, October 2014
Links between Macro Framework at County and National levels and the budget
County Development
Plan
Estimation of Resource Envelope and County Expenditure Priorities
National policies and strategies (Articles 209 (5), 220)
National economicpolicy goals and objectives
CBROP Developed
Presentation of CBROP to County Assembly
Finalization of County Sector
Reports and holding of Public Hearing
The County Fiscal Strategy paper finalized and
submitted to CA
Medium-term Plan • sets priorities • sequences programs & projects • costs activities
!While the national government is estimating the resources and expenditure
limits, the counties are expected to carry out a similar exercise but at a lower scale, with fewer areas of revenue estimates and expenditure. The diagram below demonstrates the development of the macro framework at the county level.
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Budget Preparation Module – Participant Book, October 2014
• The C-BROP is an evaluation document that seeks to assess past performance, both financial and non-financial to inform the next budget. It covers also covers consistency between what was approved and what was done. In new dispensation, it covers with fiscal responsibility principles.
• The C-BROP covers sector ceilings as part of review, for coming fiscal year this is covered by CFSP. Counties are expected to issue guidelines on preparation of their C-BROPs but there should be a common approach.
• The format of the County BROP is prepared along same parameters as the National BROP, but must necessarily reflect county diversity and priorities and allocated functions.
Example Contents: (National) Budget Review and Outlook Paper, September 2013 I. INTRODUCTION Objective of the BROP
II. REVIEW OF FISCAL PERFORMANCE IN 2012/13 A.Overview B. 2012/13 Fiscal Performance C. Implication of 2012/13 fiscal performance
III. RECENT ECONOMIC DEVELOPMENTS AND OUTLOOK A.Recent Economic Developments B. Macroeconomic outlook and policies C. Medium Term Fiscal Framework D.Risks to the outlook
IV. RESOURCE ALLOCATION FRAMEWORK A.Adjustment to 2014/15 Budget B. Medium-Term Expenditure Framework
V. CONCLUSION AND NEXT STEPS Annex Table 1:Main Macroeconomic Indicators, 2014/15-2016/17 Annex Table 2:Central Government Operations, 2014/15-2016/17 (in billion of KSh) Annex Table 3:Central Government Operations, 2014/15-2016/17 (in percent of GDP) Annex Table 4: Total Sector Ceilings for MTEF 2014/15-2016/17 Annex Table 5: Recurrent Sector Ceilings for the MTEF Period 2014/15-2016/17 (KSh.Mn) Annex Table 6: Development Sector Ceilings for the MTEF Period 2014/15-2016/17 Annex Table 7: Summary of Strategic Interventions Annex Table 8: Budget Calendar for 2014/15 MTEF budget The full National BROP for 2013 can be found at http://www.treasury.go.ke/index.php/resource-center/cat_view/78-budget-outlook-paper
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Budget Preparation Module – Participant Book, October 2014
Resource Envelope and Budget Ceilings
Concepts Box: Resource Envelope and Expenditure Ceilings • The resource envelope is the total amount of money available to a county
government for spending in any one year. It is composed of: i) revenues raised in a county which will depend on each county’s ability to mobilize taxes, fees and charges ii) funds transferred from National Treasury, both unconditional and conditional iii) affordable borrowing for the year iv) any other receipts, from donors etc.
• The County Fiscal Planning Group is responsible for establishing the ‘resource envelope’ and expenditure targets (ceilings). This activity is done as part of developing the C-BROP document.
• Estimates of available financial resources (the resource envelope) are determined by forecasting the following:
Source: Information adapted from presentation ‘Constitutional and legal framework for PFM and implication on County PFM’, by A. Mwenda, National Treasury, slide 12. See Annex 1 for example expenditure ceilings.
County share of revenue from the
National Government.
County Own Source Revenue: revenues generated within the county, from taxes and non-tax
sources, e.g. fees/charges
Domestic Borrowing Potential external support
(grants and loans)
Conditional and non-conditional grants from the
national government
Grants from the Equalization Fund
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Budget Preparation Module – Participant Book, October 2014
Revenue forecasting
!Accurate revenue forecasting is essential for a county to gain a realistic picture of what
resources it will have available in the coming budget year, and ideally the following two years. An example format for a revenue forecast is provided below.
Example: Revenue Forecast Format Details Previous Actual to
date Forecast Forecast Forecast
Year (12/13)
Year (13/14)
Year (14/15)
Year (15/16)
Year (16/17)
1 Own Source revenue: Taxes – Property Rates Taxes – Other Trade Licences Other fees and charges
2 Shareable Revenue proposed in the BPS
3 Grants from Development Partners
4 Conditional Grants
Total Revenue
Much of a county’s revenue comes from transfers from the national government. It is important to use the correct figures given in the County Allocation of Revenue Bill. Note
that at the time of preparing the C-BROP (September), the CRA will not have made its
recommendations about allocation of revenue (December). However, an indication can be given from the previous year’s figures, which can be adjusted once the new figures
are released.
Counties can use previous years’ revenue forecasts as a starting point, but also should factor in changes to their own source revenues. For example, a widening of
the tax base in the county, or more efficient revenue collection systems will have an impact on levels of own source revenue. Ideally, counties will estimate their own
source revenue for the coming budget year and the following two.
Proposed funding from any external sources, such as donors, should also be
reflected in the revenue forecast.
The different types of own source revenue should be outlined.
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Budget Preparation Module – Participant Book, October 2014
Commission on Revenue Allocation (CRA) The CRA uses a formula to develop proposal on revenue sharing among the counties and the basis of this formula is given below:
Basis of Revenue Sharing among the Counties By a resolution passed on 22nd November 2012, the National Assembly resolved in pursuant of Article 217 of the Constitution, the basis of revenue sharing shall be as follows:
Parameters Percentage Weights 1 Population 45% 2 Poverty Index 20% 3 Land Area 8% 4 Basic Equal Share 25% 5 Fiscal Responsibility 2%
!For more information, go to the CRA website:
www.crakenya.org/vertical-formula-for-the-financial-year-2014-15
www.crakenya.org/wp-content/uploads/2013/07/CRA-Revenue-Divison-Among-
County-Governments.pdf
www.crakenya.org/functions-of-county-government
A copy of the 2014 County Allocation of Revenue Bill is also available on the
Treasury website at: www.treasury.go.ke/index.php/resource-
center/doc_download/689-the-county-allocation-of-revenue-bill-2014
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Budget Preparation Module – Participant Book, October 2014
Developing an accurate revenue forecast
Questions to ask Things to consider
Have we incorporated the correct figures on
national transfers from the County Allocation of
Resources Bill (Act)?
Can we use last year’s actual collection of local revenues with a realistic
% growth projection?
Is there scope to increase the collection of own
source revenues in any areas over the coming 3 years and if so, how is that likely to impact on
the amount of local revenue in our forecast?
The information from the Act should provide an accurate indication of revenue from national government and external funding for the coming year.
This will depend on how accurate the figures for revenue collection are and how steady the rate of growth in these revenues is likely to be.
In some counties where the local revenue collection process is not systematic, it may be difficult to make an accurate prediction in this way.
This will require an assessment of the current methods of revenue collection and their efficiency.
Such an analysis may point to opportunities for improved revenue collection, which could be reflected in the revenue forecast.
What factors might affect the support our county receives from
external donors in the next 3 years?
This could include the presence of new donors, or changes to the way in which donors fund development work in the county.
It will be important to have a good understanding of the external donors in the county and their proposed plans, in order to predict likely levels of support.
What factors in the coming years might
affect the amount our county receives from the
national government?
This will depend to an extent on how well the national government is able to predict its own revenues and communicate this information to the counties.
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Budget Preparation Module – Participant Book, October 2014
Concepts Box: Principles of Fiscal Responsibility Indicative ceilings set in the C-BROP (and later confirmed in the C-FSP) should follow the principles of fiscal discipline set out in the PFMA (2012) as below:
FROM PFMA (2012), 107 (2)
(2) In managing the county government’s public finances, the County Treasury shall enforce the following fiscal responsibility principles-
(a) the county government’s recurrent expenditure shall not exceed the county government’s totalrevenue;
(b) over the medium term a minimum of thirty percent of the county government’s budget shall be allocated to the development expenditure;
(c) the county government’s expenditure on wages and benefits for its public officers shall not exceed a percentage of the county government’s total revenue as prescribed by the County Executive member for finance in regulations and approved bythe County Assembly;
(d) over the medium term, the government’s borrowings shall be used only for the purpose of financing development expenditure and not for recurrent expenditure;
(e) the county debt shall be maintained at a sustainable level as approved by county assembly;
(f) the fiscal risks shall be managed prudently; and
(g) a reasonable degree of predictability with respect to the level of tax rates and tax bases shall bemaintained, taking into account any tax reforms thatmay be made in the future.
Questions for Discussion 1. Referring to (b) above, and according to Example: Karibu County Budget excerpt below, were they in accordance with the Act? What is the case in your own county for FY 2013/14?
2. Referring to (c)above, do you know what percentage is set in your own county for expenditure on wages and benefits for its public officers?
3. Regarding (d)above, what might be some problems associated with financing recurrent expenditure for the counties?
4. Regarding (e)above, what is the ‘sustainable level of county debt’ approved by your County Assembly?
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Budget Preparation Module – Participant Book, October 2014
Example: Karibu County Budget 2013/14 The excerpt below from Karibu County’s Budget for 2013/14 shows the expenditure for both the recurrent and development budgets (a), as well as revenue sources (b).
a) 2013/14 Expenditure: Recurrent and Development Budgets
Ksh TOTAL RECURRENT 5,868,328,000 Development - County Assembly 212,000,000 Development - Sub County Units 2,264,672,000 TOTAL DEVELOPMENT 2,476,672,000 TOTAL EXPENDITURE 8,345,000,000
b) 2013/14 Example of Revenue Summary
TOTAL FROM LOCAL SOURCES 3,417,121,255 TRANSFERS Grants from share of National Revenue - Equitable Share 4,155,298,066 - Conditional grants 711,380,679 Unspent Balances returned to CRF Account 61,200,000 Total Transfers from National Government 4,927,878,745 GRAND TOTAL 8,345,000,000
Questions for Discussion 1. What proportion of Karibu County’s revenue is from local sources? How does
this figure compare with your own county? 2. How well established is your county’s tax base, in terms of its ‘predictability’
for forecasting local revenues into the medium term—that is, beyond the next fiscal year?
3. What improvements could be made in your own county regarding widening the tax base, as well as improving revenue collection? What are some of the challenges of doing this? What are the benefits?
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Budget Preparation Module – Participant Book, October 2014
Example: Karibu County Budget 2013/14 (cont) c) Some examples of Karibu County’s own source revenue collection for 2013/14 budget.
HEALTH SERVICES Ksh
HEALTH SERVICE MNGT UNIT 1450105 Health centre service fees 15,000,000
Cost sharing 345,000,000 EPIDEMIC CONTROL INSPECTION UNIT
1450105 Food handlers fees 3,300,000 1450105 Public health inspection/building plans 3,165,000 1450105 Food hygiene, licence fees 5,420,000 1140501 Liquor licences 550,000
CEMETARY UNIT - 1450105 Burial Fees 282,000
TOWN HALL &MOBILE CLINIC - 1450105 Vaccine certificates 2,231,000 1450105 Health centres Fees 277,600
COMMUNICABLE DISEASE CONTROL 1450105 Malaria prevention service fees 20,0000
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Budget Preparation Module – Participant Book, October 2014
4. Sector Working Groups and Resource Allocation When: Groups convened in October, following preparation of C-BROP.
Who: Departments clustered into sectors, led by Accounting Officers.
Purpose: • Agree on sector objectives, outputs and activities, including review and development of programmes, sub-programmes and their costing.
• Prepare and submit a Sector Report, outlining prioritization of (costed) programmes and sub-programmes, expected outcomes, outputs and key performance indicators.
County Sector Working Groups, Public Hearings and Resource Allocation County Sector Working Groups • The County Integrated Development Plan is used to guide this process.
Counties should spend time on this stage to: o Identify key expected outputs and targets based on the plan. o Sequencing of the programs that are to be implemented in the
medium term (consistent with the resource envelope). o Prepare County Sector Reports to illustrate i and ii.
Public Hearings • This process also involves public hearings, which use the C-BROP and
County Sector Reports and aim to ensure the needs of citizens are considered and included in the budget.
• This stage would usually take place in October, with public hearings possibly held in November.
• Up to now, the ceilings are not disaggregated into departments—rather they are set at sectoral level.
Sectoral Resource Allocation• The county departments within their sectors need to go through a process
of sharing or allocating resources among themselves, on the basis of the sectoral review.
• This process is consensus based and driven by strategic needs and priorities.
! See Annex 3 for a format for the Sector Working Group Reports and an example mechanism for resource allocation.
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Budget Preparation Module – Participant Book, October 2014
Exercise 3: Public Hearings on C-BROP and Sector Reports As we saw earlier, public hearings on the C-BROP and Sector Reports are an important part of the MTEF approach to budgeting. In your county, do these hearings take place? Or if not, what plans will you put in place for these hearings, for the next cycle of budget preparation?
Work in groups of 4 or 5 and discuss the following questions about public hearings in your county. For example:
• What form is the public hearing—for example, is a public meeting held? If so, when and where does it take place?
• Do people have access to the necessary information in advance of the public hearing? If not, how could this be done?
• Who presents information on behalf of the County? • What kind of questions are the public able to ask? Importantly, what revisions
or changes could be made, as a result of the public hearing? • Are the public hearings in your county representative of a large cross-section
of the community? If not, what could be done to ensure more groups are represented?
• What kind of information do you think is important for the public to know? For example, what kind of information in the C-BROP and Sector Working Group Reports might be of relevance to the wider public and why? See Annex 1 and Annex 3for some examples of the type of information that these reports contain.
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Budget Preparation Module – Participant Book, October 2014
5. County Fiscal Strategy Paper (C-FSP) When: Prepared in time for review and approval by the CEC before submission to
the CA by 28 February.
Who: Prepared by Country Treasury (County Fiscal Planning Group) with input through the County Budget and Economic Forum (C-BEF) as part of the consultative process.
Purpose: • Broad strategic priorities and policy goals (medium and long-term). • Financial outlook on expenditures, revenues and borrowing for the
medium term.
• The C-FSP is developed after the public hearings have been conducted and must be
approved by the end of February.Once the C-FSP is approved, financial programming of the county budget (i.e. budget estimates) can now commence.
• County Treasury issues further instructions on preparing the detailed estimates of expenditure.This activity signals the conclusion of the Strategic Phase of Budget Preparation.
• See Annex 2 for example contents for a County Fiscal Strategy Paper.
Questions for Discussion
Your trainer will ask you to bring in a copy of your county’s most recent C-FSP to analyse according to the following questions.
Does our county’s C-FSP look to the ‘past, present and future’? In other words, does it have: • A summary of the implementation of the current year’s budget to date,
including both revenue collection and expenditure? (past) • An explanation of how our budget is being adjusted to meet our targets for
the year, if required? (present) • An overview of the total revenue and expenditure for the next budget year,
and ideally the following two? (future) • An explanation of the budget allocations to each sector, which reflect the
broad priorities of the county? (future)
Ideas for these questions adapted from ‘A county’s fiscal strategy paper is the soul of budgeting past, present, future’ 22 March 2014. Available at: www.theeastafrican.co.ke/OpEd/comment/A-county-s-fiscal-strategy-paper-is-the-soul-of-budgeting/-/434750/2253582/-/item/0/-/1vlevkz/-/index.html
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Budget Preparation Module – Participant Book, October 2014
Checklist: Strategic Phase of Budget Preparation This checklist can adapted and used as a tool when preparing the budget, to ensure all important steps are carried out for each phase. The detailed process would be listed in the ‘Activity column’, for reference and then checking off when completed. There is also room for any comments about the process, for example, information that was difficult to find, reasons for any deadlines missed etc.
Activity and date completed
Comments
County Budget Circular prepared and distributed by 30 August.
County Integrated Development Plan submitted by 1 September.
County Budget Review and Outlook Paper prepared and submitted by 30 September.
County Sector Working Group Reports prepared and submitted.
County Fiscal Strategy Paper prepared and submitted by 28 February.
!Note that the main activities of the Strategic Phase have been included here.
This checklist can be copy-pasted and expanded to include other activities that are also part of the Strategic Phase of Budget Preparation.
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Budget Preparation Module – Participant Book, October 2014
Session IV Operational Phase of Budgeting • The Operational Phase of budget preparation starts with the issue of a County Budget
Circular giving guidance on preparing budget estimates and concludes with the submission of budget estimates to the County Executive Committee and subsequently to the County Assembly (March-April). Main activities of this phase include:
o Detailed Budget Estimates prepared by departments.
o Review and consolidation of the estimates by Treasury.
o Submission of budget estimates to the CEC and then to the CA for approval.
See Diagram 9 below for an overview of the Operational Phase of budget preparation, including key target dates.
Session Objectives: By the end of this session participants will be able to: • Outline the budget preparation process, detailing the preparation of budget
estimates. • Conduct specific tasks within the Operational Phase of budget preparation,
including preparation of the 2014/15 budget estimates according to relevant guidelines.
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Budget Preparation Module – Participant Book, October 2014
Diag
ram
9: O
pera
tiona
l Pha
se o
f Bud
get P
repa
ratio
n
Budg
et
Appr
oval
Budg
et E
stim
ates
subm
itted
to
the
CA b
y 30
Apr
il
Budg
et
Estim
ates
Appr
opria
tion
Bill
mus
t be
pas
sed
by th
e CA
by
30
June
Ope
ratio
nal
Phas
e
Follo
win
g ap
prov
al o
f the
C-F
SP (e
nd F
eb),
Coun
ty T
reas
ury
issu
es fu
rthe
r in
stru
ctio
ns o
n pr
epar
ing
the
deta
iled
estim
ates
of e
xpen
ditu
re, b
ased
on
conf
irmed
bud
get c
eilin
gs in
the
C-FS
P.
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Budget Preparation Module – Participant Book, October 2014
1. County Budget Circular/Budget call circular (budget estimates) When: Issued in March each year, following approval of C-FSP.
Who: Prepared by County Treasury.
Purpose: Gives guidance on preparation of detailed budget estimates.
• After the approval of the C-FSP by the CA (submitted 28 February), County Treasury
issues another circular, to guide the preparation of the detailed estimates of expenditure.
• Note that by this point, at a national level, the following will have been approved:
o Division of Revenue Bill (vertical division) o County Allocation of Revenue Bill (horizontal division) o Budget Policy Statement
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Budget Preparation Module – Participant Book, October 2014
2. Department Budget Estimates prepared When: Commences in March, following issue of County Budget Circular.
Who: Prepared by departments, submitted to County Treasury for review and consolidation.
Purpose: Outlines the detailed expenditure for departments for the coming year and projections for the following two years.
This section is presented in four parts: A. Preparing the County Recurrent Budget B. Preparing the County Development Budget C. Budgeting for Appropriations-in-Aid D. Budget Preparation Tools – the Chart of Accounts and Programme Based Budget format
• County Treasury will issue budget formats and codes to be used in all county budgets, gazetted by the National Accounting Board. It is the department heads who are responsible for preparing their department’s budget estimates, based on their departmental allocation, which was derived through the sector resource allocation process in the strategic phase (see Session III, Part 4.).
!Counties are required to use gazetted templates and codes when preparing their
budgets. However, where these are not available, as an interim measure counties should use the Programme Based Budgeting templates in Annex 5 and the current IFMIS CoA.
County Budget Preparation
Recurrent Budget Includes ongoing or annual operational expenditures such as: • Salaries • Operations and Maintenance • Supplies – stationery, fuel etc See Annex 4a for a relevant format
Development Budget Includes capital costs or development expenditures such as: • Construction of assets at county
level e.g. roads, health facilities, public works
See Annex 4b for a relevant format
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Budget Preparation Module – Participant Book, October 2014
A. Preparing the County Recurrent Budget • Recurrent expenditure refers to expenditure that does not result in the acquisition of
long-term assets. Rather, the recurrent budget covers all the expenditures that allow the county to operate, such as staffing costs and operating expenses.
• Each department should refer to the targets set out in the following documents: •
• The process of allocating resources should take place in this manner:
Sectoral Reports
C-BROP
C-FSP County
Development Plan Any other
instructions issued by
county governments
County Recurrent
Budget
i) Compensation for employees (i.e. salaries) and other allowances to be paid to the county staff in specific departments, with projections for the outer years informed by either a recruitment policy, or any wage adjustments. Otherwise, the normal wage drift should be accommodated within provisions for the outer years (forward estimates).
ii) Operating expenses,which includes use of goods and services, transport expenses and recurrent operating expenses incurred in the provision of public goods and services. These should be driven by ongoing projects and programmes, based on work plans that have activities to be accomplished in the given period.
iii) County public corporations that are county specific, which receive resources from the county budgets and whose recurrent costs should be included in the recurrent budget estimates.
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Budget Preparation Module – Participant Book, October 2014
B. Preparing the County Development Budget • Development expenditure refers to ‘capital expenditure’, which means funds spent for
the acquisition of a long-term asset. For example, expenditure on things such as equipment, land and buildings.
• The preparation of the development budget involves establishing the capital costs of projects that the county iscurrently implementing, together with those the county intends to implement in the financial year, with first priority given to the ongoing ones, as shown below:
• However, projections should be driven on one side by the ceilings set for the development budget for each department and the ongoing commitments—and on the other, the targets set out in the C-BROP and C-FSP.
Capital costs of county projects currently being implemented
1st Priority
Capital costs of projects to be implemented in the coming financial year.
Projections of capital costs are to include: • Estimates of construction,
minor works, outright purchases of buildings and specialized equipment.
• County public corporations that require capital grants to carry out their mandates.
County Development
Budget Capital costs
related to county-specific external
funding for development
projects should also be included.
!As outlined in the PFMA (2012) Section 107 (2):
(b) over the medium term a minimum of thirty percent of the county government’s budget shall be allocated to the development expenditure.
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Budget Preparation Module – Participant Book, October 2014
C. Budgeting for Appropriations-in-Aid (A-in-A) This includes: i) Revenues raised by county departments that are spent or applied at source, based on
prior approval by County Assembly. For example, receipts from administrative fees and charges, as well as receipts from the sale of inventories, stock and commodities.
ii) Value of support in kind, by way of materials, equipment, or services, given to county departments, say by development partners or donors, local or foreign, which is disbursed directly to the county department instead of through County Treasury.
iii) Direct disbursements to be reported to CEC-MFwith full details (Section 138, PFMA). iv) Where donor A-in-A requires county contribution, receiving department to ensure
money is in approved budget, get approval by CEC-MF who reports to CA (PFMA Section 138 (6).
!Where a commitment is made for such support, the cost should be included in the cost projections, particularly due to need for operating costs associated with such support, and also for transparency and accountability.
• As county departments finalize their recurrent and development estimates they should identify any possible receipts of user fees, and budget for their collection and accounting accordingly.
• The rule in estimation of Appropriations-in-Aid is that if there is an overestimation, services are likely to experience a shortage of funding, and if there is an
From PFMA Section 130 (1) (b), Budget estimates to include:
(i) a list of all county government entities that are to receive funds appropriated from the budget of the county government;
(ii) estimates of revenue projected from the Equalisation Fund over the medium term;
(iii) all revenue allocations from the national government over the medium term, including conditional and unconditional grants;
(iv) all other estimated revenue, e.g. from own sources by broad economic classification;
(v) all estimated expenditure, by Vote, and by programme, clearly identifying bothrecurrent and development expenditures;
(vi) information regarding borrowing by the county government, including an estimateof principal, interest and other charges tobe paid by that county government in thefinancial year in respect of those loans;
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Budget Preparation Module – Participant Book, October 2014
underestimation, any amount of excess must be reflected and transferred to County Treasury. ‘Under-collection’ means less revenue collected, which has a negative effect on budget implementation. It is therefore necessary for departments to ensure accurate estimation of Appropriations-in-Aid.
D. Budget Preparation Tools – The Chart of Accounts and Programme Based Budgeting format
Example: Excerpt from the Chart of Accounts (current at
29 Nov 13)
3100000 ACQUISITION OF NON- FINANCIAL ASSETS3110000 Acquisition of Fixed Capital Assets3110100 Purchase of Buildings3110101 Purchases of Residential Buildings3110102 Purchase of Non-Residential Buildings3110103 Purchase of Military Buildings with Potential Dual Use3110199 Purchase of Buildings - Other (Budget)3110200 Construction of Buildings3110201 Residential Buildings ( Including Hostels)3110202 Non-Residential Buildings (Offices Schools, Hospitals, etc..)3110299 Construction of Buildings - Other (Budget)3110300 Refurbishment of Buildings3110301 Refurbishment of Residential Buildings3110302 Refurbishment of Non-Residential Buildings3110303 Refurbishment of Military Buildings with Potential Dual Use3110399 Refurbishment of Buildings - Other (Budget)3110400 Construction of Roads3110401 Major Roads3110402 Access Roads3110499 Construction of Roads - Other (Budget)3110500 Construction and Civil Works3110501 Bridges3110502 Water Supplies and Sewerage3110503 Aerodromes and Airstrips3110504 Other Infrastructure and Civil Works3110505 Sea Walls and Jetties3110506 Railways3110599 Other Infrastructure and Civil Works3110600 Overhaul & Refurbishment of Construction and Civil Works3110601 Overhaul of Roads and Bridges3110602 Overhaul of Water Supplies and Sewerage
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Budget Preparation Module – Participant Book, October 2014
Exercise 4: Using the Chart of Accounts—Karibu County Your trainer will guide you in this practical exercise designed to increase familiarisation with Chart of Accounts coding. DEVELOPMENT EXPENDITURE – SUB-COUNTY UNITS
2. KARIBU CENTRAL
3110202 CONSTRUCTION OF COMMUNITY HALL 4,469,000
3110202 COMMUNITY HALL 827,000
3110302 RENOVATION OF INTITUTIONAL HOUSE ‘D’ 4,380,000
3111117 STREET LIGHTING 38,000,000
3110701 LORRY FOR INSPECTORATE 7,000,000
3110302 REN. OF MEO'S (PAINTING,ROOFING,FIXTURES & FURNITURE) 3,500,000
3111403 DEVELOPING TOUR GUIDE POLICY DOCUMENT - TOURISM DEPARTMENT 500,000
3110302 RENOVATION OF MUNICIPAL WORKS YARD OFFICES 2,300,000
3110301 RENOVATION OF INSTITUTIONAL HOUSES 2,000,000
3110302 COMPLETION AND RENOVATION PRIMARY SCHOOL 1,435,000
3110706 MCK-2 BROOMERS 3,000,000
3110705 MCK-2-4TONNE REFUSE TRUCK 10,000,000
3110706 MCK-TRUCTOR MOWER 1,500,000
3110705 2 - 18 TONNES TIPPERS 12,000,000
3110501 CONSTRUCTION OF CULVERTS AND STONE PITCHING AND DRAINAGE OF USAID 22,665,000
3110301 RENOVATION AND MAINTENANCE OF INSTITUTIONAL HOUSE ‘C’ 297,250
3110302 COMPLETION OF TOWNCLERKS OFFICE TOILETS 250,000
3110202 CONSTRUCTION OF 22 NO HAWKERS STALLS AT BLOCK A 1,080,356
3110301 RENOVATION AND MAINTENANCE OF INSTIT. HOUSE ‘A’ 1,000,000
3110301 RENOVATION AND MAINTENANCE OF INSTITUTIONAL HOUSE ‘B’ 682,718
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Budget Preparation Module – Participant Book, October 2014
Example: From line item to ‘Programme Based’ Budgets Construction of Primary School ‘A’ 2,500,000 Construction of 2 classrooms at Primary School ‘B’ 1,600,000 Construction of Primary School ‘C’ 2,500,00 Renovation of Primary School ‘D’ 800,000 Estimates Projected Estimates Programme 1: The Access to Education Programme Sub-Programme 1: The Primary School Access Programme
7,400,000
Construction of Primary School ‘A’ 2,500,000 Construction of 2 classrooms at Primary School ‘B’ 1,600,000 Construction of Primary School ‘C’ 2,500,000 Renovation of Primary School ‘D’ 800,000
1. An expenditure item in a line item budget might appear as one of a long list in the development budget, like so:
2. However, this list of expenditures does not tell us much about the reason behind all this construction and renovation and what it is trying to achieve.
3. In a PBB, these items would be grouped as ‘activities’ under a specific ‘programme’, or ‘sub-programme’.
4. And as we have seen, the projected estimates would need to show the costs of the sub-programme for the coming two years (Projected Estimates; N+2, N+3).
5. The programme or sub-programme would also need to have a specific objective, for example, ‘to increase primary school access in the county from 60–70% by 2017’.
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Budget Preparation Module – Participant Book, October 2014
Exercise 5: Karibu County Programme Based Budget Below we have an excerpt from Karibu County’s 2013/14 budget. We will now try to translate some of that information into a PBB format (for 2014/15). d) 2013/14 Example of Karibu County Development Expenditure Items: Health
Ksh
3111001 Equipment/Furniture at ‘Number 1’ Health Centre 2,728,000
3110202 Construction of Doctor’s House at ‘South Town’ Dispensary 2,300,000
3110202 Construction of ‘ABC’ Dispensary 7,000,000
3110201 Construction of Doctor’s House at ‘North Town’ Dispensary 2,000,000
3111117 Electrical Installation at ‘Number 1’ Health Centre 2,000,000
3110201 Construction of Doctor’s Residence at ‘XYZ’ Dispensary 2,400,000
3110202 Construction of Maternity Wing at ‘Main Town’ Hospital 3,500,000 1. Let’s say all the above expenditure items (activities) are grouped into a ‘sub-programme’. What might be a suitable name for this sub-programme? Summary of Expenditure by Programmes Programme Baseline
Estimates 2013/14
Estimates 2014/15
Projected Estimates
2015/16 2016/17 Programme 1: Primary Health Care Programme Sub-Programme 1.1: ……………………………………… ……………………………………… ………………………………………
….……………
2. What would the estimates be for this sub-programme? (To keep it simple, we are only including the total of the above development expenditures.) 3. What might be some of the things to consider for the projected estimates for N+2 and N+3 of the sub-programme? (For example, length of construction time > 1 year?)
N+1 N+2 N+3
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Budget Preparation Module – Participant Book, October 2014
Ex
erci
se 5
: Kar
ibu
Coun
ty P
rogr
amm
e Ba
sed
Budg
et (c
ontin
ued)
4.
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and
prov
ide
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tput
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and
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f thi
s sub
-pro
gram
me.
Can
you
link
the
text
box
es b
elow
with
the
corr
ect c
olum
ns in
the
tabl
e?
Sum
mar
y of
Pro
gram
me
Out
puts
, Per
form
ance
Indi
cato
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nd T
arge
ts
Prog
ram
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Deliv
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Uni
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Key
perf
orm
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In
dica
tors
Targ
et
Base
line
2013
/14
Targ
et
2014
/15
Targ
et
2015
/16
Ta
rget
20
16/1
7
Prog
ram
me
1: P
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alth
Car
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e
Sub-
Prog
ram
me
1.1:
Se
e An
nex
5 fo
r a fu
ll fo
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for P
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sed
Budg
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10 n
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and
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ey a
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Budget Preparation Module – Participant Book, October 2014
Example MTEF 1: 2014/15–2016/17
N
2014/15
N+1
2015/16
N+2
2017/18
N+3
2019/2020
Example: MTEF—A three-year outlook • For example, if the financial year we are currently in is called ‘N’, then we are
now preparing our budget for the financial year ‘N+1’. However, our MTEF approach requires that expenditure estimates also include the years ‘N+2’ and ‘N+3’, as shown in the diagram (Example 1) below.
• The diagram (Examples 2 and 3) also outlines the ‘rolling’ nature of the MTEF. It means that next year, our current ‘N+1’ will now be our ‘N’. We need to add a new year of indicative figures each year, as the diagram illustrates.
! More information is included in the (Draft) Public Finance (Administration and
Management) Regulations (2013), Section 40–Budget Preparation Process.
The years N+2 and N+3 are known as the ‘outer years’. These will contain indicative
figures (known as ‘forward estimates’), based on estimated revenue.
We are currently preparing our budget for the year ‘N+1’. The expenditure
figures in this budget will be based on known revenue allocations.
This is the financial year we are currently in. This
budget is currently being executed.
An MTEF is prepared
for 2014/15
through to 2016/17.
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Budget Preparation Module – Participant Book, October 2014
Example MTEF 2: 2015/16–2017/18
N-0
2014/15
N
2015/16
N+1
2016/17
N+2
2017/18
N+3
2018/19
Exercise 6: MTEF three-year outlook Can you fill in the blank spaces on the following example?
Example MTEF 3: 2016/17–2018/19
……
2014/15
N
…………
N+1
2016/17
………..
…………
N+3
2018/19
The budget will be prepared for 2015/16. What were previously
‘forward estimates’ will now be revised and become hard figures.
Next financial year, 2013/14 will be known as ‘N-0’.
An MTEF is prepared for
2015/16 through to 2017/18.
2014/15 will now be our current year ‘N’.
We will need to add a new year of indicative figures,
which are estimates for the year 2017/18.
The budget will be prepared for N+1. What were previously ‘forward
estimates’ will now be revised and become hard figures.
This previous year will be known as
………….
An MTEF is prepared
for 2016/17 through to 2018/19.
The current year ‘N’ will be
……………
What will the figures be for this year? Will they be hard figures, or forward
estimates?
…………………………………………
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Budget Preparation Module – Participant Book, October 2014
Example: Predicting the forward estimates • We have seen that in an MTEF approach to budgeting, revenue and
expenditure figures are forecast for the coming year (N+1), plus the following two (N+2, N+3 – the ‘forward estimates’).
• It can be difficult to predict these forward estimates with certainty. However, by identifying indicative figures for N+2 and N+3, it gives some basis for planning ahead for the years beyond the coming budget year.
• This process enhances the ‘predictability’ principle of the MTEF, as sectors will have an initial idea of their available revenues for the next three years.
• The process of predicting forward estimates also ensures that the cost of maintaining and operating existing programmes and projects are accounted for, before any additional funding commitments are taken on. This enhances the ‘fiscal discipline’ and ‘allocative efficiency’ principles of the MTEF. Therefore, the starting point for allocating resources should always be the cost of ongoing programmes and projects.
• Have a look at the example below, which illustrates how the ongoing cost of a programme is factored into the forward estimates.
Programme Baseline Estimates 2013/14(N)
Estimates 2014/15 (N+1)
Projected Estimates
2015/16 (N+2)
2016/17 (N+3)
Road ‘A’ Construction
- 1,000,000 100,000 110,000
The construction of the new highway will
take place in the next financial year (N+1) at a cost of Ksh 1,000,000.
The cost of maintaining this road on an annual basis is included as part of the
forward estimates. Note that (N+3) is a higher amount, to allow for inflation (10%).
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Budget Preparation Module – Participant Book, October 2014
3. Review, consolidate and submit Budget Estimates When: Must take place before end April, in enough time for submitting budget
estimates to the CEC for approval, and then submitting to the CA by 30 April.
Who: • County Treasury reviews and consolidates department budgets. • CEC-MF submits the Budget Estimates to the CEC for approval, prior to
submitting to the CA by 30 April. • CEC-MF also prepares and presents his/her own comments on the budget
estimates (by 15 May).
Purpose: • Department budget estimates are consolidated by Treasury. • Budget Estimates must be submitted with all supporting documents and
draft bills.
Exercise 7: Analysis of Budget Estimates
This exercise is designed to encourage you to think about the preparation of your county’s forthcoming 2014/15 budget estimates, in the same way that the Budget and Appropriations Committee will be required to. The basis for the exercise will be to consider your county budget estimates from 2014/15 according to the questions outlined below (and as outlined above in Session II, Legislative Approval Process,6. BAC prepares report and recommendations).
!For this exercise you will need to refer to:
• A copy of your county’s approved budget estimates from 2014/15. • Your county’s C-FSP for 2014/15. • The relevant sections in the PFMA and Constitution. • Draft Management Strategy Paper (if applicable).
1. Your trainer will ask you to work in your county groups. You will analyse your 2014/15 budget estimates, according to a question and answer format. 2. You will review your county’s estimates according to the below questions (as far as possible), as though you are the Budget Appropriation Committee for your county:
i) Do the estimates comply with the PFM provisions in Constitution and the PFM Act?
ii) Are the recurrent estimates fully funded?
iii) If there is a deficit, is the planned borrowing in an approved Strategic Debt Management Strategy Paper?
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Budget Preparation Module – Participant Book, October 2014
iv) Have the estimates taken into consideration the County Assembly resolutions in the C-FSP?
v) Will the estimates lead to the accomplishment of the targets set out in the C-FSP?
vi) Are critical spending areas (mandatory expenditures) taken care of?
vii) Has the budget taken into consideration the previous audit recommendations?
3. Groups will report back in a plenary discussion to give an overview of what they found out about their own 2014/15. It is a useful forum for information and experience sharing with other counties, provided it is done in a non-judgemental environment
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Checklist: Operational Phase of Budget Preparation This checklist can adapted and used as a tool when preparing the budget, to ensure all important steps are carried out for each phase. The detailed process would be listed in the ‘Activity column’, for reference and then checking off when completed. There is also room for any comments about the process, for example, information that was difficult to find, reasons for any deadlines missed etc.
Activity and date completed
Comments
County Budget Circular on Budget Estimates prepared and issued in March.
Department budgets prepared (using Programme Based Budget format).
Department budgets reviewed and consolidated by County Treasury.
Budget estimates submitted to the CEC for approval.
Budget estimates submitted to the County for approval by 30 April.
CEC-MF prepares and presents his/her own comments on the budget estimates by 15 May.
County Assembly considers budget estimates and approves with or without amendments, in time for relevant appropriation law or laws required to implement the budget – to be passed by 30 June.
!Note that the main activities of the Operational Phase have been included here.
This checklist can be copy-pasted and expanded to include other activities that are also part of the Operational Phase of Budget Preparation.
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Conclusion Summary In this module you have learned about the following:
• The history of budget reforms in Kenya and their significance for today’s budget process.
• They key legislation in the budget preparation process, as well as key players and budget components.
• The budget cycle and calendar, including the key calendar target dates and the legislative approval process.
• The Medium Term Expenditure Framework—what it is and why it is important.
• Programme based budgeting—how it is different from traditional ‘line item’ budgeting and what kinds of formats to use.
• Public participation in the budgeting process and why it is important.
• The Strategic Phase of budget preparation—revenue forecasting and setting ceilings, preparing the C-BROP and C-FSP documents and Sector Working Group Reports.
• The Operational Phase of budget preparation—preparing budget estimates, including using the CoA, preparing recurrent and development budgets and Appropriations-in-Aid.
Assessment&Evaluation • Your trainer will now lead you through a short assessment activity, to gauge your
understanding of the content presented in this module. • Your trainer will then lead you in an evaluation activity, to gauge your thoughts and
impressions of the training you have just completed.
Knowing is not enough, we must apply.
Goethe, German writer
! It will be important in the coming weeks and months to reinforce what you have
learned in this training back in your workplace, through follow up on the job training and coaching and by referring to your Participant Book and other resources, to help you to carry out your role in county budget preparation in the best possible way.
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Glossary Allocation Refers to money earmarked for a particular purpose in the Budget.For
example, the allocation for ‘welfare’ in the national budget must be spent on welfare and not some other area of expenditure.
Appropriation Refers to an authorisation made by law or other legislativeapproval, directing the payment of goods and services out of governmentfunds under specified conditions, or for specified purposes.
Appropriations-in-Aid
These are revenues that are raised by a ministry, department or agency (MDA) itself. They include receipts from administrative fees and charges, as well as receipts from the sale of inventories, stock and commodities. They can also include donor funds that are disbursed directly to an MDA instead of to the Treasury.
Budget Refers to the estimates of revenues and receipts, and expenditures fora given entity (agency, department, ministry or government).
Budget Ceiling
Means the maximum amount that the government allocates in a given year to target sector or expenditure categories.
Budget Circular
A statement from the National Treasury (or County Treasury)togovernment ministries, departments and agencies outlining policy andtechnical guidelines on how to prepare a budget for a given fiscal period.
Budget Deficit Budget Deficit is the difference between budget expenditureand budgeted revenues.
Budget Execution
The act of carrying out the planned budget for the financial year. Good budget execution means that money is spent in the way it is intended and is in keeping with the outcomes of the planning process.
Budget Format These are formats or styles for compiling and presenting abudget. It is usually specified by Treasury or a designated authority.
Budgeting Budgeting is a process of defining, in monetary terms, the futureplans of the ministry, department or agency. It determines, for a future period of time, what is to bedone, what is to be accomplished, the manner in which it is to be done, and the cost of doing it.
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Estimate An approximation or prediction of the cost of activities, programmes,
and projects prepared for budgeting and planning purposes only. It represents the budget maker’s understanding of the scope and expense of what needs to be done. The executive’s proposal and enacted budget are made up of estimates.
Inter-governmental transfers
Transfers of funds from one level of government (usually the central government) to lower levels. In many countries they are a significant source of revenue for sub-national governments. The design of these transfers is critical for the efficiency and equity of local service provision and the fiscal health of sub-national government.
Personal Emoluments
Compensation (wages and salaries) for civil servants.
Public Corporation
Refers to a corporation, or entity of commercial nature, which is mainly owned or mainly controlled by the Government, whether at county or at the national government level.
Public Hearing A formal hearing at which the public can voice their views and concerns on a government policy, budget proposal, or government actions. These hearings can be organised by any of the institutions involved in the budget process, for example, the executive, legislature, and supreme audit institution.
Supplementary Budget Estimates
Means additional request of funds made by an Accounting Officer after original appropriation voted for by Parliament or a County Assembly.
Unauthorised Expenditure
Means— (a) overspending of a vote or programme within a vote. (b) expenditure not in accordance with the purpose of a vote, or, in the case of a programme, not in accordance with thepurpose of the programme, or not in approved budget.
Vote Money authorised by an Appropriation Act for withdrawal from the Consolidated Fund or a CountyRevenue Fund.
Source: Some terms and definitions have been included and adapted from the ‘Manual for budget demystification: A step by step guide’, from PFMA (2012) and Draft Regulations (2013) and from‘Kenya County Budget Training Workshop, Participants’ Workbook’, International Budget Partnership.
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Resources
Websites
1. The National Treasury of Kenya www.treasury.go.ke
2. The Office of the Controller of Budget www.cob.go.ke
3. Commission on Revenue Allocation www.crakenya.org
4. County Assembly Bills 2014http://kenyalaw.org/kl/index.php?id=3408
Documents
A list of useful resource documents is provided below. URLs for sourcing these documents have been provided where available:
1. County Budget Implementation Review Report: Fourth Quarter FY 2012/13. Office of the Controller of Budget, July 2013. Available from www.cob.go.ke
2. Budget Review and Outlook Paper. National Treasury, September 2013. Available from www.treasury.go.ke
3. Treasury Circular No. 11/2013: Guidelines for the preparation of the Medium Term Expenditure Framework (MTEF) Budget for the Period 2014/15–2016/17.
4. Constitutional and legal framework for PFM and implication on County PFM. PowerPoint presentation, presented at the Induction Training for the County Transition Teams, February 2013, by Albert Mwenda, National Treasury.
5. Kenya’s new budget process. PowerPoint presentation, by National Treasury.
6. Implementation of the Public Finance Management Act, 2012. PowerPoint presentation, presented at a Forum for Induction of Members of the Transition Authority, August 2012, Permanent Secretary/National Treasury.
7. Learning By Doing: Toward Better County Budgets in 2014/15. A Joint Brief by Institute of Economic Affairs, TISA, International Budget Partnership, WALINET, World Vision Kenya, Article 19, and I Choose Life – Africa, December 2013. Available from: http://internationalbudget.org/wp-content/uploads/Joint-Synthesis-Paper-on-County-Budgets.pdf
8. The Governance Brief. Linking Planning and Budgeting: The Medium Term Expenditure Framework (MTEF), Asian Development Bank, www.adb.org
9. Kenya County Budget Training Workshop, Participants’ Workbook. International Budget Partnership, June 2013. Available from: http://internationalbudget.org/publications/kenya-county-budget-workshop-training-materials/
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Assessment
Discuss and answer the following—each question is worth 2 points: 1. Write the budget code for the following:
1. Construction of Roads……………………………………………………………………….
2. Purchase of Residential Buildings……………………………………………………………………………… 2. Put the following activities in correct order of occurrence by numbering them 1-6:
__Submit C-FSP
_1_Treasury Budget Circular issued
__Submit Budget Estimates
__Submit C-BROP
__Submit County Development Plan
__Budget Approval
3. True or False? Public participation is only needed in the development of the County
Development Plan and not during budget preparation. TRUE / FALSE 4. Circle the correct answer. Which of the following is nota consideration when preparing
the development budget? a) The capital costs of projects that the county iscurrently implementing. b) The capital costs of projects the countyintends to implement in the financial year,
with first priority given to the ongoing ones. c) Any county specific external funding. d) Compensation for employees and other allowances to be paid to the county staff in
specific departments. 5. By which date must the Appropriation Bill be passed?
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Annexes
Annex 1: Example Revenue Forecast Format, Example Sector Ceilings
Annex 2: C-FSP Format
Annex 3: Sector Working Groups Report Format
Annex 4 a&b: Recurrent and Development Estimates Formats
Annex 5: Format for Presentation of Programme Based Budgets (PBB)
Annex 6: County Departmental/Sectoral Committees
Annex 7: County Integrated Development Plan Chapter Outlines
Annex 8: Template for Costing of Programs and Activities
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Annex 1: Example Revenue Forecast Format, ExampleSector Ceilings
Example: Revenue Forecast Format Details Actual/audit
ed Actual to date Forecast
Latest Year Year (13/14)
Year (14/15)
Year (15/16)
1 Own Source revenue: Taxes – Property Rates Taxes – Other Trade Licences Other fees and charges
2 Shareable Revenue proposed in BPS
3 Grants from Development Partners
4 Conditional Grants
5 Total Revenue
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Example: Ceilings by sector in BROP 2013 The following table, from the National BROP (prepared in September 2013), shows the projected baseline ceilings for the 2014/15 MTEF, classified by sector (Ksh Millions).
SECTOR ESTIMATESFY 2013/14
CEILINGFY2014/15
PROJECTIONS2015/16 2016/17
AGRICULTURE, RURAL & URBANDEVELOPMENT
SUB-TOTAL 53,343.4 55,674.9 64,974.5 66,966.1Rec. Gross 15,022.2 16,080.7 17,514.1 18,417.3Dev. Gross 38,321.2 39,594.2 47,460.4 48,548.8
ENERGY, INFRASTRUCTURE AND ICT
SUB-TOTAL 216,531.9 241,908.1 290,198.6 279,286.6Rec. Gross 27,533.6 41,606.7 44,212.1 46,422.8Dev. Gross 188,998.4 200,301.4 245,986.4 232,863.9
GENERAL ECONOMIC AND COMMERCIAL AFFAIRS
SUB-TOTAL 12,930.2 14,243.4 14,610.8 14,868.7Rec. Gross 7,941.4 8,810.2 8,895.2 9,016.4Dev. Gross 4,988.7 5,433.2 5,715.6 5,852.3
HEALTH SUB-TOTAL 36,218.1 37,900.6 40,522.6 43,430.0Rec. Gross 20,324.7 23,432.0 25,946.1 28,743.4Dev. Gross 15,893.4 14,468.6 14,576.5 14,686.6
EDUCATION SUB-TOTAL 276,242.5 303,150.7 316,799.0 327,787.4Rec. Gross 245,827.7 268,538.6 281,447.7 291,990.6Dev. Gross 30,414.7 34,612.2 35,351.3 35,796.7
GOVERNANCE, JUSTICE, LAWANDORDER
SUB-TOTAL 126,151.8 135,065.8 140,967.3 149,203.9Rec. Gross 111,263.6 120,750.7 126,341.4 134,308.4Dev. Gross 14,888.2 14,315.1 14,625.9 14,895.5
PUBLIC ADMINISTRATION AND INTERNATIONAL RELATIONS
SUB-TOTAL 173,454.5 172,643.6 177,641.9 182,789.7Rec. Gross 73,855.4 81,490.1 83,342.0 85,853.3Dev. Gross 99,599.1 91,153.5 94,299.8 96,936.3
NATIONAL SECURITY SUB-TOTAL 84,723.2 80,301.0 81,104.1 81,915.9Rec. Gross 84,723.2 80,300.0 81,102.1 81,912.9Dev. Gross - 1.0 2.0 3.0
SOCIAL PROTECTION, CULTURE AND RECREATION
SUB-TOTAL 20,542.8 21,001.5 21,792.9 22,596.9Rec. Gross 10,893.2 10,972.5 11,054.0 11,137.5Dev. Gross 9,649.7 10,028.9 10,738.9 11,459.4
ENVIRONMENTPROTECTION, WATERAND NATURAL REOURCES
SUB-TOTAL 57,133.5 55,278.9 57,795.2 58,979.1Rec. Gross 13,200.2 14,936.6 14,888.0 15,769.0Dev. Gross 43,933.4 40,342.3 42,907.2 43,210.2
TOTAL TOTAL 1,057,271.9 1,117,168.5 1,206,406.9 1,227,824.3Rec. Gross 610,585.3 666,918.0 694,742.8 723,571.5Dev. Gross 446,686.7 450,250.5 511,664.0 504,252.9
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Example: Ceilings by sector – A County BROP 2013 Medium Term Sector Ceiling 2013/14 - 2016/17, Ksh million
Total Expenditure, Ksh Million
NAMEOFSECTOR 2013/14
2014/15
2015/16
2016/17
Printed Ceiling
S01 FINANCEANDECONOMICPLANNING 408 448 493 543 S02 AGRICULTURE ANDANIMALRESOURCES 214 472 569 726
S03 EDUCATIONANDVOCATIONALTRAINING 333 366 403 443
S04 COMMUNITYDEVELOPMENT, GENDER,SPORTSA N D CULTURE
122 160 176 193
S05 PUBLICWORKS ANDTRANSPORT 353 438 482 530
S06 LABOUR,PUBLICSERVICE,ICT,PUBLICITY ANDINTERGOVERNMENTAL RELATIONS
423 302 332 365
S07 LANDS,HOUSINGANDURBAN 197 217 239 262
S08 WATER,ENVIRONMENTANDNATURAL 90 248 273 300
S09 HEALTHANDSANITATION 758 834 917 1099
S10 TRADE,COOPERATIVES ANDTOURISM 158 199 219 265
TOTAL 3,056 3,684 4,103 4,726
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Annex 2: C-FSP Format Example Contents: County Fiscal Strategy Paper Foreword Acknowledgement Introduction Outline of the Fiscal Strategy Paper Legal Basis for Preparation of the Fiscal Strategy Paper Fiscal Responsibility Principles in the Public Finance Management Law Performance of FY 2013/14 Budget Performance of Revenue Expenditure Performance Fiscal outlook to end June 2014 Expenditures Revenues Strategic priorities over the Medium Term Medium Term Fiscal Framework Revenue Projections Expenditures Development expenditures Criteria for Resource Allocation Conclusion
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Annex 3: Sector Working Group Report Format (Adapted from Treasury Circular No 11/2013)
Note: This format is based on guidance from National level. It is expected that at county level the format would be revised as needed for the County context. TABLE OF CONTENTS (Please ensure that Headings and Subheadings are identical to those in the report) Chapters 1 - 5 should form the main body of the report and should be divided into logicalsections and subsections, using appropriate headings and numbering. Its purpose is toexplain the conclusions and to justify the recommendations EXECUTIVE SUMMARY (Restate conclusions for each section and summarize findings and recommendations under this section) CHAPTER ONE
1. INTRODUCTION 1.1. Background 1.2. Sector Vision and Mission 1.3. Strategic goals/Objectives of the Sector 1.4. Sub-Sectors and their Mandates 1.5. Autonomous and Semi-Autonomous Government Agencies 1.6. Role of Sector Stakeholders (The introduction should briefly describe context; identify general subject; describe the problem or issue to be reported on; define the specific objective for the report; outline thescope of the report; and comment on any limitations of the report) CHAPTERTWO
2. PERFORMANCE EXPENDITURE REVIEW 2010/11- 2012/13 2.1. Performance of sector Programmes - delivery of outputs 2.2. Review of Key indicators of Sector Performance 2.3. Expenditure Analysis 2.3.1 Analysis of programme expenditure 2.3.2. Analysis of programme expenditure by economic classification 2.3.3. Analysis of capital projects by Programmes 2.4 Review of Pending Bills 2.4.1. Recurrent Pending Bills 2.4.2. Development Pending Bills
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CHAPTER THREE
3. MEDIUMTERM PRIORITIES AND FINANCIAL PLAN FOR THE MTEF PERIOD 2014/15 - 2016/17 3 1 Prioritization of Programmes and Sub-Programmes 3.1 1. Programmes and their Objectives 3.1 2. Programmes, Sub-Programmes, Expected Outcomes, Outputs, and KeyPerformance Indicators for the Sector 3.1.3. Programmes and their Objectives 3.2. Analysis of Resource Requirement versus allocation by: 3.2.1. Sector (recurrent and development) 3.2.2. Sub-Sectors (recurrent and development) 3.2.3. Programmes and Sub-programmes 3.2.4. Semi-Autonomous Government Agencies 3.2.5 Economic classification 3.2 6. Resource Allocation criteria CHAPTER FOUR
4. CROSS-SECTOR LINKAGES AND EMERGING ISSUES / CHALLENGES CHAPTER FIVE
5. CONCLUSION This section should summarize the key findings of the report, as outlined in the discussionunder the chapters 1-5of the report. The conclusions should relate specifically to the report'sobjectives (as set out in the introduction); identify the major issues; be arranged in order ofimportance; be specific, and to the point; and be a list of numbered points. CHAPTER SIX
6. RECOMMENDATIONS This section should outline future actions. The Recommendations should beactionorientated, and feasible; Relate logically to the Conclusions; be arranged in order ofimportance; and be to the point. REFERENCES This section should list the sources referred to in the report APPENDICES Appendices should contain information that is too complex to include in the report. Youneedto direct readers to this information, as in "Appendix A provides an overview of the Budget ofMinistry X”
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Example: Sectoral Resource Allocation
Adapted from: The Governance Brief, ADB. Linking Planning and Budgeting: The MTEF. www.adb.org/publications/search/254%2C1120?ref=themes%2Fgovernance%2Fpublications
The Sector Resource Allocation discussions need to boil down from aggregation at sector level, to be allocated among different departments within sectors. How is this done? One good starting point is to conduct a ‘hypothetical’ allocation exercise among the different ministries. The budget agency can ask each department head to allocate a fixed amount, say KsH 100,000,000 among all the other departments, excluding his or her own. Then the resulting allocations are collected and add up the individual ministerial allocations for each ministry.
Say in ‘Sector 1’ there are 3 Departments – A, B, C. The head of each is asked to allocate KsH 100M between the two other departments that are not his/her own.
Dept A Dept B Dept C Sub-Total
Head of Dept A - 30 70 100
Head of Dept B 80 - 20 100
Head of Dept C 20 80 - 100
Sub-Total 100 110 90 300
Ratio 0.33 0.37 0.30
From this an allocation ratio is established, which is the starting point for discussions on allocation. If the total aggregate ceiling was KsH 100,000,000, then Department A would be allocated KsH 33,000,000, Department B would receive KsH 37,000,000 and Department C 30,000,000.
The agreed upon allocation of the aggregate ceiling to a specific department for a given budget year becomes the ‘hard budget constraint’ for that year. The same ratio can be used to determine the ‘forward estimates’ for the following two years.
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Annex 5: FORMATFORPRESENTATIONOF PROGRAMME BASEDBUDGETS(PBB) (Adapted from Treasury Circular No 11/2013)
Vote No.: Vote Title: Part A: Mission Part B: Vision Part C: Strategic Objectives (List all the programmes and their strategic objectives. Please note that each programme must have only one strategic objective/outcome which must be linked with Strategic Plan andVision 2030) Part D: Context for Budget Intervention This section is supposed to be a review of MTEF period 2010/11- 2012/13and should brieflydiscuss the following:
• Expenditure trends; • Major achievements for the period; • Constraints and challenges in budget implementation and how they are being addressed; and • Major services/outputs to be provided in MTEF period 2014115- 2016117(the context within which the budget is required).
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Part E:Summary of Expenditure by Programmes, 2013/14–2016/17 (KSh Millions) Programme Baseline
Estimates 2013/14
Estimates 2014/15
Projected Estimates
2015/16 2016/17
Programme 1: (State the name of the programme here)* Sub-Programme (SP) SP 1.1 SP 1.2 …N Total Expenditure of Programme 1
Programme 2: (State the name of the programme here) Sub-Programme (SP) SP 2.1 SP 2.2 …N Total Expenditure of Programme 2
* Repeat as shown above for all programmes. Provide total expenditure for each programme and their summation must equal the total expenditure of the vote. Part F: Summary of Expenditure by Vote and Economic Classification** (KSh Million) Expenditure Classification Baseline
Estimates 2013/14
Estimates 2014/15
Projected Estimates 2015/16 2016/17
Current Expenditure Compensation to Employees Use of goods and services Current Transfers Govt Agencies
Other Recurrent Capital Expenditure Acquisition of Non-Financial Assets
Capital Transfers to Government Agencies
Other Development Total Expenditure of Vote ** The total current expenditure and capital expenditure must be equal the total expenditure vote given in tables E, F & G.
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Part G: Summary of Expenditure by Programmes, Sub-Programmes and Economic Classification (KSh Million)
Expenditure Classification Baseline
Estimates 2013/14
Estimates 2014/15
Projected Estimates
2015/16 2016/17
Programme 1: (State the name of the programme here)* Current Expenditure Compensation to Employees Use of goods and services Current Transfers Govt Agencies Other Recurrent Capital Expenditure Acquisition of Non-Financial Assets Capital Transfers to Government Agencies
Other Development Total Expenditure Sub-Programme 1: (State the name of the sub-programme here)* Current Expenditure Compensation to Employees Use of goods and services Current Transfers Govt Agencies Other Recurrent Capital Expenditure Acquisition of Non-Financial Assets Capital Transfers to Government Agencies
Other Development Total Expenditure - Repeat as above in cases where a Department has more than one programme and/or sub-programmes. Part H: Summary of the Programme Outputs, Performance Indicators and Targets for FY 2013/14–2016/17 Programme Delivery
Unit Key
Outputs Key
performance Indicators
Target Baseline 2013/14
Target 2014/15
Target 2015/16
Target 2016/17
Name of Programme: Outcome: SP 1.1: SP 1.2 Etc
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Annex 6: Departmental/Sectoral Committees
Second Schedule Departmental/ Sectoral Committees
(Standing Order….) Sectoral
Committees Subject Area
Agriculture, Environment and Natural Resources
All matters related to agriculture, including crop and animal husbandry, livestock sale yards, county abattoirs, plant and animal disease control and fisheries; implementation of specific national government policies on natural resources and environmental conservation, including soil and water conservation and forestry and control of air pollution, noise pollution, other public nuisances and outdoor advertising.
Health Services
All matters related to county health services, including, in particular county health facilities and pharmacies, ambulance services, promotion of primary health care, licensing and control of undertakings that sell food to the public, veterinary services (excluding regulation of the profession), cemeteries, funeral parlours and crematoria and refuse removal, refuse dumps and solid waste disposal.
Children, Culture and Community Services
All matters related to cultural activities, public entertainment and public amenities, including betting, casinos and other forms of gambling, racing, liquor licensing, cinemas, video shows and hiring, libraries, museums, sports and cultural activities and facilities and county parks, beaches and recreation facilities; fire -fighting services and disaster management, control of drugs and pornography; ensuring and coordinating the participation of communities and locations in governance at the local level and assisting communities and locations to develop the administrative capacity for the effective exercise of the functions and powers and participation in governance at the local level; and animal control and welfare, including licensing of dogs and facilities for the accommodation, care and burial of animals.
Transport and Public Works
All matters related to county transport, including county roads, street lighting, traffic and parking, public road transport and ferries and harbours, excluding the regulation of international and national shipping and matters related thereto; county public works and services including storm water management systems in built-up areas and water and sanitation services.
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Planning, Trade, Tourism and Cooperatives
All matters related to county planning and development, including statistics, land survey and mapping, boundaries and fencing, housing and electricity and gas reticulation and energy regulation; trade development and regulation, including markets, trade licences (excluding regulation of professions), fair trading practices, local tourism and cooperative societies.
Early Childhood Education andVocational Training
All matters related to pre-primary education, villagepolytechnics, home craft centres and childcare facilities.
Labour and Social Welfare
All matters relating to labour, trade union relations,manpower or human resource planning, gender, cultureand social welfare, youth, National Youth Service children’s welfare; national heritage, betting, lotteries and sports.
Justice and Legal Affairs
Constitutional affairs, the administration of law and justice, including the elections, ethics, integrity and anti-corruption and human rights.
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Annex 7: County Integrated Development Plan Chapter Outlines Source: Guidelines for preparation of County Integrated Development Plans, Prepared by the Ministry of Devolution and Planning, May 2013. Note that outlines are given below for each Chapter, except for Chapters 7 and 8, which give more detail about the purpose and structure of these Chapters in the CIDP. Chapter 1: County General Information
This chapter should provide a detailed background of the county, population, history, resource endowments, major development constraints, previous development achievements, health, education, etc. Most of this information is available in the County Development Profiles already provided to the counties.
Chapter 2: County Socio-Economic Development, Challengesand Strategies
The chapter should describe developmental strategies the county will adopt. In view of locally-defined priorities, it proposes specific policies that the county government plans will put in place to address the current challenges and previous development shortfalls. These strategies should be based on the developmental needs of the county as identified by the stakeholders and prioritized over the implementation period, taking into account the available resources and any other challenges.
Chapter 3: County Spatial Framework
The chapter should describe the spatial framework within which development projects and programmes will be implemented.
Chapter 4: Linkage with other Plans
The chapter should describe the linkages of the County Integrated Development Plan with the county sector plans, county spatial plans, sub-county plans, national plans and international commitments madeby the governmentsuch as the MDGS, andhow they apply to the county. This chapter will also include:
I. Linkage with the Constitution of Kenya 2010. II. Linkage with the Vision 2030 and Medium Term Plans: National programmes and
projects in the County, Flagship projects of Vision 2030 in the County. III. Cross-cutting projects and programmes involving the County and neighbouring
counties. IV. Mainstreaming of MDGs at the county level: indicate status of the MDGs and explain
what will be done to reach the MDGs not yet attained. V. Linkage with Sectoral Plans, Urban and City Plans within the County.
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Chapter 5: Institutional Framework
This chapter should identify the institutional framework and provide an organisational flow chart required for implementing the County Integrated Development Plan.
Chapter 6: Resource Mobilization Framework
This chapter should explain the resource mobilization framework thatshould include strategies for the following: revenue raising, asset management, financial management, capital financing, and accountability.
Chapter 7: County Development Priority Programmes and Projects
The Chapter should provide details of programmes and projects that will be implemented in the County.This will include details of strategic priorities addressed, measurable indicators of performance, and budgets.
Give a brief introduction of the chapter giving a summary of what is being discussed in the chapter seven. The programmes and projects are outlined based on the new Medium Tern Expenditure Framework (MTEF) Sector Working Groups developed by the National Treasury. Ensure the following sub-sections are well covered:
• The Sector title • Sector Vision and Mission (as per national MTEF SWGs) • County Response to Sector Vision and Mission
• Role of Stakeholders
Stakeholder Role
• Sub-sector Priorities, Constraints and Strategies
Sub-sector Priorities Constraints Strategies
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• Projects and Programmes (on-going projects/programmes, priority activities
identified during MTP2 consultations, flagship projects in the county)
i) On-going projects/programmes Project Name Location/Ward/Constituency
Objectives Targets Description of Activities
ii) New Project Proposals Project Name Location/Ward/Constituency
Priority Ranking
Objectives Targets Description of Activities
iii) Flagship Projects Project Name
Location Objectives Targets Description of Activities
iv) Stalled Projects Project Name
Location Description of Activities
Reasons for stalling
• Strategies for mainstreaming cross-cutting issues in the sector
The idea behind mainstreaming cross-cutting issues is to ensure that they are inbuilt within various development programmes. It is necessary, therefore, that the County Development Plan clearly highlights the approaches to be applied in mainstreaming cross-cutting issues in all stages of the proposed development projects/programmes.
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Chapter 8: Implementation, Monitoring and Evaluation
Thischapterspecifiesprograms/projects tobeimplementedduringtheplan period.It also specifies objectively verifiable indicators that willbeusedto monitor project/program implementation,and setsmediumtermmilestones for impact assessment.Theoutlineofthechapterisasfollows: a) Introduction(abriefdescriptionoftheissuescoveredinthechapter) b) InstitutionalFrameworkforMonitoringandEvaluationintheCounty c) Implementation,MonitoringandEvaluationMatrix:Shouldincludeallongoingand proposedprojects.Thefollowingformatshouldbeused:
Project Name
Cost Estimate (KsH)
Time Frame
Monitoring Indicators
Monitoring Tools
Implementing Agency
Source of Funds
Implementation Status
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Annex 8: Template for costing of programs and activities This is a simple template aiming at introducing the participants to the process of estimates. Name of Program Name of activity
Frequency Quantum Total
1. Inputs required 1.1. input I (e.g. stationery 1.2. input 2 (e.g. personnel) 1.3. input 3 (e.g. drugs) 1.4. input 4 (transport)
Total for Activity I. Total for Activity II Total for Activity III Total for Program