62248 Decentralization in Rural Russia: Effectiveness of Reforms Maria Amelina, Diether Beuermann, Imogen Wade1 formally independent administrative unit (poselenija or ‘settlement’) with an elected head (executive), an elected Key Messages council (representative body), a formal budget with assigned revenue sources, and mandated responsibilities for Russia has implemented a far-reaching providing services. About 10,000 new administrative units decentralization program that increases the were created (up about 40% from the pre-reform total), powers and responsibilities of rural settlements mostly in rural areas. in the country. The World Bank provided technical assistance Settlements are the smallest formal self-governing units in for several aspects of the reform Russia. Next up are districts or rayons, which are implementation, including piloting mechanisms agglomerations of settlements. Significantly, settlements are for citizen-participation in public decision- not administratively subordinate to districts. According to making, capacity building in settlements and the responsibilities conferred on them by the law, measuring the impact of reform. settlements are now responsible for the delivery of a specific subset of local services (for example, street Assessment of the interventions showed that cleaning, waste collection), maintenance of a subset of providing training in public participation alone structures and institutions on their territory (publicly owned did not significantly affect citizens’ participation, housing fund, cemeteries, parks, settlement road repairs), satisfaction with local services, or assessment of intra-settlement transportation (roads and bus services), and local administration effectiveness. On-site utilities (electricity, heating, water, gas). Districts retain the assistance by technical experts in settlements responsibility for education, health care, municipal police, with more open administrative practices yielded district-level institutions, and inter-settlement transport. The better results for public participation and mandates of the settlements are funded through land and government efficiency. property taxes, service fees and higher-level transfers. Impact evaluation of the reforms showed that District-level administrations do not levy or collect taxes. decentralization has had a positive impact on The Law on Local Governance has significantly expanded political and administrative aspects but mixed the legal and institutional space for citizens to participate in results on fiscal issues. public decision-making, and the allocation and use of public resources at the settlement level. Aside from elections, public meetings are now also required on issues of public Decentralization Reforms: Main Facts importance--such as strategic planning, budget allocation and use, and land-use rules. The Law on Local Governance, enacted in 2006 by the Government of the Russian Federation (GoR), brought about dramatic decentralization of political, administrative, World Bank Assistance for Decentralization and fiscal powers to rural settlements in the country. After Reforms the legislation was passed, every settlement or group of settlements with a population above 1000 became a The World Bank provided technical assistance on the following aspects of the reform implementation: 1 The team also includes Omar Azfar, Ricardo H. Cavazos-Cepeda, Leah Cohen, Paul Dower, Natalia Golovanova, Tugrul Gurgur, Nicolas Perrin, Dorn Townsend, Dylan Myles Primakoff, and Paul Saumik. This Piloting mechanisms for effective participation of Knowledge Brief draws from the study “Who Governs Rural Russia: Preliminary Outcomes of the 2006 citizens in public decision-making; Decentralization,” World Bank, 2010. ECA Knowledge Brief Capacity building among settlement-level public hearings, help identify three achievable funding priorities, officials; and provide assistance in achieving those priorities by Developing tools for data collection and carrying mobilizing public and private resources and skills.2 In out the first rigorous measurement of the reforms’ addition to creating the legal documents (charters of the impact and effectiveness; settlements, fiscal documentation, etc.), the RLCs also Suggesting objective measures to be used for provided pro-bono consultations to the settlement assessing the performance of local administrations; populations on private matters of public significance (for and example, rights for social assistance, cadastre/land/property Suggesting incentives for rewarding high- issues). performing settlement administrations and assisting others in increasing their capacity and the demand- The sampling frame of the project also included a sub-set of driven orientation of services provided to citizens. control settlements, randomly selected for periodic comparative measurements. Overall, 109 panel surveys of Piloting Participatory Management at the Settlement settlements, households and public officials were carried Level out. In addition, objective data on the socioeconomic characteristics of the localities were collected, along with historic data on self-governance in the same localities. The Bank, assisted by a grant from the Japan Social Development Fund (JSDF), undertook a pilot project to The evaluation showed that the effectiveness of the improve the participation by the rural populations in public decision-making, assist settlement administrations in capacity-building intervention (as measured by citizens’ understanding the new “rules of the game” on fiscal matters, participation in public affairs and perceptions of improved and facilitate the preparation of legal documents necessary service provision) was critically dependent on the duration to operate independent administrative units (for example, of institutional experience each settlement had had with charters and budgetary documents). The project settlement-level formal governance. In settlements with simultaneously helped build the capacities of local more stable institutional environments (found in Penza, governments to be responsive to citizens and encouraged citizen engagement in local decision-making processes. On- where settlement-level formal administration had been the-ground interventions were accompanied by evaluations introduced a decade earlier), providing information alone of the interventions, wherein officials and citizens were had no significant impact. However, support around asked to measure the effectiveness of the first year of specific concerns, like how to organize public discussions, reforms. significantly improved public participation and government efficiency. In settlements without a long history of local First, in randomly selected sets of rural districts and self-government (Adygeya and Perm), neither information settlements in the three regions studied - the Republic of Adygeya, Penza Oblast and Perm Krai - local nor on-the-ground technical support led to significant administrations and residents received training and improvement in average public perceptions of services. But, information about techniques for public participation and among settlements in Adygeya and Perm, on-the-ground public involvement in budgetary decision making. They assistance led to significantly greater results in settlements also received the “information treatment”, or information where government was viewed as more accountable to the and explanations about the formation and execution of citizenry (see Table 1 for specific results and distribution of formal budgets. outcomes). These findings underline the importance of The second intervention included the basic “information” tailoring technical assistance programs to local conditions treatment” but also assigned one full-time Rural Municipal and viewing capacity building assistance to local Consultant (RMC) and one Rural Legal Consultant (RLC) administrations as a multi-year commitment to building for the period of one year to each treated settlement institutions. (“capacity building” treatment). The consultants were local dwellers trained in the fundamentals of fiscal planning and participatory budgeting (in the case of RMCs) and local/district lawyers (in the case of RLCs) trained in the creation of the legal documents necessary to enact the provisions of the new law in a settlement. The task of the RMCs was to guide the treated settlements through the first post-reform budget cycle, help train public officials and 2 More than 40 projects reflecting community priorities, identified during public hearings, were successfully interested citizens in organizing meaningful budgetary implemented. For more details, see the pilot project website at: www.worldbank.org/russia/localgovernance ECA Knowledge Brief Table 1: Impact of Information versus Capacity- the United States and parts of Western Europe where Building Interventions in High-Accountability citizens tend to have greater trust in local governments.3 versus Low-Accountability Settlements Another finding was that citizens who interact with their Information Capacity building Public Satisfaction Public Satisfaction administrations like what they see. Voting, political Decision with services Decision with Services activism, participation in voluntary organizations and other Making Making forms of informal collective action, were significantly and Penza Same Greater in Greater in Same high- low- negatively correlated with the perceptions of corruption and accountability accountability positively with the feeling of trust between local Adygeya -- -- Same Greater in governments and the governed. high- accountability Perm Same Same Same Greater in high- Figure 1: Understanding of Household Priorities in accountability Service Provision by Elected and Appointed Note: No calculation is made for the impact of information in Adygeya because no household data collection was done in a settlement in the bottom half of the pre- officials in 2007 (each dot corresponds to one of treatment accountability index. seventeen public services provided in the studied settlements)4 Source: World Bank study (2008) Effects of Decentralization 30% 25% The political and administrative aspects of decentralization Houshold's Preferences 20% r = 0.69 demonstrate measurable improvements in the processes of 15% local governance. On average, citizens prefer direct 10% elections to any other format of local transition of power 5% (appointments, indirect elections). The reform ushered in a new and, on average, younger, better educated and 0% wealthier cadre of local officials. It also helped institute a -5% 0% 5% 10% 15% 20% more transparent, collegial, and formal relationship between -10% settlements and district-level officials. Elected public Appointed Officials Preferences officials demonstrated a better knowledge of citizens’ preferences (Figure 1). 35% Houshold's Preferences 30% The impact of fiscal decentralization was more ambiguous. 25% r = 0.86 The reform increased access to resources by allocating land 20% and property taxes directly to the settlements and increasing 15% the prevalence of a formula-based methodology (as opposed 10% to arbitrary decisions) for allocating the bulk of Government grants. However, the federal and regional governments’ 5% responsibilities for tax administration and settlements’ 0% 0% 5% 10% 15% 20% dependence on Government transfers limited fiscal Elected Officials Preferences autonomy. The inability of settlement executives to participate in tax administration diminished collection rates. Source: Surveys of Elected and Appointed Public Officials, World Bank, 2007. Settlement-level officials demonstrated some confusion concerning the level of subsidies their settlements are entitled to. This indicates that that fiscal autonomy of the settlements correlates more with the level of education of 3 In the United States, surveys by Gallup and the Pew Center consistently find that respondents view state the settlement heads rather than with the objective financial and local governments more favorably than the Federal Government (with state and local governments and economic characteristics of the localities. registering approval ratings close to 70% and the Federal Government just above 40% during the past decade). See http://www.gallup.com/poll/28795/Low-Trust-Federal-Government-Rivals-Watergate-Era-Levels.aspx. Settlement officials are perceived by citizens to be For Sweden, SOM surveys also showed that people are consistently (from 1999-2007) more satisfied with the way democracy works in their local governments than in their region or in the European Union (SOM Report significantly less corrupt than regional and national 2008: 18 “Swedish Trends: 1986-2007”, p.21). officials. Nevertheless, there is a higher level of trust in the 4 Traditional and mandated local services included in the survey are: a) small businesses; b) support to Federal Government (Figure 2). This view contrasts with collective farms; c) support to private farms; d) support to individual farming; e) housing funds; f) communal services; g) public transportation; h) roads; i) law and order; j) Youth; k) cultural institutions; l) natural and cultural monuments; m) waste management; n) general education; o) pre-school education; p) medical treatment; q) cemeteries. ECA Knowledge Brief Figure 2: Public Perceptions of Corruption Do Not of civic observer and monitoring groups) should be a Correspond with Trust in Leadership, 2007 high priority in regional and federal policies. 6. National social assistance programs in rural settlements remain critical and need to be managed at federal/regional levels, given that poverty alleviation is not viewed as a core responsibility of local governments and that elected officials tend to target their services at the median voter, not the poorest. Extensions of the Project The World Bank and the GoR teams have identified numerous avenues for adjusting reform implementation, legislation, and practices: Note: Index number for corruption ranges from 0 (corruption doesn’t exit) to 100 (widespread corruption). Index number for trust ranges from 0 (great distrust) to 100 (great trust). Federal level: The Government has adopted Source: Surveys of Public Perceptions, World Bank, 2007. indicators of local government effectiveness, developed in consultations with the World Bank Policy Implications team. Russian Statistical Agency (Rosstat): Rosstat has a Having identified patterns and weaknesses, the project team set of indicators (“passport of municipalities”) recommended strategies and tools which the GoR can which are publicly available on its website and follow to increase the reforms’ effectiveness. include information on the performance of rural 1. Standardized collection of data on local government settlements. performance is vital to guide reform implementation. Regional level: The Bank is extending its Results of analyses of local administrations’ cooperation on governance with Perm, one of the performance should be publicly available and project regions. A pilot project will expand disseminated among local public officials and their cooperation between the ombudsman, local constituencies. government and local activists so that public 2. Incentives for enhancing performance can be improved decision-making becomes more demand-driven, by tying measured performance indicators to the receipt transparent, and effective. of development grants. The index should be easy to Local level: Associations of municipalities in access and understand. It should be based on the project regions have adopted the piloted dynamics of change rather than absolute numbers so methodology for organizing public hearings. RMCs poorer and smaller settlements are not penalized. trained during the project implementation have 3. For reform to succeed, it is important to engage in become valuable resources for the associations. contextual, specific, long-term capacity building programs for local officials. Without improvements in The methodology and instruments used for assessing the capacity, the settlements may continue relying on effectiveness of the JSDF-funded intervention are being districts for funding and decision-making. used to assess grant allocation effectiveness of the program 4. Settlements need to have more responsibility for supporting local initiatives in Southern Okrug. administering and collecting local taxes so local knowledge can be used to improve tax collection. About the Authors 5. The reform has created the potential for local Maria Amelina is a Snr. Social Development Specialist in participation in government decision-making. Technical the Social Development Network of the World Bank; assistance to improve officials’ ability to organize Diether Beuermann and Imogen Wade, consultants, Social constructive and open venues for public participation Development Unit of the Europe and Central Asia Region (public hearings, meetings with constituency, formation of the World Bank. “ECA Knowledge Brief” is a regular series of notes highlighting recent analyses, good practices and lessons learned from the development work program of the World Bank’s Europe and Central Asia Region http://www.worldbank.org/eca