This presentation was made by Eneken Lipp, Estonia, at the 40th Annual Meeting of OECD Senior Budget Officials (SBO) held in Tallinn, Estonia, on 5-6 June 2019

1. Performance budgeting and
links to strategy in Estonia
Eneken Lipp
Project Manager of Performance Based Budgeting
Ministry of Finance, Estonia
eneken.lipp@fin.ee

2. • Why the change?
• Concept of performance based budgeting
• Links to strategy and examples of practice
• Service management and customer value

3. • Lack of co-operation
• Planning and budgeting as separate worlds
• Too much attention to inputs
• Not enough performance evaluation and monitoring
• Number of planning documents
• Number of people responsible for strategic planning,
producing planning documents
• Foreign funds management - different rules, separate
indicators and documents
• Doubled activities, documents, functions, IT systems
• Pressure on budget costs, decrease of foreign funding
Challenges that triggered the change

4. 2. Public Services
100% of Budget costs are
connected to services
3. Service Costing
Cost accounting of services in
Ministries and Agencies. Agencies may
choose between traditional and activity
based costing.
Performance Based Budgeting in Estonia
where resources are connected to outcomes
1. Programme budgeting
Structured strategic planning and
budgeting in all Government areas and
Agencies
Unified performance planning and budgeting - Financial Management Information System and
Costing Software available for all Agencies.

5. Centralized accounting and personnel
records, unified coding
State Budget Strategy structured by
performance areas - connection to
strategic documents (2012)
Government action plan in line with
long-term strategic objectives
Long-term objectives and sub-goals with
impact indicators in strategic documents
Single software for accounting and
reporting
Monthly reporting state budget
actuals, tax revenue collection
Financial management Strategic management
Accrual based budgeting (2017)
Starting point for PBB reform

6. Performance planning and budgeting

7. Public services
Direct services
social benefiits
Licences
Indirect services
a person
society
Shared services
policy planning
prevention
monitoring
law enforcement
other agency
IT support
accounting
Clients Examples
Support services organisation
other services
budgeting
legal aid
personnel management

8. Financial and non-financial information planned and
reported in the same hierarchy
Performance area
Programme
Measure
Programme
activity
Service
Measure
Programme
activity
Service Service
Programme
activity
Service Service
Programme
Measure
Programme
activity
Service Service
Long-term impact
objective
7-10 yrs
Sub-goals 4 yrs
Intermediate
Outcome
Output
Results
Intermediate
Outcome
€
€
€
€
€

9. Performance areas and programmes in 2020
Intelligence and
Early Waning
21 performance areas
45 programmes
Incl. 2 co-operation programmes

10. Ministry/Gov Office
Number of
programmes
Number of
measures
Number of
programme
activities
Number of
services
Number of
Agencies
Government Office 1 1 1 1 1
Ministry of Foreign Affairs 2 4 6 26 1
Ministry of Finance 4 9 18 64 5
Ministry of Justice 1 6 20 72 18
Ministry of Culture 3 6 20 84 7
Ministry of Interior 2 8 22 85 7
Ministry of Defence 4 12 72 93 5
Ministry of Environment 2 7 19 160 7
Ministry of Education and Research 11 31 82 160 73
Ministry of Economic Affairs and
Communication 6 18 34 162 8
Ministry of Social Affairs 9 13 41 175 10
Ministry of Rural Affairs 2 5 26 217 8
TOTAL 47 120 361 1299 150
Performance levels statistics in 2020
Co-operation programmes counted per ministry = 1

11. Expected changes
Better
management
Less strategic
documentsPrioritizing
Efficiency,
dashboards
Performance
levels,
open data
No more
silos
Customer Value
Flexibility
To reduce
administrative burden
Flexibility for resource
management
Service and quality
Management
To increase co-operation
between Ministries
Transparency in
budget planning
Tool for agency
management
Instrument for
policy planning

12. New amendments in budget law – take effect in 2020
Planning documents connected to budget are:
• Policy Fundamentals (Parliament)
• Performance area planning documents (Government)
• Programmes (Minister)
 The budget limits are set on programme level.
The budget is divided: Ministry, Performance area(s), Programme(s).
 Flexibility rule: Gov. is allowed to reallocate costs between
programmes up to 0,25% of programme fixed cost limit.

13. Government
action plan
(4 years)
Long-term strategic plan „Estonia 2035“
Long term
15 years
4 years
State Budget
4 years
Performance areas strategies
State Budget Strategy
Performance report of development plans
Spending reviews, mid term and ex post evaluation,
impact analysis
Programme documents
7-10
years
Policy principles
1 year
Previous
year/period

14. 12%
46%
29%
13%
Ministry of Social Affairs
performance areas - budget and KPIs (2020)
Labour Market 669,3 mEUR
• Employment rate 76%
• Duration of working life 37,5 y
No of programmes: 1
• Labour Market pr: 669,6 mEUR
Health 1 644,6 mEUR
• Life expextancy rate (M) 75 y & (W) 84 y
• Healthy life years (M) 60 y & (W) 65 y
No of programmes: 3
• Environmental Health pr: 8,2 mEUR
(2%)
• Health Risks pr: 16,7 mEUR (2%)
• Health System pr: 1 621 mEUR (96%)
Social Protection
2 639,5 mEUR
• Absolute poverty rate 3,0%
• Relative poverty rate 15%
• Gender pay gap 19,7%
No. of programmes: 3
• Social Insurance pr: 2 553,4 mEUR (97%)
• Social Care pr: 85,2 mEUR (3%)
• Gender Equality pr: 1,56 mEUR (0,04%)
Family Policy 754,7 mEUR
• Nat. Birth rate: positive
• Total fertility rate 1,62
• Abs. Poverty rate among children 3,5%
No. of programmes: 1
• Children and Families pr: 754,7 mEUR
5,709 bEUR

15. 1.65 1.67 1.67 1.62 1.65 1.65 1.67
3.8
3.2
3.6 3.5 3.4
3.2 3.1
0
0.5
1
1.5
2
2.5
3
3.5
4
0
100,000,000
200,000,000
300,000,000
400,000,000
500,000,000
600,000,000
700,000,000
800,000,000
900,000,000
2018 budget 2018 actual 2019 budget 2020 budget 2021 budget 2022 budget 2023 budget
Family Policy costs and main indicators 2018-2023
Family Policy (€) Total fertility rate (%) The absolute poverty rate among 0-17 children aged
1,67
Example of performance area - family policy 2018-2023
Indicator:
Natural birth rate
expected POSITIVE
2018 actual - 1384
• Not all impact indicators are available in spring when budget process starts
• Combination of various indicators is used to reflect one year outcome
• The last known actual is used to describe slowly progressing impact
(2017)
4 Agencies services included:
Ministry of Social Affairs
Social Insurance Board
National Institute of Health
Development
IT Agency for Health and Wellbeing
(support services)
4
3
22
OBJECTIVE: The Estonian nation is a growing nation and the welfare and quality of life of children and families has risen

16. Family Policy
Children and Families Programme
The rights of the child are guaranteed, a
functioning child protection system values
every child, its development and well-being
Services for children and families are of high quality
and meet the needs of families
There is a social protection system in Estonia
that supports families adequate economic
livelihoods and the reconciliation of work and
family life
Services aimed at the
development of parental
skills
Services for children who
need extra assistance and
have committed offences
Services for children with
disabilities
Improving the quality of
replacement care and
promoting family-based
substitute care
Creation of childcare
places and supporting
provision of service for
children aged 0-7 years
Development
and provision of
support services
for disabled
children
Support services
for disabled
children
Rehabilitation
service for
children with
special needs
Physical aids for
children with
special needs
Increasing the
quality of
replacement care
Improving the
competence of
substitute care
specialists and
families
Service for
organizing and
developing
substitute care
PROGRAMME INDICATORS
• Desired number of children - actual number of children =
• Children (4-12-class), generally satisfied with life
• Employment gap of M & W betw. 20-49y. having children
aged 0 to 2 years (%point)
61
2,9m€ 25,36m€ 726,44m€
1,42m€ 2m€ 19,5m€ 1,2m€ 1,12m€
0,15m€ 7,6m€ 9,48m€ 2,3m€ 0,15m€ 0,28m€ 0,82m€
M
E
A
S
U
R
E
A
C
T
I
V
I
T
Y
S
E
R
V
I
C
E
754,7m€

17. Service management in Children and Families programme
0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 9,000,000
Support services for disabled children and
facilitating reconciliation of work and family life
Development and provision of support services for
disabled children
Rehabilitation service for children with special
needs
Aids for children with special needs
Increasing the quality of replacement care
Examples of services in Children and Families programme
2018 actuals 2018 budget
target actual
1000 2405
Family-friendly
employer label
model - YES
5500 7151
6000 2194
750 680
Indicators

18. Parental benefit service – for parents after cildbirth
Support services
from IT agency
Accounts
Personnel
Operational
Amortisation
Bacground
work to bring
the benefit to
the Client
Target 2020
17 100/y
171 141 €
The benefit
Grants Benefits
Resource groups
Property related
Direct costs
Events
Vehicles
Personnel related
IT related cost
Support services
Document management
Finance management
Asset management
IT support
Management
Communication
Legal Aid
Personnel management
Internal control
1 209 793 €
Application
(declaration)
Document
processing
(declaration)
Decision
making
(dossier)
Pay out
(decision)
Issuing
documents
(decisison)
1 209 793 € 1 209 793 €
275 276 793 €
Total service
cost
274 067 000 € 274 067 000 €
Customer
journey
(e-services)

19. Children and families programme
service development principles
The services offered are provided in a timely manner, are relevant and
effective
• The child's needs are taken as a whole
• The assistance is organised in cooperation of different agencies
• Services are offered in the child's everyday environment
• The support is provided in one place
Reduces fragmentation and allows to provide more support for the
same money

20. A child
perspective
Speech therapist
at study
counselor
Speech therapist
at school
Speech therapist
at helth care
Speech therapist
at
rehabilitation

21. Transparent
Seamless
Governance
A good service is what a person does not
notice, he/she just feels good. A service that
best suits human needs, values and the world

22. ©ReneeAltrov
Thank You!