As the LETA agency was informed by the ministry, the Ministry of Education agrees that there are opportunities to improve the funding planning process, but insists that the forecast of the number of GMI benefit recipients was made in the summer of 2022, “when the state of emergency declared due to Covid-19 had ended just a few months ago, which had a great impact on employment and the income of the population, as well as a rapid increase in the prices of energy resources was observed”.
In accordance with the plan approved by the Cabinet of Ministers for the provision of state co-financing in the amount of 30% of the municipal GMI benefit expenses, 1.35 million euros were planned in 2023, while less than a million euros, or 74% of the planned amount, were used.
LM states that according to the data of the Central Statistical Office in 2022, the income of 7.8% of the population of Latvia was below the minimum income level – 302 euros per person. Thus, the number of residents with very low incomes was “much higher than in previous years”, the average number of GMI benefit recipients. LM believes that, therefore, it was not possible to accurately determine the number of households whose income is equal to the increase in the GMI threshold, in order to accurately conclude what part of the population could qualify for the GMI benefit.
The Ministry claims that, taking into account the listed external factors, assumptions were made that in 2023 a much larger number of residents will apply for social assistance, therefore the estimated necessary funding was increased even more than the forecasts of the Consumer Price Index of the Ministry of Finance.
LM highlights the conclusion of the SC that, in general, the municipal GMI benefit is granted in accordance with the regulatory enactments and it was used in accordance with the purpose, which confirms that the allocated funding has reached the target group.
At the same time, the Ministry acknowledges that the findings and conclusions of the SC indicate the need to improve the approach to planning additional funding requests and the understanding of municipal social services about changes in the legal framework. Among them, it is necessary to promote cooperation so that information about the granting of social assistance reaches the responsible employees.
The SC, conducting random inspections in six Latvian municipalities regarding the allocation of GMI allowance, found inconsistencies in the cases of household clients, which do not significantly affect the total amount of the targeted grant paid to the municipalities. In the view of LM, the detected inconsistencies in almost all cases are related to the amendments to the legal regulation on the assessment of the household’s material situation for the awarding of poor or low-income household status or social assistance benefit – they were allowed only in the first months after the change of the legal regulation. This reinforces the Ministry’s belief that in cases where changes in regulatory acts are planned, the necessary measures should be taken proactively to promote the understanding of responsible employees of local governments.
In LM’s view, the SC audit is focused on one benefit of the priority measure “Support for increasing the minimum income”, that is, only on the planning and use of GMI benefit funding, with less consideration of the housing benefit component. The LM assesses the criticism of significant mistakes in funding planning as too critical, “taking into account that the funding for the payment of both basic social assistance benefits (GMI and housing benefit) has been used for 76% of the planned and in accordance with the goal”.
The usage monitoring data were regularly analyzed and according to the actual expenses and planned forecasts transferred to GMI and housing allowance payment, thus providing financial support to low-income residents, which is the main goal of this priority measure, LM insists.
According to the statement of the ministry, in the process of preparing the state budget for 2025 and the budget for 2025, 2026 and 2027, when planning the amount of necessary funding for the co-financing of the GMI allowance for local governments, the suggestions of the Central Government have been taken into account.
The forecast of state basic budget expenditures for 2025 – 2028 for the provision of state co-financing to municipalities for GMI benefit expenses is based on the actual data of the implementation of the measure – the number of benefit recipients, the trends of changes in the number of recipients by month and the average amount of benefits paid, including the percentage ratio to the maximum possible.
In the opinion of the Ministry, the recommendations expressed in the audit report will improve funding planning and promote the understanding of local government social services in assessing the material situation of households.
It has already been announced that the audit of the SC concluded that the Ministry of Finance requested an unreasonably large amount of funding for the payment of the guaranteed minimum income benefit in budget planning over a period of several years. The revision emphasizes – if the approach used so far in funding planning will not be changed, for 2025 and 2026, funding for the payment of the targeted grant to municipalities for the co-financing of GMI benefit expenses will be allocated at least 7.8 million euros more than is actually needed.