1. Financing of Services – Reporting back from Breakout Session 3

2. Financing of Services – Breakout Session 3 Focus: How to redirect resources from residential to alternative care? How to cost such reforms? Objectives: To better understand financing systems, approaches, tools; To define practical lessons and obstacles for from three concrete country cases: Georgia, Ukraine, Serbia To suggest ways to address obstacles and formulate issues for winder /plenary discussion Approach: Tried to look for systemic barriers, not cosmetic problems Tried to be open and critical Tried to brainstorm, but more questions than time

3. Points of strongest resonance with the group Ms. Gordana Matkovic, Director of Social policy Studies / Centre for Liberal Democratic Studies, Serbia Structure of major reforms: how to redirect resources from residential to family-based + what are transaction costs and how to cover them? Importance of keeping institutions on board. > We need diversified menu of high quality services, not only alternative services; > Residential providers: big employers, political players, valuable assets > Ideas: 1-year moratorium on taking new staff; fixing capital investment; trade good buildings with other sectors; re-employ qualified staff; motivate teachers take new roles (example with caring for children over summer); Allocating roles between levels of government: > Reform mandates at single level (e.g. national) > Co-funding from different layers Intergovernmental transfers to fund services: block of earmarked?

4. Points of strongest resonance with the group Mr. George Kakachia, Head of the Child Care and Social Programs Unit, MoLHSA, Georgia Rich background on social welfare systemic context for Georgia; New system of vouchers for child care services, which raised a lot of interest and questions: > Vouchers: a payment mechanism as a pragmatic solution of procurement problems or a new approach to service commissioning? > Does a new system improve flexibility of choice? > Issues of predictability of funding and therefore risks for viability of some services; > How wide is the coverage of services? (at the moment in Georgia, not too wide); > Window of opportunities to develop a strategic and prioritised policy/plan (i.e. which services should be expanded; which regions should be covered).

5. Points of strongest resonance with the group Ms. Halyna Postoliuk, Director of Hope and Homes for Children, Ukraine An example of convincing cost-benefit analysis; How a rayon-level pilot can uncover system-wide problems and lessons: > The only way to fund new services: through a temporary, diminishing and manually distributed subvention; > Strong financial incentives for residential provision in the current formula of intergovernmental transfers; > Strong administrative incentives against change: provision dominated by vertical administrative mandates of sector ministires; very difficult for prevention and innovative services; > Continued confusion in distribution of responsibilities across levels of government; > Key task: to introduce complex institutional reforms for social commissioning of services for children.

6. Points of strongest resonance with the group Ms. Elena Andreeva, Academic director, Center for Fiscal Policy, Russia Costing of policies versus costing of services; Well-costed policies as strong arguments to lobby for reforms, including negotiations with financial authorities; Forecasts and costing should help to make choices, not literally describe the details of future outcomes; Country cases show how costing policies illustrates significant benefits of re-allocation of funds towards family-based care (including such indirect channels as improved productivity) and justifies investment in the short-run.

7. Open issues for further / wider discussion: The problem of ambiguous concepts which require further clarification (e.g. Money Follows the Child). Decentralisation: Where in the ladder of decentralised government we should locate the point of policy-making? National? Regional? Local? Intergovernmental transfers to fund services – earmarked or block; is there a scope for democracy to work for social welfare at the local level? How to incorporate political economy? (e.g. align reforms with local election cycles, so that governors do not oppose hard choices; match child care reforms with other factors such as poverty reduction strategies etc).