The Minister of Finance and Public Function, María Jesús Montero, has sent this Friday to all the Autonomous Communities of common regime and to the Autonomous Cities of Ceuta and Melilla a document to start the debate on the reform of regional financing. The Government has submitted a proposal for calculating the adjusted population, one of the essential variables of the financing model and which determines the distribution of resources based on demographic, social or territorial circumstances.
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The Ministry of Finance has also empirically analyzed the distribution of regional spending to establish new distribution percentages by functions. Specifically, basic indicators of spending needs of the Autonomous Communities in health, education and social services have been analyzed, as well as spending on other autonomous services.
On the other hand, to complement this information, corrective variables of a geographic and demographic nature have also been taken into account, such as surface area, dispersion or insularity, which the current model already contemplates. In addition, depopulation correction elements have been included and fixed costs related to spending, which have an impact on less populated communities, are also taken into account.
With this document, the Government aims to “open a loyal and rigorous debate, which goes beyond the dialectic of winning and losing communities, and which is committed to a rational model, in which the interests of all communities converge.”
Summary of the proposal:
In the case of health spending, the current indicator in the adjusted population is the equivalent protected population variable, which is divided into 7 age groups and where coefficients are applied that reflect the costs that health has based on the years of its beneficiaries. In the proposal put to the Autonomous Communities, the groups are divided into five-year age groups, which means going from 7 to 20 groups. In this way, the actual existing healthcare cost can be specified much more precisely by age group. In short, the equivalent protected population takes into account that, in terms of health spending, the age of citizens is relevant.
The greater stratification has been possible thanks to the current availability of use and expenditure indicators that present a greater breakdown by age group. Likewise, the proposal also contemplates an update of the applicable coefficients, improving the data and information sources.
For example, the distribution of healthcare spending relative to hospital and specialized services is taken into account; primary health services; pharmacy; and consumption in prostheses, transfers and therapeutic devices. With all these elements, the weight of health spending in the adjusted population would increase with respect to the current system and would go from having a weighting of 38% to one between 40% and 45%.
The current model of the autonomous financing system assesses the needs in education, taking as a variable the population from 0 to 16 years of age. Therefore, other academic stages such as university or vocational training were excluded, which are incorporated in the proposal submitted from the Treasury. In fact, the document raises several options for how these variables could be computed to determine the preferences of the communities.
- Assess the needs of the non-university population. That is, the population from 0 to 17 years old according to the register and the entry of Higher FP students from other Autonomous Communities, to take into account the transfer that occurs significantly to certain territories.
- Assess the needs of the university population. That is to say, population of the register between 18 and 24 years old and the arrival of university students from other communities.
However, the document raises a second option that would include the non-university population from 0 to 17 years old and the university population from 18 to 24 years old. That is, without incorporating students from other Autonomous Communities.
A third possibility also included in the report is a non-university population aged 1 to 17 years and students of higher Vocational Training and a university population based on enrolled students.
The weighting of this variable of spending on education would also increase from the current 20.5% to a range that varies between 25% – 30%, with non-university education being 75-80% of it and university education the rest .
In the current model, the regional financing system assesses the needs for spending on social services based on the population variable aged 65 and over.
However, taking into account that these resources are focused on the most advanced ages, the submitted proposal includes the need to divide this group in two. That is, one section would be people between 65 and 79 years old and another group of people over 80 years old. The greater breakdown allows a better adaptation to the reality of this expense, according to the Treasury.
Likewise, there is a high consensus that the social services provided by the Autonomous Communities reach a population that exceeds the elderly. For this reason, as a novelty, this variable includes the unemployed without unemployment benefit.
The weighting of spending on social services in the current model is 8.5% and it would become between 6% or 10%. Within this variable, the register of people over 65 years of age would weigh between 80% or 90% and that of the unemployed between 10% or 20%.
Rest of services
Regarding spending on the rest of the services carried out by the Autonomous Communities, after analyzing different alternatives, the proposal is to maintain the current structure with respect to this variable. This means that it will be measured taking into account the total registered population. In this case, the weighting of this indicator would be reduced from the current 30% to a scale between 18% and 22%.
The corrective elements are the following:
Non-population corrective variables
The adjusted population is also made up of corrective variables that aim to guarantee an adequate provision of services in those communities whose geographic characteristics especially affect their spending needs. In this sense, the document presented takes into account a key challenge for many regions, such as the demographic challenge.
In fact, the set of these non-population factors go from a weighting of 3% in the current system to a range between 3% -4%. The following elements are part of these corrective variables of a geographical nature.
The area is a variable that has been part of the regional financing system since the first model that integrated the Autonomous Communities into homogeneous financing models.
There are certain autonomic competences in which the surface factor is decisive in the direct identification of the needs of the communities. Furthermore, it is a characteristic that can modulate the spending needs of the territories in relation to those competences not directly linked to the surface area. In other words, the larger the surface area, to provide health, education or social services, either the number of centers must be increased to reduce user travel or they must be taken care of.
Also, the surface can be representative of phenomena such as depopulation and scattering. The way the variable is weighted is in square kilometers.
Depopulation is another factor that the proposal takes into account and that is linked to the demographic challenge that the Government wants to face. However, the report describes the need to analyze whether, in addition to variables such as surface area, which consider the density of all the Autonomous Communities, it is necessary to identify a specific variable, with a more concentrated nature, that specifically measures the problem faced by Autonomous Communities with areas more depopulated.
The document sent by the Ministry of Finance includes various formulas to address the calculation of this variable. One of them is to take into account the population necessary for each province to reach medium density – not including populations with more than 75,000 inhabitants – which allows reinforcing the results of the most depopulated communities.
At this point, the submitted proposal contemplates two possibilities. On the one hand, take into account the singular entity of inhabited population. That is, any habitable area of the municipal term. It is considered a habitable area when there are inhabited dwellings or in a condition to be so.
An area is considered clearly differentiated when the buildings and dwellings belonging to it can be perfectly identified on the ground and all of them are known by a denomination.
Another option is to consider inhabited population centers, which represent a set of at least ten buildings, which are forming streets, squares and other urban roads. Included in the nucleus are those buildings that, being isolated, are less than 200 meters from the outer limits of the aforementioned complex.
The insularity variable is also included in the document. The way to weight it would be based on the kilometers from the islands to the peninsula.
Finally, another of the novelties of the report has to do with the incorporation to the adjusted population of the corrective variable linked to fixed costs or economies of scale. This factor could affect the seven autonomous communities with the smallest population and which, therefore, have greater difficulties in achieving economies of scale and fixed costs have a greater impact on them.