CRA costing review sets stage for higher county allocations
The Division of Revenue Bill has allocated the level five hospitals Sh2.06 billion in the 2015/16 financial year. PHOTO | FILE
What you need to know:
The Commission on Revenue Allocation (CRA) is undertaking the review of public functions together with the Transition Authority.
At the moment, the Treasury relies on the historical costing method which pegs allocation on what those institutions have received in previous years.
Counties have, however, complained that historical costing only perpetuates under funding that the institutions have suffered in the past.
The Commission on Revenue Allocation (CRA) will undertake a fresh costing of county functions, paving the way for higher allocations to institutions like Level Five hospitals which are currently underfunded.
CRA commissioner Rose Osoro on Wednesday said that they were undertaking the review of public functions together with the Transition Authority.
“We are in the process of doing the real costing called normative costing so that we can be able to allocate resources to functions and determine the level of delivery of those services,” she said during a forum to discuss the Division of Revenue Bill.
At the moment, the Treasury relies on the historical costing method which pegs allocation on what those institutions have received in previous years.
Counties have, however, complained that historical costing only perpetuates under funding that the institutions have suffered in the past.
Albert Mwenda, a Treasury official, defended the historical costing method saying that it was internationally accepted. He added that alternatives also come with their pitfalls.
“The notion that those estimates are not grounded in any objective criteria is wrong. Looking at history, line ministries went through a process to arrive at the baseline,” he said.
“But the issue of whether there should be an adjustment in between the years is a debate that can be had.”
The Division of Revenue Bill has allocated the level five hospitals Sh2.06 billion in the 2015/16 financial year. However, this is said to be too little considering they are regional referral hospitals.
Institute of Economic Affairs chief executive Kwame Owino observed that the amount allocated may have been low and the continued use of the approach means that they would continue to be underfunded.
“It may be that the justification for the costing was that we don’t have the money in historical terms. But this is an opportunity to open up and because of the importance of the level five hospitals, why don’t we try to provide them with sufficient funds to ensure that services are provided,” he said.
The money to the hospitals is supposed to be supplemented by funding from the host county governments but their regional nature has seen the hosts balk at providing this money because neighbouring counties only enjoy the services.
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