Serbia Justice Functional Review
Internal Performance Assessment > Financial Management
a. Effectiveness in Budget Formulation
- Budget formulation is a top-down process. When the Government adopts the Fiscal Strategy, the MOJ provides direct budget beneficiaries with instructions for the preparation of the upcoming years’ financial plans by July 5th. In addition to economic assumptions and submission guidelines, the plans include hard budget ceilings for each direct budget beneficiary. These ceilings are usually based on previous year’s allocation adjusted only for macroeconomic expectations. Based on the financial plans prepared by the direct budget beneficiaries,677 the Government revises its Fiscal Strategy and submits a Draft Law on the Budget to the National Assembly. The Parliament is obliged to adopt the Law on the Budget of the Republic of Serbia by December 15th.678 Budget negotiations between the direct budget beneficiaries and the MOF are not precluded, but they are not encouraged. As a matter of practice, institutional budget negotiations do not take place.
- In the Serbian judicial system, budget planning is driven by the inputs-based budgets of previous years rather than any assessment of what needs to be accomplished in the future. The overall budget framework is focused on allocating funds to historically defined inputs, and on holding the direct budget beneficiaries accountable for not exceeding those allocations. Within this input-oriented budget framework, the court system’s direct budget beneficiaries, mainly the MOJ, the HJC and the SPC, could in theory focus the allocation of financial resources based on demand for services and outputs (i.e. the anticipated caseloads). However, decision-makers do not use data to inform these kinds of decisions, and there is no analysis of cost-effectiveness or objectively defined standards for technical and financial performance. In addition, authority for managing judicial resources is fragmented and not aligned with the budget authority. Hence, the court system reverts to the traditional input-oriented methods.
- Regardless of business needs, the judicial budget prioritizes salary expenditures, which are determined by a Human Resources Plan that is set outside of the budget process.679 From 2010 to 2013, current expenditures averaged 97.67 percent of the executed budget. Of that, salaries averaged 76.46 percent of the total executed budget, and current non-salary expenditures averaged 21.20 percent. Notwithstanding its title, non-salary expenditures also include compensation for people working in the system, including lay judges and remuneration for individuals employed on service contracts. The capital investment averaged only 2.33 percent of the total executed budget for the reporting period.
- Although on paper the judiciary budget has a three-year horizon, in reality budget planning is conducted on a year-by-year basis. Agencies are unable to engage in a contract for longer than a year, making multi-year investments challenging to execute. Meanwhile, the court system is preoccupied with day-to-day problems related to arrears, inadequate infrastructure and inefficient operating systems, and has little capacity to focus on future needs and how to resource those. As discussed below, the court system has been investing very little in modernization initiatives and its capacity for any large-scale multi-year modernization initiatives has been severely constrained.
- The authority over matters that define or strongly influence financial management is scattered across the Councils, the MOJ, the SCC and the courts. First, authority over the judicial budget is divided between the Councils (the HJC and the SPC), which is responsible for the current expenditures net of maintenance, while the MOJ680 is responsible for capital investments and maintenance.681authority over non-financial matters, which have a significant financial impact, is separated from the budget authority. For example, the SCC is responsible for several human resource matters concerning judges and in matters of internal court organization. Individual courts are managed by their Court Presidents under a general oversight of the presidents of the next-most superior court.
- Effective budget planning is also undermined by a lack of clarity regarding the division of financial responsibilities between the courts and PPOs for a range of mandatory expenses in criminal cases.682 SSuch services are required to be provided under the CPC and include mandatory legal defense, expert witnesses, interpretation, prisoner transportation and detention. Due to the lack of clarity regarding who pays for what, neither organization plans for such expenditure. Although the data on PPO’s expenditures on these services is not yet available, the amounts are significant in comparison with their budget. Many courts attribute their inability to operate within their existing operating budget to this type of expenditure.