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Calculations on central government funding for counties

The calculations on central government funding for counties reflect the latest estimates of the future financing required by the counties. The calculations will be updated several times before the final calculations at 2021 prices will be made. 

The postponement of the regional reform and the health and social services reform by one year can first be taken into account in the calculations on central government funding in February–March 2019, after the new budget survey by Statistics Finland, collected from data on municipalities, is complete.

Counties’ funding for the first year will be calculated in the autumn of 2020, using the annual accounts of municipalities and the budget for 2020. The evaluation data will be adjusted according to the annual accounts in the autumn of 2021, when the data on realisation outcomes in 2020 becomes available.

Calculations on central government funding for counties will be adjusted three times a year

Calculations on central government funding for counties will be updated three times a year. The first update will be made at the beginning of the year when Statistics Finland delivers new data analysis on expenditure. The second update will be made in the spring when the statistics on the determining factors are updated (for example, the new population data will be published on the 29th of March).

The third update to the calculations on central government funding will be performed in the autumn, when Statistics Finland publishes the economic statistics for municipalities for the previous year. This update will take into account any changes to the cost base, as well as the statistical updates of the determining factors, and will update the sectoral weights of the needs-based coefficient and basic prices so that they correspond to the latest economic statistics of municipalities. The updates are listed in detail in the Excel tables for the calculations on central government funding for counties.

Cost level calculation for 2019

The calculations on central government funding for counties were updated at 2019 prices in July 2018. The basis for the calculations was the budget survey for municipalities for 2017–2019. In total, approximately EUR 18.6 billion will be transferred to counties’ universal funding in 2019. 

The decisions relating to the General Government Fiscal Plan for 2020 and the legislative effects of the regional reform and the health and social services reform in 2020 are not taken into account in the cost bases. The calculations reflect the 2019 cost situation and the adjustment between the current distribution of costs and the distribution resulting from the calculated model with the assumption that the system is fully effective. In the update published in May 2018, the determining factors of calculated funding were updated to correspond to the 2017 statistics. The cost base of the calculations was amended to correspond to the decisions made in the spring. The transfer of the transportation of patients and emergency care trips from Kela to the counties was added to the cost base for duties related to health and social services (totalling approximately EUR 98 million, incl. the portion to be financed by insured people and the state). In the cost base for the counties’ other duties, the decisions concerning the funding of growth services (items of the Ministry of Employment and the Economy) reduced the funding for growth services by a total of approximately EUR 133 million. In the last calculation, the health and social services costs of Punkalaidun were erroneously included in those of Satakunta, instead of Pirkanmaa. This error was amended in the May calculation. 

The corrections to the cost base of the calculation which were notified by municipalities were taken into account in the autumn update. There were numerous corrections, especially to the costs reported by the municipalities in the county of Kainuu. However, the largest amendment to the cost base concerned Varsinais-Suomi where the costs of specialised health care were entirely missing from the costs of one of the county’s municipalities. Additionally, this autumn’s update will take into account the statistical updates of the determining factors, as well the updates to the sectoral weights of the needs-based coefficient and basic prices.

The county-specific calculations are preliminary estimates for now and must be regarded with certain reservations. In addition to the reliability of the cost data used as the basis of the calculations, it must be noted that the final level of funding for the counties will also be influenced by potential future alterations regarding the counties’ duties and the cost base.

An analysis of county-specific changes also requires follow-up work and conversations with the persons in charge of the preparation work in the counties.

Calculation on the counties’ universal funding

The counties’ universal funding is largely needs-driven. More than 80 per cent of the universal funding is distributed on the grounds of the calculated need for services of the counties’ inhabitants (age structure, morbidity and socioeconomic factors). Approximately 10.5 per cent of the funding is distributed based on resident-related funding. The rest of the funding will be distributed to the counties on the grounds of the following criteria:

  • foreign-language speakers (1.3%),
  • bilingualism (0.30%),
  • population density (1.5%),
  • archipelago inhabitants (0.10%),
  • farm businesses (0.80%),
  • growth services (2.4%) and
  • the promotion of health and wellbeing (0.90%).

The most recent costs relating to social welfare and health care and the rescue services are based on the budget survey performed by Statistics Finland on municipalities in the first quarter of 2018. This survey utilised the municipalities’ budgets for 2018 and financial plans for 2019. The expenses of student welfare services (school social workers and psychologists) and labour market subsidies, which will remain within the municipalities, have been removed from the costs of social welfare and health care. The data about labour market subsidies are final information for 2017. The cost estimates of the student welfare services remaining in the municipalities are based on the previously mentioned budget survey on municipalities.  Additionally, four items of the Ministry of Social Affairs and Health to be transferred to the counties' universal funding have been taken into account in the 2019 budget preparation, as well as the costs of patient transportation and emergency care.

As regards the costs specified in chapter 4 of the act on central government funding for counties, (non-health and social services) expenses constitute budget preparation data for 2019 in terms of items to be transferred. For rescue services, the results from Statistics Finland’s budget survey for municipalities were used. For environmental health care, the data on realised outcomes for 2017 were used. The cost data on rural administration duties were obtained from the Agency for Rural Affairs and they are budget data for 2018. The expenses relating to the duties of regional councils are municipalities’ membership fee contributions for 2017 for the regional councils’ statutory duties (to be transferred to counties), with non-statutory duties (such as summer universities) removed.

The calculated model will not be immediately employed; instead, funding will be based on the current distribution of transferrable costs in the year that the regional reform and the health and social services reform come into effect. Starting in 2021, the calculated funding model will be gradually put into practice and will be fully effective in 2026.

Calculations on central government funding for counties 

Calculations on central government funding for counties for the provision of social and healthcare services

Inquiries:

Senior Financial Adviser Tanja Rantanen, Ministry of Finance, tel. +358 (0)295 530338 (steerage of counties and calculations)
Special Adviser Miikka Vähänen, Ministry of Finance, tel. +358 (0)295 530465 (specifically calculations concerning the financing of the counties’ other duties and the financing of social and health and rescue services)
Ministerial Adviser Ville Salonen, Ministry of Finance, tel. +358 (0)295 530388 (specifically calculations concerning the financing of social and health and rescue services)
Ministerial Adviser Antti Väisänen, Ministry of Social Affairs and Health, tel. +358 (0)295 163044 (specifically calculations concerning the financing of social and health and rescue services)
Budget Counsellor Virpi Vuorinen, Ministry of Finance, tel. +358 (0)295 530557 (legislation)