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09/04/2019   National Audit Office: we have to orient the system of municipal functions and their funding towards the needs of the population

Municipalities are authorities that are closest to the people, which deliver public services to local people while implementing functions designated to them by the state as well as independent functions in their day-to-day operations. The central government also deliver public services in the same areas, therefore, their quality and accessibility depend both on the state and municipal decisions. The audit performed by the National Audit Office “Does the System of Municipal Functions and their Funding Provide Conditions for Efficient Operation?” revealed that the system is not oriented towards the needs of the population.

“The country‘s progress and economic indicators are improving, however we are constantly facing challenges, especially in the areas of education, health care and social services. For instance, we do not ensure the necessary accessibility of pre-school education, we do not manage patient queues in hospitals, we observe the increase in income inequality, etc. The extent of these and other problems vary in each municipality, therefore only the joint work of central and municipal authorities can best respond to the needs of the population in individual municipalities. However, this joint work has shortcomings“, – says Jūra Ivonaitytė, Chief Advisor of the Governance Audit Department.

Audit results reveal that there is no evaluation performed at what level of governance (state or municipal) and with the implementation of which functions (independent or delegated by the state) needs and wishes of the population will be satisfied best of all and public funds will be used in the most efficient way.

For instance, shortcomings in the area of health care service delivery are being detected both at the level of central government and the local government. More than a half of the questioned population consider accessibility of general practitioners’ services organised by municipalities satisfactory or poor. Centralization of tertiary health care was aimed at more efficient use of expensive medical equipment, however the problems remained unsolved – more than a half of the said equipment is used little, a part of it is not used at all, this being the reason for patient queues. Thus, delegation of functions to one of the governance levels does not, of itself, ensure better accessibility of services and use of funding.

The audit detected that it is not known what is the actual cost of the implementation of state functions as the methodologies for calculation of the state budget needs do not help to objectively and reasonably estimate which amount is necessary. For instance, each municipality, irrespective of the number of young people residing in the municipality, is allocated funds for a single position of a youth coordinator. Therefore, the amount per young person allocated for the implementation of youth policy might differ 50-fold in individual municipalities.

Having delegated the state functions to municipalities, funding should be envisaged for their implementation, however the audit findings indicate that one third of the delegated state functions (12 out of 36) are not covered by the allocated funding, therefore municipalities finance the implementation of these functions from their own budgets. During the last three years, municipalities have used 1.7 million euros for the implementation of such functions as registration of civil status acts or provision of the state guaranteed legal aid. The state is not aware how much funding from municipal budgets has been used for the implementation of the state functions, because the responsible authorities do not accumulate such information.

On the other hand, implementation of the independent functions should be covered from municipal budgets, however, 162.9 million euros of state budget funding has been allocated for the implementation of the independent municipal functions without carrying out the costs benefits analysis and setting out the tangible and measurable objectives to be achieved by municipalities. Therefore, it is not known if the allocated budget funds have contributed to better quality of the services rendered to the population.

Implementation of audit recommendations will result in a review of organisation of secondary health care and emergency medical aid, planning and delivery of social services, and fire protection functions aimed at evaluating the expediency of division of these functions into state and municipal, and defining criteria for this division. Later, it is envisaged to review other functions too. Also, procedure will be established defining the setting of objectives, indicators and expected outcomes for municipalities and regions when allocating state budget funds.


Responsible for the information Communication Division
Last updated on 18 June 2019

National Audit Office of Lithuania

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