ROMANIA Reimbursable Advisory Services Agreement on Strengthening Capacities for an Integrated Approach to Sustainable Development (P178917) Deliverable no. 3 Report on the advice provided on budgeting approaches and financing options for the operationalization of the CExDD January 2024 „NRRP. Funded by the European Union – NextGenerationEU” https://mfe.gov.ro/pnrr/ https://www.facebook.com/PNRROficial/ Disclaimer This report is a product of the staff of the World Bank. The findings, interpretation, and conclusions expressed in this paper do not necessarily reflect the views of the Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work and does not assume responsibility for any errors, omissions, or discrepancies in the information, or liability with respect to the use of or failure to use the information, methods, processes, or conclusions set forth. 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This report was delivered in January 2024 under the Reimbursable Advisory Services Agreement on Strengthening Capacities for an Integrated Approach to Sustainable Development (P178917) signed on November 18, 2022, between the General Secretariat of the Government (GSG) and the International Bank for Reconstruction and Development (IBRD). It corresponds to Deliverable 3 under the above-mentioned agreement. 2 Acknowledgements This report was produced by the World Bank Governance Global Practice and Environment Global Practice team under the “Strengthening Capacities for an Integrated Approach to Sustainable Development” (SD RAS) project (P178917), led by Robin van Kippersluis (Task Team Leader), Fanny Weiner (co-Task Team Leader) and Sasa Eichberger (co-Task Team Leader). The report was developed by a team composed of Costel Todor (Senior Economist), Mircea Tulea (Budgeting Expert) and Sorin Buda (EU Funding Programs Expert). The team would like to thank Fabian Seiderer (Practice Manager, Governance Global Practice, Europe and Central Asia), Anna Akhalkatsi (Country Manager), the Governance ECA Ops Team, and the Romania Portfolio Team for their overall advice, guidance, and support throughout the development of this report. The team would also like to thank to May Olalia (Senior Public Sector Specialist), Anita Sobjak (Senior Governance Specialist), Dimitrie Mihes (Governance and Public Sector Specialist), Łukasz Marć (Senior Economist), Holly Burduja (Senior Public Sector Specialist) and Razvan Voinescu (Senior Public Sector Expert) for their valuable feedback and suggestions and for the operational support provided by Ana Maria Tomescu (Team Assistant). The team would like to express its gratitude to the government officials and counterparts of the Department for Sustainable Development (DSD) within the Government of Romania, for their constructive collaboration, in particular László Borbély (State Counsellor, National Coordinator for the Implementation of the 2030 Agenda), Luminita Bălălău (Director, DSD), and Anamaria Iacoviță (Project Manager, DSD). 3 Table of Contents List of Figures............................................................................................................................... 5 List of Tables ................................................................................................................................ 5 Acronyms .................................................................................................................................... 6 Executive Summary...................................................................................................................... 7 1. Introduction ........................................................................................................................ 9 2. The design of CExDD .......................................................................................................... 11 3. CExDD costing approach and the calculation results ............................................................ 14 3.1. Methodology ....................................................................................................... 14 3.2. Budget calculations .............................................................................................. 16 3.3. Budgetary impact of CEXDD operations ................................................................ 17 4. Additional and alternative financial sources for CExDD sustainability .................................. 18 ANNEXES ................................................................................................................................... 23 Annex 1: Costing approach, methods, inputs, calculation model .......................................... 23 Costing approach ..................................................................................................................... 23 Methods ................................................................................................................................... 23 Inputs to calculate the budget ................................................................................................. 24 The Calculation Model ............................................................................................................. 29 Annex 2: Details of budget calculations ......................................................................... 37 Personnel expenditure – Title I ................................................................................................ 37 Materials and services expenditures (recurring and non-recurring) – Title II ......................... 40 Expenditure on non-financial assets (investment in fixed assets) – Title XIV ......................... 42 Expenditure occasioned by the NRRP funded projects – Title XII ........................................... 43 Expenditure with the specific interventions under NSSD or other strategic documents........ 43 First-year budget estimation ................................................................................................... 45 Five-year budget forecast estimations .................................................................................... 45 Annex 3: Considerations on legal requirements for institutionalization of CExDD operations 47 Annex 4: Workshop materials - Costing CexDD ............................................................... 49 4 List of Figures Figure 1: CExDD strategic goal and long-term outcome of the five functions (source:OECD) ............. 12 Figure 2: Draft organizational chart of CExDD ...................................................................................... 12 Figure 3: Expenditures distributed by economic classification ............................................................ 14 Figure 4: Calculation Model Flow ......................................................................................................... 15 Figure 5: CexDD responsibilities within NAP (in red) (source: DSD) ..................................................... 28 List of Tables Table 1: The CExDD budget for five-year period .................................................................................. 16 Table 2: Budgetary impact of CExDD operating.................................................................................... 17 Table 3: The minimal structure of a public institution; departments and positions ............................ 26 Table 4: Base salary for the General Director, assimilated to Secretary of State ................................. 37 Table 5: Base salaries for executive positions ...................................................................................... 37 Table 6: Base salary for other management positions ......................................................................... 37 Table 7: CExDD salary-related expenditures......................................................................................... 38 Table 8: CExDD - budget Title I - Personnel expenses........................................................................... 39 Table 9: CExDD Materials and services expenditures for year 1 .......................................................... 41 Table 10: Expenditure on inventories ................................................................................................... 42 Table 11: Expenditure on tangible assets – investments ..................................................................... 42 Table 12: CExDD services and investments financed by NNRP ............................................................ 43 Table 13: A12 budget ............................................................................................................................ 44 Table 14: A13 budget ............................................................................................................................ 44 Table 15: First-year budget estimations ............................................................................................... 45 Table 16: Budget five-year forecast ...................................................................................................... 46 5 Acronyms CExDD Center of Excellence for Sustainable Development CMA Common Maritime Agenda DSD Department of Sustainable Development EU European Union FMO Finance Ministerial Order FTE Full time equivalent GD Government Decision GOR Government of Romania GSG General Secretariat of the Government IBRD International Bank for Reconstruction and Development ICT Information and Communication Technology MIPE Ministry of Investments and European Projects NAP National Action Plan NRRP National Recovery and Resilience Plan NSSD National Strategy for Sustainable Development OECD Organization for Economic Co-operation and Development OSS One-Stop-Shop PDD Sustainable Development Program POAT Technical Assistance Operational Program POCIDIF Smart Growth, Digitalization and Financial Instruments Program RAS Reimbursable Advisory Services R&D Research and Development RRF Recovery and Resilience Framework SD Sustainable Development SDE Sustainable Development Experts SDGs Sustainable Development Goals TSI Technical Support Instrument UN United Nations 6 Executive Summary Background and scope As part of Romania National Recovery and Resilience Plan (NRRP), the General Secretariat of the Government (GSG), through the Department for Sustainable Development (DSD), is strengthening the coordination for an integrated and coherent approach to sustainable development initiatives at the Center of Government. In this context, the DSD is providing comprehensive support to the Sustainable Development Goals (SDGs) agenda around three pillars. The first pillar aims to consolidate governance capacity at the central and local level by developing a center of excellence on sustainable development (CExDD). The second pillar centers on human resource development across the central and local administration to ensure that the relevant staff are equipped with the necessary skills to work as sustainable development experts. The third pillar focuses on strengthening the implementation and monitoring capacity at the local level by operationalizing a One-stop-shop Romania 2030 – a virtual resource center that would support a local approach to sustainable development objectives. The Government is partnering with two international organizations in its establishment of the Center of Excellence on Sustainable Development. The center aims to strengthen coordination, implementation, and monitoring of sustainable development initiatives and ensure a more integrated approach to achieving the SDGs. The Organization for Economic Co-operation and Development (OECD) is providing support in the design of the center (e.g., strategic goal, functions, governance and operating model) while the World Bank is providing technical assistance related to the costing of the center’s operations for a five-year period. This deliverable is a Report on the advice provided on budgeting approaches and financing options for the operationalization of the CExDD under the Reimbursable Advisory Services (RAS) on “Strengthening Capacities for an Integrated Approach to Sustainable Development" (P178917). It includes advice on the budgeting approach, methods for estimation, budget figures for setting up and operating the center, and provides information on the legislative process for approval and alternative financing options to support CExDD financial sustainability. The information presented in the report aims to provide analytical underpinning that the GSG-DSD could consider when preparing the draft law for the approval of the center’s establishment. Summary of key findings The budget calculation considers the CExDD design that is aligned with the legal1 and financial2 requirements to enable it to operate as a public entity of the central public administration . The OECD provided the center design that constituted the basis for the costing process while the DSD, with support from the World Bank, identified the necessary number of staff and positions and their distribution across organization to comply with the legal requirements. The costing for the CExDD is in line with current budget requirements and on the economic classification of expenditure as detailed in the Romanian legislation. The budget of CExDD for a five-year period is estimated at RON 53,288,721, while for the first year it is RON 13,795,110. The budget estimations consist of recurrent and non-recurrent operating expenditures by economic classification and grouped by budget titles for one fiscal year and for a five-year period. The expenditure financed through the National Recovery and Resilience Plan (NRRP) projects and National Action Plan (NAP) initiatives3 (A12 and A13) to implement the National Strategy for Sustainable Development (NSSD) are also included. The five-year period budgetary impact of CExDD operations results in a total cost to the state budget of RON 35,589,135, of which RON 2,887,837 constitute incomes to local budgets. Yearly, the impact on local budgets is positive up to RON 577,567 gains while the state budget losses are RON (7,117,827). The budget estimations 1 EOU no. 57/2019 regarding the Administrative Code - https://legislatie.just.ro/Public/DetaliiDocumentAfis/215925 2 The Public Finance Law no. 500/2002 - https://legislatie.just.ro/Public/DetaliiDocument/180952 3 A12. The Communication and Promotion of Sustainable Development Concepts Programme; and A13. Annual sociological survey 7 by economic classification for operating for a five-year period and the budgetary impact on the state and local budgets should supplement the normative act that approves the CExDD establishment. The costing considers the inputs provided by the DSD regarding the governance and operating model of CExDD, which is a permanent entity at the central level under the coordination of GSG, with 50 full time equivalent staff positions and entirely funded from state budget. The public entity includes a general director and another three-management positions, and a Scientific Council with seven members. The estimations were determined by a calculation model that is based on the economic classification of expenditure (FMO 1954/2005) and use inputs provided by legal provisions applicable to the public administration sector in Romania (Law no. 500/2002 of public finance; Law no. 153/2017 of public wages; G.D. no 467/2022 on performance- based budgeting). The financial sustainability of CExDD should be analyzed in the context of its mandate, mission and contributions to the sustainable development of Romania. Once the CExDD is established and has a clear mandate stated by the approving law, a business development plan (BP) should be prepared, integrating the outcomes and outputs expected to be achieved in a medium-term with the financial resources available/necessary. The CExDD could consider for example potential EU funds to supplement budget resources. It is therefore recommended to develop the capacity to attract and use external funding by organizing specific departments and processes and recruiting qualified staff in the center who can help identify long-term alternative financial sources. Structure of the report The report is divided into four chapters. • Chapter 1: Introduction – provides information about report purpose, the approach and the technical assistance provided to develop it and the aimed audience. • Chapter 2: The design of CExDD – provides details on the strategic goal, the role and functions, the structure and organization of the center, the inputs for costing of operations. • Chapter 3: The costing approach and calculation results – describes the approach, methods, tools and the validation conditions of costing used, and provide the results of calculation and budgetary impact of CExDD operating (1-5 year). • Chapter 4: Additional and alternative financial sources for sustainability – provides information on available financial resources that can be used by CExDD and on options to attract those resources. The report also contains four annexes with supplemental information and tools. Among these, are the costing methodology and the calculation model (provided as electronic file) and the workshop materials. 8 1. Introduction The World Bank’s technical assistance is provided to DSD under the Reimbursable Advisory Services (RAS) on “Strengthening Capacities for an Integrated Approach to Sustainable Development (P178917). The RAS contains three components with five deliverables: • Component 1 – Support for the development of the career development program for selected job profiles in the field of sustainable development (SD) (Deliverable 1, Deliverable 2 and Deliverable 4); • Component 2 – Support for preparatory activities in the establishment of a virtual resource center for the localization of SDGs (Deliverable 5); and • Component 3 – Advice on proposed operationalization of the CExDD (Deliverable 3). This report corresponds to Component 3 – Advice on the proposed operationalization of the CExDD (Deliverable 3). This deliverable, Report on the advice provided on budgeting approaches and financing options for the operationalization of the CExDD, includes advice on the budgeting approach, methods for estimation, and budget figures for setting up and operating the CExDD (under the scenario of one-year, and forecast for a five-year period). The report aims to inform GSG’s decision-making process on the final design and implementation arrangements of the CExDD. The report provides information on alternative financing options to support financial sustainability and the legislative process for approval of the establishment of the center., The World Bank team adapted the costing approach and tailored the technical assistance based on the inputs available and the resolutions on the center’s governance and operating model.. Approach and technical assistance The main activities carried out in preparation of this report include: • Provision of technical assistance on defining the structure of CExDD, which included technical meetings: (i) between DSD and the Bank to clarify financial attributions and management characteristics of the CExDD within the structure of government; (ii) among the DSD, OECD, and the Bank for recommendations on governance and for adapting the operating model to the requirements of the Romanian Administrative Code or Finance Law; (iii) among the DSD, OECD and the Bank to define the number of operational and management position and departments within the organizational structure of CExDD; • Gather data for budget calculation, which included: (i) the structure and content of expenditures that are included in the budget calculation according to economic classification4; (ii) the methods to determine the budget estimations by items and by titles, and (iii) the legal framework5 applicable when costing/budgeting a newly established public entity; • Development of a cost calculation model: (i) creation of 12 worksheets that are interlinked and allow the calculation of the budget by making changes to the variables; (ii) data input and verification of the results in the flow of calculations; (iii) validation of the preliminary results with DSD; and (iv) calculation of the budgetary impact of CExDD operating for a five-year period; • Transfer of knowledge on using the costing model, by delivering a one-day workshop and on-the-job training to DSD; and presentation of the results of costing to DSD. Audience The main audience of this report includes leadership and technical level staff in the GSG-DSD who are tasked to prepare the normative act for the set-up of the CExDD operations. Other national and sub-national stakeholders6 involved in the implementation of the UN Agenda 2030 may be interested in learning about and 4 FMO no. 1954/2005 regarding economic classification of budget expenditures 5 Law no. 500/2002 of public finance; Law no. 153/2017 of salaries in public administration; G.D. no 467/2022 on performance-based budgeting 6 Ministries and agencies across all sectors of the Romanian Government; Inter-departmental Committee for Sustainable Development; The Advisory Council for Sustainable Development; The Coalition for Sustainable Development; The Parliamentary Sub- Committee for Sustainable Development; Members of Parliament; Non-Governmental Organization; media; and the general public. 9 cooperating with CExDD and are invited to consult this report as well as the relevant OECD reports7 regarding the governance and operating models analyzed and proposed for the Romania case. In addition, other public institutions involved in determining a budget for an existing or a newly established department, branch, or agency might be interested in the costing approach, methods, necessary inputs, and the calculation model detailed in this report. The calculation model could be adapted by interested institutions (depending on public administration unit – i.e., central or local) and fed with specific details and data (e.g., organizational structure and positions; salary gradations) to determine the budget and forecasts for personnel, materials and services expenditures. 7 “Centre of Excellence for Sustainable Development: Comparative Stocktake Report”; Output 1 – OECD; “Design Report – draft outline”; Output 2 – OECD 10 2. The design of CExDD The operationalization of public institutions usually refers to the process of setting up such organizations for action and ensuring their effective functioning. It entails the translation of the institutions goals and objectives into concrete actions and implementing the necessary structures, processes, and systems to achieve set objectives. Several procedural steps are usually involved in operationalizing a public institution: (i) Planning: This involves defining the mandate, mission, vision, and objectives of the institution, as well as identifying the strategies and activities required to achieve them. (ii) Organizational Structure: Establishing the organizational structure of the institution, including defining the needed departments or units, and their corresponding roles and responsibilities. (iii) Resource Allocation: Allocating the necessary resources, such as budget, staff, and infrastructure, to support the operations of the institution. (iv) Policy Development: Developing policies and procedures that guide the operations of the institution, including governance, decision-making, and service delivery as needed and required by the applicable legal framework. (v) Human Resource Management: Recruiting, hiring, and training staff members with the required skills and expertise to carry out the institution's functions effectively. (vi) Stakeholder Engagement: Engaging with relevant stakeholders, such as government institutions at national and sub-national levels, research and education organizations, community organizations, companies, media, and the public, to ensure their participation and support in the institution's operations and address potential opposition, considering their interests and influence. (vii) Monitoring and Evaluation: Establishing mechanisms to monitor the performance and impact of the institution, and regularly evaluating its effectiveness and efficiency in achieving its goals. The GSG has received support from the OECD for “the design of the Center of Excellence” and from the World Bank for the costing of the center’s operations. The OECD provided the center’s design8, which was used by the World Bank team as the basis for the costing process. The OECD experts, together with the DSD team, analyzed the context of SDG implementation in Romania and designed the center’s strategic goal, specific functions and corresponding long-term outcomes (Figure 1), and the governance and operating model (centralized, decentralized, hybrid). Throughout this process, the DSD facilitated several technical consultations with the OECD team to share and discuss the design concepts with the World Bank experts. Alongside this, the DSD prepared and shared a preliminary draft law and indicated the expected number of positions in the CExDD. The completed CExDD design is reflected in an organizational chart that aligns with the legal9 and financial10 requirements to be able to operate as a public entity within the central public administration. The CExDD is envisioned to be an innovative center for research, education, and dialogue on Sustainable Development (SD) within the public administration that could help ensure public policies and decisions align with the SDGs. The center will aim to facilitate interdisciplinary cooperation and policy development as well as the exchange of knowledge between higher education institutions and researchers on SD. It will also provide specialized consultancy and will assume, develop, and implement SD modeling capabilities, which will support administrative and legislative activities of decision-makers. It will also prepare projects and partnerships that could secure funding and could be adapted and applied in sustainable development interventions. Also, it is expected to have national audience/coverage, supporting the establishment of hubs on SD through partnership with universities. 8 “Centre of Excellence for Sustainable Development: Comparative Stocktake Report”; Output 1 – OECD; “Design Report – draft outline”; Output 2 – OECD; 9 EOU no. 57/2019 regarding the Administrative Code - https://legislatie.just.ro/Public/DetaliiDocumentAfis/215925 10 The Public Finance Law no. 500/2002 - https://legislatie.just.ro/Public/DetaliiDocument/180952 11 Figure 1: CExDD strategic goal and long-term outcome of the five functions Source: OECD The CExDD will be established and operate “as a public institution of national interest”11 under the coordination of the GSG (see Annex 3). Envisaged as a permanent entity at the central level, the proposed CExDD operating model includes 50 full time equivalent (FTE) staff positions and a Scientific Council with seven members. A Steering committee, comprised of the Scientific council’s chairman and deputy-chairman, the general director and the two directors, would support the CExDD management. The draft organizational chart, which was drafted together with GSG-DSD, and is the basis for costing, includes one cabinet (department) under a general director, two directorates and one unit (service within a directorate) that cover the center’s functions and could comprise suggested future departments, as follows: (i) data collection and management; (ii) generating scientific arguments; (iii) strengthening relationships and partnerships; (iv) communication and knowledge dissemination; (v) strategic thinking; (vi) attracting funding (NREF, donors, etc.); (vii) trainers; and (viii) support functions (Figure 2). The support functions organized within the administrative directorate cover: budget and accounting, human resources and payroll, procurement, audit, legal advisory, general administration and logistics, public relations and communication, and marketing. Figure 2: Draft organizational chart of CExDD Scientific Council 7 Steering Committee 5 General Director 1 Scientific Director 1 General Director Cabinet 2 Administrative Director 1 1 E. Thinktank / B. Generating C. Strengthening D.Communication G. Support functions strategic thinking 3 scientific 9 networking and 4 and knowledge 5 (e.g. Budget&Accounting; 10 arguments partnerships dissemination HR; Legal; Audit; others F. Attracting funding A. Data Center 3 (EU, IFI, donors) 2 H. Trainers 8 Note: The numbers indicate the corresponding management and executive positions within departments. 11 Citation NNRP, Component 14. Good Governance 12 The CExDD will become operational once it is legally approved and receives financial resources to implement the activities under its responsibility. The CExDD will be approved for operation through a normative act that has a budget substantiation, including the budgetary impact of the center’s operations on the state and the local budgets. This report estimates the necessary budget by economic classification for operating for a five- year period. The costing/budgeting process calculated the necessary financial resources and determined the anticipated changes in the state budget expenditures and its gains/losses for a five-year period. The budget estimation considers two categories of expenditures: (i) operational costs, which cover the expenditures of personnel (including salary-related expenditures), materials and services, assets, and investments; and (ii) costs needed of the NAP activities12 envisaged under CExDD responsibility for implementation of the NSSD. The results of the costing exercise are presented in the following chapter and the calculation details can be found in the annexes of this report. 12 A12. The Communication and Promotion of Sustainable Development Concepts Program; and A13. Annual sociological survey 13 3. CExDD costing approach and the calculation results 3.1. Methodology The proposed costing for the CExDD was prepared in line with current budget requirements as detailed in the Romanian legislation. The budget of a permanent public entity in Romania includes the estimation of recurrent and non-recurrent expenditures by economic classification and is grouped by budget titles for one fiscal year or for another determined period. Any resource-consuming activity that CExDD implements has costs attached that should fall under one of four budget titles: Title I – Personnel Expenditures; Title II – Materials and Services Expenditures; Title XII – Projects financed from the amounts representing non- refundable financial assistance related to NRRP; and Title XV – Capital (non-financial assets) expenditures. The budget estimation considers the expected organizational structure and operating scenario of CExDD (e.g., personnel, qualifications, workload, outputs expected under NAP) corroborated with the Romanian legislative framework in place (FMO no. 1954/2005; Law no. 153/2017; Law no. 165/2018) (Figure 3). Figure 3: Expenditures distributed by economic classification Recurrent Expenditures Non-recurrent Expenditures Non-recurent Material and Personnel Capital Material and Services Expenditures Expenditures Services Expenditures Expenditures Inputs Inputs Positions from Fixed assets structured Inventory items organisational chart Materials and services according to their structured according to expenditures of seven Level of education category/type their category/type, (7) institutions (extracted from budget Minimum gross salary executions) per country Necessary quantities of Quantities of each each category of fixed category of inventory Data on total base assets item required Budget Expenditures Legal coefficients - salary expenditure multipliers for positions and grades Unit prices (including Unit prices (including Maximum legal Distribution keys for VAT) for each category VAT) for each category amount of all each material of fixed assets of inventory items increments and expenditures bonifications proportionaly with Regulated fraction of salary expenditures the normal working day Outputs Outputs Gross monthly base Recurrent expenditure salaries for all Expenditure for the on materials and Total expenditure for personnel acquisition of each services of the centre purchasing of all category of fixed detailed by economic inventory items assets Gross annual base classification on salaries for all budget paragraph level personnel Non-recurent expenditures financed from NNRP Inputs Outputs Total expenditures financed from Budget justifications in NRRP NNRP 14 The budget calculation of CExDD used several methods that are applied in the public administration sector, as follows: (viii) The deterministic method of calculation for cost per item for salaries, materials and services, inventory items and non-financial assets; (ix) The extrapolation of consumption trends of materials and services and annual adjustment of their values; (x) The estimation of the value of materials and services based on market prices; (xi) The extrapolation of data from other or similar public institutions using a distribution key for categories of expenditures (e.g., materials and services) when no historical information is available. The estimations were calculated through a model that is based on the economic classification of expenditures (FMO 1954/2005). The calculation model comprises 12 worksheets that are interlinked (Figure 4) and allows calculation of the budget by making changes to a series of variables. The calculation model was prepared by Bank experts and is detailed along with the methods in Annex 1: Costing approach, methods, inputs, calculation model. Given its flexibility, the calculation model could be used by any public institution to substantiate the budget for an existing or a newly established department, branch, or agency or when the reorganizing of institutions must take place. Depending on the public administration unit/institution type (central or local) envisaged for costing, the calculation model could be easily adapted and fed with specific details and data (e.g., organizational structure and positions; salary grades) to determine the budget and forecasts for personnel, materials, and services expenditures. The model is designed to be user-friendly and thus facilitates calculations of budgets by any staff consulting the description (Annex 1) or receiving a basic training on how the model works. In the case of CexDD, during a one-day workshop, designated DSD staff learned about the model structure and how to use it, and were able to modify, add input data (e.g., positions in organizational chart; salary grades; inventory items or non- financial assets) and observe the calculations generated (see also the Annex 4: Workshop materials – Costing CExDD). Additional on-the-job training was provided to designated DSD staff who learned about detailing budget needs and how to justify the figures to the MoF during the draft law consultations and endorsement process. Moreover, the DSD (or the CExDD) could use this model in the future for budgeting purposes by adapting the number and type of staff and management positions of departments and by updating the legal provisions regarding the wages and limits for different budgetary items (e.g., bonuses and financial benefits; or material and services expenditure amount allocated by staff). Figure 4: Calculation Model Flow 1.Organizational 4.Material 5. Inventory 6. Investment 2.Wages 3.Payroll chart Expenditures Items Expenditures 7. Total 8. NRRP 9. Initiatives & 10.Total budget 11.Budget 12.Budgetary Org&Mgmt Exp. expenditures Measures Year 1 Projections 1-5Y Impact The estimates are valid under several assumptions, as follows: (i) All budgeted positions are full time equivalent staff with all non-managerial jobs classified as civil service and fully paid for a period of 12 months (for the first year of operation), providing an estimate of the highest potential costs for the wage bill. (ii) The salary is in accordance with the provisions of the Framework Law no. 153/201713. 13 Law no. 153/2017 - https://legislatie.just.ro/Public/DetaliiDocumentAfis/190446 15 (iii) All expenditures with materials and services calculated based on the distribution keys are expressed based on budget executions of 2022. (iv) The expenditures with inventory items and investments are made during the first year of activity (estimations are based on 2023 market prices). (v) The expenditures of consultancy services funded by the NRRP were estimated by price reference and volume of services from SIPOCA projects). (vi) The budget forecast for a five-year period of operation considers inflation that affects the cost of materials and services. 3.2. Budget calculations The cost calculation estimated the budget necessary for CExDD operations, considering the proposed design and compliance with the legislative procedure, which requires an estimation for a five-year period. It should be noted that calculations could vary depending on the input data provided. The variables can be adjusted in the calculation model, and alternative budget scenarios can be generated. Thus, depending on the changes in the entity’s mandate, mission or functional structure, the results could be adjusted to comply with the structure and number of positions and/or with the ceiling set by the MoF due to budget constraints that might occur during the fiscal year. The distribution of expenditures by budget titles, by economic classification and by years is presented in the table below. A. The budget of CExDD for a five-year period is estimated at RON 53,288,721. B. RON 13,795,110 represents the first-year budget of CExDD, which consists of the expenditure of the organization and operating cost, including expenditures for NRRP projects and initiatives (A12 and A13). Table 1: The CExDD budget for five-year period Breakdown of expenditure in the A. TOTAL B. Year 1 Year 2 Year 3 Year 4 Year 5 economic classification [RON] TOTAL organisation and operating expenditure 52,496,930 13,650,110 9,728,604 9,712,699 9,703,951 9,701,566 Title I Personnel expenditure 44,428,262 8,885,652 8,885,652 8,885,652 8,885,652 8,885,652 Title II Materials and services expenditure 4,308,648 1,004,437 842,951 827,047 818,299 815,913 Title XII Projects financed from the amounts representing the non- refundable financial assistance related to NRRP 2,807,520 2,807,520 0 0 0 0 Title XIV Non-financial assets expenditure 952,500 952,500 0 0 0 0 TOTAL expenditure on NAP initiatives 791,792 145,000 153,700 159,848 164,484 168,760 Title II Implementing the NAP A12 initiative expenditure 573,366 105,000 111,300 115,752 119,109 122,206 Title II Implementing the NAP A13 initiative expenditure 218,425 40,000 42,400 44,096 45,375 46,555 TOTAL CExDD BUDGET 53,288,721 13,795,110 9,882,304 9,872,547 9,868,435 9,870,326 The details of the calculations can be found in the Calculation model (Annex 1) and the Details of budget calculations (Annex 2). 16 3.3. Budgetary impact of CEXDD operations The establishment and operation of the CExDD will require initial funding from the general consolidated budget. Budgetary resources are needed to finance specialized and administrative staff that will serve the institution, as well as for investments, equipment, and the provision of funds for the financing/co-financing of national, European, and international projects. As public resources are limited, any change in (or for) an organization that affects the budget resources requires the calculation of budgetary impact on consolidated state and local budgets. Table 2: Budgetary impact of CExDD operations RON Year in 5-year Budget Indicators: Next 4 years progress average 1 2 3 4 5 6 7 2024 2025 2026 2027 2028 2024-2028 1. Changes in budget revenues, gains/losses, of which: 4,286,841 4,076,837 4,074,983 4,074,202 4,074,561 4,117,485 a) state budget, of which: 399,368 189,364 187,510 186,729 187,088 230,012 i. profit tax 0 0 0 0 0 0 ii. income tax 0 0 0 0 0 0 iii. other incomes 399,368 189,364 187,510 186,729 187,088 230,012 b) local budgets 577,567 577,567 577,567 577,567 577,567 577,567 i. income tax 577,567 577,567 577,567 577,567 577,567 577,567 c) state social insurance budget: 3,309,905 3,309,905 3,309,905 3,309,905 3,309,905 3,309,905 i. insurance contributions 3,309,905 3,309,905 3,309,905 3,309,905 3,309,905 3,309,905 2. Changes in budget expenses, gains/losses, of which: 13,795,110 9,882,304 9,872,547 9,868,435 9,870,326 10,657,744 a) state budget, of which: 13,795,110 9,882,304 9,872,547 9,868,435 9,870,326 10,657,744 i. personnel expenses 8,885,652 8,885,652 8,885,652 8,885,652 8,885,652 8,885,652 ii. goods and services 4,909,457 996,651 986,895 982,783 984,674 1,772,092 b) local budgets 0 0 0 0 0 0 i. personnel expenses 0 0 0 0 0 0 ii. goods and services 0 0 0 0 0 0 c) state social insurance 0 0 0 0 0 0 budget: i. personnel expenses 0 0 0 0 0 0 ii. goods and services 0 0 0 0 0 0 3. Financial impact, gains/losses, of which: -9,508,269 -5,805,467 -5,797,564 -5,794,233 -5,795,765 -6,540,260 a) state budget -10,085,836 -6,383,035 -6,375,132 -6,371,801 -6,373,332 -7,117,827 b) local budgets 577,567 577,567 577,567 577,567 577,567 577,567 The five-year period budgetary impact of CExDD operating reveals a negative balance on the state budget by RON (32,701,298) of which a loss of RON (35,589,135) for the state budget and RON 2,887,837 gains for local budgets. Yearly, the impact on local budgets is positive up to RON 577,567 gains while the state budget losses are RON (7,117,827). Thus, it is therefore recommended that from the outset, the CExDD should focus on identifying longer-term additional and alternative financial resources and should consider developing sources of income. The next chapter discusses this in more detail. 17 4. Additional and alternative financial sources for CExDD sustainability The financial sustainability of CExDD should be analyzed in the context of its mission and contributions to the sustainable development of Romania. Public institutions often face constraints in terms of funding, staff, and infrastructure, which can hinder their operationalization, and may be (partially) offset by identifying and accessing financial resources additional and complementary to those already available or easily mobilized. The expertise and competencies that CExDD has/will possess could be exploited to support research and development and the public sectors or similar organizations from Romania that need a partner who develops projects, identifies appropriate financing options, and ensures the project management to sustain their capacity development and growth. The financial sustainability will reside of additional revenues obtained for CExDD activities from different sources that could include: (i) direct financing of CExDD projects from EU and international non-reimbursable funds; (ii) partnerships with managing authorities of EU funds available in Romania to implement technical assistance activities under operational programmes; (iii) partnerships, contracts for projects and activities commissioned by third parties (other public and private organizations; training providers, companies); and (iv) any other opportunities identified during daily activity of CExDD. The financial sustainability of CExDD could be further considered by adapting the scenarios and the case studies of the OECD Report14 on the potential financial sources available in Romania and the options for diversifying the financial sources. The “Funding Model Scenarios” (section of the OECD Center of Excellence for Sustainable Development: Comparative Stocktake Report) provides detailed and documented core, integrated, and innovative scenarios for funding the center. Also, the case studies explain the financial interventions applied with organizations similar to the CExDD in different countries. Those constitute examples of activities that the CExDD should consider and complimenting them with the potential projects and partnerships presented in this chapter could diversify the financial sources that can be accessed for center operations. Moreover, by combining them with the active non-reimbursable funding programs available for Romania during 2024-2027 (presented below), the CExDD staff would have a better understanding about opportunities and the process for obtaining additional fundings (incomes), which could ensure the medium- term financial sustainability of CExDD. The Economic Development, Transport, and the Environment (ELY) Centres have effectively rolled out various projects to promote sustainable development in Finland. Their efforts have enhanced coordination between sectors, enabling more efficient resource allocation and well-targeted interventions (Aarnio and Hyvärinen, 2014). This functional operational model has allowed the ELY Centres to maintain a sharp focus on their respective areas, resulting in more effective and comprehensive solutions to Finland's sustainable development issues. (Case study: Finland’s functional operational model for sustainable development – OECD Report 1 “The cross-functional structure of Advanced Research Projects Agency-Energy (ARPA-E) allows it to bridge the gap between research, development, and market deployment. The agency backs projects that can transform energy markets and give rise to new industries, all the while encouraging collaboration across academia, industry, and government (Bonvillian and Van Atta, 2011)” (Case study: The US’ cross-functional model to capacity building OECD Report 1) “A relevant example of the innovative funding scenario is Denmark's Danish Innovation Fund (DIF). The fund invests in novel ideas across research, technology, and innovation, fostering innovative thinking and an entrepreneurial spirit. Through this approach, Denmark has emerged as a global leader in sustainable technologies (Danish Innovation Fund, 2018)”.(Innovative funding scenario - OECD Report 1) 14 Center of Excellence for Sustainable Development: Comparative Stocktake Report; Output 1, OECD, 2023. 18 EU funds are a highly attractive and well-known source of financial resources for research institutes and public institutions. The CExDD should consider these funds as a key additional source for financing its operations. To take advantage of these funds, the CExDD could develop projects and partnerships; and therefore, it would be important for the CExDD to develop the capability to attract international funds by empowering its departments and mandating them to do so. To achieve this, it is recommended that the CExDD recruit qualified staff who can help identify long-term alternative financial sources. Since the organizational chart of the CExDD includes a dedicated department for this activity, the staff in this department should regularly map the available financial resources and prepare action plans for accessing funds. By involving the technical departments, the CExDD could develop a pipeline of projects and partnerships to attract external funding. Below are several suggestions on how the CExDD could attract such partnerships. Once the CExDD is established and has a clear mandate by the approving law, a business development plan (BP) could be prepared, integrating the expected medium-term outcomes and outputs with the financial resources available/necessary. This BP should indicate the actions to be taken by the management and staff to attract revenues to co-finance the functions and the daily work of CExDD. The revenues could be constituted of grants that are provided mostly through EU funding programs and from invoicing CExDD customers in the fields of project management, administration, proposal writing, knowledge transfer, and other activities. Sources of grants include EU funded programs available until 2027. As the ability of preparing projects is directly linked with the CExDD establishment, the financing sources would most likely be explored at the beginning of activity and later would be more carefully planned as the needs arise. Previously, to clarify the eligibility of CExDD to access and such funds, the Ministry of Investments and European Projects (MIPE), the administrator of EU funding in Romania, would need to be consulted. EU programs that might be of interest to CExDD include: ➢ Technical Support Instrument (TSI)[1] established by the European Commission can be a source for building up and strengthening the administrative capacity of CExDD. The national contact point in Romania is the GSG[2]–- ”The Technical Support Instrument (TSI) is the EU program that provides tailor- made technical expertise to EU Member States to design and implement reforms. The support is demand driven and does not require co-financing from Member States. Technical support is provided in a wide range of policy areas, including but not limited to climate action, digital transition and health. Member States can also request support to prepare, amend, implement and revise their national recovery and resilience plans under the Recovery and Resilience Facility.” Applications are collected on an annual basis. However, it is essential to emphasize that competition has increased in the recent years because funding through the cohesion policy for public administration reform has been phased out. Grants sizes are usually not more than EUR 800,000. [1] https://commission.europa.eu/funding-tenders/find-funding/eu-funding-programmes/technical-support- instrument/technical-support-instrument-tsi_en [2] https://sgg.gov.ro/1/tsi/ ➢ Horizon Europe[3]–- Research and innovation funding programme until 2027. Horizon Europe is the EU’s key funding programme for research and innovation with a budget of EUR 95.5 billion. It tackles climate change, helps to achieve the UN’s Sustainable Development Goals, and boosts the EU’s competitiveness and growth. The programme facilitates collaboration and strengthens the impact of research and innovation in developing, supporting, and implementing EU policies while tackling global challenges. It supports creating and better dispersing of excellent knowledge and technologies. [3] https://research-and-innovation.ec.europa.eu/funding/funding-opportunities/funding-programmes-and- open-calls/horizon-europe_en [4] https://defence-industry-space.ec.europa.eu/eu-defence-industry/european-defence-fund-edf_en 19 ➢ Smart Growth, Digitization and Financial Instruments Program 2021-2027[5] (POCIDIF)–- POCIDIF aims at national level measures in Research, Development and Innovation and digitization, including from the cultural sector, based on the analysis of development needs, the funding priorities of the Partnership Agreement (PA), as well as the relevant strategic documents at EU and national level (e.g. National Strategy for Research, Innovation and Intelligent Specialization (SNCISI), Analysis of Factors that Prevents the Dissemination of Innovation, including Digitalization (AFIDI), Policy Support Facility (FPS), Public Policy eGov, Catalog of Public Services (CSP), Barriers to Digitalization of the public and private environment from Romania (BDMPP RO)). PoCIDIF Action 1.2, 2.2 and 2.3 cover horizontal subjects and act like a hub among R&D institutes. The CExDD should discuss with MIPE to determine eligibility for this funding. [5] https://mfe.gov.ro/pcidif-21-27/ ➢ The 2021-2027 Technical Assistance Program[6] (POAT) – POAT aims to ensure support for an efficient and effective implementation process of the funds in Romania. To achieve a climate neutral economy by 2050 at the latest, POAT envisages supporting interventions for growth the awareness and administrative capacity of the structures involved in the management of assisted programs, to address aspects related to climate change in the life cycle of the financed projects. The program second priority area provides support that aims to ensure the integration of environmental requirements at the level of selected projects, including compliance with the "energy efficiency first" principle, “do no significant harm (DNSH) principle, "climate proofing" in the relevant fields. [6] https://mfe.gov.ro/pat-21-27/ ➢ The 2021-2027 Sustainable Development Programme[7] (PODD) – PoDD contributes to the transformation of the EU economy into a modern, competitive and efficient economy, dissociated from the use of resources, according to the objectives of the European Green Deal (EGD) and the EU Action Plan on reducing pollution to zero, as an integral part of the EGD. PDD is grounded in Romania’s National Strategy for the Sustainable Development (SNDD) 2030, which is based on SDGs according to the 2030 Agenda of the UN for Sustainable Development and EU Council Conclusions and contributes to the EGD objectives. [7] https://mfe.gov.ro/pdd-21-27/ ➢ Enhancing the European Administrative Space (ComPAct)[8] – The ComPAct will help Member States address the EU Skills Agenda and the actions under the European Year of Skills, deliver on the targets of the Digital Decade to have 100% of key public services accessible online by 2030, and shape the conditions for the economies and societies to deliver on the ambitious 2030 climate and energy targets. [8] https://eur-lex.europa.eu/legal-content/EN/TXT/ ➢ Innovation Fund[9] – The Innovation Fund is one of the world’s largest funding programs for the demonstration of innovative low-carbon technologies and was established by Article 10a(8) of Directive 2003/87/EC to support across all Member States innovation in low-carbon technologies and processes. The CExDD should consult the open calls for proposals and consider partnerships or facilitation of projects with other national or international R&D organizations. The National Contact Point is the Ministry of Economy, Directorate of Industrial Policies and Competitiveness, Ministry of Economy. [9] https://climate.ec.europa.eu/eu-action/eu-funding-climate-action/innovation-fund_en ➢ The Common Maritime Agenda (CMA) for the Black Sea [10] – This is a sea basin initiative to enhance regional cooperation for achieving a sustainable Blue Economy in the Black Sea. It is developed in the broader framework of the Black Sea Synergy and has an Innovation Fund (Euro 100 million). [10] https://black-sea-maritime-agenda.ec.europa.eu/node/557 20 ➢ P4 - Basic and frontier research Program [11] – It envisages the development of fundamental research in the fields in which Romania has established its national priorities through National Strategy Research Development and Innovation 2020; it is implemented by UEFSCDI. [11] https://uefiscdi.gov.ro/p4-cercetare-fundamentala-si-de-frontiera ➢ Cohesion policy for 2021-2027. The administrative development needs have been mapped during the design of the 2021-2027 programs, and funding has been secured for specific interventions. Currently, it does not provide a special program to address strengthening of the public administration. However, reviews take place on a regular basis and funding is reallocated if available. MIPE could advise on the possibility of using such funds to support the CExDD operationalization. EU grants offer various financing opportunities that could be utilized either directly or indirectly through the implementation of the CExDD's own projects or in partnership with others. Another option is to provide consultancy services to third parties. In addition to the options provided by the OECD, there are several ideas that can be further explored. However, it is important to note that these ideas have not been tested or implemented elsewhere. The decision of which option to pursue and when, should be made by the CExDD. This decision should be based on the necessity and opportunity of a specific project, taking into consideration the capacity of the CExDD to successfully implement it. The BP should indicate the targets of amounts expected and what capacities should be deployed for this goal. ➢ Link Romanian R&D institutes to the European R&D networks; CExDD could support Romanian institutes in writing project proposals and project management. • Identify R&D Institutes in Romania with little to no involvement in the EU R&D projects (universities should be also considered); Map the institutes competences and infrastructure; • Identify similar institutes within the EU and map the topics of EU R&D (e.g., Horizon Europe might be a starting point). ➢ Serve as a hub on horizontal topics among R&D institutes within POCIDIF, facilitating contracts to access the R&D infrastructure. Facilitate access for the companies to test at lab scale the new iterations for their products by using the R&D institutes infrastructure. Currently, companies are using their production lines to test new product iterations, which is generating a high cost of testing and losses in production income. • Map the lab infrastructure of the R&D institutes in Romania (regional can also be considered); • Identify related companies from the industry with production lines that can be replicated at lab level. Prior, it would be necessary to discuss with MIPE to clarify if CExDD is eligible. ➢ Support R&D institutes to access cohesion funding; Sign a protocol with 2021-2027 Technical Assistance Program (TAP) Managing Authority (MIPE) for services like ”support for the preparation process of projects/project portfolios, documentation (…) of projects financed at the program level”; the services would be funded by TAP; • Map the R&D institutes that do not have satisfactory track record in accessing EU funding; • Provide support for R&D institutes to design and implement EU funded projects. ➢ Support the management of 2021-2027 cohesion funding programs like POCIDIF, PODD and others; • Sign a protocol with POCIDIF Managing Authority under the 2021-2027 Technical Assistance Program for services like ”support for the (…) the evaluation, selection, monitoring and verification of projects financed at the program level”; • Provide support to the 2021-2027 POCIDIF Management Authority to evaluate, select, monitor, and verify their projects portfolio. 21 ➢ Design and implement projects financed through cohesion funding in partnership with other R&D institutes; • Map the R&D institutes that do not have satisfactory track record in accessing EU funding; • Map cross sectoral topics that are not covered by only one R&D Institute; • Create partnerships among R&D institutes; • Apply for EU funding to corresponding financial lines where the projects are eligible. ➢ Partnership with the National Institute for Administration (INA). INA oversees coordinating the training agenda in the Romanian Public Administration, and it could make sure that the knowledge and trainings developed by the CExDD are incorporated in its own training offers on SD. As head of the network of the main private training providers and promoter of training quality standards, INA could also encourage other providers to align their SD-related curricula with the CExDD’s agenda and contract training with its staff. The CExDD could become a reference, best practice model for using or supporting other organizations in financing the projects from external sources. 22 ANNEXES Annex 1: Costing approach, methods, inputs, calculation model Costing approach The calculation of budget is based on a process that considers and answers to the following: 1. What should be obtained at the end of calculation? As the endorsement of the normative act requires an assessment of the budgetary impact of the center’s operations for a five-year period, then the type of expenditures that should be substantiated are to be calculated. • The structure of budgetary impact by items and by year is the description of the result envisaged - the budget Titles I, II, XI, VIV (Section 4 of the substantiation note of a normative act). • The costing/budgeting process calculates the needed financial resources, and determines the changes in the state budget expenditures, gains/losses for a five-year period. 2. How should the budget be calculated? The budget estimation considers the total cost with the personnel salaries (including salary related expenditures), with the quantities of materials and volume of services, the number and types of assets, and the investments, necessary to operating the center. Also, the cost to carry out the activities that CexDD has through the NAP and those financed from NRRP. Various mathematical methods and operations, which are available, known, and facile should be used to calculate. (See discussion on methods below.) 3. Which are the inputs? The number of personnel, qualifications, workload, the volume of services, limits and requirements regarding inventory items, assets, working environment, and others are the inputs. 4. What tools should be used? The calculation must be easy to update and use common technology, which is available at the level of the public administration. A calculation model in EXCEL spreadsheet software could support the calculation and allows the access to interested persons. The spreadsheet program is well known to public administration staff and poses no problems in use. As (2.), (3.) and (4.) are strongly interlinked, the approach presents the methods, the inputs, and the calculation model. The results (1.) are included in a separate annex with details and explanation on the methods applied. Methods The budget calculation used several methods that are applied by the public administration. The case of a newly established center required the use of combined methods for budget calculation, as follows: (i) Deterministic method of calculation for cost per item. The method is generally used for institutions that have accounting records and a history of budget execution (of at least 1 year). Time series of data relating to the evolution of the consumption of the resources used are available, and expressed either in physical or value units, and for each expenditures item. The calculations are made by multiplying the item quantities with their price. (ii) Extrapolation of trends on materials and services quantities and expenditures. The use of average expenditures resulting from previous years of executions is a common practice for public institutions. In such cases, a method used to estimate expenditures of materials and services is by analysing their evolution over time and extrapolating the trend. Thus, in a time series of 3-4 budgetary years, an average increase by 3 to 5 percentage (or the inflation rate) each year in the expenditure for an item of expense, represents an assumption for the extrapolation of this increase in the yearly plan as well. (iii) Adjusting the value of material expenditures with an annual growth index calculation is often used in public administration, because it is easy and requires a small consumption of substantiation time. The growth index is generally discussed with representatives of the Ministry of Finance and considers the guidelines of the State Budget Framework Letter. 23 (iv) Extrapolation of data from other or similar public institutions. Given that at the time of the establishment of CExDD, there is no historical information available that could reasonably substantiate the consumption of resources (materials and services), this type of information can be taken either from institutions if possible similar in size and, preferably, in scope of activity or from the ones that provide enough details (number of personnel and budget execution) to calculate a ratio between salaries and material expenditure15. To determine the budget necessary for the operation of CExDD, data collected from seven public institutions16 that have been operating for several years and have a history of budget execution was used. In this case, the process of extrapolation included several steps: a. The calculation of keys for the distribution of expenditure with materials and services, detailed at the level of budget item, as a ratio between the respective budget item, for each of the analyzed institutions, and the total of their expenditure with basic salaries; b. The calculation of the median (indicator of central tendency) for each distribution key established per item of expense and institution analyzed; c. The extrapolation of distribution keys for the substantiation of expenditures with materials and services of CexDD; d. The calculation of expenditure with materials and services for the first full year of operation of CexDD, by multiplying the median value of the allocation keys, calculated for each budget item, with the estimated total amount of expenditure for basic salaries of CexDD; e. The adjustment of some expenditure items by using the arithmetic mean instead of the median, in the situation where the results were not relevant enough. (v) Estimation of the values of goods and services by consulting the market prices. In the case of inventory items or non-financial assets the estimations are in accordance with the market prices. As a general approach, within the framework regulated by FMO no. 1954/2005, the personnel and the material and services expenditures are determined as follows: Personnel expenditures = Expenditures with base salaries + other expenditures salary-related Material/service expenditures = Annual resource consumption (physical units) X unit price Inputs to calculate the budget Two groups of inputs are needed to estimate the operating costs. One group is the organizational structure with functionalities determined by the applicable normative acts, the scope and role of CExDD, which are providing the staff (number and qualifications) - the largest consumer of resources. The other group is CExDD responsibilities derived from the NAP of the NSSD, which will consume additional resources with the 15 The method has been used only for recurrent expenditure on materials and services necessary for the normal functioning of a public institution. Material expenditure has been detailed at the level of budget item/paragraph (line), in accordance with FMO 1954 approving the Classification of Public Finance Indicators. For estimating the budget of a newly established institution, was assumed that there is a direct correlation between the evolution of the material expenditure amount (volume) and the size of the institution, expressed either in terms of: (i) the number of staff (information not available in the budget executions); or (ii) the amount of total expenditure on base salaries (available in the budget executions). A specific indicator was determined as the ratio between the value of each item of material expenditure and the total value of base salary expenditure (without other allowances or bonuses). In other words, for each RON spent on salaries, the amount spent on each item of material expenditure was determined. If the denominator of the fraction (the value of salaries) increases or decreases, the numerator of the fraction (the value of the material expenditure item) increases or decreases in the same proportion. The value of the indicator therefore remains unchanged. This was applied for seven institutions. 16 Ministry of Finance; General Secretariat of the Government; National Integrity Agency; Romanian Academy; Economic and Social Council; Ministry of Economy; Permanent Electoral Authority; 24 implementation of interventions. These are corelated with the requirements imposed by the normative acts for establishing the center, as follow: (1) The Administrative Code17 that sets the minimal structure, mandatory functions, qualifications and positions, specific of public employee contract for a public institution; (2) The Public Wages Law18 that establishes the limits of wages for positions within the public institution; (3) The Public Finance Law19 that sets the obligations for budget drafting and the financial sources available for central public institutions; (4) Other normative acts that set rules for expenditure calculation or provide details about process: (a) The economic classification of the budget specifies all the items that should be considered for costing and budget preparation (FMO no. 1954/2005); (b) The minimum requirements necessary for operating into the public premises, which specifies the surface or volume allocated for an office per employee (GD no. 866/1996); (c) The programs and interventions (measures) under the GSG Institutional Strategic Plan (ISP) that operationalize the national/sectoral strategies, respectively the interventions and their immediate results, which should be costed to estimate the budgetary needs (GD no. 427/2022); and (d) The budget planning and execution process that is applicable to all central institutions (GD no. 467/2022). The input data was identified (i) by determining the organizational structure that is required by applicable normative acts, the scope and role of CExDD; and (ii) by mapping the interventions (measures and reforms) that CExDD will implement as part of its responsibilities allocated through NAP of NSSD that will consume resources. The structure of CExDD The organizational structure of a public institution, like the envisaged CExDD, is stated by the Administrative Code. It must include departments and positions that ensure fulfillment of attributions and the achievement of the mission. Such structure follows the legal requirements for continuous operation and includes a core of permanent activities (cross-support activities like: HR, budget and accounting, legal counselling, auditing, administration) along with the specific functions20, which the CExDD will fulfill. Those determine the number of specialized positions and the units. Distribution by units helps to clarify the available number of management positions to comply with the legal provisions. Art. 391, paragraph (1), (2), (3) of GEO no. 57/2019 regarding the Administrative Code: (1) The total number of public management positions within each public authorities or institutions, with the exception of the public functions of general secretary of administrative-territorial unit/subdivision, as well as public functions of management whose occupation is done by secondment with staff from within the institutions from the defense sector, public order and national security, according to the states of approved organization, according to the law, is a maximum of 8% of the total number of approved positions. (2) To determine the total number of management positions by the application of the 8% quota provided for in para. (1), proceed as follows: a) if the resulting number is less than one, it is rounded to the whole; b) if the resulting number is greater than one, it is rounded to the whole number immediately above it, if the fraction is greater than 0.50. 17 EOU no. 57/2019 regarding the Administrative Code -https://legislatie.just.ro/Public/DetaliiDocumentAfis/215925 18 Law no. 153/2017 - https://legislatie.just.ro/Public/DetaliiDocumentAfis/190446 19 Law no. 500/2002 - https://legislatie.just.ro/Public/DetaliiDocument/180952 20 The CExDD functions are described in the reports prepared by OECD; The DSD distributed the Report no. 1 and Report no. 2 elaborated by the OECD 25 (3) The organizational structure of public authorities and institutions must comply with the following requirements: a) a minimum number of 10 operational staff position is required to establish a service unit; b) a minimum number of 20 operational staff position is required to constitute a directorate unit; c) for the establishment of a general directorate, a number of minimum 40 operational staff position. The costing/budgeting process will consider the staff distributed in an organizational structure with two directorates and one service, and one cabinet under general director, and a scientific committee. The management of the Centre is ensured by the Scientific Council, the Steering Committee, and the General Director. The Scientific Council is composed of 7 members. The Steering Committee is a deliberative body and consists of the President and Vice-President of the Scientific Council, the General Director, the Scientific Director, and the Administration Director of the Centre's support departments. The General Director of the Centre of Excellence is responsible for the day-to-day management of the Centre and is assimilated in terms of salary to the position of Secretary of State. The members of the Scientific Council will receive a monthly indemnity of 20 percent of the base salary of the General Director. To carry out its activities, the Centre can attract and use external collaborators as experts (specialists in the field), remunerated in accordance with the law. The organizational structure indicates the staffing and consequently the facilities that are needed for the Centre's operation. The CExDD functions are sustained by 50 FTE staff positions. Four management positions correspond to this number of staff, which is in accordance with the legal provisions. The calculation of the expenditures takes into consideration the cost of labor force (qualifications, full time / part time, permanent or temporary contract) and the facilities for operating (premises, works, equipment, licenses, utilities, and logistics). The value of expenditures calculated represents the budget that will be requested and negotiated with the Ministry of Finance when the draft law is endorsed. Table 3: The minimal structure of a public institution; departments and positions Crt./ Units/structures in the Positions within the Number of Expected Permanent Civil servant Item organization unit/structure positions number of (P) (CS) minimum positions required under Temporary Contractual CExDD (T) (C) 1 Managing Director (State Managing Director 1 1 P C secretary) 2 Scientific Council Scientific Council 7 7(*) T C member 3 Scientific Director Scientific Director 1 1 P C 4 Administration Director Administration 1 1 P C Director 5 Cabinet of Managing Chief of Cabinet 1 1 P C (CS) Director Secretary 1 1 P C (CS) Councilors - 0 P/T C (CS) 6 Technical units (one for Technical experts 25 25 P/T C (CS) each of CExDD functions) 7 Budget and Accounting Accountants 2 2 P CS 8 HR and Payroll HR Specialist 1 2 P CS 9 Public Procurement Procurement 1 1 P CS Specialist 10 Auditing Auditor 1 1 P CS 11 Legal department Legal councilor 1 1 P CS 26 12 IT administrator IT administrator 1 1 P CS (C) 13 PR and Communication Communication and 1 1 P C PR specialist 14 International Funding International - 2 P CS (C) funding specialists 15 Training unit on SD SD experts - 16(**) P/T C 16 Logistics and Administrative staff 1-3 1 P C administration TOTAL x 50 * According to the draft law these positions are not part of CExDD permanent structure. The members receive a monthly indemnity equal with 20% of General Director salary. ** The positions are 1/2 FTE that totalize 8 FTE as they are considered for calculations made. The materials and services necessary for CExDD activity are proportionally linked with the number of personnel. The facilities, the inventory assets and equipment or the non-financial assets (laptops, PCs, furniture, meeting rooms), the office supplies and utilities are directly/proportionally linked with the number of personnel. This information is used in the calculation model to determine the budget necessary for CExDD operations. The specific interventions under the NAP The CExDD will have to accomplish the tasks that are under the NAP. In the costing process, these tasks are considered specific interventions/actions that request resources for coordination, research and work, and which generate an additional consumption of resources. The NAP is structured by priority directions, specific objectives, actions, outputs, responsibilities, and has indicative financial resources. The NAP interventions in the responsibility of the CExDD should be accordingly budgeted. By analyzing the activities of the action plan, the activities that generate additional consumption of resources will be distinguished. Of the 5 NAP activities (A12, A13, A14, A15 and A16), only two (A12 and A13) generate an additional consumption of resources. The other activities can be carried out entirely by the CExDD staff, within the limits of the attributions, skills, responsibilities from the job descriptions, during the normal working time and within the allocated operating budget. Within the cost calculation, the activities are broken down, and the resources needed for implementation are identified. Activities use resources to generate products and milestones (goods and services). Each activity involves several contributions / inputs (human resources, materials, services, etc.) that compete for the realization of the results that must be determined, and the expenditures that must be estimated. However, the CExDD could consider outsourcing of the other NAP activities under its responsibility for the effectiveness of their implementation, and accordingly a request for additional budget resources must be submitted to GSG. The details are presented in the cost calculation (Annex 2 of Report). 27 Figure 5: CexDD responsibilities within NAP (in red) (source: DSD) Specific Objective Action Outcome indicators Output indicators Institutional coordinator Responsible authority Financing Status PRIORITY DIRECTION 1 Strengthening and Extending the Governance Framework for Sustainable Development SpO2 National budget planning A3 Implementation of the budget Budget statements for the SDGs No. of budget executions / budget statements by targets framework for implementing reporting framework for each / SDGs m CSDC, CExDD, UEFISCDI, budgeting based on the SDGs SDG based on the identification DSD CNR through Own budget appropriations of budget allocations and universities executions corresponding to each NSSD 2030 target SpO3 Supporting local authorities to A4 Development of communication Good practices identified No. of good practices incorporate sustainable and information tools to No. of local authorities where distributed/disseminated development principles and values facilitate the integration of the m into local policies and strategies SDGs into local policies and CSDC, CExDD, UEFISCDI Instruments ellaborated No. Of communication tools strategies DSD CNR through Own budget appropriations No. of workshops universities No. of training sessions No. of entities participating in workshops/training sessions SpO4 Supporting and stimulating A5 Development and Romanian Code of Sustainability No. of non-financial statements from mandatory CSDC, CExDD, CoRS, business and civil society in operationalization of the (RCS) RCS reporting entities Economic and Social m adopting and implementing the Romanian Code of Sustainability Implementation guide DSD Council, Social Partners Own budget appropriations principles and values of sustainable (RCS) Non-financial statements No. of non-financial statements from voluntary development disclosure platform reporting entities A6 Information campaigns and Communication and information No. of workshops training sessions to facilitate the plan No. of training sessions CSDC, CExDD, CoRS, integration of the SDGs in the m DSD Economic and Social Own budget appropriations business and civil society No. of entities participating in workshops/training Council, Social Partners environment sessions PRIORITY DIRECTION 3 Promoting Sustainable Development Principles and Values SpO8 Promoting sustainable A12 Implementation of the Communication platform No. of page views on the platform development concepts with the Communication and Promotion Annual communication Incidence of SD terms in platform searches aim of achieving the NSSD 2030 of Sustainable Development programme No. of communication tools targets Concepts Programme m No. of communication actions (TV shows, articles published online) NIS, SDHs, CSDC, CExDD, DSD Own budget appropriations No. of interested groups CoRS, media partners TV audience No. of social media page views Incidence of SD terms in content analysis of multimedia materials A13 Conduct opinion surveys on Annual sociological studies No. of surveys m perception of awareness of the principles and values of SDHs, CSDC, CExDD, DSD Other sources sustainable development and CoRS progress towards the SDGs No. of semi-structured interviews m A14 Development and promotion of Visual Identity Manual No. of entities integrating visual and verbal identity CExDD DSD Own budget appropriations, visual identity elements on other sources sustainable development in Romania PRIORITY DIRECTION 4 Monitoring and Evaluation of the Implementation of the NSSD 2030 SpO11 Reporting on the status of A18 Develop, publish and promote Annual update of the ISDHs No. of web page hits m implementation of the NSSD 2030 the Scoreboard with ISDHs on Scoreboard on the DSD web Romania's progress towards the page NIS, SDHs, CSDC, CExDD, Own budget appropriations, No. of citation DSD CoRS, media partners other sources 2030 targets No. of Press Releases 28 The Calculation Model A calculation model has been developed in EXCEL spreadsheet software to support the budget proposal preparation of CExDD. The spreadsheet program is well known to public administration staff and poses no problems in use. The model allows the development of alternative scenarios for budgeting by making changes to the variables it operates on. In principle, the value of a variable is entered only once and the model takes it over in all worksheets. The model consists of 12 worksheets, numbered 1-12. Each digit is followed by a short name, referring to the contents of the worksheet. The model uses, as input data, the functional and operational structure of the proposed public entity provided by GSG-DSD. Public institutions limit their expenditure to those strictly provided by law, and structure their budgets based on revenues and expenditure. In this case, CExDD structure is presented in the report with the indication of the functions it must perform (based on information provided by DSD) and an estimate of the number of positions within them. The operating budget values of the CExDD will be estimated based on the final organizational structure and the number of personnel by categories and functions. In the present version, the model has been fed with values of variables that take into account the legal provisions existing at the time of development, the options of the members of the working group of the DSD of the GSG, the proposals of the expert and the prices resulting from a market analysis. Any legal provisions, or managerial and administrative decisions with an impact on the variables are represented in the model by a corresponding change in the value of the variables, leading to an alternative scenario for budgeting. The structure of the model is as follows: • Worksheet 1. Organizational chart - is used in modelling the organizational structure and total number of personnel by hierarchical levels, functional structures and personnel categories (management and executive). • Worksheet 2. Wages - is used in establishing, according to the law, the monthly base salaries of all personnel, structured by hierarchical levels and functional departments. • Worksheet 3. Payroll - is used in modelling annual personnel expenditure which cumulate both base salaries and the employer's other legal payment obligations (increments, compensation, allowances, bonuses, prizes, including those for food and holiday allowances and employment insurance contributions). • Worksheet 4. Material expenditures - is used to model recurrent material and service expenditure in the structure given by Ministerial Order 1954 of 2005 on the classification of public finance indicators - economic classification. • Worksheet 5. Inventory items - is used in modelling expenditure on inventory items required when setting up new institutions. Inventory items have a longer duration of use and will not incur annual expenditure. • Worksheet 6. Investment expenditure - is used in modelling expenditure on intangible assets - fixed assets needed for the operation of the institution from the time of establishment. • Worksheet 7. TOTAL.Organiz.&Operating Exp - makes a cumulative total of all the expenditure modelled in worksheets 2 - 6, grouping them by title, in the economic classification and showing the total expenditure for setting up and running the centre. • Worksheet 8. NRRP – is used in centralization of all the expenditure financed from NRRP. The model takes over the substantiations that were the basis of the elaboration of the NRRP. • Worksheet 9. Initiatives&measures - is used to model expenditure for the implementation of initiatives, in this case projects included in the NAP of the NSSD, under the implementation competence of the CExDD. 29 • Worksheet 10. TOTAL budget year 1 - cumulates the costs of setting up and running the centre with the costs of carrying out the initiatives by calculating the total expenditure required for the first year of operation of the centre. • Worksheet 11. Budget Projections - makes a projection of budgetary expenditure over a time horizon of 5 budget years. • Worksheet 12. Budgetary impact - presents, according to the standard methodology, the financial impact that the implementation of the Centre would have on the revenue and expenditure of the different budget categories over a 5-year time horizon. The following spreadsheets describe the role of each worksheet and detail how to calculate their input and output data. The model is available in electronic format and is provided with this report. Worksheet 1 < Organizational chart > Role - modelling the organizational structure and total number of personnel by hierarchical levels, functional structures and personnel categories (management and executive). How - the model uses a structure with no more than four (4) hierarchical levels in which advisory structures, collective management, functional departments, management and executive positions are represented. The model allows to enter the names of the structures and the number of staff serving them, differentiated into managerial and executive personnel. Input data: • Names of advisory structures, collective management, functional departments and number of management and executive positions • Number of personnel serving those structures Output data: Number of persons assigned to the advisory structure, Number of persons assigned to the collective management structure, Number of General Director positions, Number of Director positions, Number of Head of Service positions, Number of executive officials positions. Worksheet 2 Role - calculation of base salaries for designated personnel in the organizational chart How - The model calculates the base salaries for the head of the institution (General Director), the management staff (directors and heads of department) and the executive staff according to the legal provisions. The multipliers, legal coefficients and salary scales per staff category are used, applied to the minimum gross salary in payment on the date of calculation/for the year of calculation as appropriate. Input data: • Positions established by the organizational chart, title and type (taken from the "Organizational Chart" worksheet) • Level of education (higher, secondary) • Minimum gross salary guaranteed in payment in 2023 - 3300 lei • Legal coefficient - multiplier for calculating the gross base salary in the public system (positions of public dignity secretary of state - 8; management positions between 3,3 - 4,98; executive positions 1,86; 2,63; • Grade I (3,3-4,56) or II (3,65-4,98) - multiplier of the legal coefficient for management personnel • Grades 0-5 - multiplier of the legal coefficient for executive personnel (1 - 1.075) 30 Output data: Gross monthly base salaries in RON for the categories of personnel considered for the calculation and for all available grades. The choice of base salaries by category, position and grade is at the discretion of the organization (user of the model). Worksheet 3 Role – calculation of annual personnel expenditure according to the organizational chart and output data from the spreadsheet How – for each functional department and personnel category, the model allows, on the one hand, the generation, or not, of salary type expenditure (allocation of figure 1 represents the generation of salary entitlements, allocation of figure 0 represents the non-generation of salary entitlements). The model measures the regular working day by splitting the 8-hour day (a sub-unit index is allocated, or at most a unit index, corresponding to the fraction of the normal day). The solution is necessary to make it possible to pay part-time salaries to certain categories of personnel (e.g. trainers), or to pay an allowance calculated as a fraction of the General Director's base salary in the case of members of the advisory structure. The model calculates the annual expenditure on base salaries/allowances for each advisory structure, management, functional department and personnel category by multiplying the number of positions by the corresponding base salaries/allowances for a 12-month budget year. Considering the amendments to the Framework Salary Law, the worksheet allows the modelling of increments, compensations, allowances, bonuses and prizes including food and holiday allowances in an amount which, until the amendment of the existing legal framework, is a maximum of 30% . The contribution of 2.25%, representing the labor insurance contributions is added to the amount thus determined, estimating in this way the total annual prsonnel expenditure. Input data: • Name of advisory, management and functional structures, type and number of position assigned to them (to be taken from the 'Organizational Chart' worksheet), • Distinction between employeed and paid personnel (e.g. management board and trainers paid under a service contract) by allocating 1 and 0 respectively, • The fraction of the normal working day of 8 hours to be regulated for each category of personnel, by allocating a coefficient not exceeding 1, • The maximum amount of the increments, allowances, bonuses and prizes, including food and holiday allowances, which may be granted in accordance with the law, by applying a percentage to base salaries. In this case, under the legal provisions, the percentage is a maximum of 30%. Output data: Annual gross base salaries/annual allowances for all management and advisory structures, hierarchical levels, functional structures and personnel categories, the total statutory amount of bonuses, compensation, etc., the total statutory amount of labor insurance contributions and finally, by aggregating these elements, the total amount of annual personnel expenditure expressed in RON. The choice of the percentage representing the maximum amount of compensation, allowances and other salary rights used in the model is at the discretion of the organisation (user of the model). Worksheet 4< Material Exp. > Role – calculation of recurrent expenditure with materials and services for the operation of the centre in the first year of operation. How – the model uses the economic classification of budget indicators detailed at paragraph level, in accordance with Order 1954 of 2005 approving the classification of public finance indicators. Given that the organisation will be newly established and that there is no budget execution for previous years, the budget executions for the year 2022 of 7 public institutions are used as references. 31 The institutions considered are: the Ministry of Finance, the General Secretariat of the Government, the National Integrity Agency, the Romanian Academy, the Economic and Social Council, the Ministry of Economy and the Permanent Electoral Authority. On the basis of the budget executions of 2022, for each of the 7 institutions, the model calculates at paragraph level (in the economic classification), an indicator considered relevant: "material and services expenditure in relation to total base salary expenditure", hereafter referred to as the "distribution key", which will be used to dimension recurrent material and services expenditure, detailed at paragraph level, for the first year of operation of the Centre. For each budget indicator detailed at the level of the budget line, it is calculated: - the series of values corresponding to each institution chosen as a benchmark, - the median (indicator of the central tendency) of the series of values, which in most cases is considered to be more representative than the arithmetic mean. - the arithmetic mean (at the option of the user) in specific situations where the user considers it more relevant. For the estimation of recurrent materials and services expenditure at line level for the first year of operation of the Centre, the median value representing the distribution key corresponding to each budget indicator (budget line) is multiplied by the total budgeted amount of the Centre's base salary expenditure for the first year of operation. The result is the estimated value of each budget indicator, detailed at the level of the budget line, for the first year of operation of the Centre, expressed in RON. The model also allows the user to calculate the arithmetic average value of the budget indicators, detailed at budget line level, if this is considered more relevant in certain situations. Input data: • detailed data at budget line level, corresponding to Title II (expenditure on materials and services) of the 2022 budget executions, for the 7 institutions, namely: the Ministry of Finance, the General Secretariat of the Government, the National Integrity Agency, the Romanian Academy, the Economic and Social Council, the Ministry of Economy and the Permanent Electoral Authority. • data on total base salary expenditure for the year 2022 for the 7 institutions mentioned above, • the estimated total expenditure on base salaries in the first year of operation of the Centre , taken from the worksheet Output data: Recurrent expenditure on materials and services of the centre, detailed at budget line level in accordance with Order 1954/2005, for the first year of operation, expressed in RON. Worksheet 5 Role – calculation of non-recurrent material expenditure for the purchase of inventory items necessary for the operation of the centre. Inventory items are goods (current assets) used for a longer period of time, with an acquisition/inventory value of less than 2,500 lei. How – the model allows the use of an extended list of inventory items considered necessary for the smooth running of the centre's activities. For each category of inventory item, the quantity deemed necessary is multiplied by the purchase price (including VAT) obtained from a market survey. The sum of the purchase value of all the inventory items gives the total expenditure on equipping the Centre with these assets and, finally, the total expenditure on non-recurrent materials and services. Input data: • inventory items structured according to their category/type, • quantities of each category of inventory item required, • unit prices (including VAT) for each category of inventory items Output data: 32 Expenditure for the acquisition of each category of inventory items, expressed in RON Total expenditure for the purchase of all inventory items necessary for the smooth running of the Centre's activities, expressed in RON Worksheet 6 < Investment Exp. > Role – calculation of non-recurring expenditure for the purchase of non-financial assets - fixed assets necessary for the operation of the Centre. How – the model allows for the use of an extensive list of fixed assets considered necessary for the proper functioning of the Centre. For each category of fixed assets, the quantity deemed necessary is multiplied by the purchase price (including VAT) obtained from a market survey. By multiplying the quantities by the unit prices for each category of fixed assets, the total expenditure for equipping with that category of fixed assets is obtained and, finally, the total expenditure of a non-financial, non-recurring nature for the purchase of fixed assets. In the case of the purchase of cars, it was assumed that, as the Centre is a flagship institution in the field of sustainable development, it would equip itself with electric cars, thus exceeding the maximum amount of EUR 23 000 per car, under the conditions laid down in Ordinance No 80/2001 on the establishment of expenditure rules for public authorities and public institutions. Input data: • fixed assets structured according to their category/type, • neccessary quantities of each category of fixed assets, • unit prices (including VAT) for each category of fixed assets Output data: Expenditure for the acquisition of each category of fixed assets, expressed in RON, Total expenditure for the purchase of all fixed assets necessary for the smooth running of the Centre's activities, expressed in RON. Worksheet 7< TOTAL.Organiz.&Operating Ex > Role – it represents a centralisation of all the expenditure for setting up and running the Centre calculated in the previous worksheets How – the model automatically takes the totals of budgetary expenditure, by title, according to the economic classification of public finance indicators, as follows: Title I Personnel expenditure - automatically taken from the worksheet , Title II Expenditure on materials and services is made up by adding the total of the worksheet for recurrent material expenditure to the total of the worksheet for non- recurrent material expenditure. The data are automatically retrieved. For more transparency, the two components - recurrent and non-recurrent - of Title II are presented separately. Title XIV Expenditure on non-financial assets is automatically taken over from the worksheet The model cumulates the annual expenditure, estimated for the first year of operation of the Centre, structured by economic classification, resulting in a total annual expenditure for setting up and operation, expressed in RON. Input data: 33 • Amounts estimated as necessary for the first year of setting up and operation, broken down by Title I Personnel expenditure, Title II Expenditure on materials and services and Title XIV Expenditure on non- financial assets Output data: Total annual expenditure for setting up and running the centre in RON Worksheet 8 Role – it has the role in centralization of all the expenditure financed from NRRP How - The model takes over the substantiations that were the basis of the elaboration of the NRRP. The activities are detailed, and the budget appropriations are estimated according to the substantiations from NRRP. The deterministic method was used to evaluate the expenditures with the provision of services by experts, and the identification from the public environment of information on similar public procurements - purchased in SIPOCA projects (excerpt from JOUE - CSM announcement for SIPOCA project 752/SMIS 129914). Input data: required number of experts total time required expressed in days expert hourly rate the prices resulting from purchases for the provision of means for online conferences, purchased in SIPOCA projects (extract from JOUE - CSM announcement for SIPOCA project 752/SMIS 129914). Output data: Annual total of the expenditures financed from the NRRP in RON Worksheet 9 Role – the budget estimate for activities A12 and A13 of the NAP for the implementation of the NSSD under the responsibility of the Centre How – the model is used to evaluate the budget of A12 and A13 activities. Activity A12 - Implementation of the communication and promotion of sustainable development concepts programme which involves the implementation of 2 sub-activities namely: 1)Realization of the electronic platform for communication and training and use and 2) Contracting TV appearances. The model allows to define the types and number of inputs needed to carry out each sub-activity and to calculate the total expenditure by multiplying the number of inputs by the specific unit costs. Activity A 13 - Annual sociological survey, 2 sub-activities are required, namely: 1) the production of opinion surveys and 2) conducting semi-structured interviews. The model also allows defining the type and number of inputs needed to carry out each sub-activity and calculating the total expenditure by multiplying the number of inputs by the specific unit costs. The unit costs of the inputs required to carry out activities A 12 and A 13 are evaluated on the basis of a market analysis. Input data: • the activities foreseen in the NAP of NSSD within the implementation competence of the centre • the sub-activities of each activity • the inputs required to carry out each sub-activity 34 • number of neccessary inputs • unit cost of neccessary inputs Output data: The total costs and therefore the budgetary expenditure for the implementation of the 2 activities of the RSDS action plan that fall under the implementation competence of the centre. Worksheet 10 Role – cumulates all expenditure for the organisation, operation and implementation of initiatives in the National Sustainable Development Strategy Action Plan. It relates strictly to the first year of the Centre's activity How – the model centralises and aggregates all expenditure incurred in setting up and running the centre, provided by: - worksheet 7 - < 7. TOTAL.Organiz.&Operating Ex> - worksheet 8 - Cumulative totals are expressed in RON Input data: • total for Title I - Personnel expenditure • total for Title II - Expenditure on materials and services • total for Title XIV - Total expenditure on non-financial assets - fixed assets • total expenditure for the implementation of initiatives in the NAP of NSSDwhich are of the economic nature of expenditure on materials and services Output data: Total expenditure in the first year of operation of the Centre, expressed in RON Worksheet 11< Budget Projections > Role –forecasts the evolution of the Centre's budget over a 5-year time horizon How – the model reproduces the budget expenditure for the first year - setting up and operation of the centre, detailed in the worksheet . For the budget forecast, the model uses two variables, namely: 1) the evolution of the General Price Index and 2) the evolution of the Gross Domestic Product. Not knowing the legislative changes with an impact on public sector pay, a linear evolution of personnel expenditure is assumed over the whole forecast horizon. Subsequent changes in the legal framework, which will have an impact on the salaries of the Centre's personnel, will influence the variables of the EXCEL model. Starting with the second year of operation, the Centre's recurrent expenditure, with the exception of personnel costs, is increasing, with an index that combines the estimates of the evolution of the general price index with those of net domestic product, resulting in an increase compared with the previous year of 7%, 6%, 5% and 4% respectively. It should be noted that expenditure on materials and services for the forecast period does not consider expenditure on the purchase of other inventory items. Input data: • total Title I - Personnel expenditure • total Title II - Expenditure on materials and services • total Title XIV - Expenditure on non-financial assets - fixed assets • total expenditure for the implementation of initiatives in the NAP of NSSD which are of the economic nature of expenditure on materials and services 35 Output data: Forecast of the Centre's budget, detailed in the economic classification, including separately expenditure for initiatives aimed at the implementation of the RSDS Action Plan. The forecast horizon includes 5 budget years, namely the first year (establishment and operation) and the following 4 years. The latter has as starting point the substantiation of the first year. Budget figures are expressed in RON. Worksheet 12< Budgetary impact S4 SN > Role – evaluation of the impact of the establishment and operation of the Centre on the consolidated state and local budgets How – the model is a format that initiators of legislative acts are required to complete in order to substantiate the budgetary impact of initiatives that generate revenue and expenditure for the consolidated state and local budgets. The model automatically takes all expenditure items from the detailed budget forecast table according to their economic nature. Social Insurance Contributions, Social Health Insurance Contributions and Labor Insurance Contributions cumulate to 37,25 % of the total gross income of employed personnel. These contributions constitute revenue for the consolidated state budget. Local budgets benefit from their own revenue regulated by law consisting of a 10% share applied to the income of employeed personnel, the so-called amounts deducted from income tax. All contributions established by the above-mentioned rates are calculated and presented over a 5-year time horizon. Considering the establishment and operation of the Centre over a forecast period of 5 years, the following are calculated: i. revenues to the general consolidated state budget (VAT; CAS; CASS; CAM) ii. revenues to the local and county budgets from the deducted income tax (salaries and allowances) iii. total expenditure from the state budget No other budget category incurs expenditure for the establishment and operation of the Centre. Under these circumstances, the difference between (i) and (iii) results in a net impact on the general consolidated state budget. The impact on local budgets is positive, evidenced by a revenue mentioned under point (ii) Input data: • total Title I - Personnel expenditure • total Title II - Expenditure on materials and services • total Title XIV - Expenditure on non-financial assets - fixed assets • total expenditure for the implementation of initiatives in the RSDS Action Plan which are of the economic nature of expenditure on materials and services Output: Net impact on the general consolidated state budget and on local budgets expressed in thousands RON 36 Annex 2: Details of budget calculations Personnel expenditure – Title I The fundamentals of the personnel expenditure considered the proposed organizational structure within the maximum number of 50 FTE remunerated positions. Title I of the budget includes the personnel (base) salaries and other related-salary expenditure. The establishment of salary rights was carried out in accordance with the provisions of the Framework Law no. 153/2017 on the salaries of staff paid from public funds. Thus, in accordance with Article 12, paragraph 2, from 2023 onwards, base salaries and employment allowances shall be determined based on the coefficients set out in Annexes I to VIII applied to the minimum gross base salary in place, guaranteed in payment. By Decision no. 900/202321 the Romanian Government set the minimum gross base salary in country guaranteed in payment at RON 3,300. Given the role and tasks of the Centre, as well as the need to recruit and hire highly qualified and experienced staff, it is important that the salary package is motivational. Thus, the legal coefficients used for setting base salaries are as follows: - coefficient 8 for the base salary of the General Director, similar to the Secretary of State; - coefficient 4.77 (Grade II) for Director (management positions); - coefficient 4,35 (Grade II) for the Head of Service position (management positions); and - coefficient 1.05 (Grade 3) for executive positions. Applying the coefficients determined values of the monthly base salaries, as following: Table 4: Base salary for the General Director, assimilated to Secretary of State Position of public Gross minimum wage guaranteed in Base salary in 2023 - in Legal coefficient office payment in 2023 RON Secretary of State 3,300 8 26,400 Table 5: Base salaries for executive positions Gross minimum wage Legal Grade Grade Grade Grade Grade Grade Position guaranteed in coefficient 0 1 2 3 4 5 payment in 2023 Coefficient x 1 1.075 1.05 1.05 1.025 1.025 Base salary for adviser, legal adviser, expert, inspector; senior professional grade 3,300 2.63 8,679 9,330 9,796 10,286 10,543 10,807 Head of cabinet 3,300 1.86 6,138 6,598 6,928 7,275 7,457 7,643 Table 6: Base salary for other management positions State public offices Base Gross minimum Level of Base salaries - RON salary Position Coefficient wage education Year 2022 2023 - in guaranteed in RON Grade I Grade II Grade I Grade II payment in 2023 Director S 10,880 11,933 4.35 4.77 3,300 15,741 Head of Service S 10,002 10,880 4 4.35 3,300 14,355 21 GD no. 900/2023 determining the minimum gross base salary guaranteed for payment at national level, https://legislatie.just.ro/Public/DetaliiDocument/274843 37 Under Title I – Personnel expenditures also included other salary-related expenditures. The calculation considered the provisions of the Framework Law no. 153/2017 and the derogations established by the EO no. 70/2020. Thus, the maximum amount allowed for this category of personnel expenses is up to 30% of the annual base salary for the entire institution. "The amount value of increments, compensations, allowances, premiums, bonuses and allowances, including those for food and holiday, granted cumulatively on the total budget for each authorizing officer may not exceed 30% of the amount of base salaries, function wages/ function salaries, grade wages / salaries of the professional grade held, grades and command wages /command salaries, employment allowances and monthly allowances, where applicable”. The CExDD personnel could benefit from the following salary-related expenditure: (i) An increase of up to 15% of the base salary, corresponding to the time worked, granted for dangerous or harmful conditions. In the practice of most Romanian institutions, this increase is granted to almost all personnel. (ii) A food allowance of 346 lei/day. In the current budget scenario, all staff benefit from this allowance, except for the members of the Scientific Council and trainers paid by hour. (iii) Employees of the public system receive holiday vouchers worth 1,600 lei based on the Law no. 165/2018 regarding the granting of vouchers. (iv) Staff working in structures that implement projects with non-reimbursable funding from European funds may benefit from a 50% increase in their base salary. This bonus has been applied to the calculation of personnel expenditure. (v) By law, the employer is obliged to pay a contribution of 2.25% representing a legal labor insurance contribution. The contribution is applied to the total base salaries. This contribution as well has the economic nature of personnel expenditure. As the total amount of salaries for the first year is RON 6,684,711, then by applying the rules mentioned (max. 30% and 2,25%) the amount value of salary-related expenditure totals RON 2,200,941. Table 7: CExDD salary-related expenditures TOTAL A: Employed/paid staff and salaries 50 6,684,711 TOTAL B: Increments, compensations, add-ons, bonuses, Maximum prizes, and indemnities, including food and holiday 30% 2,005,413 amount allowances TOTAL C: Legally work insurance contributions Maximum 2.25% 195,528 amount The budget Title I – Personnel expenditures (total value) resulted from summing up expenditure with base salaries and with other salary-related expenditure. The annual budget for personnel expenditure values RON 8,885,652 for the first year of operation (12 months). The details of articles are presented in the table below. 38 Table 8: CExDD - budget Title I - Personnel expenses Employed/paid Number (yes or no) Base Annual expenditure on Description of yes=1 salary base salaries [RON] positions fraction no=0 Management and advisory structures Scientific Council 7 1 0.20 5,280 88,704 Steering Committee 5 0 0.00 0 0 General Director/Secretary of State 1 1 1.00 26,400 316,800 Scientific Director 1 1 1.00 15,741 188,892 Administrative Director 1 1 1.00 15,741 188,892 General Director Cabinet 2 1 1.00 7,275 174,592 Data Center Head of Department 0 1 1.00 14,355 0 Executive personnel (officials) 3 1 1.00 10,286 370,305 Generating scientific arguments Head of Department 1 1 1.00 14,355 172,260 Executive personnel (officials) 7 1 1.00 10,286 864,044 Strengthening networking and partnerships Head of Department 0 1 1.00 14,355 0 Executive personnel (officials) 4 1 1.00 10,286 493,740 Communication and knowledge dissemination Head of Department 0 1 1.00 14,355 0 Executive personnel (officials) 7 1 1.00 10,286 864,044 Thinktank /strategic thinking Head of Department 0 1 1.00 14,355 0 Executive personnel (officials) 3 1 1.00 10,286 370,305 Attracting funds (NEDF, donors) Head of Department 0 1 1.00 14,355 0 Executive personnel (officials) 2 1 1.00 15,429 370,305 Support functions Head of Department 0 1 1.00 14,355 0 Executive personnel (officials) 10 1 1.00 10,286 1,234,349 Trainers Head of Department 0 1 1.00 14,355 0 Contract trainers (8 positions filled by 16 part- 1.00 time contract trainers) 8 1 10,286 987,479 CENTRALIZATION Scientific Council 7 88,704 Management staff 4 866,844 Executive personnel 46 5,729,163 TOTAL A: Employed/paid staff and salaries 50 6,684,711 TOTAL B: Increments, compensations, add-ons, bonuses, prizes, and indemnities, including food Maximum amount 30% 2,005,413 and holiday allowances Maximum amount TOTAL C: Legally work insurance contributions 2.25% 195,528 Total Personnel expenditure 8,886,652 39 It should be noted that the calculation follows the provisions of the Administrative Code. The total number of management positions is set within the limit of 8% of the total number of executive positions (see Box 1). The structure regulations are also observed, in the sense that a minimum of 40 positions are required for the establishment of a general directorate, a minimum of 20 positions are required for the establishment of a directorate and a minimum of 10 execution positions are required for the establishment of a service. Materials and services expenditures (recurring and non-recurring) – Title II All expenditure within Title II - Materials and services may be incurred by a permanent public entity. The budget estimation includes the materials and services and the inventory items. The fundamentals of expenditure on materials and services shall be based on the number of staff (50 FTE staff) and the surface area and physical condition of the building to be handed over to the Centre for the purposes of its current activities. In the case of CExDD, no information is available that can reasonably substantiate the consumption of resources, but this type of information can be gathered from other institutions, if possible similar in the size and, preferably, in the scope of activity. In the case that the data about similar institution on scope in size is not available or could be interpreted as not relevant, should be considered the available information of public institutions budgets, even if they are different in size and field of activity but provide enough description of the budget items in the economic classification. The calculation of the necessary resources used several prerequisites, as follows: (i) The quasi-totality of recurrent expenditure on materials and services for the operation of the CexDD is in direct proportional to the number of personnel and therefore also to the expenditure on base salaries; (ii) In the absence of historical data on this type of expenditure at the level of the CexDD, the budget executions of 2022 for 7 public institutions different in size and field of activity were analysed (Ministry of Finance, General Secretariat of the Government, National Integrity Agency, Romanian Academy, Economic and Social Council, Ministry of Economy, Permanent Electoral Authority). The calculation of expenditure with the materials and services extrapolates the data obtained from the seven institutions examined by using distribution keys. For each institution was calculated at budget paragraph level, the ratio between the expenditure item and the total expenditure on base salaries. Seven series of 20 indicators (corresponding to each expenditure paragraph) were obtained in this way, representing the same number of distribution keys. For each of the 20 indicators the median value at the level of the 7 institutions was calculated as a representative indicator of the central trend. The median value was extrapolated for the Centre of Excellence. In the case of median values equal to 0 and if the item was considered relevant for CExDD (see books, publications, PR services), the arithmetic average value of the budget indicators was calculated and applied for final calculation. The budget for expenditure on materials and services was calculated at paragraph level (RON 795,237 for first year of operation). The calculations are presented in detail and explicitly in the model (see Annex 1). 40 Table 9: CExDD Materials and services expenditures for year 1 Forecast Forecast Median of CExDD CExDD CExDD Name of financial indicators the series total base budget on budget on Title Article Line Average as per FMO no 1954/2005 of seven salaries in median average institutions RON indicators indicators in RON in RON 10.01.01 Base salaries 6,684,711 10.01.13 Delegation allowances 0.670% 44,766 0.94% 63,053 20.01.01 Office supplies 0.232% 15,517 0.51% 33,839 20.01.02 Cleaning materials 0.062% 4,136 0.35% 23,636 Heating, electricity, and 20.01.03 power 2.481% 165,832 3.59% 239,936 20.01.04 Water, sewer, sanitation 0.325% 21,735 0.50% 33,634 20.01.05 Fuels and lubricants 0.285% 19,039 0.39% 26,298 20.01.06 Spare parts 0.022% 1,472 0.07% 4,516 Post, telecommunications, 20.01.08 radio, tv, internet 1.029% 68,784 1.55% 103,353 Materials and services of a 20.01.09 functional nature 0.883% 59,017 11.02% 736,806 Other goods and services 20.01.30 for maintenance and operation 2.693% 180,028 5.25% 350,637 Internal travel, 20.06.01 secondments, transfers 0.195% 13,049 0.24% 15,718 20.06.02 Travel abroad 0.236% 15,755 0.29% 19,699 Books, publications and 20.11 documentary material 0.009% 590 0.02% 1,545 20.12 Advice and expertise 0.048% 3,211 0.18% 12,156 20.13 Professional training 0.067% 4,500 0.13% 9,017 20.14 Labor protection 0.077% 5,173 0.19% 12,947 20.30.01 Advertising and publicity 0.072% 4,813 0.31% 20,845 Protocol and 20.30.02 representation 0.088% 5,913 0.26% 17,347 Other expenditure on 20.30.30 goods and services 2.422% 161,908 4.64% 310,437 Fund of the head of the public institution 0.000% 0 0.00% 109 TOTAL 795,,237 x 2,035,528 The budget of the Centre includes the cost of the inventory items estimated at RON 209,200. These are calculated by deterministic method, based on market prices of the needed inventory items. Most inventory items will be purchased at the beginning of the first year of operation. Thus, for subsequent budget years, this type of expenditure is not planned and is not calculated. 41 Table 10: Expenditure on inventories Number of Cost per Total cost Description units unit RON] RON Individual management desks 3 3,000 9,000 Individual management chairs 3 1,700 5,100 Individual desks 47 1,500 70,500 Office chairs 50 500 25,000 Guests’ chairs 30 450 13,500 Meeting tables 4 2,500 10,000 Lockers/cabinets, etc. 34 650 22,100 Mobile phones 8 500 4,000 Other equipment (small furniture, maintenance, cleaning, etc.) 50,000 TOTAL x x 209,200 Expenditure on non-financial assets (investment in fixed assets) – Title XIV Investment expenditure consist of the purchase of fixed assets necessary for the establishment and operation of CExDD. The substantiation of investment expenditure is based on the need for fixed assets and the unit prices of the market. The deterministic method is applied. The expenditure with non-financial assets is RON 952,500 and is detailed by category in the table below. As they will be purchased in the first year of operating, this is a non-recurrent expenditure, thus will no longer be calculated for subsequent budget years. Table 11: Expenditure on tangible assets – investments Cost per unit (VAT Name Number of units Total cost [RON] included) [RON] Laptop 8 8,000 64,000 PCs + monitors 42 5,000 210,000 Multifunctional A3 laser printer 2 20,000 40,000 Laser printer A3 5 6,000 30,000 Software license 50 350 17,500 Portable video projector 2 8,000 16,000 Car 2 125,000 250,000 Van 1 325,000 325,000 TOTAL x x 952,500 42 Expenditure occasioned by the NRRP funded projects – Title XII The CExDD has been allocated consistent financial resources through NRRP that is provided in a separate budget title within economic classification. Approximately RON 2,807,520 is planned for services, IT applications and software licenses that support the functions of the CExDD: (i) data collection and management; (ii) generating scientific arguments; (iii) strengthening relationships and partnerships; (iv) communication and knowledge dissemination; and (v) strategic thinking. Even this budget title includes services, inventory assets and investments, which had could be considered under Title II or Title IV, is mandatory that the Title XII is exposed separately due to RRF financing. The distribution of costs is presented in the following table. Table 12: CExDD services and investments financed by NNRP Annual Title Article Line Name of item/indicators expenditure (RON) 20.30.30 Other expenditure on goods and services Expertise services for the development of the Charter of the Centre of Excellence for Public Administration in Sustainable Development 825,100 IT application development services - support Function 1. Data center 297,000 IT application development services - support Function 2. Centre for the generation of scientific arguments in support of public administration decisions 297,000 IT application development services - support Function 3. Knowledge dissemination 297,000 IT application development services - support Function 4. Strengthening networks and partnerships 297,000 Equipping online conference centre (Function 5. Strategic thinking) - investment 544,420 Software license 250,000 TOTAL 2,807,520 Expenditure with the specific interventions under NSSD or other strategic documents Two activities under the NAP (A12 and A13) generate an additional consumption of resources at the level of CExDD. The process applied for estimating the costs (budgeting) of an action or a project to determine the budget resources needed for implementation. The budgeting process is similar to the one applied by GSG and ministries for Institutional Strategic Plan and is stated under the GD no. 427/2022 and GD 467/2022. The explanations presented below could be incorporated in an internal procedure applied by DSD/GSG, a methodological approach by which an estimate of the expenditure attached to projects and activities is made. The purpose is the elaboration of a funding proposal/request and implicitly the subsequent construction of the institution's budget proposal. The activities and projects are constituent components of the interventions (e.g. Measures under the ISP) carried out by the institution with the aim of reaching certain targets. As in the case of NAP, the Specific objectives are operationalized/implemented through Activities, which are comprehensive, then will be used the sub-activities to break down and identify the resources needed for implementation. Activities use resources to generate products and milestones (goods and services). Each sub-activity involves several contributions / inputs (human resources, materials, services, etc.) that compete for the realization of results 43 that must be determined and expenditure that must be estimated. The formulation of sub-activities involves several steps: (i) Decompose A12 and A13 into component sub-activities as comprehensive as possible and order them logically; (ii) Elaborate a checklist of the legal, operational, and economic feasibility of the sub-activities, based on some criteria that can be operated easily and shall clarify at least the following aspects: • if the occasioned expense has a legal basis; • if the sub-activity is necessary or can be given up without compromising the achievement of the target; • if the sub-activity generates significant or negligible expenditure; • if there are cheaper alternatives of the sub-activity; and • if the sharing of financing responsibility between the partners is established; (iii) Analysis of sub-activities according to the checklist, completing, modifying, merging or abandoning some of the activities (for example: abandoning activities that generate expenditure without a legal basis, or generate insignificant expenditure, have more efficient alternatives, etc.); and (iv) Choosing from the revised list of sub-activities those deemed necessary and sufficient. The monetization of contributions represents the calculation of expenditure and the estimation of the budgets of sub-activities. The CExDD needs RON 105,000 to implement the A12 - Implementation of the communication and promotion of sustainable development concepts programme, and A13 - Conduct annual sociological survey. Below is presented the budget of initiatives A12 and A13. Table 13: A12 budget Measurement Number of Unit cost Total cost Sub-activities Observations Unit inputs [RON] [RON] Implementation of the electronic platform for communication and user contracting training pcs services 50 1100 55,000 contracting Contracting TV appearances rating points services 100 500 50,000 TOTAL A12 105,000 Table 14: A13 budget Measurement Number of Unit cost Total cost Activities Observations Unit inputs [RON] [RON] contracting conducting opinion surveys number services 1 25,000 25,000 contracting conducting semi-structured interviews number services 1 15,000 15,000 TOTAL 40,000 44 First-year budget estimation The total budget of CExDD for the first year consists of the expenditure of organization and functioning to which are added the expenditure of NRRP projects and the initiatives (A12 and A13). A total amount of RON 13,795,110 was estimated for the first-year of operation. Table 15: First-year budget estimations Description Year 1 TOTAL organisation and operating expenditure 13,650,110 Title I Personnel expenditure 8,885,652 Title II Materials and services expenditure 1,004,437 Title XII Projects financed from the amounts representing the non-refundable financial assistance related to NRRP 2,807,520 Title XIV Expenditure on non-financial assets 952,500 TOTAL expenditure on initiatives 145,000 Title II Implementing the A12 initiative expenditure 105,000 Title II Implementing the A13 initiative expenditure 40,000 TOTAL CExDD BUDGET (first year of operation) 13,795,110 Five-year budget forecast estimations The five-year forecast was prepared to substantiate the draft law for the approval of the center’s establishment. Several prerequisites were considered, as follow: (i) The materials and services are adjusted with the General Price Index indicated by the MoF in the Budget Framework Letter released on November 13, 202322 (6% in 2024; 4% in 2025; 2.9% in 2026 and 2.6% in 2027) (ii) The salary is based on the provisions of the Framework Law no. 153/2017 regarding the salary of staff paid from public funds and the base salaries remain unchanged. (iii) Starting with the second year of activity, neither inventory items nor fixed assets (investments) are purchased. 22 https://mfinante.gov.ro/static/10/Mfp/Scrisoarecadru2024/Scrisoareacadrubuget2024.pdf 45 Table 16: Budget five-year forecast Breakdown of expenditure in the economic Year 1 Year 2 Year 3 Year 4 Year 5 classification TOTAL organisation and operating expenditure 13,650,110 9,728,604 9,712,699 9,703,951 9,701,566 Title I Personnel expenditure 8,885,652 8,885,652 8,885,652 8,885,652 8,885,652 Title II Materials and services expenditure 1,004,437 842,951 827,047 818,299 815,913 Title XII Projects financed from the amounts representing the non-refundable financial assistance related to NRRP 2,807,520 0 0 0 0 Title XIV Non-financial assets expenditure 952,500 0 0 0 0 TOTAL expenditure on initiatives 145,000 153,700 159,848 164,484 168,760 Title II Implementing the A12 initiative expenditure 105,000 111,300 115,752 119,109 122,206 Title II Implementing the A13 initiative expenditure 40,000 42,400 44,096 45,375 46,555 TOTAL CEXDD BUDGET 13,795,110 9,882,304 9,872,547 9,868,435 9,870,326 Description Year 1 Year 2 Year 3 Year 4 Year 5 Increase in base salary and other legal rights 100.0% 100.0% 100.0% 100.0% 100.0% Inflation index 100.00% 106.00% 104.00% 102.90% 102.60% Growth rate of budgetary expenditure, excluding Titles I and XII and XIV 100.0% 100.0% 100.0% 100.0% 100.0% 46 Annex 3: Considerations on legal requirements for institutionalization of CExDD operations The legalistic approach for the institutionalization of a new public entity is the purview of Romanian authorities. However, considerations regarding the legal procedures applicable for approving the CExDD establishment and operation were provided to GSG during the project. The considerations presented below were developed within the framework of the RAS Agreement. The CExDD will be established and operate “as a public institution of national interest”23 under the coordination of the GSG. The activities that CExDD will implement lead to an organization operating as a research and development institute. Several aspects devolve upon legal procedure of CExDD’s establishment: (i) the legal provisions of organizing the central public administration, which are stated by Romanian Constitution and the Administrative Code; (ii) the specific (type) of the public entity, which clarifies the role in the administration (ministry, agency, department); (iii) the placement (hierarchy) in the central public administration, which clarifies the relationships, the subordination, and the financial rights; and (iv) the institution empowered or detainer of the legal attributions to approve the establishment. All of those interrelate and influence the legislative process. Two legal procedures for the establishment of new public institutions/entities could be considered as applicable for CExDD operationalization. First, by a law that should be proposed by GSG and approved by the Parliament chambers (Senate and Chamber of Deputies) and finally promulged by the Romanian President. And second by a government decision proposed by GSG, endorsed by advisory ministers (e.g. Justice, Finance, Labor, Investments and European Funds) and approved by Romanian Government. The legalistic way of approving (law or by law/G.D.) does not necessarily affect the costing/budgeting process, which is the scope of activities under this deliverable, but in the end will contribute to the easiness of adapting the figures, by case. A review of applicable normative acts and of characteristics/differences between law and government decision process was made. The legal provisions, which indicate the process of CExDD establishment, are as follows: (1) The Romanian Constitution24: (a) Art. 116 Structure (of public administration) – mentions that (1) Ministries are established, organized and function according to the law. and (2) Other specialized bodies may be organized under the Government or ministries or as autonomous administrative authorities. (b) Art. 117 Setting (2) The Government and the ministries, with the approval of the Court of Accounts, may establish specialized bodies under their authority only if the law recognizes this competence. (2) The Administrative Code25: (a) ART. 51 The structure of the specialized central public administration (1) The specialized central public administration consists of ministries, other structures under the subordination or coordination of the Government or ministries and autonomous administrative authorities. (b) ART. 67 Specialized bodies subordinate to the Government (1) The Government may establish under its authority, with the approval of the Court of Accounts, specialized bodies, other than ministries. (2) The competence of the bodies provided for in para. (1) is distinct from that of the Government and that of the ministries. (3) The provisions of this code, which regulate the organization and functioning of the Government and the ministries, apply accordingly to the other specialized central bodies subordinated to the Government, except for some institutions of public interest whose organization and functioning are regulated by special 23 Citation NNRP, Component 14. Good Governance 24 Romanian Constitution https://legislatie.just.ro/Public/DetaliiDocumentAfis/1413 25 EGO no. 57/2019 https://legislatie.just.ro/Public/DetaliiDocumentAfis/215925 47 laws. (4) The nature of the functions held by the heads of the bodies provided for in para. (1) is established by their act of establishment. (3) The Government Ordinance no. 57/200226 regarding scientific research and technological development: (a) ART. 11 Research and development units organized as national institutes or as public institutions are established, reorganized or abolished by decision of the Government, unless the law provides otherwise. (a) Framework Regulation on the organization and operation of national research-development institutes (approved by G.D. no. 637/200327). The Framework is applied when drafting the Government Decision for the establishment of the research-development institute. The Framework contains rules regarding the concrete way of organization and operation (object of activity, patrimony, organizational and functional structure, management bodies, the budget of revenues and expenditure and its execution and financial relations). (4) The NRRP specifies a law as the legal act to establish and operate the new public entity: (a) The establishment of the research institute by law could be achieved in the situation when the rules derogating from Government Ordinance no. 57/2002 are considered exceptions. (b) In the case of CExDD, the NRRP specifies the normative act that establishes the new public entity. The characteristics of the centre’s scope and objectives must be described by GSG (DSD as part of it) in a substantiation note to sustain the exception. Otherwise, the Parliament cannot legislate where the law establishes that the attribution/authority belongs to the Government (potential risk of unconstitutionality). From the perspective of the legal administrative process, the following are to be considered to decide between a government decision and a law: (a) The government decision requires a draft initiated by the GSG in CExDD case. Once prepared, it follows the inter-ministerial endorsement and the approval by the Government. The usual period for approval is between 30 to 60 days. In the case of revision or change of the legal provisions set by the government decision the process and the duration are like the ones described above. (b) The promotion of a draft law implies three stages. First after the drafting law add the Court of Accounts in the loop to endorse the normative act. Second at the Government level where the draft law should be approved and submitted to Parliament for adoption (30-60 days). Third at the Parliament level that involves debating in the Senate (60 days) and in the Chamber of Deputies. The Chamber has no deadline for debate and adoption and practically, the legislative process could last 1, 2 or more months. During the parliamentary vacation, draft laws are not adopted (January and July-August). In the case of revision or changing the legal provisions the process and duration is similar as described above. Combining the observations made, there are pros and cons for both options - law and decision- to establish the entity’s operation. The statements of the Constitution and the Administrative Code clarify how to establish the CExDD. The Government should demonstrate the exception applicable for public bodies organized under its/GSG coordination and when the case draft and promote a law. This could be interpreted in the context of the NRRP engagements - the CExDD will be established and operates “as a public institution of national interest established by law”. The options trial could concern the stability of center management and operation, the coordination and collaboration, the capabilities to interact with similar bodies from central and public administration or from abroad, and the duration of legislative processes. From the perspective of declared scope of the CExDD corroborated with the approval process (law vs bylaw/government decision) the legalistic option of establishing belongs to GSG-DSD. 26 G.O no. 57/2002 - https://legislatie.just.ro/Public/DetaliiDocumentAfis/38222 27 GD no. 637/2003 https://legislatie.just.ro/Public/DetaliiDocumentAfis/44394 48 Annex 4: Workshop materials - Costing CexDD Workshop for costing of CExDD, October 24, 2023 (DDD and GSG) 1. Introduction 2. CExDD – management and operational concept 3. Prerequisites for CExDD costing/budgeting a. Legal requirements b. Objectives under responsibility of the center c. Permanent organizational structure, i. Central unit ii. Subordinated/territorial hubs iii. Coordination, subordination and collaboration with other interested parties (public, academic, private entities) d. Sources of funding (state budget, EU and international funds, donations, own revenues) 4. Concepts to be applied for costing/budgeting the CExDD – use of costing models a. Substantiation Note requirements b. The budget of a permanent public entity i. Cost of personnel/wages, goods and services, capital investments ii. The budget of recurrent activities of CExDD – considerations c. Budgeting of the interventions in responsibility of CExDD (e.g. under the National Action Plan for NSDD implementation, other tasks assigned from i. Mapping the responsibilities of center in implementing NAP, other tasks ii. Results-based budgeting process - alignment with requirements set by GSG and MoF (Institutional Strategic Plan, budget on programs G.D. 427/2022 and GD 467/2022) d. Consolidation of the budget ceilings using the results of a. and b. e. Further costing options for correlation of OECD and WB deliverables i. Scenario 1 – minimal budget proposal in the case of no available inputs from OECD on structure ii. Scenario 2 – update of budget proposal when inputs are available (at a latest moment after law promulgation) 5. Structure of the budget in the view of promoting the draft law for CExDD institutionalization and operating (one-five years) The electronic file of the materials is distributed with the report. 49