Building Democracy in Poland
The State Reform of 1998
Jerzy Regulski
Discussion Papers, No. 9
Published in 1999 by the Local Government and Public Service Reform Initiative
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Introduction to the Series
The development of democratic and effective government at subnational levels remains one of the central tasks of transition in Central and Eastern Europe and the former Soviet Union. The sharing of expertise between countries can contribute significantly to the reform process in the region. Pursuing this goal, the Local Government and Public Service Reform Initiative (LGI) has launched a series of discussion papers, which will be distributed widely throughout Central and Eastern Europe.
The series will report the findings of projects supported by LGI and will include papers written by authors who are not LGI grant recipients. LGI offers assistance for the translation of the papers into the national languages of the region. The opinions presented in the papers are those of the authors and do not necessary represent the views of the Local Government and Public Service Reform Initiative.
Jerzy Regulski holds a Doctor h. c. from the University of L«—dz, Poland and the University of Roskilde, Denmark. He is also the holder of academic honors from Leicester Polytechnic, UK; Johns Hopkins University, USA; University of Birmingham, UK and others. Professor Regulski is President of the Foundation in Support of Local Democracy, Warsaw, Poland. He was a former Senator (1989-91), minister in charge of local government reform (1989-90), Ambassador to the Council of Europe (1992-97), and Chairman, Council for State System Reforms of the Prime Minister (1998). Comments can be addressed to: regulski@frdl.org.pl.
Introduction
Poland, similar to other former communist countries, has been going through a dif?cult and complex period of transition from a centralized, authoritarian political system, which was subordinated to ideology, to a democratic, free-market system based on the principles of freedom and liberty for its citizens. It has been a hard road which has not been undertaken by anyone in Poland before. In order to become a member of the European family of democratic countries Poland—like all the other former communist states—has to be restructured in several dimensions. New legislation has to be voted in and implemented, democratic institutions must be created, a market economy established and the property structure completely changed. The Polish people also have to reject the communist heritage and adapt their skills and behavioral patterns to the new democratic conditions. The task is enormous and the time is short.
One of the crucial reforms currently being implemented in Poland is a profound change of the entire state system, based on principles of decentralization and subsidiarity. The role of the state under the communist system was to realize socialist ideas, which were implemented by the Party’s authorities, and put into practice outside of the state structures. The state was supposed to execute and implement all that had been previously decided upon by the party. That is why the state had the executive power: its role was to manage the economy and all public affairs, and in many instances to interfere in the private lives of its citizens. In a democratic system, however, the role of the state is quite different. The state is not supposed to control and to manage, but to create stable and secure conditions in which its citizens, social groups and business entrepreneurs can actively manage their own affairs. Thus the role of the state in a democratic system is completely different from that under a communist regime; therefore, it becomes apparent that both the state structures and their organization must change. It is impossible to implement the principles of a democratic system using the state structures organized in a totalitarian way. The reforms that are currently being undertaken are designed to change and adapt the state structures to their new role.
Change in the state political system, even an evolutionary one, is a very dif?cult and complex process. Both legal and institutional systems must closely relate to the culture, traditions, organization and mentality of the society they serve. Only then can laws be commonly accepted and respected. It would be impossible to impose on a society a political system, which would be dif?cult for the general public to understand and, therefore, to accept. Society is usually conservative. People are afraid and suspicious of change. They only demand change in a situation when the existing conditions are no longer acceptable and when the need for change overcomes their fear of change. However, in such cases, it is already too late.
It is crucial then to devise an appropriate schedule for change. When reforms greatly surpass the development of public awareness, con?icts follow and the proposed reforms might be rejected since they do not ful?ll expectations. Thus, if the reforms are not undertaken at the right time, the development of the country becomes threatened. This codependence of both changes in the political system and the public mentality also makes it impossible to undertake changes that are too radical in one sweep. Rather, restructuring of the state system must be a process of successive changes, which will re?ect the evolution of the society itself and its mentality. The reform of the state system is therefore a very complex political and social undertaking. Its presentation requires greater description. It is de?nitely not a process to be characterized only by a few indicators.
The state reform, which is being currently implemented in Poland, makes one very crucial step in the ongoing process of transformation. This paper presents the goals of these reforms and the means of their implementation, as well as some of the dif?culties that must be addressed. In order to make these remarks understandable for foreign readers, it is necessary to present information on the previous communist system, which de?ned the starting point on our road toward transition. To do so, this paper is divided into three sections: a historical introduction, guidelines of the current state reform, and dif?culties and problems in implementing the reforms.
It should be emphasized that this paper was prepared in September 1998, at the time when the reforms were being implemented and the basic legislation had been passed by the Parliament. However, the restructuring was just beginning. Local government elections to elect candidates for the municipal, district and regional authorities took place on October 11, 1998, but the new administrative system did not come into effect until January 1, 1999. Since then it has been apparent that many aspects of the reforms will change, either during the next few months or as the reform laws are amended over the next few years. However, only from a historical perspective will it be possible to conduct a full evaluation of the attempt undertaken to restructure the political system of Poland.
This paper has, above all, an informational character. Many diverse sources were used in its preparation. The ?rst part is based on materials gathered within the framework of a research program titled "Building Local Democracy in Poland 1989-1998," which was conducted under my leadership and which was sponsored by the Local Government and Public Service Reform Initiative (af?liated with the Open Society Institute–Budapest), the US Agency for International Development–Warsaw, and PHARE–European Union assistance program. The informational chapters of the second part contain syntheses of bills passed by the Polish Parliament, informational materials published by the Of?ce of the Prime Minister and documents from the Council for State Reforms of the Prime Minister, published in bulletins numbers 1 through 4. Finally, the discussions and opinions contained in the ?rst two parts of the second section and in the third section represent my own point of view and opinions which were formed during the work of the abovementioned Council, parliamentary discussions and many working sessions with politicians and representatives of the central administration.
Historical Background
The political history of the communist period in Poland is marked by the consecutive, cyclical political and social crises, which gave direction to the events that transpired.
1948—The communist authorities ?nally eliminated all opposition and the remains of democratic institutions, thus commencing a period of repression and terror. At the same time, some of the communist leaders were in prison.
1956—Workers’ protests forced the authorities to end direct terror and to introduce certain measures of political liberalization. However, the ideological principles of the regime were not changed.
1968—Growing discontent among the intellectual elite and students coincided with ?ghting for power between two factions of the Party. As a result, students’ protests were suppressed, and an anti-Semitic campaign was initiated which forced many people to emigrate. Simultaneously, this action was used to divide members of many social groups.
1970—This time riots broke out because of workers’ protests. The social elite, broken after the 1968 crisis, was not able to support the workers. Consequently, the leadership of the Party was changed and it initiated a policy of openness, but the basis of the political system remained unchanged.
1976—Another crisis was caused by workers’ protests. This time the protests were brutally suppressed; however, the democratic opposition consolidated. The Committee for the Defense of Workers’ Rights (KOR) was established. It provided the basis for cooperation among members of the political elite of the opposition and working milieus.
1980—As a result of another wave of workers’ strikes and protests, which this time were fully supported by the democratic elite, the authorities were forced of?cially to recognize “Solidarnosc,” the independent trade union and to introduce a number of reforms. The constant provocation on the part of authorities destabilized the situation in the country, which provided justi?cation to impose Marshal Law in December 1981.
1989—Continuing political and economic crises in the country forced the leaders of the Party to initiate contacts and discussions with the opposition about changing the political system. Ongoing changes in the USSR diminished pressure and external threats. In February, talks of a “Round Table” were initiated between the communists and members of the opposition. In June, partially free parliamentary elections took place and resulted in an overwhelming victory for the opposition. In September, a coalition government was formed under the leadership of a noncommunist prime minister. Basic economic reforms and the process of rebuilding local democracy were initiated, commencing the process of the country’s transformation.
1990—Lech Walesa was elected president, and in 1991 in completely free parliamentary elections the former opposition con?rmed its earlier victory. In the governments that followed, members of the postcommunist parties did not participate.
1993—In the parliamentary elections the postcommunist party of the United Left was victorious and formed a government in coalition with the Farmers’ Party. The defeat of the Right—the political successor of the former opposition—was mainly caused by the break up of the party into many small factions which could not gain enough votes for its members to enter the Parliament. In the 1995 presidential elections, the leader of the Left, Aleksander Kwasniewski became president.
1997—The parties of the Right, having learned from their former defeat, united with the “Solidarnosc” trade union to form one block and won the parliamentary elections. A new coalition government was formed by the winning block together with the Freedom Union (Unia Wolnosci), a party of the center whose members came from the former anticommunist opposition. The Left and the Farmers’ Party joined the opposition. The new coalition government announced the need for great state reforms and declared this aim to be its priority.
Poland, like all other communist countries, had a strong ideological orientation. Ideology has always been, since World War II, more important than the economy. The Polish Constitution (1976) recognized the Communist Party as a leading force entitled to de?ne policy goals, and the state was understood as an executive power only. The ideology-oriented state required an extremely centralized system of decision-making. Any institutional network was constructed as a hierarchical pyramid of bodies. Such a hierarchical pyramid was also built for the system of local government for both the elected and the executive bodies.
The system of local government was the result of the Local Government Act introduced in 1950. This act abolished local self-government and de?ned dual roles for local authorities as representatives of local interests and as executors of state power over a given area. These dual roles of the local authorities and their dual subordination derived directly for the general principle of the uniformity of state authority, as included in the Act of 1950. The introduction of that principle resulted in the forfeiture of the status of a legal entity of any municipality and, in consequence, of the municipality’s property rights.
The ideological orientation of the state, and the hierarchies of elected bodies and public administration resulted in an environment with no place for local policies. Centrally set state policies did not consider local interests, needs and priorities.
Another important factor was the organization of the society around the workplace and professional interests and not according to the place of residence. Within the centralized and nationalized socialist economy, state-owned enterprises provided their employees with services usually offered by local authorities (e.g., kindergartens, day-care centers and cultural, leisure and sport facilities) or by special institutions (e.g., insurance, and very often, health care). The system, therefore, ignored links with the place of residence, neighborhood, and city or village.
Polish postwar history was characterized by a repetitive wave of political crises leading to some moves toward decentralization. After each political crisis a new act concerning local government was passed by the Polish Parliament as a governmental reaction to public discontent (see Table 1 below). The decentralization policy was, however, abandoned every time after a relatively short period. Only since the political change in 1989 has the evolution toward decentralization taken on a different character.
Table 1.
Acts Concerning Local Government in Poland.
Year of political crisis Year of new act Next amendment
1948 1950
1956 1958 1963
1968-70 1972-75
1980-81 1983 1988
1989 1990 1994
This phenomenon of a cyclical wave of decentralization and centralization that followed is a result of a “game” between pressures for and against decentralization. The elements of the game under the communist regime were:
Pressures for decentralization:
? strong social dissatisfaction and the threat to economic growth that resulted from the very poor quality of the urban fabric: the housing shortage, the underdeveloped and weak infrastructure, and the heavily polluted environment (which centralized management was unable to resolve);
? the need for social support for political and economic policies that would make the communist regime more open to decentralization of tasks, and thus give more opportunities for the direct involvement of local societies;
? the need for less direct control and supervision, and less command-like management from the central level, which has been and continues to be broadly voiced by local governments and by many state-owned enterprises.
Barriers to decentralization:
? decentralization was perceived as a threat, as a ?rst step in the erosion of the political entity and a challenge to the overall control by the leading party;
? decentralization threatened the interests of the bureaucracy which became a very important political power;
? the economic crisis and the unbalanced state budget called for tight central control over local ?nances;
? the lack of experience and knowledge of what self-government means and what the bene?ts of a decentralized system for local communities have resulted in the lack of public support for decentralization.
The impact of particular factors has varied over time. Since the early 1980s we have witnessed broad legal openings re?ecting the of?cially declared decentralization policy. Parallel to this, however, the political structures have remained centralized.
The workers’ strikes that ended in agreements with the authorities in September 1980 began a new period in Poland. Opposition to the communist government, which found support in the legalized trade union “Solidarnosc,” attempted to reform the political system of the country. This attempt was unsuccessful and ended with the imposition of Marshal Law in December 1981. This short period, however, allowed for the formulation of a few key problems for the future period when sovereignty would be regained. One was a proposal to introduce a democratic system of local government.
A team from L«—dz University under my leadership ?rst submitted this proposal in May 1981. It was then successively developed over the next few years together with the concepts of rebuilding local democracy. During the period of Marshal Law and the following years until the end of the 1980s, while political system changes were not possible, a research program was conducted by L«—dz University, the Polish Academy of Sciences and Warsaw University under my guidance and with the active participation of Michal Kulesza. The program consisted of:
? studies of the histories of local governments in Poland, because this is a tradition we wanted to refer to;
? comparative studies of Poland and ten Western European countries;
? studies of current developmental problems in order to de?ne problems that the future democratic institutions would have to solve;
? creation of a concept of political system changes and the means for their implementation.
This research created the basis for talks with the government at a time when such an opportunity emerged. In 1988 a local government section was established under my leadership within the framework of Lech Walesa’s Citizen Committee. This section participated in the “Round Table” negotiations with the communist authorities in the spring of 1989. The Solidarity delegation1 proposed eight principles for the new system of local government:
1. the abolition of the constitutional principle of the uniformity of state authority: the local councils would only represent local communities and would be released from hierarchical dependencies;
2. creation of a new democratic electoral law;
3. re-establishment of municipal legal entity and property rights;
4. creation of a stable and controllable system of supplying local budgets, free of arbitrary state administration decisions;
5. limitation of state interference in local affairs, allowing control of the legality of municipal decisions only;
6. transfer of state administration to municipal control;
7. freedom to establish intermunicipal associations;
8. the right to juridical appeal against decisions of state administration.
The communists rejected most of these proposals and no agreement was achieved. The rebuilding of local democracy represented for the authorities a mortal danger as it upset the basis of the system. Therefore, there was no room to compromise.
On the other hand, the leaders of the opposition parties did not appreciate the ideas of local democracy enough. It is worth remembering that the Polish “revolution” was conducted by groups of intellectuals being supported by the workers’ movement, which in turn was organized by the independent trade union. None of these groups understood the real signi?cance of local government. The intellectuals concentrated on the basic values such as citizen’ freedoms, freedom of the press and association, and the necessity for economic reforms. The trade unions were ?ghting for better living conditions and social bene?ts. They were organized around factories and professions, and in terms of regions and local interests. Thus proposals concerning the rebuilding of local government were not initially considered a priority. The situation changed somewhat during the electoral campaign before the parliamentary elections, when the proposals suggested by local communities were presented and heard in the public forum.
After the elections, local government reform became a priority. The Senate in which the former opposition gained an overwhelming majority, undertook a legislative initiative. We had at our disposal a well-developed concept of the needed reform, as a result of a ten-year period of hard work. This concept was presented in the Senate and approved by the chamber on July 29, 1989, as its ?rst political decision. Soon after, within the framework of the ?rst noncommunist government, an Of?ce of the Governmental Representative in charge of Regional Government Reform was established, and I had the honor of accepting this post.
At that time we faced the necessity of making a dif?cult but crucial decision. There were two options in those early days:
1. to call local elections immediately and reform the system later;
2. to introduce legislative changes ?rst, and once the process had been completed, to call elections.
The ?rst solution was recommendable from the political point of view, since the public had demanded immediate personal changes. It was particularly important as municipal of?cers were viewed as symbols of communist authority. Additionally, serious signals came from different parts of the country that numerous activities were taking place, which were advancing the interests of individuals but not necessarily those of the public. On the other hand, the introduction of people without any experience or knowledge of the functioning of democratic institutions into the old legal and institutional structures would inevitably lead to further reinforcing these structures and creating additional barriers to their reconstruction in the future. Despite strong pressures to the contrary, a decision was made to adopt the second option.
This choice resulted in the achievement of a signi?cant change in the system in just a few months and the initiation of the evolutionary process of decentralization. Democratic and, to a great extent, independent local authorities were somewhat foreign bodies in the structures inherited from the old system, which was based on the state being organized along sections. The presence of local authorities put pressure on the old system and slowly began to pull it apart.2 However, this choice created enormous dif?culties when the new system was introduced. Estimates showed that at least 18 months were needed in order properly to prepare the reform package. This meant that local elections could not be held until 1991, and until then power would remain in the hands of the old administration. That was completely unacceptable both to the public and the political leaders. It was therefore necessary to adopt a strict deadline and assume that whatever was not completed by that time would be done during the further stages of the reform.
The package of local government legislation included:
1. a Constitutional Amendment (March 8, 1990) which introduced several amendments to the Constitution by recognizing local self-government as an element of the political system of the state;
2. the Local Government Act (March 8, 1990) which might be regarded as the local government constitution;
3. the Local Government Elections Act (March 8, 1990);
4. the Local Government Employees Act (March 22, 1990);
5. the Paving Regulation Act (May 10, 1990);
6. the State Administration Act (March 22, 1990);
7. the Local Government Duties and Powers Act (May 17, 1990);
8. the Warsaw Capital City Government Act (May 18, 1990).
The work was immense, as it required not only new acts but also amendments to nearly 100 other legislative acts. The ?rst democratic municipal elections took place on May 27, 1990. Over 146,000 candidates stood for 52,028 seats in almost 2,400 municipal councils. The following day the new political system of local government came into effect.
The system of local government introduced at the time was meant only as the ?rst step in the process of reforms.
Local self-government became recognized as “the fundamental form of organization of public life within municipalities” and a municipality as a legal entity executing public activities on its own. Local autonomy became protected by law. As a ?rst step, self-government was established on the local level only, i.e., within 2,400 municipalities. (Poland has 38 million inhabitants and covers an area of 312,000 km2.) The forty-nine provinces remained under the control of the central government. The municipal councils directly elected by the citizens became responsible to their constituents only. Each council appoints a board and a mayor as its executive body, but it is within the power of the councils to recall both the mayor and the board, at any time, by a simple majority. The mayor and the board have limited power. Most important decisions are to be taken by the councils; internal organization is regulated by municipal charters freely established by the councils. The administrative staff are appointed or contracted and can be dismissed only by the council’s board, free from any in?uence of state of?cials. The new acts made local authorities responsible for all public activities that are not assigned by parliamentary acts to other public institutions. They took control of all local public services, including public housing, land use and urban planning. Polish local councils were also allowed to conduct pro?t-oriented activities, but in subsequent years this authorization became limited. All primary schools were transferred to local responsibility by the end of 1994, as the teachers’ trade union had previously blocked any reforms in this domain. State agencies may delegate some tasks to the mayors and their administration within limits de?ned by parliamentary acts or upon agreement (e.g., marriages, births and deaths registers; civil defense including records, identity cards and census.) Any delegation of tasks also requires a transfer of adequate means to accomplish such tasks. The central government administration can control only the legality of councils’ decisions. Councils may appeal to the court if they disagree with an administrative veto. The municipal ownership rights were re-established, and municipalities acquired substantial amounts of land, buildings, public facilities, companies and other properties linked to their tasks. Municipalities should set their budgets annually. Municipal resources come from several sources, including a share in state taxes, local fees and charges, rents and property management, earnings from lotteries and events, loans and credits, and central government grants. Provincial assemblies were established in order to represent municipal interests on a provincial level. They consist of delegates of all municipalities from a given area.
In order to understand the importance of the ?rst stage of local government reform in Poland one has to remember that through it the ?ve fundamental monopolies of the state were broken:
Political monopoly. The communist state depended on the goals and politics of one monopolistic party. Since the 1990 elections local councils have consisted of members representing various parties and diverse political programs. They have not been subordinated to any one particular political power.
Uniformity of state power. This means that only the state could hold power in every area of public life. This power was not shared. Within such a system there was no room for an autonomous local government. The introduction of local self-government reduced the hierarchical dependency between local and central authorities and resulted in the municipal councils assuming exclusive responsibility for an important sphere of public life.
Property and ownership rights. The state is no longer the sole owner of public property. Municipalities are independent legal entities acting within civil law. They have a right to present their cases against the state in public courts.
Financial monopoly. There was in the past one uniform state budget, which also encompassed all local budgets. Therefore, there was no local ?nancial policy. Within the new system local governments, which had their own sources and were receiving state subsidies, were able to set their budgets, according to objective criteria and count on becoming more and more ?nancially independent from the central budgets and increasingly able to execute local policies according to the people’s needs.
Administration. The uniform state administration was one of the principal executors of central orders. The bureaucracy was also a political power supporting the communist state. Now, on the local level we have public but not state administration. Municipal councils have their own executive structures. They are now able to run and implement their own policies independent of the state administration.
The local government reform of 1990 was only the ?rst step in the process of rebuilding the state. The reform’s signi?cance slowly gained public approval. Local authorities became a lasting element of the Polish political scene. The municipalities established and joined many diverse associations. Three basic kinds of associations emerged: associations of municipalities according to their size and character; associations of municipalities based on similarities of their functions and regional associations. All of these associations are fully independent. During the work on the reform in 1989, an idea emerged to create by law a compulsory union of all municipalities. The result would have been a strong representation of municipalities, which in turn would have become a partner with the central government. That project was blocked in Parliament by members of the postcommunist parties with strong parliamentary representation at the time. In both their oral and written presentations their motivation was clearly shown. They were afraid that if a national representation of local government were to emerge and play an important political role, it would mainly consist of people who were anticommunist. So, in the end, there emerged not one strong representation of all municipalities but many smaller associations.
The most important associations are the ones that were created according to their size and character. There are four such association:
? the Metropolis Union, grouping the ten largest cities in the country;
? the Polish Cities’ Union, to which about 400 cities of different sizes belong;
? the Small Polish Towns’ Union with about 200 members, i.e., small Polish towns;
? the Rural Municipalities’ Union.
In addition, many other associations were established by municipalities based on their special functions and locations, e.g., municipalities that are located in spas, at the seaside, in the mountains, in the major forest areas, etc. Activities of these associations differed greatly, and some of them did not last for very long. There are also several regional associations, but only a few of them play a signi?cant role. This could be a result of the existence of regional assemblies that represent municipal interests in the regional forum. It could also be explained by the fact that a full understanding of regional interests has not yet been formed in Poland. Creating local governments, which had their own ?nancial resources and were to a great extent independent from the central government, initiated the formation of the entire self-government sector. The events that followed this process include:
Emergence of the real estate market. When the municipalities received state lands at their disposal, they were able to sell them or to become partners in the joint ventures contributing the land. As a result the land gained market value.
Municipalities caused the fall of many monopolistic organizations. As an example, a case could be given of the state-owned retail trade companies that dominated the market in the past. When the municipalities received ownership of the state buildings and then abolished preferential treatment in renting shop premises, the result was the closure of many state-owned retailers, which were unable to compete with the private ones.
Creation of local ?nance markets. When the municipalities set their own separate budgets, they created a need for ?nancial services for the municipalities, for municipal credit and service of many ?nancial operations, such as issuance of municipal bonds. This has resulted not only in the development of local bank chains but also in local banks becoming specialized in offering particular services.
Development of municipal investments. To a great extent these investments are directed at environmental protection.
Emergence of a private sector offering municipal services. Such services as transportation and garbage collection are being offered, although the development has been slow in this area, particularly in smaller municipalities.
Development of cooperation with municipalities from other countries. This has become especially important in areas located close to the Polish borders. This type of cooperation is especially important for changing the mentality of people—speci?cally, in their ability to develop a greater understanding of democratic ideas and functioning of democratic institutions.
Establishment of many institutions. In particular, creating institutions to provide services to local governments in the ?elds of training, consulting and legal advising.
The effect of all the above listed changes has led to the emergence of an entire sector of local self-government which includes not only of?ces for towns, municipalities and entities that are directly dependent but also many institutions that were established in order to provide services for these municipalities.
One such institution, typical of the Polish reality, is the Foundation in Support of Local Democracy (FSLD). It was established in 1989 through the initiative of a group of Polish members of Parliament in order to support local milieus at the time when self-government was being formed. This organization created a network of regional centers active in training politicians and civil servants, and established several higher schools of public administration. Over 40,000 people participated annually in a variety of courses and seminars. By the end of this year the number of people who have participated since the foundation was established will exceed 250,000. At the same time, about 4,000 students are studying at schools founded by the FSLD. These schools are recognized by the state as institutions that have the right to grant degrees and diplomas to their students. The foundation does not have a monopoly in this market. However, because of the lack of data it is impossible to de?ne the size of this market; suf?ce it to say that the number of participants in this type of training exceeds 100,000 people annually.
The reform of 1990 initiated all of the abovementioned developments. It was planned that the creation of municipalities would be followed by the establishment of the next two levels of local government. It was expected that in the following three to four years it would be possible to do just that. Unfortunately, the reality proved to be quite different. The development of the self-government sector was met with serious political resistance.
After the fall of Prime Minister T. Mazowiecki’s government, the liberals took power. They were interested in regional reform, but the model that they proposed to implement was very close to the German federative model, which was not popular with the Polish public. At the same time, the liberals in power did not adequately protect the newly formed and still quite weak municipalities. In effect, the process of decentralization, instead of gaining momentum, was considerably slowed and even halted. The next attempt at continuing the reform was undertaken in 1992 by Michal Kulesza, Minister-in-Charge of Public Administration Reform within the government led by Prime Minister Hanna Suchocka. A concept of districts as the second level of local government was prepared. However, the fall of this cabinet, after the parliamentary elections of 1993, made this program’s realization impossible, even though the legal acts had already been prepared and discussed in Parliament, and the most important act had been passed, giving to many towns and cities far-reaching rights and powers which were, in turn, to be passed to the districts.
The period of 1993–97, when the power remained in the hands of the coalition government of the postcommunists and the members of the Farmers’ Party, did not bring anything new to the reform besides the abovementioned bill concerning big cities. There was a de?nite regression in many other domains. The local governments were given many new responsibilities but without the resources needed for their realization. In effect, the ?nancial situation of many municipalities worsened considerably, because they were forced to devote a major part of their budgets to cover current expenses and to limit their municipal investments to the detriment of local communities.
The discontent of local governments was slowly growing. That is why proposals of profound changes in the political system constituted an important part of the electoral programs of the opposition parties before the parliamentary elections in 1997.
Current State Reform
Goals and Issues
Nine years of an ongoing transformation process has allowed for many signi?cant social and economic changes to be achieved. It also helped clearly to de?ne the barriers that had prevented the country from achieving further development and progress. It became apparent, however, that without vast institutional changes, further transformation and economic development will shortly be halted. Given this situation, the coalition government of Akcja Wyborcza Solidarnosc (AWS) (“Solidarity Electoral Action”) and Unia Wolnosci (UW) (the Freedom Union) made a decision to implement a few key reforms that would include: reforming public administration, public ?nances, education, the health care system, social insurance, the welfare system, police and public security, and the judicial system.
All of these reforms are interconnected and are being realized almost simultaneously—which has proved to be a great challenge. Both the coalition government and the public are aware that these reforms are necessary. The existing state structures were inherited from an authoritarian and centralized state. In effect, the still binding laws forced the central government and administration to deal with too many details and problems which could be dealt with equally well by other institutions. Lack of higher levels of local government resulted in the development of special administrative organs subordinated to particular ministries. In turn, the ministers were responsible for the activities of many thousands of small institutions and their organs. At the same time, the great resources of public initiative and activity were not used to their full potential.
Public ?nance management was not clear and understandable enough for the general public and even for many employees of state organizations. Central bureaucracy still had too much in?uence on the disposal of resources and was appropriating funds outside of public and parliamentary control. This was especially the case with non-budgetary funds where revenues from various kinds of public payments were collected. These funds continue to be dispensed by the state budget and are being managed by supervisory boards whose members are appointed by particular ministers. In practice these boards are outside of any kind of control. The scale of this problem is large; it is estimated that the expenditures of non-budgetary funds constitute over 35 percent of all public expenditures in Poland.
The health care system requires complete reform. The current system was established on the principle that health care should be completely free of charge and ?nanced by the state budget. In practice this has proved to be impossible, and the patients have been forced to assume larger and larger shares of the cost of health care. Simultaneously, the common lack of respect for money awarded in the form of grants has resulted in huge, totally unjusti?ed costs and corruption, while salaries for the medical staff remain very low.
The social security system will have to be completely transformed as well. In the past, when the Polish population was young, revenues from social security payments greatly exceeded pension expenses. At the time, the authorities used the surpluses to cover current budgetary expenses. The Social Security Of?ce completely monopolized this domain and did not function as a separate entity but as an element of the state administration. As a result, no capital for future investment was created. Now, the situation has changed. Because of demographic changes, currently every working person has to cover the expenses of 0.4 pensioner. It is quite apparent that out-payments exceed the revenues of the system and that this imbalance has to be equalized by the state budget.
The educational system was also created by the totalitarian state that wanted to have full control over the upbringing of young people and to limit the role of the family as an institution politically dubious and often antagonistic towards the state.
The judicial system, which is functioning inef?ciently, has not been adapted to play its proper role in a democratic country and also needs to be reformed. Finally, the police and the entire public security system must be completely changed, given that the past role of the police was to control citizens and not to protect them. The dramatic rise of crime, especially organized crime, has forced the government to undertake intensive activities in this ?eld. However, for the proper functioning of this system one more element becomes necessary, i.e., close cooperation of the police and the public, which would only be possible when there is mutual trust among the members of the public and the police force.
During the past nine years many signi?cant changes have been achieved in all of the above ?elds. However, these changes were the result of modi?cations of the old system and old institutions, and the state organization, inherited from communism, included so many internal obstacles and incongruities that proper development was impossible. These obstacles include:
? excessive centralization (of government),
? huge bureaucracies,
? unclear public ?nances, and
? inadequate public control over administration.
As a result, use of public resources has been ineffective. It has become clear that the series of small amendments and corrections originally enacted were only partially effective and that the time has come to undertake sweeping reforms of the state system.
The reforms that are being implemented by the Polish government constitute an ambitious attempt to ?nd practical ways of solving these problems. The majority of the reforms realized have come into effect since January 1, 1999. They are to reform the political system in such a way that it will be based on the principles of: (1) a democratic country, (2) subsidiarity, (3) effectiveness, (4) transparency and accountability, and (5) ?exibility and openness for future evolution.
In order to de?ne the range and character of the reform, a proper de?nition of the role of the state is needed. In the past, the state, which played the role of an executive organ in relation to the ruling communist party and was responsible for the realization of ideological programs, was organized in such a way as to be able to manage the economy and all public affairs, and at the same time to interfere in the private lives of its citizens. Presently, the role of the state has changed; thus the institutional structure of the state also needs to be modi?ed.
In the Polish Constitution, passed in 1997, it was stated that Poland was a country of law and that the principle of the supporting role of the state was legally binding. In effect, the main function of the state is not to “manage,” but only to create stable and secure conditions for people, companies and citizens’ groups to be active, and to support these activities so they contribute to the development of the country. It is thus clear that the state should deal only with what is necessary. It is not the role of the state to replace activities of other independent entities.
All that the state does not have to become involved in should be delegated to other institutions, which can manage such tasks more effectively. This philosophy is completely different from the one that was prevalent in communist times. The state should in a very basic way limit its functions. Until today, the range of the state responsibilities and its in?uence on the economy has been much greater in the countries of the region than in Western states. This should not be forgotten. It means not only that the economy should be privatized, but also that the state administration should be deregulated and its interference in many domains of life limited. The range of state activities and responsibilities should be drastically limited in order to be able directly to compare states’ methods of administration in countries of both Western and Eastern Europe.
At the same time, decentralization is necessary, i.e., delegating as many responsibilities as possible and leaving them in the hands of public authorities. The direction of these activities is de?ned by the principle of the supporting role of the state. However, it has to be emphasized that a true decentralization has to take place, i.e., handing over the responsibilities to entities of public administration must be done according to the law, and independence of these entities must be guaranteed by the constitution. During the communist period operations called decentralization were conducted many times, but what they amounted to, in fact, was only delegating the central government’s rights to its own regional agencies. Such a decentralization of power was not, of course, real in any sense because it did not change the basic pattern of sharing authority and responsibilities but only changed the way of executing tasks. Unfortunately, such seeming decentralization attempts are still to be found. A typical example of this was an intensive development of the administration of particular ministries that were creating their administrative agencies throughout the country during the 1993–97 period when the coalition of postcommunist parties was in power.
The reform programs concerning privatization and deregulation as well as decentralization will in the end lead to the limitation of power of the government and other central agencies. The process of implementing these reforms is dif?cult because it requires extensive structural modi?cations, and it has to surmount many obstacles including strong resistance to change. All this is proving to be very dif?cult because, at the same time, it is necessary to:? limit the range of the central authorities’ activities through privatization and deregulation;
? decentralize authority and resources;
? transform administrative structures, eliminating the system of sections and developing the territorial model of the development policy;
? increase participation of citizens in wielding power and its control.
As a result of these changes a democratic country should emerge where the role of the state is one of support. Only then will appropriate relations be formed that will allow for a true partnership between the citizens and the state, and regional and local administration.
Public administration
The ?rst and the most basic reform to achieve is the transformation of public administration. Since the system is to be decentralized it is necessary to create entities to which authority will be transferred. That is why administrative reform is the ?rst step in the process of state transformation. Members of some milieus have criticized this approach, proposing that the ?rst reforms to be undertaken should concern health care or education, the domains of public life where the effects of the changes on the public at large will be sensed more directly. But such demands are evidently illogical.
Traditionally, in Poland a three-level administrative system has been in place. It included, from the lowest level: municipalities, districts and regions. In the ?rst half of the 1970s, the leadership of the party, being afraid of the growing in?uence of regional organizations, decided to conduct administrative reform. The number of regions was increased from seventeen to forty-nine, and, at the same time, the districts were eliminated and the number of municipalities was decreased.
In 1990 the municipal authorities were granted the right to self-government. However, in the regions the central government administration still wielded power. Recently, it has been decided to go back to the old tradition. Two new levels of public authorities were created, besides the already existing, democratic and independent municipalities. In this way a three-tier system was established composed of the existing 2,489 municipalities, 308 districts and 16 regions. The sixty-four largest cities will function as both municipalities and districts. All entities will be self-governing. Each entity will have a council whose members will be elected in national elections and who will supervise administration. Each entity will have a legal status and its own ?nancial resources. Each of them will also have the right to combine into freely chosen associations and to initiate and enter into cooperative agreements with other entities both in Poland and abroad.
Municipalities, established in 1990, are and will continue to be the primary and fundamental vehicle of citizens’ communities to perform public tasks on their own behalf and on their own responsibility. Municipalities enjoy a status of legal entities, with their own independent budgets and juridical protection of their autonomy. They own ?xed assets and manage their property. Municipalities are responsible3 for all public matters of local signi?cance which are not reserved by law for other entities. Municipal tasks focus on meeting the collective needs of the communities for public services.
Districts, which came into existence as of January 1, 1999:
— are communities of citizens living in a given area,
— constitute legal entities, independent of the state, as well as of the communities,
— perform public tasks on their own behalf and are responsible for such tasks, and
— own ?xed assets and control their own revenues.
The major task of the districts includes management of public services, which cover a territory of more than one municipality.4
Regions (Voivodeships) will in turn be responsible for economic and cultural development in their geographical areas. Their tasks concentrate on four ?elds:
? promotion of economic development;
? public services of a regional character, such as higher education, specialized health services, some kinds of cultural activities;
? environmental protection and management of natural resources;
? development of regional infrastructure, including maintenance of roads, transport and communication networks.
Regions will also be legal entities, with their own budgets and ownership rights.
It is hard today to de?ne the entire range and form of functioning of regional authorities because their activities will not offer concrete services to the population. Both economic and cultural development could be supported and encouraged in many different ways, and the choice of appropriate means will belong to future governments. They will be responsible for the preparation and approval of long-term development strategies and the preparation of short-term programs de?ning ways of realizing long-term goals.
State administration will be present only at the regional level. However, the government representative (the Voivode) will not deal with management issues. His role will be to protect the interests of the state as a whole and to supervise the activities of regional and local authorities with respect to legality. The Voivode will, therefore, be responsible for all supervisory and inspection bodies (e.g., health inspection, environmental inspectors, etc.) All of these entities will form part of the state administration. Yet, only very few of these services will remain in the hands of ministries and other bodies of central administration.
Implementation of the change
Administration reform could be divided into two basic phases: legislative work and the implementation process. In Poland, because of the great pace of work, these two phases are taking place almost simultaneously. On the government’s initiative the Parliament passed bills on: (1) district government, (2) regional government, (3) state administration at the regional level, (4) administrative division of the country, (5) electoral law, (6) division of authority among the three levels of administration (modi?cation of 147 existing laws), (7) introduction of administrative changes and interim regulations, and (8) public ?nances. Following these laws the Council of Ministers issued a number of executive decrees.
However, it is not enough just to pass laws and issue decrees, since the appropriate institutional changes need also be conducted. It is clear that the ?nal success of the reform will, to a great extent, be decided by the manner in which the reform is implemented. The scale of the reform could easily be illustrated by the following numbers:
? 16 state of?ces and 16 of?ces of regional administration will be created;
? 49 regional of?ces have to be eliminated;
? 308 new district of?ces have to be established and 64 town of?ces have to be transformed into district of?ces;
? 287 regional of?ces of state administration have to be eliminated;
? many (the exact number is dif?cult to estimate) administrative entities subordinated to particular ministries will also have to be closed;
? about 10,500 institutions such as: schools, hospitals, libraries, which have been managed by the government administration up until now, will be given over to local governments.
Close to one million people are employed in all these institutions. Many of them will have to be employed by the new institutions. One of the goals of the reform is to reduce the employment in administration, but to downsize only gradually. At the same time, local of?cials have to feel that their employment is secure. It will be their role to lead the country through the dif?cult period of transition. Thus it becomes very important not to allow for any part of the old administrative staff to lose their jobs during this phase of the reform. All presently employed in the old administrative structures have received guarantees that their employment would last for a six-month period following the introduction of reforms. During this time the new authorities will decide who will receive long-term work contracts in the new institutions. For those who lose their jobs, a special program will be put in place that will help them train for new positions and then assist them in looking for jobs.
Awarding districts and regions with legal status means that these entities will have their own resources and assets needed to perform their tasks. The implementation of the reform requires then conducting a serious action of handing over property to many entities of public administration. In the majority of cases it will consist of handing over state property to district and regional authorities.
The basic dif?culty in implementing the reform remains the necessity for all these transformations to take place at the same time, since no break in the functioning of public administration is permissible. In order to introduce these radical changes on January 1, 1999, it has been vital to de?ne very clearly these transformations well in advance. That is why the prime minister created a special team for all matters connected to the implementation of administrative reform. The deputy prime minister, who also holds the Of?ce of the Minister of Internal Affairs and Administration, became the chairman of this team. The members of the team are deputy ministers of all the ministries with interest in implementing the reform. The team’s secretary is simultaneously its executive manager, and he also holds the of?ce of a deputy minister with a special of?ce at his disposal.
In each of the new regions a delegate of the government responsible for organizing the future structures of administration was nominated. The delegates prepared preliminary organizational charts of government administration services and projections of regional and district budgets. Undersecretaries of state from different ministries were nominated as government delegates so that they will be able to remain independent in their decision-making from pressures exerted by local interest groups. The new authorities started their formal functioning only on January 1, 1999, while the regional authorities, elected on November 10, 1998, immediately began to cooperate with the delegates of the government in organizing future of?ces.
Public ?nance
A thorough reform of the public ?nance system will be necessary when the state is being decentralized. The reforms in this domain were initiated in 1990 when municipal budgets were separated from the general state budget. However, the level of decentralization of public ?nances was generally judged to be inadequate. This problem recently worsened because municipalities received more and more tasks to perform but were not receiving enough additional ?nancial resources to implement their objectives.
Decentralization of the state is just one of the problems that the reform of the public ?nance system has to solve. This reform will also have to address several other matters, the most important of which is tax reform. Only a few years ago a new tax system was introduced in which income taxes were to be paid by individuals. Before that, employers paid all taxes for their employees as a lump sum. The new tax system included so many social tax deductions that it has become successively too complicated and requires radical changes. At the same time, political decisions that will de?ne objectives to be achieved by using the system of social tax deductions have become necessary. The ?nance minister proposed a radical simpli?cation of the tax system in which the majority of tax deductions would be eliminated and a ?at tax rate for everyone would be introduced, regardless of the amount of individual revenues. At the same time, the part of revenues that would be tax-free was to remain quite high. These proposals stirred up so much controversy that the tax reform was postponed for a year or two.
However, the need to limit nongovernmental funds persists. As mentioned before, these funds are directly supplied from payments of different fees and charges that are separated from the state budget, and thus remain outside of parliamentary control; provisions need to be made to increase the effectiveness of the system for payment and tax collection.
Within the framework of the current reforms, the Parliament passed two basic bills. The ?rst act regulates all matters concerning the economy of public ?nances—that is, it de?nes general principles, e.g., limits on public debt, means of preventing excessive public debt and purely technical matters concerning, for instance, undertaking ?nancial commitments or managing ?nancial resources. This act has become, in effect, a ?nancial “constitution” of the state.
The second act concerns local and regional authorities’ revenues and will remain in force for the next two years. By the end of this period different experiences will have been re?ected on, and proposals from newly elected authorities will have been analyzed. It should be remembered, that, until now, since there have been no districts and regions, there were no representatives to express their interests.
The revenues of municipalities have not undergone any basic change. These revenues consist of:
? receipts collected directly from taxes on: real estate, agricultural production, trade activities, forests, means of transportation, inheritances and other less signi?cant items such as receipts from local charges and fees for administrative activities;
? shares in state taxes, i.e., 27 percent of personal income tax, and 5 percent of companies’ income tax;
? general government subsidies paid from the state budget;
? government grants from the state budget for serving central administration objectives;
? revenues obtained from municipal assets and other entities belonging to municipalities.
Districts constitute a new level of local government, and it will be a serious task to de?ne principles of ?nancing their activities. District revenues consist of:
? one percent share in personal income tax;
? general subsidy from the central government;
? government grants to implement tasks of control and supervisory services which will be subordinated to the head of a district, and grants to perform other activities which belong to central administration tasks;
? revenues obtained from districts’ assets and other entities belonging to districts.
Table 2.
Structure of District Budgets
Revenues Expenses
Districts own revenues 4%
Government subsidies 49%
Government grants 47%
Education 46%
Public safety 22%
Social welfare 11%
Transportation 10%
Health care 4%
Administration 3%
Art and culture 2%
Agriculture 1%
Other 1%
Regional revenues come from the following sources:
? shares in state taxes: 1.5 percent of personal income tax and 0.5 percent of companies’ income tax;
? general government subsidy;
? government grants for speci?c objectives from the state budget;
? revenues from assets and entities belonging to regions.
Table 3.
Structure of Regional Budgets
Revenues Expenses
Regions own revenues 36%
Government subsidies 34%
Government grants 30%
Transportation 28%
Art and culture 22%
Health care 17%
Education 15%
Agriculture 4%
Municipal economy 4%
Administration 3%
Grants for economic tasks 2%
Sports and physical education 2%
Housing 2%
Others 1%
The general government subsidy plays a special role in the revenues of all entities belonging to different administrative levels. This subsidy represents a sum of ?nancial resources transferred from the state budget according to principles that are strictly de?ned by law. The method of its calculation vary, of course, depending on the administrative level of its recipient. But its main importance lies in the fact that although it is ?nanced from the state budget; at the same time, it supplements revenues that entities of each administrative level collect on their own. Since the method of calculating the amount of this subsidy is de?ned by law, it does not depend on the central administration’s decisions. However, the way in which it is used solely depends on the authorities of each administrative entity and is not in any way limited by the central administration. The general government subsidy should be clearly differentiated from a government grant which is a sum of money transferred by the state budget to local government to be used to achieve a clearly de?ned, particular objective. In this case the way in which the government grant is being spent is subject to the central administration’s control as an element of the state budget.
These general government subsidies have special signi?cance in the district budgets. The structure of district revenues might seem curious at ?rst sight, because most of the revenues come from government grants (47 percent) and government subsidies (49 percent), and only 4 percent of revenues from the districts’ own revenues. As such, an explanation seems necessary here. A high share of government grants in the district budget is a result of the elimination of central government administration on the district level. In its place, inspection and control services, which up until now have been reserved for the state administration, will be subordinated to the head of a district who represents the local government. These services will be ?nanced through the districts, but the ?nancial resources will be coming from the state budget so that the state needs to maintain control over the expenses incurred.
On the other hand, a high share of government subsidies in the district budgets is a way of looking for the best method to overcome dif?culties in ensuring an equal level of ?nancing in a situation where different kinds of services are spread out unevenly throughout Poland. Education constitutes the biggest expense (46 percent) in the districts’ budgets. This is a result of districts taking over all secondary schools. However, these schools are not evenly spread out. As a rule, these schools are located in towns, so some districts which include only rural municipalities will not have any secondary schools in their area. Awarding all districts the same level of tax shares would result in an unequal level of education ?nancing. Thus a separate method was developed to calculate of the amount of an education subsidy, which in turn constitutes a part of the general government subsidy. The method of calculating a subsidy for education, however, has no in?uence on the way in which these funds will be spent. This subsidy merges into a district budget with the resources coming from the district’s own revenues, and a district council can use any of these funds freely, without the necessity of providing a separate accounting for these moneys in its budget execution report. (This system will change when in the next few years an attempt will be undertaken to introduce the so-called “educational voucher.”)
It is expected that the reforms will create favorable conditions for the development of local economic activity. Because of decentralization the following are expected to be achieved:
? stability of development conditions, which will allow for long-term planning of economic activity;
? direct involvement on the part of local authorities, especially the regional ones, in supporting local development. These authorities will bear political and constitutional responsibility to do just that;
? increase of public control which should lead to a decrease in bureaucracy and an increase in the public authority’s effectiveness;
? more transparent public ?nances which should help to eliminate corruption.
Introduction of the new rules also means that the public ?nance system will become signi?cantly decentralized.
Table 4.
Approximate Structure of Public Finances
Before the reform After the reform
(approx)
Central budget 76% 55%
Municipalities 24% 24%
Districts – 7%
Regions – 2%
Health care funds – 12%
Today, it is dif?cult to predict to what extent the reforms will ful?ll our expectations. It is clear, however, that the effects of the reform can only be evaluated after enough time has passed for the public fully to understand its meaning and learn how to take advantage of the new opportunities. Experience has taught that it is easier to change laws and reorganize institutions than to change people’s mentality and behavior. Changing society takes time too.
Education
The planned reform has a complex character and is directly connected to public administration reform. The educational system reform includes: (1) changes in organization and in the supervisory system, (2) regulations concerning the educational process, and (3) regulations concerning work conditions and the professional status of teachers.
The reform of education’s organization is above all, as in other domains, to make the system clear, to introduce an unambiguous division of duties and responsibilities and to signi?cantly increase citizens’ participation in decision-making. At the same time, the new system is designed to ensure equal access to schools for all citizens and to set equal quality standards of education throughout the country.
The ?rst principle entails full separation of the institutions that manage schools from the institutions that supervise teachers and educators. The entities of the territorial government (municipalities and districts) will take over schools, which have been controlled by the state until now. Besides these schools, others will also exist, such as schools owned and managed by different institutions including churches and religious communities, associations and private people. However, it is safe to assume that the majority of educational tasks will be given to local governments. These entities will have the right to appoint educational councils as public bodies that will allow local communities to have in?uence on educational policy in a given area. All functions de?ned as supervision of teachers and educators will, however, remain in the hands of state administration.
According to current practice, education of children in kindergarten (three to six years of age) will conclude with a yearly course that prepares children to enter primary schools. Primary school will last six years (children from seven to thirteen). Currently, it takes eight years. Education in the new type of primary school will be closely connected to upbringing and will be directed at the general development of children, in close cooperation, whenever possible, with parents.
Upon completing primary school a student will go to a three-year long middle school, (13-16 years of age). In this type of school, education will encompass basic arts and sciences. Introduction of a six-year primary school and three-year middle school is supposed to adapt schools to the needs of a given group of students in terms of their age. Additionally, a student facing the choice of further differentiated education will be older, i.e., sixteen instead of ?fteen, as is the case currently.
Middle school graduates will have the possibility of choosing either a three-year long high school (16-19 years of age), or a two-year long vocational school (16-18 years of age). Both types of school comply with the constitutional duty of every citizen to remain in school until the age of 18. High school, which will offer different educational programs, will allow its students to obtain a high school diploma and to prepare to enter university. High school graduates will enter university in order to obtain BA or MA degrees, or to get specialized education at a post-secondary vocational school where during a one or two-year course students will obtain professional quali?cations at an intermediate technical level.
Together with these organizational changes, a complete transformation of educational programs, their content and methods, will take place in order to adapt them to new requirements. The communist inheritance in this domain makes the upbringing of a new generation, whose members should properly understand the values of democracy and be ready for new challenges and European integration, very dif?cult.
Decentralization of the school system increases the signi?cance of the system of supervising teachers and educators’ in order to maintain a standard level of education. A new national system of objective evaluation of the results of education will be created. Every type of school program will end with an examination whose results will be evaluated by commissions independent of the schools. The subjects of the examinations and criteria for evaluating the results will be decided upon by local administrations under the supervision of the National Education Ministry. The results of these examinations will allow for the evaluation of schools in terms of the quality of education they provide. If this evaluation proves to be negative, the government administration will have the right to intervene.
The test at the end of primary school will re?ect the level of a student’s knowledge and skills. Based on the results it will be decided if students, in order to continue their education, need to take additional courses or if they require individual assistance from teachers. The examination ending lower high school is to facilitate the selection process of higher education institutions. The high school exam will lead to a high school diploma that, in turn, will bestow the right to enter university.
Educational system reform is directly connected to administration reform. As already mentioned, both primary schools and middle schools will become the responsibility of the municipalities, and high schools will be managed by districts; these local governments will be responsible for the realization of the constitutional duty to provide free education to all children until the age of 18. Schools will belong to different owners, but all must be guaranteed equal rights under the Constitution. This requires a basic change in the system of ?nancing education including the elimination of a dangerous relic of the past. In the communist system state ownership was privileged over private ownership. Until now, in many cases, state institutions have maintained their privileged position, and this is true of the educational system. In order to change this situation the introduction of a so-called educational voucher program is being considered in which public authorities will allocate a certain amount of money for the education of each child. This money will be handed over to the school to which parents decide to send their children so that the money will follow the child. All schools, whether public or private, will have the same rights, and parents will have the freedom to select a school for their children without extra payments.
Health care system reform
The transformations of the state system, initiated after 1989, were primarily concentrated on political and economic priorities, leaving the sphere of social services, such as health care, education and pension insurance, without major modi?cations. Subsequently, the living standards of the public have not been greatly improved. Now an attempt to improve the situation has been undertaken. Social reforms will be introduced together with the administrative reforms of the country. When the reforms are fully implemented, the transformation process of our country will end.
Special attention has been paid to the terms of the health care system reform. The system in its present state can no longer be sustained; decreasing access to and low quality of medical services make citizens feel that their health is not well protected nor well taken care of. The main reasons for this status quo include:
? lack of adequate ?nancing for many years;
? centralization and bureaucracy of management which means that even when spending on health care is increased, the situation does not improve;
? lack of incentives (e.g., ?nancial ones) to improve poor work ef?ciency;
? the growing presence of a “gray market” as a result of the widening disparity between increasing needs for medical services and the possibility of obtaining them within the existing system;
? the low salary range of medical personnel that does not in any way re?ect the responsibilities and the amount of work required of them.
Changing the method of ?nancing of the entire health care system was selected as a key factor in transforming the system. That was the direction led by the National Health Insurance Act of June 2, 1997, which was passed by the previous Parliament. At present the reform is being implemented and adapted to the new administrative structures and divisions of the country. This reform entails the establishment of separate institutions ?nancing medical care for all those insured. These institutions, the so-called “Patients’ Funds” (Kasy Chorych) come from the prewar tradition. The result will be a separation of the institutions that ?nance health care, which will buy services for their clients from hospitals and other health care providers. This constitutes a serious change in the present system, in which hospitals and other facilities offering medical services are directly ?nanced from the state budget and are not particularly motivated to increase their ef?ciency and effectiveness.
At the same time, the state is giving up its monopoly in the ownership of hospitals and other health care facilities. Only teaching hospitals (ones with close ties to universities) will remain in the hands of the state. All other health care institutions will be handed over to local authorities. Founding new private hospitals and clinics, as well as private medical practices, will be allowed.
Initially 16 regional “Patients’ Funds” will be created. Each one will cover one administrative region. A fund will be managed by a council whose members will be appointed by the regional councils. In the future more funds could be established, e.g., special funds for certain groups of professionals, provided that at least 500,000 people wish to create such a fund. Presently, there are initiatives to form a separate fund for the army and the police.
The activities of the funds will be mainly ?nanced from the compulsory health insurance premiums paid by working adults, the amount of the premium being set by law at 7.5 percent for each person.
These premiums will be collected as part of the personal income tax and directed to the fund previously chosen by each taxpayer. These premiums will not be the only source of health care ?nancing. In addition, the state, from its own budget, will be required to pay for the following expenses:
? ?nancing programs of public health, including epidemiological services, hygienic inspections, prevention;
? educating medical staff and ?nancing medical research;
? de?ning standards concerning medical services and their supervision;
? supervising activities of all institutions that perform health care services;
? ?nancing national health care investments.
Health care premiums for people with low incomes and highly specialized medical operations (e.g., organ transplants) will also be paid from the state budget. Both municipal and district authorities, as owners of hospitals and other places offering medical services, will have to cover the costs of investments and maintenance of buildings from their own budgets.
In order to become a member of the new system, a patient will have to join a selected “Patients’ Fund.” Initially, every citizen will become a member of the regional fund in the area of residence. After an initial period, it will be possible to move to another fund, especially in cases where other funds are able to offer better services.
A patient will, according to the contract signed with his or her fund, choose a family doctor and health care institution. The fund will then sign contracts with selected doctors, or with their group representative and the appropriate health care institutions. The fund will cover all medical expenses as de?ned in the contract of its members. The costs of medical services considered to exceed the limits set by the contract will be covered either by the patient or by her own additional private health insurance. (The extra expenses will also be covered by the state budget in some special cases.)
All citizens have the right to use the national health insurance system, no matter the amount of the premium paid by them. A premium of the person insured will guarantee services to all his or her ?nancial dependents.
Hospitals and other health care institutions will receive payments for the services and tests performed according to prices set by contracts. Better health care institutions will be able to attract more patients and thus increase their revenues. This will result in the emergence of a competitive market of medical services, which will force its participants to increase the quality and the range of services offered. Not only will the system become more ef?cient, but also the salaries of doctors and medical staff will increase.
The entire system will become more transparent and understandable. It will be strictly controlled and supervised by:
? central medical services;
? regional authorities supervising patients’ funds;
? local authorities, which will own hospitals and other health care institutions;
? patients themselves, who will know exactly where their premiums are going, and thus will expect appropriate care for their money.
Pensions system
It might surprise the reader that this paper describing decentralization and administrative system reform also discusses the pension system reform. However, the state system and especially the system of public ?nance remain closely interconnected. Increasing the pressure on one of them affects the remaining systems, and a “domino effect” could result in the fall of many systems if just one breaks down. The pension system that has been in place to date could easily pose a serious threat in the future and destabilize the entire state administrative system.
The present pension system in Poland is based on the “generations’ contract.” In such a system those currently employed pay pension premiums, which are then immediately channeled to bene?ts to present pensioners. When the working people of today retire themselves, their children’s premiums will be used as payment to them. A direct ?ow of money between the generation of children and the generation of their parents sustains the “generations’ contract.” If the number of working people well exceeds the number of pensioners this system has a chance to work. The problems begin when the number of unemployed increases and, at the same time, the society ages. A crisis results in the system, as the current premiums do not cover the pension bene?ts payments.
The process of an aging society—characteristic of countries with high development levels—is also beginning to happen in Poland. According to demographic forecasts, in the year 2000, 16 percent of the Polish population will be older than 60 years of age, in 2010 this number will be 17 percent, and in 2020 it will rise to 22 percent. Already, today, the difference in the number of people paying premiums in relation to the people who receive pension bene?ts is smaller: in 1990 for one pensioner there were 2.2 working people; in 1995, 2.17; in 2005, 2.09; in 2010, 1.94; in 2015, 1.8; in 2020, only 1.76.
If the present system were to be maintained only three options would be possible:
? to increase social insurance premiums, already one of the highest in the world (presently it amounts to 45 percent of the basic salary, but in order to compensate for the increasing costs of bene?ts it would have to be raised to 58 percent by 2005;
? to increase budgetary subsidies to the Social Insurance Fund, but the other budgetary expenses would then have to be lowered (e.g., education and health care expenses); or
? to decrease pension bene?ts.
None of the above listed solutions is acceptable for economic or social reasons.
Most Poles feel that the present pension system is unjust and ambiguous, and that it does not ensure a feeling of social security and the promise of decent revenues in old age. The reform that is currently being introduced is based on three elements.
The ?rst element constitutes a basic pension paid out as it has been up until now from the central insurance institution (ZUS), being ?nanced from current premiums of all working people. Because of strict registration of premiums paid into personal accounts, this pension will be closely related to the job seniority and salary of the person who pays the premiums.
The second element includes a pension paid out of national private pension funds, which would receive a part of the premium to be collected and deposited in individual accounts, then invested and increased.
The third element would be a pension from a voluntary old age insurance policy purchased from different insurance agencies, company and professional pension plans organized by employers and mutual insurance societies.
Social assistance
Economic transformation poses an economic threat to large groups of society. Many companies are closed down, unemployment rises and ?nding another job requires new skills and quali?cations that many people are unable to obtain. This results in social frustration and pathological phenomena. The present coalition government considers the strengthening and stabilization of the role of the family as one of its priorities. Public dissatisfaction and discontent pose a great threat to the entire process of reform. Some discontented social groups could initiate energetic protests that could stimulate other groups and thus effectively halt further reforms; therefore, an ef?cient social welfare system has a key role to play.
Changed laws concerning social help, which came into effect on January 1, 1999, introduced far-reaching decentralization. State administration will hand over many of their rights and responsibilities to local governments. Within the district administration system, Family Assistance Centers will be created, which will not only perform district tasks in this domain, but will also take on the implementation of central programs. The tasks to be performed by the centers will include: managing and maintaining welfare “homes,” assisting the needy, organizing social workers services and training, and preparing local social welfare programs.
The decentralization program of social welfare is based on the obvious truth that the local authorities know better how to effectively help their people than the central government does. However, putting this into practice will not be easy. On the one hand, it requires the elimination of bureaucracy, which is always met with resistance; on the other hand, it will also have to break with certain past stereotypes, according to which a representative of the central authority seems to be more trustworthy than one from the local government.
Public safety
Any period of transformation brings in its wake certain threats to public safety. Rising crime, including organized crime, constitutes a serious problem and source of fear. The reform of the judicial system, the police and other public security services becomes a necessity. In this paper I will not discuss in detail any of these reforms because they are extremely complex and are not the subject of this work. Instead, I will mention only a few important aspects.
The reform of the judicial system has to be conducted because of the need to adapt not only to the changes introduced by the state reform but also to the European standards and to international conventions that have recently been signed. This reform includes:
? a structural reform of courts and district attorney’s of?ces in order to adapt them to the new administrative division of the country;
? changes in sharing authority according to jurisdiction, which will also include creating the lowest level of courts, the so-called municipal courts, which will take over small cases that have until now been resolved in an administrative procedure;
? changes of the penal code and penal action code;
? reform of the prison system and other reforms.
The reform of the police system is also being implemented to increase the effectiveness of the police by decentralizing them and making them more closely connected to local societies. Although the uniform structure of the police as a state organization is being preserved, the participation of local governments in supervising the activity of local police units is being increased. This way a manager of the district administration will have in?uence on appointing a district police commanding of?cer and will have the right to monitor his work. In addition, other changes have been introduced, i.e., limiting bureaucracy and moving larger number of police of?cers to the ?eld, while reducing the number of people working in of?ces and police headquarters.
New laws regulating the activities of authorities in crisis situations are also being introduced. Experience gained during the last years’ disastrous ?oods showed that the current bureaucratized administration is not able to act effectively in a crisis. New laws clearly de?ne the types of activities to be engaged in at the time of natural disasters. The representatives of local governments will now receive almost dictatorial rights but will bear the full responsibility for solving the crisis. They will thus gain the right to demand assistance and order action from all state institutions, including the police and the army. The ?ood of 1997 showed that the state organized from the top down, when each action demanded consent from different state ministries located in Warsaw, was not able to provide basic security to its citizens.
Dif?culties and Problems in Implementing the Reforms
Parties, which form the present ruling coalition, have expressed in their electoral programs the clear political will to implement deep reforms in the state system. The public supported these plans in voting for these parties in the national elections in 1997. However, will alone is not enough to realize such sweeping changes. The reforms have to be implemented, and serious resistance and barriers have to be overcome and dealt with in order to realize these reforms. It is too early to conduct a full analysis of these barriers. However, certain contradictions in opinions and con?icts of interests have recently surfaced. It is extremely dif?cult to realize initial plans to their full extent. Contradictions and con?icts force departure from initial proposals, and the ?nal shape of the reforms is ultimately the result of both compromises and resistance met during the implementation process.
What are the basic contradictions and con?icts then? They could be divided into two groups. The ?rst includes political con?icts the second, anti-reform activities of interest groups that feel threatened by the reforms. Separating these two types is not an easy task. Interest groups have always had strong in?uence on behavior and activities of different politicians, and they in turn have often looked for support among groups that have been characteristically afraid of change. The present ruling coalition consists of two parliamentary clubs AWS (“Solidarity Electoral Action”) and Unia Wolnosci (Freedom Union). Together they have 242 seats in a parliament that has a total of 460 seats. The AWS, a leading political power, is not based on one party but on an alliance of over 30 political organizations, which came to an agreement, formed a block and won the elections. Many parties are represented in the AWS. They can be divided into three basic groups representing the following views: national-Catholic, representing the Right; liberal-conservative and a Christian-democratic group based on the trade union “Solidarnosc.” The differences in understanding and interpreting the program’s principles proved to be the source of internal con?icts right from the beginning. As a result, twenty members of Parliament left or were expelled from this club for lack of party loyalty and discipline. A further decrease in the number of club members can mean the loss of their majority position in Parliament. This situation encourages different kinds of pressure and political blackmail.
The present opposition consists of two parties formed from the previous coalition that was in power between 1993 and 1997. It includes the SLD (United Left Alliance) and the Stronnictwo Ludowe (SL) (Farmers’ Party). The Extreme Right also belongs to the opposition; it only has four seats but cooperates with those AWS members that left their party.
The president also plays a special role. He has the right to veto parliamentary bills, and in order to override his veto, a three-?fths majority of parliamentary votes is needed. The present coalition does not hold such a majority. The president is a previous leader of the Postcommunist Party that presently forms the opposition.
Political confrontation takes place on many levels. The ?rst one includes interparty con?icts within the ruling coalition. In the parliamentary debate about the state system clear differences emerged between the representatives of the national-Catholic faction and representatives of the other factions, as well as among the members of the second coalition party, the UW. The MPs representing the national-Catholics are against the decentralization of the state and the creation of districts and new regions with strong local authorities. They also oppose Poland’s joining the European Union, as they fear that the country might lose its national values. During the debate they supported the proposal to limit the authority of regional governments, especially in the domain of international cooperation. They also demanded an increase in the number of regions, rightly claiming that smaller regions would be weaker in relation to the state administration. The confrontation inside the party was very strong. In order to arrive at a compromise, the authority of regional governments was limited and the supervisory rights of the Voivodes (as the representatives of the central government) were increased. Additionally, it was agreed to modify the government’s proposal concerning the administrative division of the country and to increase the number of regions from twelve to ?fteen.
The opposition parties in an obvious way tried to delay the reform and compromise it in the public’s eye. The Farmers’ Party has always been against change. The United Left Alliance understands the necessity of reforms and is glad that these changes are being implemented by others. The SLD would like to achieve a double aim: on the one hand, it would like to make the reforms possible and, on the other hand, it would like to create an impression that the present ruling coalition is not able to do this properly and that only the left party has the public’s interests at heart. Additionally, there is a feeling among SLD members that not being in power during the time of reforms gives their party another advantage, i.e., the public will not have the chance to feel important bene?ts coming from the reforms before the next elections, so people will vote for the present opposition. The opposition attacked many of the government’s proposals; it concentrated on the number of regions and supported protests of the local elite in cities that will no longer be the capitals of the regions. The opposition demanded the creation of 17 regions.
The president, although ideologically tied to the opposition, would like to play the role of superarbiter and thus increase his personal electorate before the next presidential election in 2000. During the ?rst con?ict concerning the selection of the date for local government elections, the president supported the parliamentary majority against the protests coming from his old party. However, when it was time to determine the exact number of the new regions, the president supported the opposition and vetoed the bill previously passed by the Parliament. In addition, he made a further move and decided to tour the cities that, according to the governmental proposal, will no longer be the capitals of their regions.
The coalition did not have enough votes to override the president’s veto. In effect, the whole legislative procedure concerning the administrative division of the country had to begin again. Under the pressure of time, the ruling coalition had to compromise with the opposition and agree to the creation of 16 regions. The compromise allowed the new version of the bill to be passed in two weeks and to keep the original schedule of legislative work, so the elections could take place as planned.
This example was only one of many con?icts and confrontations going on in Parliament. The legislative work took place during the beginning of the electoral campaign, which created an additional source of con?ict and pressure. The political parties that form the AWS political block would like to emphasize their separate identities and political programs. Not all of them will enter the local and regional elections in the same block. Because of differences in regional spheres of in?uence, different local coalitions are being formed.
The second group of the reform’s opponents come from groups that are afraid of losing their in?uence. The con?ict concerning the administrative division of the country was just discussed above. The changes in this division will result in a smaller number of regions, and many of the old regional capitals will lose their of?ces. Certain groups in these cities ?nd themselves particularly challenged by the reform. Local administration employees became especially active as they feared either losing their jobs or, in the best case scenario, being moved into positions of lower pay status and in?uence. To pacify them, the government guaranteed their short-term employment and initiated a special assistance program to help those who will have problems in the future. However, during the parliamentary debate on the reform, these protests were so strong that they were effectively used by the parliamentary opposition to block the reform.
Together with the current local administration employees, other groups representing the local elite, also afraid of losing their prestige, in?uence and opportunity for future development, protested against the reform. The public still identi?es prestige with the represented level of administration, another legacy from the past when the administration decided almost everything. The ?ght to create additional regions took on different forms including street marches, blocking of national highways, petitions and even threats.
The employees of the central administration have resisted the reforms in perhaps the strongest, although not the most spectacular, way. It is clear that decentralization will limit the in?uence of bureaucracy by decreasing its number of personnel and access to budgetary resources. Although in the present stage of reforms transformation of the ministries and other central institutions is not being planned, this will have to be conducted in the near future. Already today the in?uence of particular ministries is being restrained, e.g., many ministers have lost the right to appoint managers in those institutions that will be handed over to local authorities. That is why the representatives of many ministers have used different methods to limit decentralization and to maintain different types of funds and institutions managed and subordinated to the central authorities.
The complexity of the situation has to be emphasized. At present, the institutions whose authority and rights are being de?ned, do not as yet exist. The political groups that will stand behind these institutions have not yet been formed. Thus there are no groups to represent the interests of future districts and regions. Presently, in Poland only municipal governments exist. But the municipalities are not particularly interested in creating strong districts and regions, because they are afraid of their own rights being curtailed by the new entities. Some municipalities’ leaders say directly that it would be better for the central administration to maintain some of its authority instead of handing it over to the districts, as this might prove detrimental to the municipalities’ interests.
So, in the end, the ?ght for decentralization and strong local government is being led by some politicians of the center parties, for whom, it is said, local government is a hobby. The ministers of some departments are in an especially dif?cult position. As politicians belonging to the ruling coalition, they have to implement the reform. As members of the central government they make collective decisions about decentralization. At the same time, as a result of these decisions, they limit their own in?uence and are under constant pressure from their administrative staff, which is interested in blocking the progress of the reform. Thus they ?nd themselves in a vicious circle of contradictory interests.
The ?nal shape of the reform will result from a compromise. However, the most important effect of the reform will be the creation of local government entities, because the new regional and local governments will form a serious political force that will ?ght for more rights, i.e., for future decentralization, in the future.
It would be very dif?cult to evaluate the entire reform and its effects today. The Council for State Political System’s Reforms prepared, on the prime minister’s demand, an evaluation in which it positively assessed the entire reform as being conducted according to the principles of democracy and subsidiarity. It is clear that during the reform implementation process and also later when the newly elected local governments will begin to function, serious problems will appear that will have to be solved. Many of them will require amendment of existing laws. So, the political system of the state will never be decided upon in a ?nal way. Rather, it will evolve together with the development of the country. It is true that during the transformation period it will be evolving much faster. And, from the point of view of accelerating the process, the present state of the administrative reforms in Poland should be considered a success.
Conclusion
The state reform of 1998 is only one of the steps on the road to restructuring the state. This reform is based on serious experiences that have accumulated during an almost ten-year-old transition period. At the same time, the reform has been providing answers to problems that have been accumulating. However, solving one set of problems creates new challenges. The state and society together constitute a highly complex system, which never remains at rest, but needs instead to be continually restructured if it is to follow the world in progress. Even after implementing the current reform, new and further changes will be necessary. These will prove more essential because in the current period it has been impossible to implement the initial guidelines of the reform to their full extent. Because of the reform, many different interest groups felt threatened; various initial objectives had to be relinquished and certain compromises had to be achieved.
There is no doubt that as a result of problems and dif?culties which will appear during the period of the reform’s implementation, it will become necessary to further amend existing laws. It should be remembered that when the reforms were being prepared, the regional and district authorities did not exist, so that there were no bodies to represent these authorities’ interests. As a result, many of the bills passed could prove to be very dif?cult to accept. The actual form and means of activities performed by particular institutions will then have to be created.
It is dif?cult to predict what the next steps will be on the road to transition in Poland. However, even today, certain problems that will have to be resolved appear clearly. The ?rst is the necessity to reform the central government and administration. Decentralization means that the ministries will have diminished responsibilities and resources; they will have to limit the employment of their staff and adjust their structures appropriately.
New forms of activities will also be necessary. While in the past the main activity of the government consisted of issuing orders, now it will also have to include negotiating decisions. The best example of this is the organization of the regional political system. This is a problem that urgently needs to be solved in the very near future. When the principle of central planning was dominant in the past, this type of politics scarcely existed. Today, however, regional politics will be based on negotiation and joint agreements concerning common aims and objectives among different bodies, which will be to a great extent independent from one another. Thus it becomes necessary to develop new forms of cooperation, con?ict resolution and joint ?nancing of common aims by institutions that remain independent from one another. The new system must be based on mutual respect for diverse objectives and priorities represented by different autonomous bodies.
Changes in social behavior have been taking place at the same time as the state transformation process. Ideally, both processes occur in harmony, so that the differences between the restructuring of the state and the way that society perceives this process are not substantial. The commercialization of public services is one case in which there will de?nitely be social con?icts. Under the socialist system, state propaganda told people that each citizen had the right to use social services free of charge, or with minimal payment; society still treats social services in domains such as health care, pensions, education and even housing as something granted to them by law. Today, we would like people to understand that social services are products that have to be paid for. It is a concept very dif?cult for many people to understand, even apart from the question of whether people using a social service will be directly paying for it or the payment will come from their taxes. However, the effectiveness of the reform process is based on this concept.
Finally, the reforms will require that personnel become truly professional. The positive effects of the reform will not be achieved without the purposeful, consistent and effective work of employees. One of the main assumptions of the reform has been that when the responsibilities for each public domain are clearly de?ned, the requirements concerning ef?ciency and effectiveness at work will also have to be raised. The need to upgrade professional skills and quali?cations will follow as a result.
All of these problems will require constant and careful observation of the reform implementation processes. At the same time, it will also demand that many activities be initiated, in order to adapt the state system to newly emerging conditions. The transformation process is continuous; just as unceasing is the development of technology and organizational knowledge, or the process of social transformation.
Notes
1. I. Byczewski (secretary), S. Jurczak, A. Kowalewski, M. Kulesza, W. Panko, J. Regulski (chair), Z. Rokicki, J. Stepien, H. J. Stepniak, J. Zdrada. As assisted by experts: M. Budzynski, M. Gintowicz-Jankowicz, A. Klasik, T. Dybowski.
2. The key role of the independent local authorities in the process of changing the political system of the country will be discussed in more detail in a book currently being prepared under the direction of Jerzy Regulski on the history of the development local democracy in the period 1989 -1998.
3. In particular, municipalities are responsible for:
– land management and planning, zoning and local protection of the environment,
– local roads, bridges, streets and squares,
– water supply, sewage systems, including disposal and treatment,
– maintenance of cleanliness and order, as well an land?lls, and solid waste disposal,
– electricity and heat supply,
– local public transportation,
– primary health care centers and social welfare centers,
– municipal housing,
– kindergartens and primary schools,
– culture,
– sports and leisure,
– public markets,
– maintenance of municipal buildings and public facilities.
4. The basic tasks of a district are as follows:
– management of secondary schools, and schools for handicapped children,
– management of hospitals,
– sanitary and epidemiological supervision,
– public order and safety,
– supporting cultural institutions whose activities exceed the municipal level,
– district roads construction and maintenance,
– development control and land register,
– water management and environmental protection,
– ?ood and ?re precautions, natural disasters prevention and management,
– ?ghting unemployment,
– protection of consumer rights,
– maintenance of district facilities and public utilities.
The above two levels of local government will deal with the provision of direct services to the population. All services and utilities, currently in the hands of the state, will be transferred to these governments.