“FINANCING CROSS-BORDER COOPERATION”	Agenda Summary of discussion List of participants

AGENDA

SUMMARY OF DISCUSSION

Introduction – Armin Schabus
Specification of the workshop agenda – Marta Horká
Introduction of the participants and their questions and topics to discuss
Elfriede Kober – ERP Fund, Austria

• if there is a separate account for European money, it is easy to follow how much money has flown through and also the interests
• HU, SI: money for final beneficiaries is pre-financed by state budget after first-level control. IB sends the payment request to the ERP Fond and after 2nd level control, the money is paid by EU and transferred back to the budget
• the monitoring system includes a detailed plan of the amounts equivalent to the single measures so you can monitor in which measure the projects do not draw the allocation

FINANCIAL FLOWS
- pre-financing is actually “working capital”
- interim payments – 3-5 payment requests per year (request to the European Commission), Austria: after payment of 50% „liquidity“ new payment from EU
- final payments – after final report, 5% ERDF must be pre-financed
Important is the correspondence of data in the monitoring system (Austria, Czech Republic, Slovakia, and Hungary) with the real progress of implementation. All data have to be put into the central monitoring system – if not, no money… Czech Republic has its Sub-paying Authority that asks for payments, and then sends the request to the Austrian Paying Unit (Slovakia and Hungary directly to the Austrian Paying Unit).

TRANSFER OF EUROPEAN MONEY

• usually 6-8 weeks after the sending of the payment request (exceptionally 2-3 months)
• money is calculated in accordance with the financial plan. That sometimes means that less money then required is obtained (e. g. if more private funds spent – Austria only), it is necessary to calculate the national financing as soon as possible and put it into the system, so that the share of ERDF-funs can be calculated. If the national financing is not in the monitoring system, European funds are cut down.

N+2 RULE

• budget of the appropriate (first) year must be spent till the end of the third year at the latest
• cumulative sum is relevant, considered is the overdraw of the last year
• calculated on programme level, not in the framework of one measure

How to ensure financing according to N+2 rule:

• most important is the implementation of individual projects
• reports must be done until October or November but their submission has to be spread out over the whole year, otherwise the reports come at the same time (eventual delays complicate the situation, there is usually no time to contact the project owner).
• the best information source is the monitoring system!
• see allocation table from Ms. Kober

N+2 RULE ON PROJECT LEVEL:
What shall be consulted with the applicant:
- implementation schedule of the project
- milestones
- what shall be proved and how

Avoid projects with long duration (especially large projects). Make phased projects!
Interim payments 3-4x per year, not to accept projects longer than 2-3 years
Pay attention to exact formulation of the Contract.
Provide national pre-financing – pre-financing by EU is not possible.
1st Level Control and also the on-the-spot inspections shall be made swiftly so that the money can be spent quickly.
Compare the data in contracts with the programme deadlines.
Fast monitoring is crucial.

Example (Austria, EU co-financing 50%):
monitoring system statements – exact amounts: how much shall be spent and when
Contract appendix –implementation schedule, changes.
Recommended overbooking – 10 %
Further „reserve“ amounting to 10% is made by contracts with substitute applicants (project implementation is started together with other projects), e.g. EU co-financing is fixed to 25% and additional 25% only in case that there is a surplus of European money.
There are two approaches to the interim payment financing – to pay higher percentage at the beginning of the project and when the project draws to the end (so the amount of the EU money is already clear), to use the national financing only). In this case, there is a risk that the project would be unfinished and that the European part would be overdrawn – there must be a way, how to put it into the monitoring system. The other possibility is to start with lower percentage of co-financing and increase it at the end of the project.
In Austria only individual projects with the implementation period until the end of the year 2007 are accepted now.

CO-FINANCING OF INTERREG IIIA PROJECTS

The applicant makes requests to the appropriate ministry on the federal level and to the responsible department on the regional level. The ministry (or department) decides if the project is in accordance with its strategy and if there are sufficient financial resources.
Carinthia – the regional government has a budget for INTERREG IIIA projects, the decision about government’s support is made by a special commission.
Italy – there is fixed distribution of finances: 50% EU, 35% national, 15% regional, the regions pre-finance all projects by 100%, then the money is paid by the Ministry of Finance; Italy has one budget for European money but the authority to decide about projects is on the regional level.
Austria: there is not one budget for co-financing European money. The financing flows from ministries on federal level and from regional governments.
Slovenia – pre-finances 100% of the project from national money. Financing: 75% EU and 25% national money (but if the applicant offers his own co-financing, he gets higher rating).

FINANCIAL REALLOCATION IN THE PROGRAMME FRAMEWORK

The last changed financial plan of priorities and measures must be sent to the European Commission in October/November 2006. It is important to be realistic and make all the important financial changes because this is the last possibility to change allocation on the measure in this programming period. If it is clear that one region is not able to use its allocation, the money should be offered to other regions (but the agreement of regions might be more difficult than reallocation made by European Commission). During the year 2007 there should be a „Working sheet“ from the European Commission available that will describe the procedure of financial plan changing.

PROFIT AND INTEREST IN THE FRAMEWORK OF A PROJECT

Profit from events organized during the project implementation must be always deduced from the grant.
Profit from infrastructure projects in its operational phase: e. g. building of tollable road – if the net-income is higher than 25%, the EU financing is decreased to 50%.

Interest is used either for bank transfers between countries or deduced from the grant – there is not a standardized approach.

FINANCIAL FLOWS IN THE NEW PROGRAMMING PERIOD

• N+2 rule
• one paying unit – one programme
• European money will be held as public money (in Austria nowadays = public as well as private money), 75% EU financing for all countries, it means min. 25% “public” money
• shorter terms – plans and deadlines for programmes
• „lead partner“ principle

LIST OF PARTICIPANTS