Brennan Report - Department of Health and Children

Appendix 4The most detailed element of the Letter of Determination relates to new developmentfunding. The new development funding is additional funding available to health boards forservice improvements. All other funding is committed to fund existing services together withthe full year costs of services begun part way through the previous year. The funding isallocated on an incremental basis, with the detailed analysis and commentary in the Letter ofDetermination focused strongly on funding for new initiatives. As such, health boards’ ServicePlans tend to concentrate on new services rather than on the core or existing services, whichinvariably account for over 97% of the total cost of services delivered by health boards.There are a number of agencies, other than the health boards, that receive funding directly fromthe Department of Health and Children. These agencies are funded from a separate VoteSubhead (Subhead B.4 for 3 agencies, and Subhead F for the majority of the remainder). Thedetermination process for these agencies mirrors that of the health boards, althoughresponsibility for issue of the letters of determination rests with the relevant line divisionwithin the Department of Health and Children (i.e. Food Unit has responsibility for thedeterminations for the Food Safety Advisory Board and the Food Safety Authority of Ireland;Personnel Unit has responsibility for Comhairle na nOspidéal etc.).Service PlansUnder the Health (Amendment) (No.3) Act, 1996, health boards are required, within 42 days ofreceipt of their Letter of Determination, to adopt and submit to the Minister for Health andChildren an annual Service Plan, outlining the planned activity which they will deliver for thefunding they have received. As the Letters of Determination are issued in the first week ofDecember, the deadline for submission of Service Plans falls in mid-January.In order to be in a position to meet their statutory obligations, health boards engage in aprocess of advance preparation. In advance of receipt of their determination, health boardsthemselves will have assessed their own minimum funding requirements to deliver the samelevel of service in the following year as in the year about to end. For example, a health boardmay, at a detailed level, calculate each cost centre’s pay costs and non-pay costs (updated forinflation) with adjustments for once-off expenditure which will not be repeated, costs of knowncontracts and the full year costs of staff recruited part way through a year.By comparing the outcome of this with the allocation in their Letter of Determination, eachhealth board’s finance department can advise senior management of difficulties, if any, whichrequire corrective action to ensure a balanced budget. This highlights areas of fundingdifficulties before the year begins so that immediate corrective action can be taken by the chiefexecutive officer and the relevant care group manager and allowed for in the Service Plan.At the end of the process, all funding is allocated between pay and non-pay cost elements acrossthe health board’s cost centres. Health board cost centres include all hospitals, child residentialunits, etc. Allocations to individual cost centres are then consolidated to derive programmebudgets and care group budgets (see Box 2 below).165