This report assesses public governance and territorial development in Polish local self-governments (LSGUs). It provides recommendations on enhancing territorial development and multi-level governance, improving service delivery and strengthening public management processes in municipalities and counties.

Poland has a three-tier self-government administration system composed of 16 voivodships, 380 counties and 2 477 municipalities. Currently, Poland has a rather balanced population distribution across regions, with a relatively high share of the population in non-metropolitan regions (49%), well above the OECD average (29%). However, with Functional Urban Areas (FUAs) growing and non-metropolitan regions (especially remote ones) contracting, this balanced distribution is beginning to change, which represents an important policy and governance challenge. Ensuring efficient public service delivery at the municipal level, especially in municipalities outside FUAs, strengthening urban-rural linkages, and implementing development strategies at the right scale are crucial.

Strategic planning for local development requires a well-designed, financed and evaluated local development strategy (LDS). Recent reforms to the Act on Principles of Implementation of Development Policy introduce a functional approach and allow for supra-local development strategies, which may help overcome technical and governance difficulties in planning. Poland could improve its strategic planning capacity by making LDSs compulsory, improving the quality of data used in planning, fostering private investment for local development, engaging more effectively with citizens, and strengthening the strategic planning skills and finances of LSGUs.

Solving complex and cross-cutting policy problems in LSGUs requires effective co-ordination across administrative units, policy sectors, and levels of government. In Poland, mayors are responsible for internal co-ordination, but can delegate it to other actors in the LSGU. Insufficient time, financial and human resources, institutionalisation and awareness are among the biggest obstacles to effective co-ordination in municipalities and counties. Formal mandates and reporting arrangements can establish responsibility for co-ordination; policy documents can raise awareness of the importance of intra-LSGU co-ordination and provide advice to staff. While institutional responsibility is important, increasing co-ordination is a long-term endeavour supported by institutional mechanisms, partnership practices and adequate capacity and resources.

The principles of budgetary governance are recognised in LSGUs; budgetary rules and procedures are codified in the Public Finance Act and allow the municipal council and the Regional Audit Chamber to perform their mandates. Recent reforms on participatory budgeting promote a citizen-centred culture of governance. However, Poland could further align budgeting with strategic priorities, for example through greater use of medium-term budgeting and performance budgeting. Public spending efficiency should be systematically scrutinised through spending reviews for large LSGUs and systematic performance benchmarking. Given competitive pressures on the tax side and the limited autonomy of LSGUs, it is important to strengthen co-ordination between LSGUs and the national government -- in particular the Ministry of Finance -- to address medium-term budgetary policy issues across levels of government, for instance, within the Joint Commission of Government and Territorial Self-government.

Poland could improve its multi-level governance system in three areas: strengthening subnational public investment, addressing subnational fiscal challenges, and improving inter-governmental co-ordination and collaboration. Poland’s subnational governments are key public investors, accounting for 50.2% of total public investment in 2018. Yet, funding gaps in subnational public investment persist, and could become more acute following the COVID-19 pandemic. Subnational expenditures have substantially increased with decentralisation, but revenue is falling short, creating a need to increase subnational revenue-generating capacity and diversify revenue sources. Finally, Poland should develop a functional approach to inter-municipal co-operation by providing stronger incentives, greater support for adopting supra-local development strategies and co-operation schemes, and flexible models for metropolitan governance. Poland should also reinforce tools such as territorial contracts and ensure two-way consultation among levels of government.

Workforce management in LSGUs is influenced by broad trends such as the digitalisation of public services, increased competition for skilled staff, new working methods, and changing citizen expectations. Although all LSGUs operate under the same legislative framework, their ability to solve workforce management challenges differs greatly according to size and relative proximity to urban centres. All, however, could better align recruitment and people management with longer-term development strategies. Strengthening leadership and management capability and attracting and developing key skills require effective co-ordination between different institutions and managers. There is a need for greater sharing of good practices and collaboration, and a long-term approach to developing human capital at local level.

Polish LSGUs integrate the principles of open government – transparency, integrity, accountability and stakeholder participation – in various legal and policy frameworks, including the local development strategy. While LSGUs implement a wide range of open government initiatives, they can be fragmented. A more strategic, consolidated approach requires improving institutional responsibility and co-ordination, raising awareness among public officials and stakeholders of the benefits of open government, and ensuring that human and financial resources are channelled towards effective implementation and impact.

Administrative simplification in Poland has focused on reducing administrative burdens for SMEs and businesses, and LSGUs has been limited to implementing national government decisions. In public procurement, LSGUs are bound by national and European rules. Successive regulatory and public procurement reforms have strained the capacity of LSGUs. Stronger collaboration among LSGUs could ensure that their views are heard. Similarly, increased communication and engagement between national and local levels will improve implementation and full adoption of regulations, specifically the new public procurement framework. LSGUs are encouraged to use digital tools for simplifying procurement and increasing transparency in interactions with stakeholders.

Monitoring requirements for LSGUs are focused on accountability. Monitoring is often perceived as a tool for control tool rather than for improving decision-making and policy implementation. LSGUs should be encouraged to use monitoring as a management tool and given tailored guidance. There is scope for more systematic involvement and greater ownership by LSGUs in evaluation, for example by raising awareness among of the benefits of measuring performance and evaluation; ensuring sufficient resources and capacity (e.g. through institutional co-ordination and resource pooling), and institutionalizing the use of evaluation findings in decision-making through systematic but proportionate requirements and incentives.