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SLOVAKIA HOUSING ALLOWANCE PROGRAM FINAL REPORT Prepared for Prepared by Maris Mikelsons Peter A. Tatian The Urban Institute Jaroslava Zapletalova Housing Allowance Program—Slovakia Institut byvania U.S. Agency for International Development Contract No. EEU-I-99-00015-00, Task Order 802 THE URBAN INSTITUTE 2100 M Street, NW Washington, DC 20037 (202) 833-7200 July 2000 www.urban.org UI Project 06901-004 TABLE OF CONTENTS ACKNOWLEDGMENTS CHAPTER 1: OVERVIEW AND FINDINGS ..........................................................................................1 Introduction and Background...........................................................................................................1 Housing Subsidies ......................................................................................................................1 History of the Housing Allowance Program in Slovakia ..................................................................2 Organization of the Report...........................................................................................................5 The System of Social Protection in Slovakia .....................................................................................5 The Housing Allowance Program in Slovakia ....................................................................................7 Importance of Monitoring and Evaluation of Social Programs...........................................................10 Monitoring Government Programs .............................................................................................12 Evaluation of Government Programs..........................................................................................13 Housing Allowance Monitoring and Evaluation Pilot ........................................................................14 Analysis of Administrative Data..................................................................................................16 Household Survey ....................................................................................................................16 Evaluation of District and Regional Office ...................................................................................17 Findings .......................................................................................................................................18 Characteristics of Nitra Households ...........................................................................................18 Participation in the Housing Allowance Program .........................................................................19 Administration of the Housing Allowance Program ......................................................................28 Baseline Conditions in Nitra for Future Monitoring and Evaluation ................................................35 Key Issues ...................................................................................................................................38 Housing Allowance Design Issues Related to Program Eligibility..................................................39 Increasing Participation in the Housing Allowance Program .........................................................41 Interaction of Housing Allowances with Other Assistance Programs.............................................42 Administrative Practices ............................................................................................................44 Future Monitoring and Evaluation ..............................................................................................46 CHAPTER 2: DESIGN OF MONITORING AND EVALUATION PILOT..................................................49 Selection of the Site......................................................................................................................49 Housing Allowance Recipients Survey .......................................................................................58 Checking and Entering Survey Questionnaires ...........................................................................59 Integrating the Resident and Recipient Surveys ..........................................................................60 Review of Administrative Practices ................................................................................................64 Recommendations for Future Monitoring and Evaluation.................................................................65 Site Selection ...........................................................................................................................65 Administrative Data...................................................................................................................65 Household Survey ....................................................................................................................66 Administrative Practices ............................................................................................................67 References...................................................................................................................................69 Annex A Housing Allowance Brochures Annex B Household Survey Questionnaire Annex C District and Regional Office Staff Interview Guide Annex D Table D-1 Annex E Tables E-1 and E-2 ACKNOWLEDGMENTS We would like to acknowledge the extent of cooperation received by the staff at the Ministry of Labor and Social Affairs (MLSA), including Boris Sopira, Olga Matasovska, Peter Guran and Novacek Zdenko. In addition, we received valuable information and support from Dzena Danekova, researcher at the Ministry’s Research Institute. Furthermore, this work would not have been possible without the contribution of the volunteer students who administered the survey and their headmasters at the geography department of the University in Nitra. We are also grateful for the cooperation of the staff at the District and Regional office of the MLSA in Nitra. Finally, we acknowledge the contributions made by the Pilot Housing Allowance Monitoring and Evaluation Advisory Group. USAID/Slovakia lent their support for technical assistance related to the adoption and implementation of the housing allowance program in Slovakia since 1993. SLOVAKIA HOUSING ALLOWANCE PROGRAM FINAL REPORT CHAPTER 1: OVERVIEW AND FINDINGS INTRODUCTION AND BACKGROUND Housing Subsidies The quality of housing has profound effects on the well being of its occupants as well as to the overall growth of a society. By developing a well functioning housing market, countries can enhance not only the quality of life for their citizens but also increase the output of the economy through substantial linkages that housing markets offer to other sectors of the economy (construction industry, infrastructure development, investment in household goods, etc.). Nearly all countries exhibit different degrees of housing problems such as availability, affordability, and overcrowding and structural inadequacy. Governments invariably respond to these housing needs by intervening in the housing market with regulations and with housing subsidies. In 1976, the United States Agency for International Development (USAID) commissioned a study of worldwide housing subsidies. The study’s author discovered that the term “subsidy” is often interpreted differently in various contexts throughout the world. The definition this study put forth is the following and was intended to be comprehensive: “A subsidy is a direct or indirect transfer of money or goods or services to an individual or enterprise for the purpose of carrying out activities (including the production and consumption of goods and services) which would not otherwise be feasible at their full economic cost.”1 In terms of housing, a subsidy allows a household to buy or rent housing that would otherwise be unavailable or affordable to them. The general definition above does not distinguish among the different types of subsidies that might impact the different segments of the housing market. Housing subsidies that are linked to the housing unit, either directly or indirectly, are supply-side subsidies while subsidies that are linked to households are demand-side subsidies. The housing subsidies that have been used in Slovakia in the past have been primarily supply-side subsidies. The State, both directly and through State-owned 1 USAID, 1977. Housing Allowance Program 2 Slovakia enterprises, paid for the construction of a large number of housing units every year. Furthermore, the State acquired a significant number of previously existing housing units that it then rented for very low cost to tenants. Since the rents in State-owned properties were inadequate to cover the costs of operation and maintenance, the State provided subsidies to the Housing Management Company to fill this gap. Through the cooperative associations, the State provided subsidized loans to allow households living in cooperatives to purchase their units. Most of these subsidies were quite inefficient and led to an inadequate supply of housing, inefficient allocation of housing units, poor quality housing, and lack of choice in housing for households. Construction costs for State-funded housing were excessive and the quality of the housing was not very high. Waiting lists for State apartments were extremely long—households often had to wait years to get a unit. Because rents were so low, some households had a strong incentive to overconsume housing—living in units that