The Swedish Agency for Public Management
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Refugee immigration and municipal cost equalisation. Analysis of the need for an inquiry (2016:32)

The Swedish Government has tasked the Swedish Agency for Public Management (Statskontoret) with describing which of the municipalities’ and county council’s costs are affected by the increased number of asylum seekers and newly arrived immigrants. Statskontoret is also to analyse the extent to which cost equalisation takes into account these costs in the municipal financial equalisation system.

The costs affect municipal equalisation

The outcome of the cost equalisation system is affected by the number of asylum seekers and people who have recently arrived in Sweden in various different ways. Firstly, the cost equalisation system contains mechanisms that deal with cost increases resulting from a general growth in population. Secondly, a change in the composition of the population affects the outcome of cost equalisation through several different sub-models. This primarily relates to the fact that among those who have recently arrived there is a larger proportion of children and a smaller proportion of older people. This affects demand for services including schools, elderly care and healthcare. A third reason is that people with a refugee background often have other needs that result in higher costs for certain local government services.

The Swedish Migration Agency pays central government grants to municipalities and county councils in order to compensate them for the cost associated with asylum seekers and, with respect to those who have recently arrived, the additional costs of establishment. The central government grants are payable at rate based on standardised cost information and the actual costs in municipalities and county councils may therefore be both higher and lower than the grants, which may affect the outcome of cost equalisation.

Compensation through nine sub-models

Statskontoret’s assessment is that it is primarily nine sub-models in the cost equalisation system that function as a means of compensating for structural differences in cost that are the result of increased refugee immigration. Two of these are sub-models concerned with population changes, the four sub-models in the schools area, the sub-model for individual and family care, the sub-model for elderly care and the sub-model for healthcare.

The sub-model for preschool and compulsory school contains a variable that provides compensation for the additional support that pupils with a foreign background may require in school. The sub-model for children and adolescents with a foreign background provides an additional grant to municipalities that have districts that have a high density of immigrants. In addition, the sub-model for elderly care provides compensation for older people born outside of the Nordic countries. The sub-models for individual and family care and the healthcare model contain variables that can provide compensation indirectly.

In general, the cost equalisation system contains no direct mechanisms that are concerned with those who have recently arrived in Sweden and others with a refugee background.

The need for a review of the cost equalisation system

Statskontoret concludes that there are large differences in how many refugees the municipalities have accepted. These differences may have contributed to increased differences in terms of structural costs between municipalities that the cost equalisation system does not capture to a sufficient extent. One reason for this is that the current compensation amounts are based on old cost data.

Statskontoret believes that there is need for a review of the two sub-models for population changes, the sub-models in the schools area, the sub-model for individual and family care and the sub-model for healthcare. The sub-models may need to be supplemented with new variables in order to capture the additional costs within various services that are affected by immigration.

Statskontoret also contends that there may be grounds to analyse whether the cost equalisation system needs to be complemented with a mechanism that equalises the cost of municipal adult education. The background to this assessment is that a large proportion of the newly arrived immigrants have a low level of education and municipalities are obliged to provide municipal adult education.

There is a lack of data about costs

Statskontoret concludes that it is not possible to compile data about the costs of the local government services that asylum seekers and those who have recently arrived make use of. This is due to a lack of data on the costs of various services in the municipal sector distributed by various groups of individuals. The official statistics report the costs of asylum seekers and those who have recently arrived as a lump sum, but without including school costs. In terms of county councils, there are no official data about the costs of healthcare provided to asylum seekers and those who have recently arrived in Sweden.

Time delay in the cost equalisation system

Statskontoret sees no direct requirement for further investigation with respect to the time delay in the cost equalisation system. Statskontoret’s analysis shows that there are two circumstances contributing to the delay. For any given equalisation year, there is a time delay in the data on which the cost equalisation is based. Statskontoret concludes that there is also a delay in the payment of central government grants to the municipal sector for asylum seekers and those who have recently arrived. 

Cost equalisation for immigration in other countries

Our international overview shows that there are a few other European countries, aside from Sweden, that have an explicit system for the equalisation of the costs of refugee immigration. The overview includes Denmark, Finland, Norway and Switzerland. The technical solutions vary between countries and in terms of which costs are equalised. One similarity between the countries is that only immigration from countries outside of that country’s own geographical area are included in the cost equalisation system. The countries’ equalisation systems differ in terms of factors including which groups of immigrants are covered and what period of time the immigrant must have lived in the country.