The challenge of fiscal federalism to expand social service

#LeParoleDiOpenCivitas is a communication campaign by SOSE and openpolis to explain the key concepts of fiscal federalism through the publication of podcasts and in-depth articles

The fiscal federalism system has profoundly changed municipalities' social care function to reduce the wide gaps in the expenditure and the provision of social care services in the area.

Effective social care services are fundamental for people in difficult situations, either economic, social, physical or mental. They aim to eliminate or at least reduce the condition of discomfort, supporting disadvantaged people financially and in various areas of their lives, from family and work to social care and education, in the case of children and teenagers.

Municipalities are required by law to guarantee social care services.

This function involves a vast intervention area, difficult to quantify, different users, and needs. The measures implemented in this area are aimed at families, minors, the disabled, the elderly, immigrants and nomads, individuals with addictions or mental health problems, adults living in poverty and hardship, and the homeless. In addition, social care services also work on prevention, trying to intervene before an individual is in difficulty. For example, the various centres to listen to people in difficulty or social mediation centres and awareness-raising campaigns have this goal.

The social care function is considered one of the municipalities' seven fundamental functions since these institutions are closest to citizen and their problems

The gaps in the offer of services

Before analysing local authorities’ social care expenditure and the recent innovations introduced by fiscal federalism to support it, we have reconstructed the overall shortage and wide disparities of these services throughout the national territory based on the data collected by Sose. In particular, we analysed the 2017 data, the most recent available, relating to the number of social care service users in the municipalities of the regions with ordinary statutes (RSOs).

1.2 per 1,000 inhabitants are the users supported by social care services in the Italian municipalities of the regions with ordinary statutes due to “Addiction and mental health” problems.

The lowest value among the seven user groups (multi-user, family and minors, the elderly, poverty, adult and homeless hardship, immigrants and nomads, disabled people, addictions and mental health) is 1 per 1,000 individuals. Less than ten users per 1,000 inhabitants, on average, access the social care services due to disability (5.8 users per 1,000 inhabitants) or are immigrants and nomads (6.3 per 1,000).


SOURCE: openpolis elaboration on SOSE database

Analysing the macro-area data, the municipalities of the Northeast and Northwest record, on average, a higher number of users per 1,000 inhabitants for each user group. The municipalities of central Italy follow, albeit with lower values, while the South records lower values for each group, except for the "Families and minors" target.

The gaps in expenditure and the old methodology

The profound differences in the offer of social care services, which we have tried to reconstruct in the previous paragraph, are strongly correlated to the differences in expenditure for this function throughout the country.

100 Euros per inhabitant is the historical expenditure of the municipalities in the regions with ordinary statutes for the social care function in 2017.

This value rises to 111 euros in the northeast and central Italy and 112 euros in the Northwest. It drops drastically in the South, where it is 70 euros per capita, 40 euros less (approximately) than the expenditure per inhabitant in other areas.

According to the old methodology, SOSE estimated how much the RSO municipalities would spend for the social care function, considering the region's characteristics. This choice was based on the central role of regions in planning services and the need to highlight the disparities mentioned above in the historical expenditure. However, the regional context over time proved too impactful in defining standard expenditure needs for the social care function and, consequently, in allocating the equalization resources from the municipal solidarity fund to municipalities. In other words, based on the fiscal federalism system, only belonging to one region rather than another determined the resources for the social care function.

Additional resources and service objectives.

Since 2020, the methodology to define standard expenditure needs has changed to neutralise the impact of the regional context and effectively reduce the disparities in the expenditure and the provision of social care services among municipalities.

The new methodology introduced additional resources for the social care function based on service objectives.

The first step consisted in identifying the provinces, as aggregations of municipalities, which recorded the best performances in terms of lower expenditure levels and greater numbers of social care services offered in the three years from 2015 to 2017. Based on the expenses incurred by these provinces, the following step was the definition of the resources to allocate to municipalities of the regions with ordinary statutes.

The 2021 budget law introduced € 650 mln additional resources for the social care function.

As described in a previous article, these resources are allocated to municipalities based on their standard expenditure needs and service objectives. According to this procedure, the municipalities must use the resources received to increase and improve the social care services of their territory, for example, through new hires or increasing the number of users. The bodies that provide the services must report on the improvements made and submit the report to the municipal council. This step is fundamental and improves transparency. In the case of municipalities with a historical expenditure lower than the standard one, the procedure highlights the administrations that dedicate fewer resources to social care and obliges them to invest the in those services.

Historical expenditure vs standard expenditure

Sose calculated the standard expenditure needs of municipalities in the regions with ordinary statutes for the social care function based on the new methodology and the additional resources introduced by the latest budget law. The OpenCivitas data allow comparing the standard expenditure with the historical expenditure incurred by administrations in 2017 to provide social care services.

This comparison helps understand which and how many municipalities have historical expenditures lower than the standard ones and which ones, on the other hand, already in 2017 have allocated more resources than those estimated by Sose (i.e. have a historical expenditure higher than the standard one).

SOURCE: openpolis elaboration on SOSE data (last updated on 15 March 2021)

A first element to note is that the standard expenditure is higher than the historical expenditure for all population segments. This means that, on average, the administrations of each group have allocated fewer resources for this function than the standard expenditure estimated by Sose.

In more populated municipalities, the expenditure levels in social care are higher.

Another evident aspect is the constant growth recorded in the expenditure on social care services, both historical and standard, as the number of inhabitants increases. The municipalities under 500 residents record a per capita historical expenditure of 66 euros and a per capita standard expenditure of 77 euros. The values increase in the cities with over 100,000 inhabitants, which register 151.3 euros for the first and 162.1 for the second. In fact, it is more complicated and therefore more expensive to identify situations of hardship requiring the support by the social care services in the most populated cities. On the other hand, it is easier to identify cases of distress in small towns due to the number of inhabitants.

But how do expenditure levels vary from the North to the South of the country?

SOURCE: openpolis elaboration on SOSE data (last updated on 15 March 2021)

73% of the municipalities in the regions with ordinary statutes spend less on social care than the expenditure estimated by Sose, but with strong disparities in the different areas of the country.

On average, northern municipalities spend more than the standard on social care.

Based on municipalities' geographical location, the Northeast and Northwest record a historical expenditure higher than the standard one. Vice versa in the central and southern territories. In particular, the gap between the average historical expenditure per inhabitant (€ 69.8) and the standard one (€ 108.8) is 39 euros in the South.

The data on the ten large cities of regions with ordinary statutes (i.e., more than 200 thousand inhabitants) show similar trends. 6 out of 10 municipalities have a historical expenditure lower than the standard (Turin, Verona, Genoa, Bari, Naples, and Rome), and 4 spend more than the standard estimated for the social care sector (Bologna, Milan, Florence and Venice).

SOURCE: openpolis elaboration on SOSE data (last updated on 15 March 2021)


To find out the historical expenditure and the standard expenditure of your municipality, click on the Search ... and write the name of your municipality. You can change the order of the table by clicking on the column header.

In the coming years, the challenge will be the implementation of the service objectives aiming to expand and improve social care services through the allocation of more resources to municipalities by the central government and a greater spending capacity by local authorities. It is fundamental to guarantee quality social assistance to citizens, regardless of where they live. It is also a crucial step towards introducing the basic levels of service (Italian acronym LEPs) throughout the national territory.

LEPs will allow identifying, for all services that impact the civil and social rights of citizens, an adequate standard of performance to be guaranteed throughout the national territory.

See "Che cosa sono i Lep, livelli essenziali delle prestazioni (only in Italian)