The reduction will increase next year’s deficit, as spending cannot be cut any further than planned.
Next year’s funding for the Päijät-Häme welfare region will be lower than previously calculated. The welfare region will receive €894 million from the state, around €8 million less than in the previous calculation.
Funding is falling in all welfare areas. The Ministry of Finance made changes to funding partly because the government removed the obligation to increase the number of carers and lowered the upper age limit for child protection aftercare from 25 to 23.
In Päijät-Häme, however, the reduction in tasks will not help the economy in the same proportion, as costs have risen dramatically. The change in funding will increase next year’s deficit, according to Antti Niemi, Finance Director of the Päijät-Häme welfare region. We are already preparing to balance the budget by €18 million, and we will not be able to increase savings by the same amount as the funding cut next year.
– The 2024 budget will already contain risks, Niemi states.
However, he says that the funding received from the state seems to improve in Päijät-Hämee in 2025 by almost 70 million euros per year.
Half of the 20 million in the wage harmonisation dispute from the state
There will be changes in the funding of the Päijät-Häme welfare area for both good and bad for 2023 and 2024
Due to the salary harmonization dispute, there has been a shortage of 20 million euros in the funding of the welfare area. However, the retroactive adjustment of Social Security expenses for 2022 brought an increase of 10 million euros as a one-time compensation for this year.
Initially, 20 million euros were missing from the funding, when the owner municipalities of the former Päijät-Häme welfare municipality association refused to record salary arrears from insufficient salary harmonization in their social security expenses for 2022.
Funding still too low for service needs
In general, the funding of welfare areas for different areas is determined based on need. Funding is affected by the need for services, such as the number of residents and how much of the population is elderly and how often the residents get sick.
According to CFO Antti Nieme, need-based funding in the Päijät-Häme welfare area will increase by around 32 million euros for 2024. There is still a shortfall of about 49 million euros compared to the calculated need.
The funding shortfall will gradually decrease during the transition period until 2029, but it will ultimately remain at 11.5 million euros.
– Without the transitional equalization, the economy of the Päijät-Häme welfare region would be very close to balance already, says Niemi.
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