22 January 2026 | The Parliamentary Budget Office (PBO) appeared today before the Constitutional Affairs Committee of the Senate of the Republic in the context of the examination of Bill No. 1623, containing a delegation to the Government for the determination of the Essential Levels of Performance (LEP).
In the document presented by Councillor Giampaolo Arachi, after a brief reconstruction of the general and regulatory framework within which the bill under examination is situated, several aspects relating to the criteria and procedures for determining and revising the LEP are analysed. The document then assesses the public finance implications associated with the simultaneous quantification of standard expenditure needs, including in cases where no transfer of functions takes place. It subsequently addresses the issue of monitoring and correcting non-compliance and puts forward some considerations on the desirability of closer coordination between the path outlined by the enabling bill and the implementation of fiscal federalism. Finally, by way of illustration, education is taken as a reference sector — a particularly relevant field for assessing the implications of the bill under consideration, as it involves substantial financial resources and services falling within the scope of civil and social rights and is characterized by a structural sharing of competences among the State, Regions and local authorities — in order to highlight the importance of coordination between the definition of the LEP, with reference to functions potentially subject to differentiated regionalism, and the roles of local authorities and Regions within the framework of symmetric federalism.
The bill aims to define the LEP required for the full implementation of Article 116, third paragraph, of the Constitution. Consistently with Law No. 86/2024 and with the approach already set out in the 2023 Budget Law, the transfer to the Regions of functions falling within the scope of the LEP is conditional on their prior determination and on the simultaneous quantification of the related costs and standard expenditure needs. The bill thus fits into the process of completing differentiated autonomy following Constitutional Court judgment No. 192/2024, which declared unlawful significant parts of Law No. 86/2024, including those relating to the determination of the LEP and of standard expenditure needs.
More specifically, the Constitutional Court clarified that devolution under Article 116, third paragraph, of the Constitution must concern individual functions and not entire subject matters or sectors within subject matters. It also specified that, even in so-called non-LEP subject matters, functions affecting services connected with civil and social rights may not be transferred in the absence of a prior determination of the LEP and of the related standard cost. According to the Court, the determination of the LEP is binding both on the regional legislator and on the public administration and, at the same time, gives rise to a right to receive the necessary resources. The judgment also censured the delegation based on the criteria laid down in the 2023 Budget Law, considering them too general and not differentiated by sector, and found unlawful the possibility of amending, by means of sub-legislative acts (Prime Ministerial Decrees), contents that should have been established at legislative level. This resulted in the unlawfulness of broad parts of Article 3 of Law No. 86/2024 and, due to the inconsistency of the procedures, in the inoperability of the provisions of the 2023 Budget Law concerning the determination of the LEP (Art. 1, par. 791-801bis).
To overcome the objections raised by the Constitutional Court, the bill sets out, in addition to general ones, also function-specific guiding principles and criteria and provides for a new single procedure for determining the LEP: the legislative decrees, accompanied by a technical report aimed at demonstrating financial neutrality or indicating the relevant coverage, are to be adopted within nine months, upon proposal of the President of the Council of Ministers and the Minister for Regional Affairs and Autonomies, in agreement with the competent Ministers, after consultation with the Unified Conference and the Parliamentary Committees competent on the subject matter and on financial aspects; a review mechanism is envisaged where the Committees identify elements of non-compliance with the guiding criteria. The same procedure applies to any corrective measures concerning the implementing decrees within eighteen months.
The bill confirms the choice to keep separate the paths for determining the LEP related to differentiated regionalism and those connected with fiscal federalism. This separation may reflect a different role of the LEP in the two contexts: in differentiated autonomy, the LEP operate primarily as a precondition for the transfer of powers and as a safeguard of unity in guaranteeing rights, whereas in symmetric federalism they mainly represent a tool for rebalancing territorial disparities. In functions already exercised by Regions and local authorities, heterogeneity in service levels is often the result not only of differentiated needs, but also of unequal administrative capacity and financial endowments that have accumulated over time; in this area the determination of the LEP tends to trigger a convergence path that requires additional resources. Services currently provided by the State, by contrast, follow uniform criteria across the territory, and the rebalancing effect of the LEP would emerge only if the existing criteria were changed or if services not currently explicitly guaranteed were brought within the scope of the LEP. In addition to this possibility, the setting of the LEP could amount to confirming the existing criteria, with the preventive function of establishing a binding threshold that the Regions would have to comply with even if they were granted further particular forms and conditions of autonomy; in that case, determining the LEP would not require the allocation of new resources and, on the contrary, could generate expenditure savings, since the Constitutional Court pointed out that standard expenditure needs must be purged of any inefficiencies. The bill appears to be oriented mainly towards this perspective, referring extensively, in the specific guiding criteria, to the LEP that, according to the preliminary work carried out by the Technical-Scientific Committee for the Identification of the LEP (CLEP), are already identified or can be inferred from existing legislation.
The bill, however, contains some critical elements and appears difficult to implement within the prescribed timeframe.
The general principles and criteria require that the identification of the LEP take account of the preliminary work already carried out by the CLEP, of the LEP already identified or inferable from current legislation, and of any subsequent additions and amendments, in compliance with public finance objectives and budgetary balance, while providing, where necessary, for gradual paths and monitoring procedures to ensure the delivery of the LEP throughout the national territory under conditions of appropriateness and efficiency and to ensure consistency between the services to be delivered and the resources available.
However, while the cross-cutting objective identified is the overcoming of territorial disparities, the function-specific criteria often appear to be more a survey of existing measures than substantive objectives capable of guiding the choices and priorities of the delegated legislator, especially in State functions where territorial differences are not systematic. Amending the LEP that the CLEP has already identified as being present in existing legislation would require additional guiding principles.
Another critical element concerns the timing for implementing the delegation. Given the number of functions involved, the nine-month deadline appears particularly compressed and may prove insufficient even if the decrees were merely to confirm the findings of the CLEP’s stocktaking exercise, which essentially captures the status quo. It should in fact be recalled that the determination of so-called quantifiable LEP must be accompanied by the simultaneous definition of standard expenditure needs, an operation that requires a detailed stocktaking of historical expenditure and a subsequent efficiency-enhancing process. The time allowed for parliamentary scrutiny also appears limited. As for updates, the bill provides for a delegation to regulate technical adjustments to the LEP, implicitly referring to the experience of the Essential Levels of Care (LEA); however, the specific nature of healthcare services and of the technical-scientific mechanisms that guide their updating makes it difficult to transpose that model directly to other sectors, suggesting the need to define more precisely the nature of the technical adjustments for which an alternative procedure should be envisaged.
From a financial perspective, the bill reinforces the idea that the determination of the LEP is constrained by public finance limits, by providing that, where resources are not immediately available, implementation may proceed gradually through the identification of intermediate service targets.
The quantification of costs and standard expenditure needs is assigned to the Technical Commission for Standard Expenditure Needs and aligned, in terms of procedure and criteria, with the experience of symmetric federalism, with reference to Law No. 42/2009 and with an emphasis on efficiency and effectiveness as benchmark indicators for comparing and assessing public action. The bill also contains an explicit reference to conditions of efficiency and appropriateness in the use of resources to guarantee the LEP and provides that the State, the Regions and the autonomous Provinces are to identify measures capable of improving the effectiveness and efficiency of the services delivered, in order to ensure quality services and optimal resource management. Although the determination of the costs and standard expenditure needs connected with the LEP is traced back to the experience of symmetric federalism, the methodological solutions will need to be further refined compared with those adopted under the consolidated practices for local authorities, in order to respond to the dual role that standard expenditure needs play within differentiated federalism: ensuring that the allocation of resources assigned to the different Regions is consistent with the territorial distribution of needs, and ensuring that their absolute level is determined by taking efficient management as the benchmark. The monetary dimension of standard expenditure needs plays a more significant role than in the experience developed for local authorities, since the Constitutional Court ruled out the possibility that resources for transferred functions could be determined on the basis of historical expenditure and required a quantification net of inefficiencies. It follows that even where the LEP were defined by confirming the existing rules governing services currently provided by the State, the estimate of standard expenditure needs would take on a function of expenditure review and rationalisation, requiring a detailed mapping of the perimeter of State expenditure by function and by territory, as well as methodological work on the allocation of common costs and the regionalisation of expenditure, an area in which the tools currently available are not always fully applicable.
After the start-up phase, the link between the LEP and standard expenditure needs may influence budget policies, given the need to update expenditure needs while the LEP remain unchanged, in order to take account of changes in standard costs or in the pool of users, or to revise the LEP if public finance constraints were to require a reduction in expenditure. It is necessary for the timing of the Prime Ministerial Decrees revising expenditure needs, while the LEP remain unchanged, to be coordinated with annual budget planning, so as to make it possible to reflect the effects on the fiscal aggregates in the Public Finance Planning Document and to specify the sources of financing and the spending purposes in the Budget Law. It would instead be appropriate for the revision of the LEP to take place within the Medium-Term Fiscal Structural Plan, which should show the consistency between the projected path of the related standard expenditure needs and the growth rate of net expenditure that the country commits to comply with.
The bill provides for procedures to monitor the LEP aimed at ensuring the delivery of services, under conditions of appropriateness and efficiency, throughout the national territory, independently of any attribution of further forms of differentiated autonomy and therefore also operating in cases where the functions remain vested in the State. In theory, this could amount to an integrated mechanism for allocating resources and verifying outcomes, applicable also to State services; in practice, however, significant organisational issues arise in a context where, on the one hand, some Regions may exercise greater autonomy while others remain under the ordinary regime and, on the other, in some cases both Regions and local authorities contribute to guaranteeing the LEP within the framework of the competences assigned to them by symmetric federalism.
Monitoring should be comparable on a regional basis and, in the event of non-compliance by Regions endowed with greater autonomy, substitute powers should be capable of being activated; conversely, it is problematic to identify who should monitor and correct any non-compliance attributable to the State, since the competent Ministries can hardly “monitor themselves” across the territory. Further critical issues emerge when the delivery of the LEP depends on the contribution of more than one level of government, as in education and active labour market policies: in such cases, consistency of financial flows and clear attribution of responsibilities are essential conditions both for aligning resources and needs and for making corrective mechanisms effective.
Also because of the significance of the resources involved, education is a useful example for assessing the implications of the bill. Since it is characterised by a structural sharing of competences among the State, Regions and local authorities, the definition of the LEP with reference to functions potentially subject to differentiated regionalism should be coordinated with the functions of local authorities and Regions within the system of symmetric federalism. With reference to the financial resources used for education, marked differences emerge in local authorities’ expenditure, attributable to the absence of a definition of the LEP and to the incomplete implementation of fiscal federalism. These are reflected in heterogeneous levels of service provision — such as the availability of school meal services, before and after-school services, summer centres and nursery schools — which tend to be concentrated in the Centre and North of the country. By contrast, regionalised State expenditure on education, which accounts for more than 71 per cent of the total, shows a territorial distribution that, in terms of the school-age population, tends to be higher in Southern Regions. This suggests that the shortcomings in services often referred to in public debate in those territories are not immediately attributable to a lower endowment of State resources, but rather to factors affecting the cost of the service. In the debate on territorial disparities in the provision of public education, the differing diffusion of full-time schooling in primary education is frequently cited among the most relevant cases. In this area, defining the LEP for functions connected with staff allocation and class formation may provide an opportunity to clarify what quality and equity objectives are intended to be pursued in primary education (for example, expansion of full-time schooling and related services, reduction in class size, or combinations of the two levers), and with what implications in terms of staff requirements, as well as of coordination with the competences and resources of local authorities, particularly as regards school meal services.
In conclusion, the determination of the LEP in subject matters or sectors of subject matters that may concern particular forms of autonomy cannot be assessed in isolation. It requires close coordination with the implementation of symmetric fiscal federalism, especially at regional level, also because the LEP constitute the point of balance between the content of rights and budget constraints and presuppose a complete and comparable picture of territorial needs. Such coordination is necessary not only for the launch of both processes, but also to ensure their functioning over time, as well as to allow the construction of a unified and readable framework of financial relations between the State and the Regions, a need that has become even more relevant in light of the requirement to plan the public budget over a longer time horizon, as also required by European rules.
The bill recognises this need by providing for a delegation aimed at the formal and substantive coordination of the legislation in force and forms of coordination with the LEP already identified or in the process of being defined in the fields of symmetric regionalism. Major issues nevertheless remain open concerning the design of equalisation mechanisms, the possible tax-based replacement of sectoral funds and, above all, the coordination between the financing of transferred functions and equalisation. In the absence of the latter, overlaps or misalignments could arise between financing and equalisation, with potentially critical effects on the overall balances of public finance. Financing through revenue-sharing arrangements with rates fixed over time tends to generate a progressive divergence between revenue, whose dynamics depend on tax bases, and standard expenditure needs, which respond to changes in costs and needs. For functions for which LEP are defined, this outcome would be problematic both where revenue exceeded standard expenditure needs, because of the potential moral-hazard effect for Regions managing the additional functions inefficiently, and in the opposite case where it fell short of them, since this would jeopardise the financing of the LEP. In addition, the absence of a periodic revision of the tax rates would create an asymmetry between the financing of the LEP relating to functions falling within symmetric federalism and those relating to functions attributed to Regions with differentiated autonomy. In light of this, it would be desirable for coordination between the reform of differentiated autonomy and that of symmetric federalism not to be limited solely to the determination of the LEP, but to be extended also to financing mechanisms. In this perspective, the determination of the LEP may represent an opportunity to strengthen the coherence of the system only if it is embedded in an overall strategy for completing fiscal federalism, capable of ensuring certainty of resources, accountability of the different levels of government and uniform protection of civil and social rights.