1% Participatory Budgeting
Seodaemun-gu Office

A. Problem Analysis

 1. What was the problem before the implementation of the initiative?
Unlike European countries with long history of local autonomy, Korea did not begin to implement local autonomy fully until 22 years ago in 1991. Taxation in the country is heavily concentrated on national taxes. Most regional and local governments have very low financial self-sufficiency rates. They depend on financial assistance from the central government. Revenues from local taxation continue to shrink. A protracted housing slump has eroded the tax revenues from real estate transactions, the biggest source of revenues for municipal governments. On the other hand, social welfare expenditures have skyrocketed as the number of benefit recipients has continued to rise. Fixed expenditures of local governments have also increased. Overall, the finances of local governments are worsening. For instance, the Seongnam-si in Gyeonggi-do declared a moratorium on payments in July 2010, and Nam-gu of Busan Metropolitan City had to issue municipal bonds worth 2 billion won to pay the wages of its public officials. In addition to the chronic problem of revenues falling behind expenditures, the finances of local governments are being aggravated by their promotion of excessively large construction projects without due consideration or reckless spending on the construction of luxurious local government buildings, for instance. In Korea, the disclosure of budgeting information is very limited. There are no procedures set for residents to participate in budgeting procedures, either. Therefore, budgets of local governments are spent without any form of direct control by the residents. Budgets are policies. At the end of the day, budgeting is policy adoption for the interest of residents. Still, budgeting is often done by officials without residents’ participation. It depends on the judgment of a few officials regardless of the needs of a large number of residents. Priority is often distorted. Poorer residents in particular are totally excluded from the processes.

B. Strategic Approach

 2. What was the solution?
Participatory budgeting (PB) involves returning budgeting rights to local residents. Initiated by Porto Alegre, Brazil in 1989, PB was introduced to Korea in 2001. Although implemented by many local governments in Korea, PB is actually a top-down approach. It depends on local government heads' commitment. Participation by residents and delegation of rights to them are mostly superficial. To realize local autonomy based on residents’ needs and common sense, Moon Seok-jin, Mayor of Seodaemun-gu proposed in 2010 “1% Participatory Budgeting,” a PB system guaranteeing residents’ participation in budgeting processes. Seodaemun-gu wanted to introduce PB based on residents’ common sense and to reflect the district's actual situation. It reviewed the current state of PB implemented by other local governments in the country. The most obvious problem was residents lacked experience in directly participating in governance because Korea only recently implemented local autonom. Therefore, PB was being exploited by small special interest groups instead of representing the interest of all district residents. Moreover, the system was mostly unstable, and nor could PB rights be delegated to residents. The fundamental reason was that PB depended entirely on the leadership of local government heads. Considering all these, Seodaemun-gu came up with a unique PB model addressing the problems of other local governments. The district enacted an ordinance to support the efforts institutionally. The population of Seodaemun-gu is mostly made up of domestic immigrants who came to Seoul during Korea's fast-paced industrialization. Civil society has not yet developed well in the district. To implement PB under the circumstances, residents should be encouraged to have continuous interest and participate actively in PB processes while fostering related basic capabilities. Seodaemun-gu decided to open local instructor training courses, among others, at PB Prep School (Budget School). Courses are designed to educate residents willing to participate in PB. Trainees get educated on all issues related to government budgets and budgeting and spread what they have learned to their neighbors. 29 residents were educated as local PB instructors in 2011, and 24, in 2012. They help the district build improved fiscal governance by facilitating communication between the Gu office and their residents. In Seodaemun-gu's “1% Participatory Budgeting,” PB is implemented only for about 1% of the district’s annual budget because, if residents are required to check the entire district budget, few will be willing to participate in the process. Moreover, if the scope is not limited, residents’ reviews will become superficial due to the massive size of the district’s budget. PB participation will continue to increase according to the preparedness and commitment of participating residents. Those participating in PB are very enthusiastic about their mission and are satisfied with their participation in the district’s policy discussions. They lead almost 99% of the changes occurring in the district.

 3. How did the initiative solve the problem and improve people’s lives?
As taxpayers, residents of Seodaemun-gu are participating in budgeting processes monopolized for a long time by government officials. Residents’ participation in policymaking decisions is expanding. Transparency is improving in the budget planning and implementation processes. Residents participating in PB have formed “Seodaemun Residents’ PB Group,” which has opened its doors to any district resident willing to participate in the discussion on a range of policy issues of the district. The voluntary resident group has continued to grow. It now engages in the evaluation of the Gu (district) office’s budget management and long-term budget plans. The Gu office has welcomed residents’ feedback. Public and private sectors in the district have joined hands to develop PB in the district. They have co-hosted a number of conferences, meetings, and symposiums to share perspectives and opinions on PB in the district with each other. They have worked hard to develop and stabilize PB in Seodaemun-gu through constant evaluations and feedback.

C. Execution and Implementation

 4. In which ways is the initiative creative and innovative?
The Budget School offers five courses: a basic course, a local instructor training course, a public-private sector communication promotion course, an on the job training course for public officials, and a budget committee course. The "local instructor training course" is helping spread PB among the district population. Graduates of Budget School have established the Seodaemun-gu PB Group to expand their PB experiences to talent donation. The Gu office holds open discussions between the public and private sectors every year before finalizing next year's budget. Meetings are organized and run by residents. Various resident organizations such as Resident Congress and Resident PB Committee, district council, and NGOs take part in completely open forums. The previous year’s budget implementation is reviewed and evaluated at the meetings. Next year’s budget is discussed for finalization. The Gu office lets its officials and residents exchange budgeting opinions through lectures held by invited outside experts. Overall, participants' sincerity in the PB discussions is so impressive, even overseas delegations benchmarking the district’s PB arrangements said they were moved by such enthusiasm. The Seodaemun-gu participatory budgeting meetings are held at two levels: dong (smallest administrative unit in Korea: Seodaemun-gu has 14 dongs) and gu (district). The dong meetings are held in two stages. The gu meeting is held once. Residents actively participate in prep gatherings to prepare themselves better for the meetings. 1) First Meeting at the Dong-level The first dong meeting is designed to collect residents’ opinions on the relevant budgets and is attended by 70 ~ 200 residents. It is organized and run by graduates of the district’s PB School. Key to the success of the meeting is participants expressing their opinions freely. 2) Second Meeting at the Dong- level The Gu office offers feedback on the results of the first dong-level meeting. Residents then discuss the budgetary priorities. Following enough discussions, participants finally vote. 3) PB Committee The PB Committee of Seodaemun-gu consists of 40 ~ 100 residents who have finished all courses offered by PB School. The committee reviews the 2nd meetings decisions. Within one percent of the total district budget, the committee makes recommendations on various proposed projects. The decision gets reflected on the district’s budget proposal and is submitted to the district council unless legal issues are involved. Residents propose new projects on the website of the Gu office (http://www.sdm.go.kr/index.do). The district also encourages residents’ participation on its blog and SNS media. The Seodaemun-gu PB Meeting runs its own website (http://cafe.daum.net/sdmjys) to collect residents’ opinions. The public officials of Seodaemun-gu continuously support all aforesaid processes. They try to ensure that residents voluntarily participate in various activities. Projects chosen through PB processes are further discussed at meetings between public officials and residents concerned with the project proposals.

 5. Who implemented the initiative and what is the size of the population affected by this initiative?
The current mayor of Seodaemun-gu has played a key role in ensuring the success of the participatory budgeting processes in the district. To prevent the processes from becoming superficial, he attends all meetings related to participatory budgeting, though he has never participated in discussions at the meetings. He sits in on the meetings, encouraging public officials and resident’s participation. Through the voluntary activities of the PB Group consisting of graduates of the Budget School, PB in the district began to be implemented fully. Residents at the PB Committee work hard to select projects with the biggest public interests. Residents are the key participants and stakeholders of the PB system in the district. The relevant departments of Seodaemun-gu have worked hard to come up with all the details of the projects proposed by residents. They then take responsibility for the successful implementation of the projects. Participatory budgeting in Seodaemun could not have succeeded without their in-depth feedback on the various projects concerned. However initially, there were officials who were suspicious of PB for fear of increasing workloads. Nonetheless, due to the district Mayor’s strong commitment and the increasing ability of residents to promote the initiative, their positions began to be positive. Now they are bridging the communication between the residents and the Gu office very successfully.
 6. How was the strategy implemented and what resources were mobilized?
1) Civil Society: the commissioned operation of the Budget School The Gu office ran the Budget School directly to enhance residents’ ability to review the district’s policymaking decisions. Nonetheless, the education run by the public sector ended up conveying the positions of the government unilaterally. Therefore, Seodaemun-gu decided to commission the operation of the school to a third party. "Center for Good Budget", a nonprofit organization devoted to the streamlining of budget-related business in public offices, was selected in 2011 to operate the PB system in its first year. Through this arrangement, the Gu office secured the neutrality of the education programs. The civic organization has done a great deal to boost residents’ capability to run PB in the district effectively. 2) Graduates of the Budget School: Voluntary donation of talent Graduates of the Budget School have held orientations on PB for the public or assumed the role of moderators at the "dong" PB meeting as part of their talent donation. Such devotion of the graduates helped change the perspectives of public officials who were pessimistic about the prospects of PB in the district. The graduates have formed an organization on their own. They exchange opinions and participate in one another’s "dong" meetings to offer feedback. Through such contributions from the residents, the PB system stabilized earlier than expected. 3) Public Officials: Continuous communication with residents To run the participatory budgeting system effectively, it is crucial for the public officials in charge of budgets to maintain an open-minded and energetic attitude to listen to residents. Residents and public officials have developed PB in the district through a continuous exchange of opinions. As a result, the district’s 1% PB system runs as effectively as possible. The operation of the PB system in the district does not require additional funds thanks to the volunteers’ talent donation. For the operation of the Budget School, however, the Gu office allocates around five million won a year. It spends another five million won a year on the operation of the PB Committee.

 7. Who were the stakeholders involved in the design of the initiative and in its implementation?
Self-rule by local governments must not be centered on the government but on citizens. Note, previously Korea lacked a system for ensuring residents’ participation in the governments’ policymaking decisions even though the public was eager to participate in governance. However, under these circumstances, through the operation of the PB system that enables anybody to participate in the budgeting processes, the Gu office meets the residents’ desire to participate. For instance, expanding sidewalks alongside school fences, installing drinking fountains, and building walking paths that are disabled-friendly are all the results of the residents’ active participation in the PB processes. Residents actively participate further when they can express their opinions and their requests are reflected on policies. Through such participation, their satisfaction level increases, which in turn motivates them to participate even more. It is a virtuous cycle. Residents make various proposals at the meetings for the 1% Participatory Budgeting, which results in actual benefits to the residents and increases their satisfaction with the operation of the local government. Residents’ proposals include: installation of water fountains at the starting points of hiking courses as proposed by amateur hikers; rehabilitation programs for severely disabled people as proposed by a parent of a handicapped person, and; building of local children’s centers as proposed by low-income parents worrying about their children being left unattended after school.

 8. What were the most successful outputs and why was the initiative effective?
At the end of each year, the Resident Congress and the PB Committee hold meetings to evaluate their activities during the year and review successes, failures, and regrets. The results are presented to residents at the Public-Private Open Discussion held every February or March. Every year, members of the Resident Congress, PB Committee, officials of Seodaemun-gu office, district councilors, city councilors representing the district, residents, and civil society get together to evaluate the previous year’s achievements and discuss future plans. The Gu office maintains a Project Execution Management Card for each PB project and discloses its contents quarterly. To enable the Gu office to get feedback on the progress, the Residents’ District Administration Evaluation Group carries out a separate evaluation. The Gu office pays keen attention to the results to ensure that the PB system runs smoothly in the district.

 9. What were the main obstacles encountered and how were they overcome?
Low financial self-sufficiency and decreasing expendable revenues have always been the worry of local governments in Korea. Many officials believed that it was not feasible for a local government to introduce PB that would further reduce expendable revenues due to increased financial burdens. Although this was the case in the example of Porto Alegre, Seodaemun-gu decided that it was all the more important for residents to participate in the budgeting processes and set the priorities of projects when revenues were not enough to cover expenditures. In other local governments that have adopted PB, the system is not run efficiently. Only a limited number of organizations participate. Consequently, PB has caused wastage of administrative power and money. To avoid repeating the same mistake in the district, Seodaemun-gu runs the Budget School and boosts residents’ competence in reviewing budgets. Through public-private governance, it ensures that the Gu office and residents constantly communicate with each other. Legally, the district council is entitled to review and approve the district budget. Therefore, councilors may feel pressure in reviewing a budget proposal containing projects proposed by residents or projects whose priorities are determined by them. Councilors may oppose the introduction of PB on grounds that it could infringe on their rights to review and approve the district budget. To eliminate such worries, the Gu office continued to talk with councilors and convinced them of the system’s numerous merits.

D. Impact and Sustainability

 10. What were the key benefits resulting from this initiative?
The biggest advantage of participatory budgeting is that a local government can respond to its residents’ demand in a very significant way. Previously, the district budget was prepared by the Gu office without residents’ participation. Civil society intervened, but only in budget settlements. Therefore, risks of cronyism by high-level officials could not be eradicated. There were contractors lobbying for particular projects for their own interests. There was no system in place to stop it once and for all. Through the introduction of participatory budgeting, any resident could easily file his/her opinion with the district government on major projects and issues. It means that the relationship between the local government and residents has shifted from unilateral to bilateral relations for a whole range of issues. In PB implemented by Seodaemun-gu, residents rate the priorities of projects subject to PB. Residents exchange opinions and vote on the priorities. The decision is binding -- unless the decision incurs legal problems, the district government must include highly rated projects in its budget proposal. Due to such institutional support, participatory budgeting runs most practically in the district. All PB processes are disclosed to the residents. Otherwise, PB would just be another form of cronyism benefiting a limited number of interest groups. Seodaemun-gu has fully opened up its PB meetings - both dong meetings and its gu meeting - to any resident wishing to participate. Participants are given full explanations about issues and encouraged to express their views without any reservation whatsoever. PB processes automatically encourage residents to study the district budget and policies more extensively. Through this residents gain a better understanding of major issues and projects in the district. It facilitates both the district government’s promotion of various major projects and the private sector’s supervision of budgeting.

 11. Did the initiative improve integrity and/or accountability in public service? (If applicable)
Previous cases show participatory budgeting being implemented superficially in many local governments where public officials lead everything, while the PB Committee is run similar to various interest groups. Thus, residents participated reluctantly in the processes. For such local governments, the model of Seodaemun-gu including the operation of the Budget School and close cooperation with civic organizations - is definitely worth trying to emulate. Everyone is tempted to implement PB for larger portions of budgets. However, if the PB scope is large participating residents could get become discouraged by the workloads they must bear. Therefore, Seodaemun-gu decided to open up just one percent of its total budget for PB processes. Such systematic, gradual approach deserves to be recognized as a model for many other local governments both at home and abroad. Japan has a much longer history of self-government than Korea, yet a Japanese delegation came to the Seodaemun-gu to benchmark its PB. It praised the district’s efficient operation of the PB system. Many civic organizations in areas where PB operations are not so successful have visited the Gu office for benchmarking purposes.

 12. Were special measures put in place to ensure that the initiative benefits women and girls and improves the situation of the poorest and most vulnerable? (If applicable)
As seen in the cases of some local governments’ financial crises in Korea, policymaking decisions only by a small number of officials can become very unrealistic. For PB, a large number of people give their insights. Budget distortion or budget waste is blocked systematically. Nowadays, public services are becoming more complex. To enhance the transparency of administration and realize financial democracy, it is crucial that residents - taxpayers - actively participate in policymaking decisions. Self-government must be based on the principle of residents governing themselves. Nonetheless, there are virtually no effective means of participation by residents in critical decision-making processes. However through PB, residents can express their points of view freely, and their input is reflected in government policies. Through this, residents are further motivated to participate in their own administration. Prior to the introduction of PB in the district, both preparation and operation of budgets were considered the public officials’ jobs. Residents expressed their opinions only on matters related to their own households. Yet, through PB processes, however, residents of Seodaemun discuss various projects on the table and eventually choose those likely to benefit the most people in the district in the long run. Through PB processes, residents are equipped with a spirit of ownership with regard to diverse district policies and learn to consider the public good first.

Contact Information

Institution Name:   Seodaemun-gu Office
Institution Type:   Government Department  
Contact Person:   Jeonju Park
Title:   manager  
Telephone/ Fax:   82-2-330-1086 / 82-2-330-1442
Institution's / Project's Website:  
E-mail:   pjj326@sdm.go.kr  
Address:   yeonheero 248
Postal Code:   120-703
City:   Seodaemun-gu
State/Province:   Seoul

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