Hans d’Orville, the ADG for Strategic Planning, and Nutan Wozencroft, the Chief Financial Officer, gave an overview of the impact of UNESCO’s financial position on the work plan exercise for the next biennium (36 C/5). The SMT then discussed areas where further fundraising or cost reduction will be required. At the beginning of the year, the gap between funds required and funds available was $188 million. Work plans were revised in January but are still $26 million higher than the $465 million budget ceiling approved by the Director-General in her Ivory Note of December 2011. In addition, estimates of committed costs that should be financed elsewhere or postponed bring the total "over-run" to $70 million.

The SMT reviewed the impact of budget cuts on institutes and field offices, and discussed whether they could all operate effectively within their new budget ceilings. Funding for two institutes requires extra-budgetary support that has not yet been confirmed by national government partners – the Institute for Statistics in Montreal and the World Water Assessment Programme in Perugia.

A better link is required between the regular budget and extra-budgetary resources to allow for shifts and equalization between programmes. In three Sectors, fully 60 per cent of programmes have zero dollar budget lines. Hans said that the balance between normative and operational activities must be improved. The Director-General, asked all Sectors to reduce zero budget lines by focusing their activities on a) strategic priorities, b) areas where UNESCO is a recognized leader and c) results.

The SMT then discussed the need to improve many indicative ratios within UNESCO’s structure, such as:

• Activities (operational) – staff
• programme – administration (including support - professional staff)
• field – headquarters.

A number of cost efficiency measures have already been put in place and others are planned. Already, regular budget work plans show a reduction of more than 70 per cent in travel and temporary assistance, although there are concerns that this level of reduction may not be feasible in the long term. Some Sectors have adopted a 100 per cent freeze on vacant posts and others have agreed to regular programme budgets for travel, temporary assistance and publications of $0. The high cost of security in the field and SITA communication lines was discussed and the SMT agreed to review the basis of these charges. It was also noted that UNESCO contributes $12 million to UN system-wide costs. This matter will be raised at the UN’s Chief Executive Board (CEB) and High Level Management Committee. The DG will also discuss it with the Secretary-General.

The Director-General noted that many Member States are pressing for a reduction in administrative and fixed costs, including a reduction in staff. While accepting that a fundamental restructuring may be required in the medium term, including a realignment of staffing levels, the DG underlined that such structural changes should follow the strategic trust that member states will set over the next two years as they develop UNESCO’s next strategic plan (C-4).

In the near term, the DG insisted on the need for reorganization and simplification of current structures, particularly in MSS and ERI where work plans exceed the budgets that have been set for them. SMT members suggested other ways to improve efficiencies and reduce costs, including better use of office space, streamlined administrative procedures and improved response time / less bureaucracy from BFM and HRM.

The SMT discussed the profile of UNESCO’s staff and emphasized the need to address its composition - particularly to reinforce its field structure. Of the 2113 fixed-term/indeterminate staff, 50 per cent are support staff, five per cent are National Officers, 40 per cent are International Professional staff and 5 per cent are Directors and above. 57 per cent work at headquarters, 30 per cent work in field offices and 13 per cent work at UNESCO Institutes. SMT members agreed on the need to reduce administrative costs (procedures, processes and staffing), centralize administrative functions, transfer international professionals from headquarters to the field and improve the ratio of programme to support staff. Investments in tools that reduce labour-intensive procedures will help UNESCO address this imbalance.

Getachew Engida, the Deputy Director-General, concluded by leading the team through a roadmap that includes the following steps:

• stabilizing the financial situation (an excellent start has been made both in cutting costs and generating revenue through the Emergency Fund);
• approving a Work Plan with a budget of $465 million – a 30 per cent cut from the original budget;
• developing a process for allocating Emergency Funds to Programmes;
• implementing programmes according to the original objectives of biennial work plan - 36C5;
• continuing the reform process to secure further efficiencies and deepen measures already taken;
• considering more fundamental restructuring for the next strategic plan (C4) with the underlying principle that structure should follow strategic trusts; and
• maintaining an organizational focus on Africa and going forward with the Field Network Reform in Africa as planned (three African countries have contributed to the Emergency Fund).

The Director-General concluded by asking for vision and commitment at all levels. She directed programme sectors to focus on key priorities and align available resources accordingly. These actions should be highlighted in the Roadmap.