The funds for reception work are used responsibly

Jarkko Mikkonen/FRC
The Lappia hall in Tornio was converted into emergency accommodation for asylum seekers in September 2015.
Image: Jarkko Mikkonen/FRC

In the autumn of 2015, tens of thousands of asylum seekers coming to Finland needed food and a roof on their heads quickly. Managing the exceptional situation required exceptional measures from the Red Cross as well as from other actors. What costs were incurred by the government-funded reception operation carried out by the Red Cross?

The Finnish Red Cross’s reception operation in numbers
  • The total operating cost of reception centers invoiced by the Finnish Red Cross from the government from 2015 to 2016 were approximately 345,5 million euros. In addition to the services provided by the Red Cross, the sum includes external services such as interpretation and the health care and reception allowances of asylum seekers living in the Red Cross Units. 
  • As a result of the reception operation, the finances of the Red Cross districts have had a surplus from 2015 to 2016. The total sum of the districts’ surplus in 2015 was approx. 1 million euros, and in 2016 it was approx. 10 million euros.
  • The surplus is used in the long term to maintain and strengthen the Red Cross’s preparedness and preparation and to develop its expertise.
  • The Red Cross uses the funding received for the reception operation responsibly and is responsible to the organisation’s elected bodies for the management of its finances.
  • The reception operation are not funded by donor funds.
  • The Red Cross does not seek profit from its reception operation.
The reception units had many establishment criteria: suitability of the property as an accommodation for hundreds of people, the rental rate and the condition of the property, existing kitchen facilities or the possibility to renovate and add individual or group kitchens, the location, and the distances to the grocery and to the key services. The authorities also emphasised a reasonable distance to the police station as well as covering geographically the entire country. 
 
Due to the urgency of the situation and the fact that many units were established within hours, it was not possible to fulfill all criteria. The first and foremost issue for the Red Cross was to ensure that public funds were used responsibly. In addition, it was – and is – of vital importance to fulfill the requirements set for the reception services appropriately and to carry out the work with high quality.
 
The Red Cross establishes, maintains and closes down reception units for asylum seekers upon the request of the authorities. This has already been done for 30 years. Under the Ministry of the Interior, the Finnish Immigration Service guides, regulates and controls the reception system and its costs. It is responsible for the decisions to establish and close down reception units, the costs of the reception services, as well as the processing of asylum applications and their decisions. 
 
The Red Cross district organisation is responsible for the reception services in its area. Each district invoices the Finnish Immigration Service for the costs incurred at the reception units, based on the agreed budget. The Red Cross has 12 districts, 11 out of which have been operating reception units.

 

Unique network of workers and volunteers that covers the whole country 

The agreement between the Finnish Red Cross and the authorities for the preparedness to receive asylum seekers at a large scale dates from 1988. The agreement was made with the then National Board of Social Welfare, which was responsible for refugee issues at the time – today, the agreement is between the Finnish Red Cross and the Finnish Immigration Service. 
 
The approved costs paid by the Finnish Immigration Service to the Red Cross have also included the compensation for administrative costs, which covers the indirect costs related to maintaining the reception units, such as financial and human resource management. The compensation for administrative costs is also used in the long term to maintain and strengthen the preparedness and preparation of the Red Cross and to develop its expertise. This is necessary, in order for the organisation to be able to act quickly in case of a need to receive asylum seekers and establish new reception units or registration centres or arrange emergency or temporary accommodation. 
 
Building the Red Cross’s preparedness is a long-term goal based on the organisation’s national operating structure. It includes 12 districts and close to 500 branches. The branches have trained volunteers and professional staff ready to be mobilised in any operation. Effective operations require maintaining and continuously developing the skills of the volunteers and the staff as well as the ability to mobilise and manage new volunteers. The compensation received by the Red Cross for maintaining the reception centres is used to develop and improve the organisation’s ability to act in future operations or other abnormal or emergency conditions.
 
The Red Cross’s operating structure and unique network of workers and volunteers made it possible to establish a hundred new reception units all over Finland in the autumn of 2015 and in early 2016. Many parties, including the government, have stated that the large-scale reception of asylum seekers would not have been possible without the Red Cross. This was proof of a situation where the Red Cross preparedness paid off. 
 

Using public funds responsibly

 
The costs invoiced by the districts of the Finnish Red Cross from the Finnish Immigration Service from 2015 to 2016 amounted to approximately 343 million euros in total. The sum included the services provided by the Red Cross (personnel and rental costs, materials and equipment) as well as the external costs (health care and reception allowances of the asylum seekers) and the compensation for administrative costs. 
 
The Red Cross continuously monitors the cost level of reception units and looks ways to make the operations more cost efficient. Local procurement is carried out with high quality, situations are anticipated and the creation of costs is thus prevented. The leading principle is to use the taxpayers’ funds responsibly.
 
Among other things, the responsibility includes a tendering process for service providers. However, the exceptional situation in the autumn of 2015 required very prompt actions, meaning that contracts were awarded directly due to the extreme urgency. Reception units, in which the facilities or the rental agreement allowed it, transitioned to individual cooking, which created both savings and provided meaningful past-time for the asylum seekers. In many situations, changing the food supply into individual cooking meant negotiating with the lessor, obtaining a permit from the Finnish Immigration Service, renovating the facilities and changing the fire alarm systems.
 
In practice, it is only possible to influence a part of the costs of reception centres. When the necessary procurements have been carried out and there is no need to procure new materials, hardly any savings can be achieved in procurement costs.
 
The largest cost items are the salaries of the employees, rent and property maintenance. The number of personnel complies with the instructions of the Finnish Immigration Service. The wage level of experienced workers is slightly higher, but the effect on the whole is minor. There are differences in the rental costs, which include the rent, electricity, water, heating and maintenance costs. The costs are negotiated as low as possible. In practice, the rents in Uusimaa and especially the Helsinki region are higher than in the rest of Finland. The authorities’ criteria have included placing asylum seekers in different parts of the country and sharing the responsibility among several municipalities. Having expertise available all over Finland is also sensible from the point of view of preparedness. Due to education and employment opportunities, reception units have been established in large cities and in Uusimaa. The rental agreements, as well as the unit budgets, are approved by the Finnish Immigration Service. 
 

How are the reception units’ costs created? 

When monitoring and comparing the cost level of reception units, the fixed and variable costs must be separated in order to create an accurate picture of the costs. The average price for one accommodation day may vary significantly at the monthly level. This is mainly affected by the variable costs, depending on the unit’s customers, such as special health care services for asylum seekers and child welfare placements, as well as the related interpretation costs and special security requirements. 
 
Fixed costs such as high rent and a lack of independent cooking opportunities may also have increased the average price. The variance of accommodation capacity also has a major impact on costs. The Finnish Immigration Service is responsible for placing asylum seekers into units. The larger the unit and the higher the utilisation rate, the lower the average price of the accommodation is. As the number of residents decreases, the price for one accommodation day cost per person increases due to the fixed costs. As the party maintaining the reception units, the Red Cross cannot affect the utilisation rate. In contrast, a reception unit may be significantly overfilled, while the daily cost is still calculated based on the number of residents in accordance with the assignment. The costs due to private accommodation (e.g. reception allowance and health services) have also showed as costs for the reception unit, even though the accommodation days of the people in private accommodations have not been taken into account in the number of places for accommodation. The asylum seekers in private accommodations are always registered at a reception centre.
 
The costs related to establishing and closing down a reception unit are significant. Among other things, the establishment costs include renovating the premises and preparing them for use, possible changes, security arrangements, purchases to equip the rooms as well as the office, staff and washing facilities, communication links, systems and equipment, as well as the access control and key management. Approximately one month must be reserved for closing down a unit, but salary, renting and personnel costs are still incurred during restoration work and archiving, among other things, while the unit has no more residents. Restoration costs are related to closing down a unit, and in some cases initial investments have been paid at the end, if such an agreement was made in the beginning in order to schedule the costs. These costs can be affected through planning according to a longer term than at present, and by regulating the capacities. 
 
It is difficult to influence other reception costs. The amount of the reception allowance paid depends on the number of residents. People can cook for themselves in almost all units. This has saved significantly in food service costs. The costs of health care, child welfare and the related interpretation depends on the residents’ needs. 
 
Comparison between units based only on the total costs does not tell enough about the situation, because there are units of different sizes, created according to the dispersed settlement model and the institutional model, and they may have specific responsibilities. For example, in the units for  unaccompanied minors, the costs are raised by the legal requirements on the number of personnel according to the Act on the Reception of Persons Seeking International Protection and the Child Welfare Act.

 

Daily costs of the Red Cross are under the Finnish Immigration Service’s average price

Comparing the costs of reception operations and the different actors is difficult, because there are so many variables, and their impact is not visible in the average costs per person that are occasionally highlighted in the media. In addition to the Finnish Red Cross, reception centres are established and maintained by many other actors, such as the state, municipalities, other organisations and private sector. The Finnish Immigration Service can make comparisons between different units and actors based on the expenditure information they receive as a contracting agency. 
 
The average cost  of reception in 2016 calculated by the Finnish Immigration Service was 65 euros/day. Close to 70 per cent of the Red Cross units come under that daily cost. Nine per cent of the units have reached an average daily cost of 37 euros. The units that go over the average daily cost are encumbered by the high level of rents in the Helsinki region, as well as the short operating times of the units, which highlights the costs of establishment and closing down. Maintaining high number of preparedness capacity also increases the average daily cost: for example, the reception units in Keuruu, Kauhava and Hennala had significant additional space for expansion.
 
In many of the Red Cross’s reception centres, the expenses  have continuously remained low. The average costs per person varied from 24 to 56 euros in the reception centres operating before 2015 (Pansio, Kristiinankaupunki, Kemi, Rovaniemi, Lammi, Mänttä-Vilppula).

 

The operating model of the reception unit affects the costs – the Red Cross is piloting a new model

The cost-efficiency of the Red Cross’s reception centres that have been operating for a long time in locations such as Lapland and Häme is primarily based on a decentralised operating model. The number of accommodations can be changed flexibly, depending on the need, and the number of personnel required is lower than in institution-type centres. The decentralised model is the best housing option for many with regard to the independence and normal life of asylum seekers.
 
A combination of the housing model and an institution is also very cost-efficient and functional. An institution may have significant additional capacity or emergency accommodation places that can be used in case of large-scale immigration. People that may need specific support benefit from the institution model and having support available close by.
 
Private accommodation is the most cost-efficient option, because it does not create accommodation costs and less personnel is needed. However, private accommodation is not without its problems. Risks include not being able to identify the people in special need of support, which means that they cannot be referred to receive assistance, or their potentially inadequate living conditions. Having sufficient resources in order to provide the services must be ensured. 
 
Currently, the Finnish Red Cross is piloting a hybrid unit for unaccompanied minors in Hämeenkyrö for the first time in Finland. The unit consists of reception unit, family group home units and supported housing units, aftercare, and coordinating the private accommodations in the area. The operation and practices of the hybrid unit are developed during the pilot. Its strength is that the familiar and safe adults remain in the young person’s life throughout the process. In addition, the cooperation with the municipality’s different services, authorities, volunteers, educational institutions and local companies create plenty of synergy benefits.

 

Cost savings from moving quickly to municipalities

The costs of reception can also be lowered by moving people to municipalities as quickly as possible after they have been granted a residence permit. However, there have not been enough municipal placements, or they have not met the need. It has been a great deal easier to find municipal placements for the Syrian quota refugees than the asylum seekers who have been granted a residence permit. 
 
Last year, the waiting period for a municipal placement was 102 days on average. The waiting period can be shortened through closer cooperation with the authorities, support to the municipalities, and financial incentives. Among other things, the Red Cross has carried out proactive work, such as the organisation of information sessions, in which municipalities have been prepared for receiving refugees. This work can also be done on a larger scale. 
 
Aiming for cost-efficiency is one of the most important quality criteria of the Red Cross in the provision of reception services, and the organisation continues to communicate openly about the finances. At the same time, the Red Cross continues to develop reception services to ensure that the reception conditions are human and the asylum seekers are treated with dignity and with  respect to human rights. 
 

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