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Such laws (and drafts) don’t take into account actualcapacity of budgets of different levels as well as the fact that, by theirnature, benefits are inconsistent with market economy. In fact, the declarativenature of such laws affects both the executive power that seems incapable ofensuring the realization of the citizens’ right for the declaredadvantages. And the legislature seeming incapable to pass the workable laws.The federal agencies of executive branch also often lack the understanding ofthe need in implementation of the reform policy in the social sphere. It is lawenforcement authorities and organizations pretending for benefits according totheir profile of whom the attempts to improve the socio-economic positions oftheir employees by using mechanisms of the state socialism society are mostlycharacteristic.

In such a situation, the objective needarises in elaboration of new mechanisms of introduction and implementation ofthe state social benefits system. This problem is both socio- economic andpolitical one, and it requires an in-depth analysis and the respectivelegislative arrangements.

2. Reforming of the system of social benefits

The reform of the system of social benefitsthat emerged in the frame of social distribution relations and not meeting themodern socio-economic situation is an important element of enhancement of theeffectiveness of the social protection of the population.

The refusal from such an instrument of socialsupport without shaping the respective compensatory mechanism for thedeprived strata will entail a significant decrease in their livingstandards.

In such conditions, the objective need indevelopment of new mechanisms of implementation of the public social benefitssystem arises. The purposes of the reforming of the social payments andbenefits system appear raising the efficiency of the social protection of theneedy strata through introducing the targeted social support, decrease ofpoverty level, maintenance of the balance between social expenditure and thegovernment’sfinancial capacity.

The general vector of the benefits systemreform should imply the following crucial landmarks:

1. The reform of mechanisms of allocation and provision of the systemof public social benefits set by the federal law and funded from the budgetresources. The Subjects of the Federation as well as municipal entities andeconomic agents enjoy the right to set benefits at the expense their ownresources (profits) not pretending for transfers from the federal budgetto cover expenditure in the provision of social benefits to single categoriesof residents.
2. While >

• The income level of the recipient of the benefit;
• Recipient’s disability;
• The urgency of the satisfaction of the need;
• Social status of the recipient of the benefit

3. As far the financing of the expenditure on payment forsocial benefits is concerned, the shift of the focus should be made from thefederal to the regional level and from the budget financing to socialinsurance and other sources.
4. An implementation of the transition from the benefits received bythe whole household due to their common residence, to the allocation of thebenefit to its recipient only.

The reform of the social benefits systemshould be based upon the transition of a number of benefits to a form of thetargeted provision of social support to the needy households and the program ofmeasures on contracting budget subsidies to producers of goods and services,and the discontinuation of the cross- subsidizing of different groups of thepopulation, along with a gradual substitution of benefits with targetedpayments to those in need of them.

It is necessary to carry out a gradualrefusal from the traditionally emerged equalizing provision of benefits totheir individual allocation on the basis of uniform indigencecriteria with account of the average income per capita and the dataon the composition and structure of a household. The practice of the provisionof benefits to the persons who are found incapable of self-servicing due totheir physical, age and family conditions as well as to complete their incomethrough participating in production activities (disabled, children) shouldbecome a regulation.

Hence, considering the targeted nature of thebenefits to individuals who are deprived of the possibility of self-sufficiency (disabled, elderly persons, and children from the families with atleast 3 children) the principle of the УcategorialФ allocation of benefits maybe maintained. A low level of well-being of may not form the grounds for theallocation for a longer-term benefits, i.e. the benefit should be temporary or,in an exceptional case, permanent, and it should imply the right to beeligible for that only under a single and the most favorable for the recipientreason.

The enhancement of the socio-economicefficiency of social benefits may be ensured in several ways: 1) raising anabsolute amount of the benefits provided (in value equivalent); 2) increasingthe number of benefits; 3) the provision of only those benefits which may notbe redistributed within the household (so that it would be only the recipientwho would use them). The former two ways are impossible due to budgetconstraints and the nature of the benefits themselves, for they are provided torelatively narrow social and professional groups of the population. A growth inthe number of their recipients practically means the provision of guarantees orsupport to the needy rather than the provision of benefits. The focus on thebenefits available for their recipient only would help maintain their highvalue for him. It is very difficult to implement that, since even therecipient’seconomizing on payments for the bills for the housing and communal services isredistributed over the other members of his household, which in reality meansthe reduction in the absolute amount of the given benefit for the recipienthimself. The provision of benefits in monetary form would automatically meanthat they also would be spread over the other members of thehousehold.

Hence, first, the benefit should not beprovided to the recipients family members as well, and, secondly, such benefitsshould have a strictly functional nature and provide for theirrecipients’ crucialneeds (such as, for instance, the need in medicines, baby food for theneedy, clothes for children from the deprived families, medical and resort andrehabilitation treatment for disabled, education, payment for the childrenpre-school institutions’ services, etc.)

In addition, the benefit may not be providedin a form of the government compensation to residents for the material and/ormoral harm caused to them, as well as due to their exercising a certain civil,official or public assignment (at this point, social security and other socialpayments should be employed). The social transfers set for single categories ofcivil servants, military and interior personnel need to be transformed in aform of wages and monetary allowance.

In the course of the reform one will have torefuse from a number of benefits as well as to identify economically efficientforms of provision to citizens of certain kinds of social benefits (in natural,monetary form or in a form of a service alike). On the one hand, that wouldallow to a maximal extent satisfy the recipients’ needs and, considering thetargeted nature of the benefits, to provide the recipients with resources thatthey will be able to sue freely, while on the other hand, that will enable thegovernment to create conditions for competition in different sectors of thenational economy as well as to encourage the consumption of goods and serviceswhose delivery by the market is unsatisfactory or non-existent.

To do that, one needs to carry out a revisionof the current system of social benefits, using such criteria as the urgency ofthe need satisfied with the given benefit and the social status of therespective recipient. That would allow to revise or cancel poorly efficientbenefits that are insignificant to their recipients and to exclude the benefitsthat duplicate each other.

In this case the social benefit appears in aform of the public social support valued in its price equivalent andconstituting a natural transfer, subsidy, and other forms of the provision ofsupport. A thoroughly targeted form of natural transfer can combine a broadcoverage of its recipients with a high socio-economic efficiency of itsprovision, and with attractiveness to its recipients.

The direct natural transfers appear bothtargeted and non-transferable, should they embrace a targeted group, theexample of which may serve the provision of food for pupils in public secondaryschools and students in secondary special educational institutions, and themedical monitoring of pregnant women. Even in the developed economies thepublic support to the needy is not limited with just monetary form, though itclearly prevails.

The social benefits provided to thepopulation should be effective within the limits of the federal socialstandards. Such an approach implies that any beneficial tariffs are effectiveonly within the limits of a social consumption standard, while any consumptionof goods and services beyond that shall be paid for at an actual price. Thatwould allow equalization the positions of households that have a differentlevel of their provision with property and a different access to theconsumption of public goods. At present, both the housing norms and standardsof the consumption of communal services have already been introduced to thecalculation of the amount of housing subsidies to the needy citizens. Such anapproach is not applicable to all kinds of benefits, that is why one will needto demonstrate flexibility while considering each kind of benefit.

The provision of a benefit as one of thekinds of public social support will be out independence on the pre capitaincome of its recipient as well as on the per capita income of the household ofthe said recipient, whose members, due to their sharing the housing andspending, may also become indirectly eligible for the said benefit.

At the first stage of the social benefitssystem reform, it will be the categories of citizens having special merits(veterans of the GPW and other categories equaled to them, heroes of the USSRand Russia, holders of the full set of the Order of Glory, Heroes of theSocialist Labor) and some other categories (disabled of the Ist Group,УliquidatorsФ of the Chernobyl disaster) for whom the benefits will be keptwithout any additional examination of their indigence. That would require therespective conduct of specification of the procedures of the benefitsprovision and the sources of their funding.

For other categories eligible for benefitsthe provision of those will be put in dependence on their per capita incomes.Thus, should the recipient have his per capita income level (exclusive of thevalue of all the benefits due) lower than the subsistence level value set inthe respective Subject of the Federation, he will be eligible for unchangedbenefits (providing that the overall volume of the disposable funds will notexceed the subsistence minimum value). At the same time the recipient whose percapita income level is higher than, or equal to the subsistence minimum set inthe respective Subject of the Federation, should be deprived of the rightfor benefits.

The consideration of social benefits as akind of social support requires the conduct of the value evaluation of thecurrent benefits. It is necessary to identify the economic nature of socialbenefits for the sake of the transfer of some of them to the social insurancemechanism. The abolition of benefits should be carried out only under thecondition of the provision of the eligible forbenefits categories of residents with the monetaryincome (pensions, compensatory payments) at the level not being lower than thesubsistence minimum one. In conjunction with that, it is necessary to developprocedures for the provision of monetary compensation or the application of amechanism of subsidies to reimburse for spending on some kinds of socialbenefits to the citizens eligible for those. As concerns the benefits extendedto the staff of various agencies according to their professions, their paymentof beneficial services should be made in full, while the cots incurred by themshould become subject to reimbursement at the respective office, at the expenseof the respective budget’s funds.

At the same time the powers of the Subjectsof the Federation and local self-governance authorities will be substantiallyextended in terms of identification of priorities in their provision ofbenefits and social support. Along with the fixing of expenditure powers withrespect to the provision of social support ( in various forms), the governmentshould consider the problem of the transfer of resources necessary forensuring consistency with certain standards of the service provision,compliance with the federal law in the part of its regulation of interbudgetaryrelations. The local authorities and NGO=s find themselves being closer to theproblems arising in the social sphere, thus they can employ more flexibleapproaches to their solution compared with the federal center.

However, as long as the provision of socialsupport is concerned, at the first stage of the interbudgetary relations reformit will be a strict legal division of competence across the tiers of executivepower, ensuring of the consistency between the function exercised and resourcesneeded, identification of responsibility of all the said government tiers inthe course of implementation of social policy will have a fundamentalimportance. Some functions of executive power in the area of provision ofsocial support are, by their nature, are purely federal, regional or local,however, there are functions whose efficient exercising is possible only in theevent of the use of all the power tiers’ combined competence.

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