NEW FINANCIAL RECOVERY PLANS OF ITALIAN LOCAL GOVERNMENTS: AN ASSESSMENT USING OUTCOME-ORIENTED DYNAMIC PERFORMANCE MANAGEMENT

This Ph.D. thesis investigates the new financial recovery plans as instruments which aim to avoid the bankruptcy of local governments in difficulties. This tool was approved by the Italian Central Government by Law Decree No. 174 of 2012. The goal of this work is to verify whether a recovery plan is capable of ensuring fiscal discipline and financial sustainability. The literature on the subject focuses mainly on two aspects: the description of legal framework and the static analysis of recovery plans. The present research, instead, explores the drafting process of recovery plans by investigating the local governments’ decision-making process and the involvement of stakeholders in planning activity. Furthermore, this investigation takes a dynamic perspective since it aims to assess the recovery plans sustainability over time. To this end, a case-study focuses on Catania city and investigates the recovery plan adopted by the Council. Catania is the second populated city in Sicily and the largest which makes use of this remedy in the Region. To conduct this analysis, a Dynamic Performance Management approach is suggested. Such an approach allows decision-makers to frame the dynamic complexity by identifying strategic resources, performance drivers which affects inter-departmental (and inter-institutional) performance outcomes. Finally, the Dynamic Performance Management chart, along with qualitative information gathered in the fieldwork, is embedded into a System Dynamics model in order to simulate and test the dynamic performance of different policies. Simulations may support decision-makers to cope with dynamic complexity, to compare the performance over time, to adopt sustainable policies, and to trigger their mental learning process. Findings of the present study reveal the specific issues on the recovery plan ranging from decision-making to implementation phase. Particularly, centralization hitting the decision-making process, cost-cutting affecting the policies designing, and barriers concerning the implementation phase.