Contents -- Acknowledgments -- Executive Summary -- 1. Introduction -- 2. Evaluation Criteria -- 3. The System Ex Ante -- 4. Political and Organizational Reforms -- 5. Assignment of Functions -- Education -- Health -- Social Assistance -- Housing and Infrastructure -- 6. Revenues -- Financing Discretionary Expenditures -- Sector-Specific Financing -- 7. Debt Controls -- Ex-ante Quantitative Restrictions -- Ex Ante Administrative Controls -- Restrictions of Certain Forms of Debt -- Bankruptcy -- 8. Directions for Further Reform -- 9. Conclusions -- Transparency and Stability -- Equity -- Macroeconomic Control -- Effectiveness -- References -- List of Boxes -- 1. Objectives of Intergovernmental Finance Systems -- 2. A Snapshot of the Economics of Expenditure Assignment -- 3. Hungary's Municipal Bankruptcy Procedure -- 4. Calculating the Formula Grant in England and Wales -- List of Tables -- 1. Timetable of Post-Soviet Reforms -- 2. Local Share of Total Public Education Spending -- 3. Subnational Spending on Health and Social Assistance (as % of total public sector spending on these functions) -- 4. Personal Income Tax Shared with Subnational Governments (2002) -- 5. Property Taxes (% of GDP) -- 6. Summary of Municipal Debt Regulations -- List of Figures -- 1. Structure of Local Government Expenditures as Shares of GDP -- 2. Structure of Government Revenues as % of GDP.