Spasiv Nataliia, Doctor of Economic Sciences, Professor, Professor of the Department of Financial Technologies and Banking, West Ukrainian National University, Ternopol, Ukraine

ORCID: 0000-0003-0797-7220
e-mail: vladnat@gmail.com

Assessment of Budget Financing for the Social Protection of Residents of Territorial Communities

Abstract. Introduction. The decentralization reform in Ukraine has significantly expanded the financial powers and responsibilities of local self-government bodies regarding social protection. However, the full-scale war has substantially increased social risks, putting additional pressure on local budgets and necessitating improvements to financial mechanisms that ensure social protection at the community level.

Purpose. This study aims to evaluate the current state of financial support for the social protection of community residents. It will do so by analyzing local budget expenditures and identifying the main trends in their development under decentralization and martial law. The study will also propose ways to improve the financial mechanisms of social protection at the local level.

Results. The economic significance of local budget expenditures on social protection and security has been examined, as has their role in implementing social policy and ensuring social stability within territorial communities. The dynamics of local budget revenues and expenditures in Ukraine from 2019 to 2025 were analyzed, as well as the functional structure of local budget expenditures. The study shows that decentralization strengthened the financial capacity of territorial communities, enabling them to increase financing for social protection despite wartime challenges. Expenditures on social protection and social security increased from UAH 28.1 billion in 2021 to UAH 61.6 billion in 2025. This increase reflects the growing number of internally displaced persons, war veterans, persons with disabilities caused by military actions, and other socially vulnerable groups. The research confirms a shift in local budget priorities toward greater social and security focus. Additionally, it was determined that the financial model of social protection is gradually shifting from financing social benefits primarily to expanding social services, rehabilitation, and social adaptation measures, in accordance with European social policy approaches. However, the growing proportion of social spending puts additional fiscal pressure on local budgets and restricts funding for economic development and infrastructure modernization.

Conclusions. It has been concluded that local budget expenditures on social protection are key to maintaining social resilience, preserving human capital, and ensuring the sustainable development of territorial communities under martial law. To further improve financial support for social protection, the focus should be on strengthening the financial autonomy of local governments, improving the efficiency of public expenditure management, implementing performance-based budgeting, expanding program-target budgeting approaches, evaluating the effectiveness of social expenditures, and diversifying financial sources for local social protection programs. Implementing these measures will increase the sustainability, efficiency, and social impact of local public finance systems.

Keywords: financial support; social protection; local budgets; territorial communities; decentralization; social expenditures; social policy; financial capacity.

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