This report is the result of an extensive assessment of the process of proposed decentralization reforms in Ukraine as it relates to the future programming of USAID/Ukraine. Fieldwork for the assessment took place during most of the month of July 2014 and included over 50 semi-structured interviews with key stakeholders in seven cities in addition to seven citizen focus groups conducted in four different cities. The three primary questions that the assessment sought to address are: 1) what is the current operating environment for local governance reforms?; 2) what is the capacity and capacity-building needs of local governments and civil society to implement such reforms and effectively exercise improved governance on the local level?; and 3) what are the existing and planned donor efforts in local governance and decentralization? With regards to the first question, the assessment team found that there exist mixed prospects for decentralization reform. On the one hand, there is widespread public support and political will within the present government for the reform, and many stakeholders view its implementation as an urgent priority to move Ukraine towards integration with the European community. On the other hand, vested interests in the present system related to the entrenched patron-client nature of politics in Ukraine threaten to undermine the prospects of meaningful decentralization that may cut-off existing avenues for rent-seeking on the national-level. Additionally, while there appears to be political will at high levels of governance, including President Poroshenko, many experts and political actors have yet to accept the present formulation of the reform more due to issues related to political competition at the national level than to the reform's role in empowering local governments. In particular, many of the national-level political actors are wary that decentralization reform proposed by the presidency will serve to strengthen the president vis-a-vis the parliament and cabinet of ministers. As a result, most of the parties in parliament did not support the version of the reform presented by the presidency over the summer. At present, the implementation of reform has been delayed at least until a new parliament can be elected in late October 2014. These elections could either provide a better or worse environment for adopting legislation needed for the decentralization reform depending upon the configuration of political forces it creates. In general, it is likely that the realization of reforms will require negotiation on various points in the proposed plan for decentralization. In addition to the question of whether national oversight of local governments will be performed by the presidency, the cabinet of ministers, or a combination of Ukraine's dual executive power structure, another controversial question that will likely need to be negotiated relates to the consolidations of villages (hromada) and rayons.1 Proposals suggest shrinking the number of hromada from about 15,000 to 1,200 and the number of rayons from about 500 to 100. This would make the proposed empowerment of hromadas in the country much more feasible, ensuring that each had the minimal human capital and technical capacity to implement self-governance. Additionally, this reform would make efforts to support each local government more feasible for the oblast and national level governments (as well as for international donors). However, many on the local level express concern that the proposal to consolidate hromada and rayons would adversely impact their existing access to health care clinics and schools. Furthermore, this reform is also likely to face opposition from many local interest groups, who would potentially lose their positions of power within the present configuration of territorial-administrative units."