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Tracking & monitoring the utilization of the SMOOE how the same is supplemented in Cabanatuan City & Munoz City
Research collaboration between the Philippine Business for Education (PBEd) And the Araullo University
9 February 2012
Definition of Terms
In the order of the budget process Expenditure program Refers to the ceiling on obligations that could be incurred by the government in a given budget year. The ceiling is supported by estimated financial resources. It also includes proposed new, continuing, and automatic appropriations An authorization directing payment to support obligations. It reflects the parameters of government spending An authorization made by law or other legislative enactment, directing payment out of government funds under specified conditions or for specific purposes An authorization to support obligations for a specified purpose or project, even when these obligations are incurred beyond the budget year. Appropriations for capital outlay (CO) and maintenance and other operating expenses (MOOE) are valid for a total of two succeeding fiscal years An authorization made annually or for some other period prescribed by law, by virtue of standing legislation which does not require periodic action by Congress (e.g., Retirement and Life Insurance Premium or RLIP of the government employees) Authorization issued by the DBM to an agency, which allows it to obligate for specified amounts contained in a legislative appropriation A liability legally incurred and committed to be paid for by the government either immediately or in the future
Settlement of government obligations and/or accounts payable by cash; movement of cash from the Bureau of Treasury or from an authorized disbursing officer to the final recipient. Disbursement is synonymous with liquidation/settlement/payment of an obligation Refers to appropriations for the purchase of goods and services, the benefits of which extend beyond the fiscal year and which add to the assets of the government, including investments in the capital stock of GOCCs and their subsidiaries Refers to the expenditures to support the operations of government agencies such as expenses for supplies and materials, transportation and travel, utilities (water, power etc) and the repairs etc Refers to the fund that comes from 1% special levy on real property tax collected by local government units will be used for improving education services of public schools
Maintenance and other operating expense
Special Education Fund
Table of Contents
Executive summary………………………………………………………….. Understanding the education budget through social accountability………………………………………………. Review of literature and extant policies on education budget reform……………………………………………….. Discussion of the research method……………………………………… Study results………………………………………………………………… Conclusions and recommendations……………………………………… Developing a social audit tool on the education budget……………… p. 5 P. 8 p. 12 p. 18 p. 21 p. 34 p. 37
List of tables
Table 1: Government spending on basic education………………….. Table 2: Summary of FGD and KII participants…………………….. Table 3: Cost parameter per pupil……………………………………. Table 4: MOOE classified by principal cost drivers ……………... Table 5: Budget utilization rate………………………………………. Table 6: Budget utilization rate………………………………………. Table 7: Total MOOE utilization rate ………………………………. Table 8: Total MOOE utilization rate (by fund source)…………. Table 9: Region III‟s MOOE utilization rate…………………….. Table 10: SEF SIE…………………………………………………….. Table 11: Matrix of social audit initiatives………………………. p. 15 p. 20 p. 25 p. 26 p. 28 p. 29 p. 30 p. 30 p. 31 p. 32 P. 38
Education is widely acknowledged to be crucial for self-improvement and country development. However, education in the Philippines still faces important queries: Why is it difficult to attract additional children to school? Why is it hard to keep them in school? And why, if they have graduated, is it hard for them to be aptly employed? While some of the answers rest in other important factors like the quality of public school education, the competence of teachers, the strategies for improving learning outcomes, and the measures for addressing the bulging population, one of the keys is in the budget for public education. To investigate the Philippine education budget is to understand the interplay of centralized and decentralized delivery of education. While most of the basic services were devolved to local government units (LGUs), basic education is still largely the responsibility of the central government through the Department of Education. Two of the main reasons for non-devolution of education were: to depoliticize education particularly the teachers who serve as election officers during national and mid-term polls and to ensure the standard or quality of public education. However, while education was not one of the devolved programs, it was deconcentrated through laws that transferred decision and policy making to the field units of the Department of Education and eventually, to school principals. The principle behind the move to deconcentrate public education is the premise that principals are in the best position to know how to run their schools and consequently, how to achieve better education outcomes. With principals at the helm, improved results particularly on learning achievements can be expected. Despite the limited decentralization of education, LGUs utilize resources for education. They also have a steady source of fund - the Special Education Fund (SEF) - which corresponds to one percent (1%) of real property taxes. Imposed and collected by LGUs, SEF was earmarked by the 1991 Local Government Code for basic education. This sustainable source of financial resources makes LGUs a substantial source of education budget. This study investigates the formulation and implementation of the School Maintenance and Other Operating Expenses (School MOOE). The Department of Education downloads this budget item through different offices all the way to public schools. The study looked at how the School MOOE budget is crafted and if the process involves important stakeholders.
The study also looked at the budget execution and gauged if the MOOE is being used effectively and efficiently. The study also investigates the formulation and execution of the Special Education Fund (SEF). The SEF is a percentage of the real property tax levied by local government units. The SEF is earmarked for education purposes. The study consists of a review of related literature on the education budget, a review and analysis of national level data and a conduct of two separate case studies in Central Luzon: Cabanatuan City and Munoz. The research is conducted from September 2011 until January 2012. The preliminary findings were presented on December 2011. However, by February 2012, some of the local case data are not yet in. Most of the gaps in the research are on the SEF. The study elicited major findings. The implementation of the new allocation formula for the MOOE, although still partial at present, is a welcome reform. Instead of pegging the MOOE budget purely school on enrollment rates, the new formula considers other factors including fund complementation. The reforms of the Department of Budget and Management on monthly release of cash allocation (beginning January 2012) and the elimination of SubAllotment Release Orders (SAROs) and Agency Budget Matrices (ABMs) beginning 2013 are also positive developments. The two reforms are expected to improve cash management and long-term and short-term programming of Dep Ed and the schools. These efforts will require agencies to seriously sync their programs and initiatives with appropriation, allocation, procurement, and obligation of funds. The reforms in the Dep Ed to empower schools and principals have led to reforms in the MOOE budget process. The downloading of the budget is welcomed by the principals since this allows them to use the funds for their actual plans and needs. However, much is still desired. The downloading of the budget suffers from inconsistencies including delays in the release of funds, varying guidelines on manner of MOOE (in cash or in kind), and inconsistent policies on the liquidation of expenses. There is also the need to enhance the capacity of school heads to effectively and efficiently manage their budget and to record their financial transactions. Moreover, despite clamors to increase the budget, national and regional level data reveal high amounts of unutilized MOOE funds. Interestingly, the interviews with school heads from Cabanatuan and Munoz reveal that most
often, they do not return unused resources to their Division Offices. They note that, often, they fully utilize the downloaded cash. They grant, however, that many of them had difficult time liquidating the resources. This means that the inefficient utilization of the MOOE is a shared problem of schools as well as the Division, Regional, and Central Office levels. The audit findings of COA for 2009 validate this when more than PhP 66 Million for MOOE was not utilized due to delayed downloading, lapse of unused NCA, and failure to include fiscal management in the submitted school improvement plans. The study does not have yet a full picture on how the SEF actually complements the school MOOE. However, the literature reviewed and data gathered show interesting findings. The use of the SEF is mostly in the hands of LGU officials and thus, there are varying experiences on how it is used. Interestingly, however, the literature and the data on the SEF in the case sites show it to be a big source of fund for school MOOE needs. Studying the education budget is a function of social accountability. The responsibility for understanding and monitoring the budget, especially of important basic services like education, lies not just with government but with other stakeholders like civil society and the private sector. This paper ends with a discussion on social accountability particularly on developing a social audit tool on the education budget. It explores possibilities in budget monitoring for the Philippine Business for Education.
Understanding the Education Budget through Social Accountability
This section identifies the approach of the research and locates how it improves the delivery of public services like education.
Defining social accountability
One of the approaches that captured the interest of a wide range of actors including civil society, academe, donor agencies, and to an extent government institutions is the framework of Social Accountability (SA). It is an approach that places accountability responsibilities on both the government and citizens or citizen groups. The frame states that while government needs to account for its performance and actions as representatives entrusted with the people‟s authority and resources, citizens or their organizations need to hold government offices and officials accountable. As an approach, social accountability focuses attention on the actions of citizen groups or civil society in ensuring or exacting government accountabilities. It encompasses the broad range of actions and mechanisms that citizens and civil society organizations (CSOs) use to make public offices and officials accountable. On the one end, social accountability includes elections, the voting process considered as the most limited (yet most sovereign) expression of democracy and accountability. On the other end, social accountability includes the holding of public demonstrations, protests, investigative journalism, and the filing of public interest lawsuit. In recent times, the range of social accountability actions and mechanisms included new processes that reaped the victories opened by traditional SA efforts. The new SA initiatives include a) evidence-based efforts (e.g. CSOs‟ impact assessments and policy think-tanks‟ benefit cost analyses of government programs and policies) and b) direct engagement efforts (e.g. participatory budgeting, public expenditure tracking, citizen report cards, and participatory performance monitoring). One definition identifies social accountability as “an approach towards building accountability that relies on civic engagement, i.e., in which it is ordinary citizens and/or civil society organizations who participate directly or indirectly in exacting accountability.”1 Another definition captures social accountability as the “actions initiated by different groups to hold public officials, politicians, and service providers to account for their conduct and performance in terms of delivering services, improving people‟s welfare and protecting people‟s rights.2” Defined as
Malena, Forster, and Singh, 2004:1. The definition coined and used by ANSA-EAP.
such, the accountability being exacted in social accountability is vertical: it exacts government performance and it responds to people‟s demands and expectations.3 Defining social accountability not just as an approach but as “actions… to hold public officials, politicians, and service providers to account for their conduct and performance,” require enabling conditions. ANSA -EAP calls these requirements the “enabling conditions of social accountability” or the four pillars. Organized and capable citizens – Social accountability is only as strong as the citizens holding their governments accountable. Where they are organized in groups and aware of their rights, they will be in a better position to monitor and assess the performance of government programs and policies. Government openness – Social accountability thrives in situations where government is open to scrutiny. While this is often dependent on having organized and capable citizens, there are situations where government offices and officials “accept” the value of transparency and accountability. In these latter instances, the openness leads to common monitoring efforts and joint evaluations. Access to information – Social accountability also rests on the availability of information that could be utilized for holding public offices and officials responsible for their actions (and inactions). In some instances, despite having organized citizens, open governments, and vital documents, particularly financial records, are not accessible. Context and cultural appropriateness – Social accountability also lies on some level of acceptable cultural behavior. These norms and behaviors usually define the acceptable kind or type of communitybased accountability tools. Without considering this requisite, an informative (and costly) social accountability tool might not earn the participation of citizens. As the four are requisites for a flourishing social accountability, efforts must be made to develop or strengthen these pillars. Efforts should also be made to address weak links among the four. Note that social accountability is only as strong as its weakest enabling environment. Finally, it is important to note that the poor and marginalized benefit the most from initiatives on social accountability since they are the “most reliant on
World Bank, 2005: 19. Horizontal accountability is operational in internal accountability systems such the internal audit of an agency or the legislative inquiry on executive programs or officials by Congress.
government services and least equipped to hold government officials accountable.” 4 Numerous experiences show that SA efforts which investigated budgets, programs, policies, procedures and from there demanded accompanying reforms resulted in more effective and efficient delivery of public resources. 5
Social accountability initiatives focused on education
In the Philippines, one of the public services that significantly improved because of social accountability initiatives, in particular, the continuous monitoring and evaluation of the use and results of the budget, is public education. Initiatives then and now to make education responsive to Filipinos‟ needs contributed to improved education policies, enhanced implementation procedures, and ownership of stakeholders. Among the examples of social accountability initiatives on the delivery of education are the following: The Textbook Count monitors the procurement and delivery of textbooks to school districts. It taps civil society organizations, parent-teachers‟ associations (PTAs) and other community-based organizations to observe the acquisition of textbooks and teachers‟ manuals and report on the book delivery (quality and quantity) to local areas; Bayanihang Eskwela monitors the construction of school buildings through the use of indicators like adherence to procurement rules, quality of materials, and building specifications. It likewise taps CSOs, school organizations, PTAs, village leaders, and other organizations to serve as monitors or volunteers; and Bantay Eskwela monitors the procurement, delivery, quantity and quality of public school furniture. CSOs were tapped to fill-up monitoring forms including the checking of whether the purchase orders, order forms, and delivery forms tally.
In regard to the education budget per se, efforts to monitor are very few. The Budget Network‟s Monitoring and Evaluation of the National Government Budget and Budgeting System, which was initiated by former Department of Budget and Management Secretary Emilia Boncodin, tapped CSOs and built their capacity to review the budget of national agencies and to provide recommendations. Beyond this, most of the social accountability initiatives on the education budget involved
Malena, Forster, and Singh, 2004:5. benefit incidence analyses on housing and health led to reform policies and enhanced public service delivery. Efforts at assessing and improving local governments‟ delivery of programs and projects led to better outcomes.
budget evaluations rather than monitoring. The studies include the benefit incidence analyses of the education budget made by the Philippine Institute for Development Studies or PIDS (details of these were discussed in the review of literature).
Review of related literature and extant reforms on the Philippine Public Education Budget
This section is divided into two main parts. The first part discusses the importance placed on education and the major pieces of legislation that were passed, including the rethinking of the budget process, in order to reach the muchdesired education outcomes. This part also includes an overview of the budget reforms being implemented at present. The second part is an overview of the related works on education, particularly the recent studies on the education budget. Valuing education In the Philippines, there is always a clamor to continuously improve Philippine education. Often, this translates to a demand for government to find ways to improve education outcomes such as learning achievements and school enrollment. For Filipinos, a good educational background is a means to a better quality of life. For the Filipino poor, it is a definite pathway out of poverty. Economists aptly described education as “a major determinant of an individual‟ s future earning stream, it is the key ingredient in breaking the cycle of poverty.6” This view puts education at par with other important structural platforms like asset reform (e.g. land redistribution) and economic empowerment. From this perspective, education is not just a result of or an achievement based on the implementation of reform policies like land transfer and financial improvement. In itself, education is a good; it is a key to structural improvements. The importance placed on education is concretized into two major strategies. The first is on the education budget and the second is on the decentralization of education. The 1987 Constitution puts primacy on education as evidenced by its provision of the highest budgetary allocation to the sector. The Constitution states that “The State shall assign the highest budgetary priority to education and ensure that teaching will attract and retain its rightful share of the best available talents through adequate remuneration and other means of job satisfaction and fulfillment.”7 This mandate, among other ways, is operationalized by the Department of Education being the biggest bureaucracy and the recipient of the highest budget. The Constitution also guarantees every Filipino‟s right to education. It provides that “The State shall protect and promote the right of all cit izens to quality
Rosario Manasan, Janet Cuenca, and Eden Villanueva, “Benefit Incidence of Public Spending on Education on the Philippines,” PIDS Discussion Paper Series Number 2007-09, July 2007, p. 1. 7 Article XIV, Section 5 (5) of the 1987 Philippine Constitution.
education at all levels and shall take appropriate steps to make education accessible to all.8” Towards the latter Constitutional mandate, several laws and policies were passed to implement free elementary and secondary education. Aside from the budget, another significant move to improve education outcomes is decentralization. Two efforts, spanning a decade, were made towards this. In 1991, the Local Government Code deconcentrated education. The whole sector was not devolved to local government units (LGUs) to maintain standard quality9 but the Code ordered LGUs to provide education services. The Code also stipulated the allocation of 1% of the collections from real property taxes for the Special Education Fund (SEF) and the creation of local school boards (LSBs) that will decide on, among other functions, the SEF allocation. A decade later, in 2001, Republic Act 9155 or the Governance of Basic Education Act decentralized education management to heads of schools for they are more knowledgeable on how to improve learning outcomes. RA 9155 abolished the Department of Education, Culture and Sports (DECS) and created a Department of Education (Dep Ed) that will ensure access to, equity in, and good quality of basic education. It also “empowered” the principals to supervise school administration and instruction and to increase the school resources by accepting gifts, donations, bequests, and grants provided that these are properly recorded. The decentralization of education also made it easier for citizen groups and the private sector to contribute to the enhancement of Philippine education. Civil society organizations like non-government groups and schools crafted programs like supplemental teaching, conduct of adult and lifelong learning, advocacy for improved education budget, and monitoring of education inputs and outcomes. Private businesses, likewise, spearhead efforts to raise funds for the sector. For these groups, there are countless reasons for working to improve Philippine education: reducing poverty, improving incomes, enhancing self-confidence, and increasing the quality of graduates that enter the workforce. Reforms in the Budget The efforts at present by the administration of Benigno C. Aquino III on good governance led to significant reforms in the budget process. Compared to the past administration where the budget was often reenacted, the present administration proposes a new General Appropriations Act (GAA)
Article XIV, Sec. 1 of the 1987 Philippine Constitution. One of the reasons for not devolving the education sector to the LGUs is the teachers‟ required involvement in national and local elections. Teachers, who administer the precincts and count votes, would be made vulnerable to local politics if they are devolved to LGUs. This could compromise not only the election results but more so, the integrity of the education system. See “Improving Local Service Delivery for the MDGs in Asia: the Philippine Case,” a joint project of PIDS and UNICEF, 15 June 2009, p. 17.
annually. This makes the budget more attuned to the needs and requirements of agencies and offices. Beginning January 2012, the Department of Budget and Management (DBM) is implementing the monthly allocation of cash to agencies. Instead of providing Sub-Allotment Release Orders (SAROs) and National Cash Allocation after the agency send their requests, the DBM is proactively seeking the proposed monthly allocation of cash and provide the resources on a monthly basis. Where these are not obligated and disbursed within the month, said cash will be reverted back to the Treasury. This means that government agencies must have better planning and management of their programs, budget allotment, procurement and fund utilization. Beginning 2013, the DBM will no longer use SAROs and Agency Budget Matrices (ABMs) but instead will rely on the items in the General Appropriations Act in providing resources to agencies. This means that offices and agencies must provide detailed budget proposals. This will entail better projection of expenses based on laid-out plans and programs. If implemented properly, the reforms on monthly cash allocation and nonusage of SAROs and ABMs will benefit the schools. The problems on delayed downloading of school MOOE will be addressed by the reforms. Review of related studies on the Philippine education budget The citizens clamor for free but quality education often translates to a demand for government to increase the budget for education. Unfortunately, this demand is often met with budget constraints.10 The studies that looked into the Philippine education budget noted striking findings: (1) spending for basic education is progressive as poorer pupils get a bigger share of public elementary and secondary education, (2) the budget for education is insufficient, (3) the budget, lacking as it is, is inefficiently utilized, (4) local government units fill a huge budget gap through the Special Education Fund or SEF, and (5) the use of the SEF is at the LGUs‟ discretion and this sometimes leads to ineffective and inefficient spending. Benefit incidence analyses – tools that evaluate the distribution of subsidies among different population groups based on efficiency and equity considerations – of government expenditures on education show that public elementary and secondary education are progressive. Based on information about which income groups utilize public education and how much is the cost of providing education
Rosario Manasan, “Basic Education: Improving Quality and Quantity,” PIDS Policy Notes No. 2000-20, December 2000, p. 2.
services, benefit incidence results show that government spending on basic education benefits poorer members of the population. The poor do not just utilize, they also benefit more, from public education.11 Moreover, the subsidy rate – or the share of total subsidy to the total per capita income – is considerably higher for poorer income groups at the elementary than all other levels. These findings “explain why government spending on elementary education is indeed to the advantage of the poor.”12 In regard to local government expenditures on education, the findings show regressive spending in that richer regions such as NCR, Southern Luzon and Central Luzon get higher shares of the education budget compared to poorer regions like CAR and CARAGA.13 Thus, despite the stated position of Dep Ed to provide “equitable funding to localities,” the Department seems not to favor poor regions in its allocations as there is no correlation between national government spending and regional incomes.14 The actual spending on education is a different matter. Most of the data reveal a serious financing gap. This insufficiency is striking during times of financial crises when spending for basic services is reduced. This budget insufficiency is also expected to escalate with the increase in population. Table 1: Government Spending on Basic Education (per pupil)
In PhP current prices (Nominal) NG spending LGU spending Total govt. spending NG spending LGU spending Total govt. spending 2002 6.544 568 7,112 6,544 568 7,112 2003 6,598 652 7,251 6,432 636 7,067 2004 6,618 655 7,273 6,086 602 6,688 2005 6,938 723 7,661 5,994 624 6,619 2006 7,499 806 8,305 6,156 662 6,818 2007 8,461 870 9,331 6,713 691 7,403 2008 9,180 930 10,109 6,752 684 7,435
In 2002 prices (real)
Source: BEPER, 2011
Rosario Manasan, Janet Cuenca, and Eden Villanueva, “Benefit Incidence of Public Spending on Education on the Philippines,” PIDS Discussion Paper Series Number 2007-09, July 2007, p. 20. 12 Ibid. 13 Ibid, p. 29. 14 Philippines: Basic Education Public Expenditure Review, World Bank and AusAID, 2011, p.
The data on spending shows that there is a declining trend on spending for education. Spending dipped in 2005 until it went up slowly until 2008. It can also be seen that local government spending on education is a steady and significant contributor to the budget. Studies point to possible reasons for the spending trends. The decline is, to an extent, due to a reduced government budget. Significant dips in the government‟s budget occurred during and after the Asian financial crisis in the late 1990s. During the crisis, the tax collection fell from 17% of the gross domestic product (GDP) in 1997 to 12.3% in 2004. Beginning 2002 until about 2005, the government needed to create fiscal balance reducing the budget of the social sector including education. The sharpest fall in the education budget was from 19.1% in 2002 to less than 15% in 2008.15 Aside from the overall reduction in education expenditure, there is also a decreasing priority given to education because of its inability to fully execute or utilize the budget. Trends in budget allocation and budget utilization show that spending for education is inefficient due to the Dep Ed‟s “waste” of available appropriation. Of the small amount that is allocated for public basic education, some of the resources are unutilized and thus are reverted back to the Bureau of Treasury. The latest work on the education budget, “Philippines: Basic Education Public Expenditure Review (BEPER),” made jointly by World Bank and AusAID, reviewed the expenditure on education vis-à-vis the achievement of the goals stipulated in the EFA or Education for All. One of its sections investigated the efficiency of the budget by analyzing the budget execution or the extent to which the authorized amounts are actually obligated. It reviewed the utilization rate of the Department of Education using the Statement of Allotments, Obligations and Balances (SAOB) figures from 2004 to 2008. The review of SAOB across five years shows that the Department of Education utilizes around 92 to 97 percent of the total budget allotted to it. When it conducted further disaggregation for MOOE, the BEPER shows that there were big shares of the obligations which were made against the previous year‟s allocations. The data reveal the following analyses a) the Department has issues of absorptive capacity, and b) the MOOE is always on “catch up” mode. Studies point to the following reasons for the low execution of the budget: an outdated budget formula, the lack of participation of principals, districts and divisions in budget preparation, the lack of capacity of most of the divisions and
Philippines: Basic Education Public Expenditure Review, World Bank and AusAID, 2011, pp. 56-57.
schools to record and manage their finances and the frequent changes in the Dep Ed‟s policies and guidelines for implementing the budget. The less efficient use of the education budget coming from the Department of Education are supplemented, in various ways, by the Special Education Fund or the SEF. The SEF comes from an additional one percent (1%) tax on real property which is imposed, collected, and utilized by LGUs for basic education purposes. The Local Government Code notes that LGUs can use the SEF for building construction and maintenance. The research of Manasan, Celestino and Cuenca on the SEF notes that on the average, the total SEF income of all LGUs combined is equal to 0.23% of the gross domestic product (GDP) in 2001 to 2008. The total aggregate SEF spending of all LGUs is 0.19% of the GDP during the same period. Specific to MOOE, the share of the SEF is at 110%. In 2007, for instance, the expenditures from the SEF of all the LGUs in the aggregate is estimated to be about 2.4 times as large as total Dep Ed allocation for school-level MOOE. In 2009, Manasan and Castel even surmise that “if one assumes that all of the SEF expenditures of all LGUs are spent on school-level MOOE and if the SEF were distributed across LGUs in direct proportion to enrollment, then per student SEF spending could be equal to PhP 692.00. This amount is higher than the average Dep Ed school-level MOOE allocation of PhP 293.00 per student in both elementary school and high school.”16 Their research further shows that the aggregate SEF incomes are higher for cities than for municipalities and provinces. The findings note that cities captured 66% of total SEF income of all LGUs combined in 2004-2008 while provinces and municipalities collected 16% and 19%, respectively. Moreover, cities contributed 63% of LGUs‟ total SEF expenditures in 2004 -2008 while provinces and municipalities contributed 18% and 19%, respectively. They note that these disparities could be attributed to factors namely, “first, the proceeds from the additional SEF 1% tax on real property that accrues exclusively to the City School Boards in the case of properties located in any given city while it is divided equally between the Provincial School Board and the Municipal School Boards in the case of properties located in any given municipality. Second, and more importantly, real properties in cities tend to have higher market values than those in municipalities because cities are generally more urbanized than municipalities.”17
Rosario Manasan, Alicia Celestino, and Janet Cuenca, “Mobilizing LGU Support for Basic Education: Focus on the Special Education Fund,” PIDS Discussion Paper Series Number 2011-07, May 2011, p. 3. 17 Ibid, pp. 12-13.
This section defines the parameters of the study. It likewise discusses the research method that was utilized including the method for gathering the data. Definitions For the purpose of this research, two budget categories were studied: the Maintenance and Other Operating Expenses (MOOE) of the Department of Education, which were downloaded to schools and the Special Education Fund (SEF). Parameters and indicators The assessment of the education budgets was based on three parameters: participation, effectiveness and efficiency. Participation measures the involvement of stakeholders (aside from government) in budget formulation. It assesses how key individuals and groups, namely the principals, teachers, parents, and the PTA participate in the identification of priorities. To measure the expenditure of the education budget, the analysis center on the effectiveness and efficiency of the budget execution process. Effectiveness assesses how the budget was utilized and measures the budget‟s usefulness. Efficiency gauges the rational use of the budget. In simpler terms, where effectiveness asks if the resources were spent according to the budget proposal and if it led to actual results, efficiency asks if the budget is spent and if it is spent where it is needed most. The indicators for participation in budget formulation are as follows: The PTCA, or if present and active, the School Governing Councils‟, priority programs and plans are reflected in the school budget, the district budget, and the budget considerations of the Local School Boards (LSB); The downloaded school budget is according to the stated requirements of the schools, as submitted by the principals; and The school budgets are reflected in the budget of the districts and divisions.
The indicators for measuring the effectiveness of the education budget are the following:
The school budget is used according to the stated purposes, priorities and plans; and Stakeholders (principals, parents, teachers, community members) perceive the budget to be useful. The indicators for measuring budget efficiency are as follows: The budget is obligated on time and not returned to the Bureau of Treasury; The budget is used appropriately; and Stakeholders (principals, parents, teachers, community members) perceive the budget to be rationally allocated.
Methodology To get a clear picture of the budget flow and decision-making, a national and local data review was undertaken. Budget effectiveness and efficiency were analyzed through a study of the appropriation, allotment and obligation of the DepEd‟s MOOE. Budget effectiveness and the exten t of stakeholder participation in the budget were analyzed through a study of the procured items for MOOE and SEF and if these corresponded to the needs of public schools. Aside from conducting national data review, case studies were also undertaken to concretize the picture of the education budget. In Nueva Ecija, stand-alone case studies of elementary and secondary public schools in Cabanatuan City and Munoz City were undertaken. In the analysis, only the obvious similarities and differences between the two cases were highlighted. The choice of Cabanatuan City was purposive and interest-based. PBEd, the institution that commissioned the conduct of the study, wishes to know the public education dynamics of a city that has a PHINMA-managed school (Araullo University). PBEd and PHINMA have overlapping board members and a study on education, with focus on a place with a PHINMA school, is strategic for both institutions. This interest-based choice of research site lessened the research cost since competent research assistance and mobilization were generated for lesser fees by Araullo University. The choice of Munoz City as the other site was a recommendation of Araullo University. PHINMA has no school in Munoz City. For the two case studies, Araullo University served as PBEd‟s research partner. A research team composed of the Dean of Graduate Studies and four faculty members provided research assistance through data gathering and analysis.
Coverage In regard to the time delimitation of this study, the focus will be for the years 2009 to 2011. The inclusive years constitute almost a full budget cycle. The 2009 education budget was the latest audited budget. The 2010 budget, re-enacted from or crafted in 2009, was utilized until December 2010. Before that year ended, the 2011 budget was already crafted and forwarded to Congress. Up to the present, the 2011 budget is being executed. While not in sequential order, the 2009 audit, the crafting and execution of the 2010 budget, and the crafting and continuous implementation of the 2011 budget, will give a complete picture of how the budget is formulated and utilized. Data gathering instruments Three methods were utilized to gather information: (1) secondary data gathering, (2) key informant interviews (KII) of Dep Ed and DBM officials and the principals of Cabanatuan City and Munoz City public elementary and secondary schools, and (3) focus group discussions (FGD) with PTA members and officials of the Cabanatuan City and Munoz City local government units. Table 2: Summary of KII and FGD participants Cabanatuan City KII with the SDS KII with 27 Elementary School principals KII with 3 High School principals (Base: 57 ES and 7 HS) FGD with PTA officials and members: 2 teachers 2 Parents or PTA officers Munoz City KII with the SDS KII with 16 Elementary School principals KII with 1 High School Principal (Base: 33 ES and 1 HS) FGD with PTA officials and members: 1 teacher 1 Accountant 1 PTA officer 5 Parents
A random sampling of all the secondary and elementary school principals was undertaken to determine who will be interviewed. In regard to the FGDs, the participants - parents and teachers - were selected from four schools, two schools each from Cabanatuan City and Munoz City.
One of the major reforms implemented by the Department of Education is the empowerment of schools, their communities and stakeholders so they will take more active roles in achieving learning outcomes. School-based management (SBM), a strategy towards improving education outcomes, is implemented in all public schools nationwide. School-based management a) empowers school heads or principals to lead their teachers and students, b) puts the resources within the control of schools to enhance the delivery of educational services, c) strengthens partnership with LGUs and communities to enhance school learning environment, and d) institutionalizes a continuous, participatory, and knowledge-based school improvement process. It is operationalized through the annual provision of two types of funds: 1) School Maintenance and Other Operating Expenses (School MOOE) and 2) School Grants. School MOOE is used to finance school operational costs while SBM grants is provided to schools for the purpose of establishing SBM structures and/or as an innovation fund for improving the teaching/learning process. A budget for MOOE is also allocated to Dep Ed Regional Offices and Division Offices to cover their operating costs. They utilize these to provide support to schools through technical assistance, quality assurance, monitoring, and evaluation. Alongside the SBM, Dep Ed is also pursuing the Basic Education Sector Reform Agenda (BESRA), a set of plans which includes a proposed reformulation of the Dep Ed resource allocation to achieve improved learning outcomes. This section discusses the main findings of the study on the Philippine education budget. The study is conducted at a juncture when Dep Ed is instituting reforms on its policies and processes on and resource allocation of the MOOE to achieve enhanced results. Hence, this study is significant on two counts. On the one hand, it validates the rationale for the reforms. On the other, it points out possible ways of improving the implementation of the reforms. This part begins with a discussion of the stakeholders‟ participation in the crafting of the school MOOE, followed by a discussion of budget effectiveness, and later on, a discussion of budget efficiency. The process is repeated for the SEF discussion.
Study results on the MOOE
This part of the paper discusses the findings of the research on the MOOE: how it is crafted, the issues surrounding its formulation, how it is implemented and whether it is used effectively and efficiently.
While the focus of this research is equally on the three aspects of formulation, effectiveness and efficiency, this paper has more extensive discussions on some of the portions than on the others. The imbalance in the discussion is not based on importance but on the availability of data. Moreover, since this research focuses the discussion of efficiency in the efficiency of the budget execution, this paper felt the need to expound on the discussion by looking not just at the case study data but on national data too. On the stakeholders’ participation in the crafting of the MOOE According to the Department of Education, the MOOE budget process is as follows:
At present, the Dep Ed Central Office crafts the budget for personnel services, MOOE, and capital outlay and submits this consolidated budget to Congress for approval. When the budget is approved, the Department of Budget and Management (DBM) Central Office downloads the budget for MOOE to the DBM Regional Offices. Then the Regional Offices download the budget to the DBM Division Offices. DBM Regional Offices perform two things. It issues a Special Allotment Release Order (SARO) to Implementing Units (IUs) whose budgets need not go through the Dep Ed Division Offices. The MOOE allocation of IUs does not pass through the Dep Ed Division Offices since IUs can manage their own accounting, bookkeeping, and audit of the budget. DBM Regional Offices also issue SAROs to Dep Ed Division Offices, which are responsible in downloading these to non-IU elementary and high schools. These schools are also called “Division-managed schools” and they get a Sub-Allotment Release Order (Sub-ARO) from the Dep Ed Division Office. Out of the downloaded MOOE, the Dep Ed Division Office cuts a percentage of the budget for Division level MOOE. They use this for doing monitoring and supervisory functions over the schools. This process is validated by the schools covered in this study. Every start of the school year, principals craft their budget for MOOE and incorporate this in their school operating budgets (SOB), annual improvement plan (AIP), and annual
procurement plan (APP). These yearly budgets are based on their three-year school improvement plan (SIP). Before they submit their school operating budget, most of the principals seek the suggestions of the parent-teachers‟ association regarding the needs of the schools. The principals submit their budget to the Dep Ed Division Office, which consolidates the SOBs and submit these to the Dep Ed Regional Office. The Regional Offices forward the budget to the Central Office, which presents their overall budget to Congress. The process flow below illustrates the budget process that emanates from the schools.
Prior to this process of downloading resources through DBM units, the MOOE was managed at the Dep Ed Central Office. This caused delays and inefficiencies in budget execution. At that time, when it would seem that cash would come late, Dep Ed officials needed to delay the execution of existing MOOE to tide the various offices of the Department. It was only at the time of Secretary Emilia Boncodin that reforms were introduced. Using the DBM Regional and District Offices is a step in decentralizing the budget. Nevertheless, it is evident that the current budget flow still needs improvement. Despite the School-Based Management (SBM) program, the Dep Ed Division, Regional, and Central Offices take over the budget process after the time the principal has crafted the school‟s annual plans. The p articipation of the teachers, principals, students, and other community members in the process is also minimal. It is limited to giving the school heads suggestions on school needs and resource-raising. MOOE downloading and liquidation One factor that is important in determining stakeholders‟ participation in the MOOE budget process lies in the downloading of funds. From the Dep Ed Division Office, the schools receive their MOOE in various ways. Over the years, Dep Ed Division Offices have varied modes and timing for downloading the budget. Sometimes the school MOOE is in-cash, in-kind, or a combination of both. In some years, the MOOE is downloaded quarterly, in some,
bi-annually, and in other years, monthly. For various reasons, the MOOE suffered downloading delays. It appears that there are no patterns for downloading. For 2011, the principals welcome the monthly downloading in cash since this permits them to purchase items that they need and allows for better cash flow management. In previous years, they cannot plan their expenses ahead of time since they were uncertain about the timing of the next release. They also did not have much elbow room on their expenditures when the budget is downloaded in-kind. In some of the covered schools in Cabanatuan and Munoz, the principals shared that they were given manila papers, yards of plastic cover and numerous bond papers when their annual improvement plan, which explains and justifies their budget, specifically states their needs to be whiteboards, markers, chalks, and computer flash drives (for the teachers). In 2009, in one of the schools, the Division Office downloaded gardening and cleaning materials at the start and towards the end of the school year. These materials were unwanted. Even in-cash MOOE can also pose problems for school heads. In 2011, in one of the covered areas, the budget for MOOE was in cash but the schools must only buy from the sellers pointed out by the Division Office. One of the plausible explanations is that the Division procured the goods at their level. Probably, the Division Office wanted to do bulk purchasing to lessen cost of goods. Still, this action does not explain why the budget was downloaded in-cash and not in-kind (the procured goods). Other possible explanations point to irregularity in procurement procedures where a private entity was preferred by a government procuring office. Principals lament that this unpredictable mode and timing of MOOE release is accruing to the frequent changes in the Department‟s guidelines. They note that policies change almost yearly and this causes confusion.18 There are also frequent changes in the guidelines on MOOE liquidation. In some years, liquidation required very strict attachments while in some years, a simple recording of purchased items is acceptable. A more important concern beyond frequent policy change is the capacity of school heads to manage the downloaded MOOE funds. The School Division Superintendents of Cabanatuan City and Munoz City note that most school heads need capacity development on fund management and financial recording. They also note that some principals need to enhance their needs analysis and prioritization.
A review of Dep Ed‟s Administrative Orders shows only one AO that stipulates the guidelines on the Direct Release of Funds (Dep Ed Order 37, issued on June 9, 2004). While yearly budget guidelines are issued, including a portion on the MOOE, the guidelines are not explicit on the mode and timing of release as well as on the policies for school MOOE liquidation. It could be surmised that the guidelines may have emanated from either the Dep Ed Regional Office or from the Division Office.
There were cases of school heads who used their MOOE for school beautification instead of direct expenses for students. A review of the 2009 audit report of Dep Ed shows that COA raised the problem of MOOE downloading particularly in terms of the capacity of school heads to record their finances. The findings reveal that funds for MOOE amounting to PhP 66,448,068.43 were not fully expended because of three reasons: the MOOE was not downloaded, lapsed or unused National Cash Allocations were reverted, and failure of school heads to include fiscal management in their school improvement plans. Part of the recommendations of COA was the conduct of trainings for school heads on financial recording including proper liquidation of expenses.19 MOOE Allocation Formula Another factor in gauging stakeholders‟ participation in the MOOE budget process lies in the allocation of funds. Until recently when efforts were introduced to reform the allocation formula for schools, the Department of Education used a standard costing based on cost per student. This cost parameter – PhP 207.00 per elementary school pupil and PhP 509.00 per secondary school student – is based on estimated enrollment for the preceding year. This is more than 100% from the cost per student in 2002. Table 3: Dep Ed’s Cost Parameter per Pupil School type Year Elementary High school – Regular High school – Trade
Figures are in Philippine Peso
1995 80.00 218.00 527.00
2002 100.00 250.00 550.00
2011 207.00 509.00 750.00
Putting the number of enrollees as the main cost driver for determining the MOOE budget of elementary and secondary schools leaves little room for participation of school principals, much less the teachers, parents and students, in the crafting of the budget. Regardless of the actual needs of schools, the fixed costs puts a ceiling on the amount that school heads can use for direct expenditures to students and for other school improvement needs. This limits the achievement of school-based management (SBM) objectives which are important for achieving education outcomes.
Executive Summary of the 2009 Audit of the Department of Education, Commission on Audit, p. 37, downloaded from http://www.coa.gov.ph/Audit/AAR.htm, 1 February 2012.
Moreover, this allocation formula neglects to consider critical factors affecting costs at the school level. The team of Emilia Boncodin, former DBM Secretary, which made a study on the Equitable Allocation of Dep Ed‟s MOOE, notes that allocation based on school enrollment fails to consider the a) geographical location of schools, b) funding assistance from local school boards including the SEF, c) special curriculum needs, and d) overhead costs.20 In Cabanatuan City and Munoz City, the SDS and principals emphasized that enrollment-based allocation favors schools which can accommodate big enrollments. These will receive more funds even if the overhead costs of running schools are the same. Since 2010, Dep Ed introduced changes in the way MOOE is allocated per school. This is a partial implementation of the formula proposed by former DBM Secretary Boncodin to improve the determination of MOOE funds per school. The proposed formula will be fully adopted when relevant data are already available. The Department estimates the full implementation by 2012. For FY 2010, 2011 and 2012, the MOOE for schools and Divisions is computed based on “cost drivers” or factors that affect the behavior and size of an MOOE item. The cost drivers include a) number of enrolment, b) classrooms, and c) teachers. However, aside from the cost drivers, the budget school Level MOOE will be based on a fixed cost, an automatic and base amount given to all schools regardless of its size, or circumstances (as there are several variables that should be considered for the school to operate smoothly). Given the requirements for secondary-school operations, the fixed amount is doubled for secondary schools: Table 4: MOOE Classified by Principal Cost Drivers Factors/Parameters Fixed Amount No. of Enrolment No. of Teachers No. of Classrooms School Levels Elementary Secondary 40,000 80,000 200 400 4,000 8,000 3,000 6,000
From the interviews with the SDS and the principals, it seems that they are still unaware of the partial implementation of the MOOE allocation formula. However, the reform answers many of their concerns on small amount of MOOE and its inequitable distribution.
20 Developed by the late former DBM Secretary, Emilia Boncodin and also by Professor Honesto Nuqui under AusAID fund assistance and from Support for Philippine Basic Education Reform (SPHERE).
On the effectiveness of the MOOE Effectiveness is the extent to which the development intervention‟s objectives were achieved, or are expected to be achieved. In this study, effectiveness is measured in terms of the achievement of the objectives of the MOOE budget. In other words, the budget is analyzed in terms of its use of the resources. The MOOE is supposedly used for direct spending for students‟ needs. In the study areas, the school MOOE is often used for supplies and materials, repairs and maintenance, and payment for utilities. While supplies and materials are for the direct needs of pupils, the latter two are for other, but equally important, needs. In both sites, the MOOE is regularly used for payment of overhead costs of schools like electric and water bills. In the absence of source of funds for these needs, the principals use the MOOE to pay for these regular costs. In several instances, the school MOOE was used to fund travelling needs of teachers and students. In one school, the principal and the teachers were pleased that they were able to purchase external drives (USBs). In both sites, the LGUs shoulder the janitorial and security services and so these are not taken from the school MOOE. The needs of schools could be strategically augmented by LGUs particularly by the SEF. If LGU resources and the SEF could fund not just the janitorial and security services but also other overhead needs like electric and water services, the MOOE could be freed up for direct needs of pupils. On the efficiency of the MOOE This study limits the study of MOOE efficiency to the budget execution process. While giving increased allocation is important for basic services like education, knowing if the scarce funds are spent and spent well is equally significant. The latest work on the education budget, “Philip pines: Basic Education Public Expenditure Review (BEPER),” made jointly by World Bank and AusAID, reviewed the expenditure on education vis-à-vis the achievement of the goals stipulated in the EFA or Education for All. One of its sections investigated the efficiency of the budget by analyzing the budget execution or the extent to which the authorized amounts are actually obligated from 2004 to 2008. To account for the allotment release system, this study continued the BEPER data from 2009 to 2010 and compared actual obligations against the total allotments released to Dep Ed every year. The data reveals the following:
Table 5: Education Budget Utilization Rate Using Statement of Allotments, Obligations, and Balances (SAOB) Figures: Total Current and Continuing Allotment Releases vs. Total Current and Continuing Obligations (in PhP „000) Particulars Total available appropriations Annual increase (%) Total allotment Annual increase (%) Total obligations Annual increase (%) Utilization rate Balance/unobligated amount % of balance to allotment 105,646 97% 3,614 3.31% 2004 108,090 109,260 2005 2006 118,819 133,880 9.93% 12.68% 116,835 127,459 6.93% 9.09% 2007 148,164 10.67% 149,297 17.13% 139,889 15.90% 94% 9,408 6.30% 2008 174,778 17.96% 169,160 13.30% 155,522 11.18% 92% 13,638 8.06% 2009 165,137 -94.48% 179,910 6.35% 174,963 12.50% 97% 4,946 2.75% 2010 202,614 22.69% 202,614 12.62% 191,118 9.23% 94% 11,496 5.67%
111,893 120,694 5.91% 96% 4,942 4.23% 7.87% 95% 6,765 5.31%
Source: SAOBs from the DepED-Budget Division, 2004 - 2011 and BEPER
Prior to analyzing the table, it is important to understand the terms used in the SAOB. Appropriation is an authorization made by law directing payment out of government funds. It is the amount provided by Congress through the General Appropriations Act or GAA and could either be current or continuing. The former refers to the authorization for the existing year while the latter refers to the authorization to support obligations even when these obligations are incurred beyond the budget year. Obligations are payables to suppliers of goods and services which, at present, are operationalized through having perfected contracts. Utilization rate is the quotient of obligations over appropriations. From the foregoing, BEPER notes that “nominal increases in total allotments have outpaced increases in total obligations, thus reducing execution ratios steadily from 97% in 2004 to 92% in 2008. ” In 2009, budget execution was better since the onset, the available appropriation was lower than the previous year. The total budget for 2009 was nearly obligated except for the PhP 5 Million unobligated amount or balance by the end of the year. In 2010, the first year of the implementation of the revised allocation scheme or the Boncodin formula, Dep Ed‟s budget increased by 22%. By the end of 2010, however, Dep Ed registered 5.7% unobligated amount, which in actual money terms is PhP 11.5 Million. The BEPER further points out those total available appropriations have increased faster than total allotments, except in 2007 and 2009 when allocations were higher than appropriations and in 2010 when the amounts were the same.
This trend means that from 2002 till about 2008 (save 2007), Dep Ed has “absorptive capacity” problems despite its attempt to increase its budget allocations (at least in nominal terms).21 In 2009 and 2010, Dep Ed‟s absorptive capacity improved when appropriations were lower than or equal to allotments. This extant research surmises that the data used by BEPER for years 2004 to 2008 on determining the utilization rate is the sum of both the current and continuing appropriations for every year. This research followed the pattern of analysis for 2009 and 2010 and came up with the data included in Table 5. However, instead of using both the current and continuing appropriation as basis for analysis, this research preferred to analyze the efficiency of the budget utilization rate using current appropriations and allocations. Using current resources shows the management of present resources. A high utilization rate of current appropriation and allotment shows efficient use, and not catch-up utilization, of resources. Using current (regular and automatic) appropriation, the total education budget shows the following:
Table 6: Education Budget Utilization Rate Using Statement of Allotments, Obligations, and Balances (SAOB) Figures: Total (Current) Allotment Releases vs. Total (Current) Obligations (in PhP „000) Particulars Total allotment Total obligations Utilization rate Balance/unobligated amount % of balance to allotment 2004 106,331 103,131 97% 3,200 3.00% 2005 113,978 109,284 96% 4,693 4.18% 2006 123,993 117,950 95% 6,043 4.97% 2007 141,036 131,958 94% 9,078 6.44% 2008 160,256 146,405 91% 13,851 8.64% 2009 160,926 157,835 98% 3,091 1.92% 2010 196,888 186,036 94% 10,853 5.51%
Source: SAOBs from the DepED-Budget Division, 2009 – 2010.
From the foregoing, it is clear that the utilization rate of current appropriation ranges from 91% to 98%. While other analysts may find this still wanting, this research argues that considering the huge size of the Dep Ed bureaucracy, this utilization rate would be acceptable. It is worthwhile noting however that most of the resources of the Department is on personnel services. Focusing on the MOOE budget execution (by zeroing in on current appropriations), the table below shows that the Department has limited utilization rate. Obligations are way lower than the total available resources. However, in
Philippines: Basic Education Public Expenditure Review, World Bank and AusAID, 2011, p.
2010, there was a huge improvement in the utilization rate. This improvement is despite the passage of stricter guidelines on obligating funds where only perfected contracts can be obligated. Interestingly, it can be seen that despite the partial implementation of the new allocation formula, a good portion of the budget for MOOE was still unobligated.
Table 7: Total PhP MOOE Utilization Rate using SAOB Figures Total (Current) Allotment Releases vs. Total (Current) Obligations (in PhP „000) Particulars Total allotment Total obligations Utilization rate Balance/unobligated amount % of balance to allotment 2004 7,313 5,868 80% 1,445 1.98% 2005 8,513 7,068 83% 1,445 1.70% 2006 12,703 9,084 72% 3,619 2.85% 2007 18,089 11,622 64% 6,467 3.58% 2008 20,441 12,601 62% 7,840 3.84% 2009 12,591 11,010 87% 1,581 1.26% 2010 20,322 14,986 74% 5,336 2.63%
Source: SAOBs from the DepED-Budget Division, 2009 – 2010.
The table below shows the source of the obligated amounts. Considering the continuing appropriation of the Dep Ed budget, the data below shows that sizable shares of the obligations are made against the previous year‟s budget. From 2006 to 2010, the Department uses its previous budget to pay for its obligations. This means that Dep Ed‟s MOOE is often operating on a “catch up plan.”22 In 2007, 2008, and 2009, Dep Ed used big amounts of their MOOE budget from previous year‟s allotment. The trend improved in 2010.
Table 8: Total PhP MOOE Utilization Rate Fund Source: Total (Current and Continuing) Allotment Releases vs. Total (Current and Continuing) Obligations, by Object of Expenditure (in PhP „000) Allotment Obligations Current Continuing 2006 14,126 10,148 9,094 1,054 2007 22,654 2008 25,771 2009 21,478 2010 23,880 18,150 76.0% 14,986 82.6% 3,164 17.4%
71.8% 16,286 71.9% 19,044 73.9% 19,000 88.5% 89.6% 10,851 66.6% 12,313 64.7% 12,803 67.4% 10.4% 5,435 33.4% 6,731 35.3% 6,197 32.6%
Source: SAOBs from the DepED-Budget Division, 2006 – 2010 Dep Ed‟s limited capacity to execute the budget is not just true for MOOE, it is also true for capital outlay.
In Region III, which covers Cabanatuan City and the Science City of Munoz, the SAOB trend on utilization rate shows the utilization rate to be fluctuating from limited to relatively acceptable execution rates.
Table 9: Region III’s MOOE Utilization Rate using SAOB Figures Total (Current) Allotment Releases vs. Total (Current) Obligations (in PhP) Particulars Total allotment Total obligations Utilization rate Balance/unobligated amount 2004 374,176 344,906 92% 29,269 2005 394,771 371,925 94% 22,846 2006 817,521 565,124 69% 252,397 2007 860,864 799,169 93% 61,694 2008 1,222,846 997,471 82% 225,375
Source: SAOBs from the DepED-Budget Division, 2006 – 2010
Study results on the SEF
This portion discusses the findings of the research on the budget execution of the Special Education Fund and how this fund complements the School MOOE The SEF is a reliable source of funds for schools. It is 1% of the levy on real property and is given to the Division Offices and schools by the Local School Board. If utilized effectively and efficiently, the SEF can complement the needs of schools and augment the downloaded MOOE In general, data on SEF shows that although small, SEF is a huge contributor to the Department of Education‟s budget for MOOE. Howev er, it also suffers from utilization problems which range from 8% to a high of 23%. The table below shows the SEF income, expenditure, and Percentage to Dep Ed MOOE from 2001 to 2007. Unfortunately, data for 2009 to 2011 are not yet available. 23 Unfortunately still, the data on SEF of Cabanatuan and Munoz Cities are not yet gathered.
Discussion with the Bureau of Local Government Financing (BLGF), Department of Finance, 28 November 2011.
Table 10: Total SEF Income, Expenditure, Balance and Percentage to Dep Ed MOOE (In PhP „000) 2001 8,451 7,744 707 8.37% 85.7% 2002 9,537 7,395 2,142 22.46% 135.0% 2003 11,002 8,826 2,176 19.78% 142.3% 2004 10,693 8,854 1,839 17.20% 120.1% 2005 12,381 10,265 2,116 17.09% 121.7% 2006 13,909 11,451 2,458 17.67% 112.8% 2007 13,540 11,679 1,861 13.74% 100.5% 2008 14,956 11,492 3,464 23.16% 59.4%
SEF Income SEF Expenditure
Balance/unobligated amount % of balance to allotment
SEF % of Dep Ed MOOE
Source: DOF‟s Bureau of Local Government Financing (BLGF), SEF Income and Expenditures (SIE), many years.
How the SEF is spent is the discretion of the Local School Board (LSB). The LSB is chaired by the Mayor and co-chaired by the School District Supervisor. The SEF should be used for education purposes. As to how it should be used is variedly interpreted. Manasan, Celestino and Cuenca found out that the priorities for the use of SEF in their study sites were on a) repair and construction of buildings, b) personnel services, c) sports development / competitions and Dep Ed co-curricular activities, and d) instructional materials, books, office supplies and school equipment. The study made by Boncodin and Nuqui notes that the SEF is often used for a) supplies and materials, b) utilities, c) repairs and maintenance, and d) others. The BEPER notes that anecdotal evidence on the SEF shows that LGUs use the resources to fund teachers particularly in areas where there are shortages on teachers. At the elementary level, the share of locally-funded teachers was 4% in 2002 and 8% in 2007. At the secondary level, the share increased from 15% in 2002 to 22% in 2007. Further, the study infers that recent improvements in student and teacher ratio are largely attributed to additional hiring of locally-funded teachers. However, the BEPER notes that the locally-hired teachers might have lower qualifications than the ones hired centrally by Dep Ed.24 Interviews with principals from Cabanatuan show that the SEF is used to pay for a) salary of teaching personnel such as the new teachers who passed the LET and have passed the Dep Ed requirements and hiring process, b) compensation
Philippines: Basic Education Public Expenditure Review, World Bank and AusAID, 2011, p.
for the school guards and utility workers, c) utilities such as electricity and water, d) construction of new school buildings. As to whether the SEF is also used to purchase supplies and materials did not surface. In Munoz City, the principals are not aware about the details of the City‟s SEF and they are not familiar on how it is spent by the Local School Board. The SDS knows that the SEF is used to pay for LSB teachers. It is clear from policies and guidelines that the SEF is to be used for MOOE. From the case study sites, however, the SEF is also used for non-MOOE items depending mostly on the decision of the city government. Compared to Cabanatuan City, the principals from Munoz City and more so, the SDS, do not know how the SEF is spent. There were cases when the SDS and the principals were surprised with how the SEF was spent. In one instance, LSB teachers were hired - using the SEF - without informing the SDS. As to whether the SEF can finance teaching and non-teaching personnel is variedly interpreted. In some areas, COA officials disallow the use of SEF to pay for personnel while in some areas, COA officials allow this type of expense. Stakeholders from the case study sites point to this opacity of SEF policies as one of the problems that need to be addressed.25 In regard to budget execution, the study made by Manasan, Celestino and Cuenca reveals that there are SEF balances registered across various years despite unmet education needs. Table 8 shows that from 2001 to 2008, the unobligated SEF is around 17 to 18%. These are resources that could have been used to augment the MOOE of schools.
Some Dep Ed officials note, however, the using the SEF to pay for personnel costs and for building repair and maintenance, is prone to patronage politics.
Conclusions and recommendations
This research on the Dep Ed MOOE and SEF reveals several conclusions. Compared to the past formula on school MOOE allocation which is based purely on number of enrollees, the new scheme for computing the budget of school MOOE is a big improvement. Putting a base amount over and above other cost drivers rationalizes and “equalizes” the distribution of the budget. This new formula is reflective of the school budgeting realities and responsive to the school improvement plans. In essence, the increase in the MOOE budget, as a result of the improved formula, suits the School-Based Management program which puts primacy on the empowerment of principals. With increased budget, school heads can better plan the expenses. In practice, however, the crafting of the budget is still centralized. Since 2009, there are no new guidelines that improve the budget crafting process to go along with the new allocation scheme. Up to the present, principals are still unsure if their MOOE will be in cash, in kind, or a combination of both. It is important to note that the improvements in the downloading of MOOE are visible. School heads welcome the monthly downloading in cash. However, in Cabanatuan, the requirement for schools to purchase goods only from Division Office approved suppliers clips the authority of the school heads and casts doubts on the procurement process. The participation of teachers and parents in the crafting of school MOOE budget is almost negligible. In the case study sites, they are asked to identify school needs and the principals considered these needs in three documents: the school improvement plan, the annual improvement plan, the school operating budget and the annual procurement plan. In the end, these needs may or may not be prioritized depending on the budget ceiling. With a more responsive budget, the participation of teachers, parents, and other stakeholders should be beefed up. To an extent, the MOOE of the two study sites is effective as these are used for direct needs of students and for other overhead requirements of schools. In regard to the efficiency of the budget execution process, the Department-level MOOE made marked improvements in obligating the budget. These improvements coincide with the partial implementation of the new allocation scheme. In the coming years, there is a need to conduct an evaluation of the results of the Boncodin formula to determine the recommendations for its full implementation. Despite the improvements in utilizing the budget, there are still significant balances and there are obligations that were charged against previous budgets. This means that the Department is still catching up on its budget execution and
thus, still has to improve its absorptive capacity. This observation is especially true in light of requests for improved budget. This observation needs to be validated with data coming from Cabanatuan City and Munoz City. The SEF poses more challenges. Recent data on national level SEF are not yet ready and the data from Cabanatuan and Munoz City are also not yet available. Meantime, national data states that the SEF hugely contributes to Dep Ed‟s MOOE. However, the SEF also suffers from inefficient execution considering the balances vis-à-vis budget. In Cabanatuan, the SEF is utilized for MOOE and for payment for teaching and non-teaching personnel. While the SEF can clearly be used for MOOE, using it for personnel services is not clear in the guidelines and the COA rules. Overall, the efforts to harmonize the data between the Dep Ed budget and the SEF are in the right direction. However, a similar level of data harmonization at the municipal, city, and provincial level are also necessary. Distilling the data is important in improving the budget sourcing for education needs. Where the Dep Ed or the school already has budget for certain needs, the SEF can be used to fund other needs. The recommendations of this research are clustered to include proposals for the Department of Education, for other national government agencies, for local government units, and for civil society organizations or CSOs. In regard to the Dep Ed, there is a need to set new policies and processes along with the implementation of the new allocation scheme. These new policies should further improve and support the SBM program. These must also include guidelines on how to use the MOOE, how it will be downloaded, and the time frame or period for downloading. Dep Ed must also have a mechanism for monitoring the performance of schools, divisions and regions on the use of MOOE. Beginning 2012, the Department of Budget and Management (DBM) will be providing cash allocations monthly based on the targets and the proposals of agencies. This means that Dep Ed must be able to carefully anticipate its budgeting and procurement so that it can disburse cash monthly. Otherwise, the available cash for MOOE might be reverted back every month to the Treasury. Moreover, beginning 2013, the DBM will begin the phase out of SubAllotment Release Orders (SAROs) and Agency Budget Matrices (ABMs) in authorizing fund releases to government departments and agencies. This means the use of the approved national budget as a comprehensive release order. This further means that only a handful of items will need the clearance of the DBM before releases can be made. The removal of SAROs and ABMs will rely on the full
disaggregation of agency lump sum budgets in the 2013 budget preparation. Dep Ed must carefully plan and disaggregate its budget so that it can effectively and efficiently use the MOOE.26 These efforts of the DBM seem laudable and thus must be commended and supported. It is anticipated that with these reforms, the delays in downloading the budget is addressed. In this case, the Commission on Audit must step up the plate and harmonize its differing interpretations of guidelines on the use of funds particularly the SEF. In the interest of maximizing scarce resources on education, the SEF must be harmonized with the school MOOE. In particular, a matching mechanism, like a performance grant program, can be tested. In areas that have high SEF and this SEF is utilized according to agreed-upon expenses and in a transparent and accountable manner, the Dep Ed can complement the fund with improved budget for MOOE. Care must be made not to lessen the national budget counterpart in areas with big SEF collection. This will signal perverse incentives to the LGUs. Along with incentive-based solutions, there is a need to compel transparency and accountability among local government units in their use of the Special Education Fund. They must be made to clarify vague items on the use of their SEF. In Munoz City in particular, the utilization of the fund could be enhanced by improving the transparency in, and participation of, stakeholders in decision making. The Department of Finance may be the right agency to impose guidelines on transparency and accountability in the use of the SEF. CSOs like PBEd must participate in the policy advocacy on the Dep Ed budget. CSOs must also observe the implementation of the reforms on the new MOOE budget formula and on the DBM reforms in the budget process.
Downloaded from www.dbm.gov.ph., 28 January 2012.
Developing a Social Audit tool On the Education Budget
Social audit is a measure of the institutional responsiveness of a social actor (government, civil society, church, academe, media, and private sector). It determines whether the functions, obligations, and commitments of societal institutions are met from the point of view of peoples‟ needs and expectations. Social audit, in other words, is a set of tools to enhance social accountability. Social audit is undertaken through a measurement of gaps. Vis-à-vis government, social audit provides citizens‟ feedback on whether government programs are relevant and if these are effective, efficient, and sustainable. As such, social audit is meant to be independent. To be effective, efforts should be exerted to ensure that the actor or government office subject to audit does not improperly influence the processes and results. Social audit, likewise, is an exercise in peoples‟ empowerment. Its eventual goal is to “make habitual, routinized, and institutionalized instruments of accountability in governance.”27 With social audit becoming a norm, it is hoped that the government will often be accountable for its actions and inactions. The Philippines has numerous social audit initiatives. While some made evaluations of existing or recently-finished government program or project, some have evaluated a certain government function or task (like this education budget study). Some made monitoring tools and approaches which are regularly conducted (e.g. Textbook Count, Bantay Eskwela, and Bayanihang Eskwela) while some checked government performance through measuring the satisfaction of citizens (e.g. report card tools and citizen surveys). The table below describes some of the social audit initiatives in the Philippines, which measured the provision or delivery of social services. This table, however, is not exhaustive but rather a means to provide a spread of initiatives related to basic services.
Segundo Romero, Social Audit Toolbox for Philippine Civil Society Organizations, unpublished paper for the Transparency and Accountability Network, January 2011.
Table 11: Matrix of social audit initiatives
Type of social audit tool Evaluation of government service delivery programs Name of initiative Performance Evaluation of the Matching Grants Program (MGP) Impact Evaluation of the MGP Description The tool evaluates the Matching Grants Program of the Department of Health. Developed by the Management Sciences for Health (MSH), the tool evaluates the performance and impacts of the program on fully-immunized children, Vitamin A supplementation, immunization of women and family planning method propagation The survey provides an understanding of the supply and demand factors of local services delivery. Developed by the Philippine Institute for Development Studies (PIDS), three modules were used to determine factors of local services delivery: information on clients, information on service providers, and information on government that manages or funds service providers. Developed by the MSH, the tool was implemented in partnership with the DOH and various CSOs. It measures the performance of local government units in meeting health needs including the provision of vitamins, prevention from TB and HIV-AIDS and understanding family planning Developed by the Transparency and Accountability Network (TAN), CGRC collects citizen feedback on the quality and adequacy of public services. The findings were disseminated and advocacy and networking were conducted to improve the delivery of surveyed services A national client satisfaction survey undertaken by the Social Weather Station and the World Bank to measure “client” satisfaction with public services in the Philippines. The assessment was made using private sector services as benchmarks. Developed by the Development Academy of the Philippines to assess the provision and delivery of 7 city services: garbage collection, traffic management, neighborhood safety, public market management, permit issuance/marketing, water supply, and housing. The survey covers 9 cities and gathers the perception of local residents on the quality of services, the price of services, the possible alternatives, and the residents’ willingness to pay for improved services Measures the progress of public works and the appropriation and obligation of the budget for infrastructure projects. Their discovery of huge leakage contributed to plugging of gaps and freed up resources. Developed by the multi-sector initiative Bantay Lansangan, the tools aim to enhance the delivery of quality national road services. It also intends to increase the transparency and accountability in the road construction and maintenance operations of the Department of Public Works and Highways 38
Local Service Delivery Survey
Local Enhancement & Development (LEAD) for Health Project
Citizens Governance Report Card (CGRC)
Filipino Report Card for Pro-Poor Services
Report Card Survey on Local Governance
Monitoring of public infrastructure
Concerned Citizens of Abra for Good Governance (CCAGG) infrastructure monitoring efforts Bantay Lansangan Road Users’ Satisfaction Survey and Monitoring Tools
Type of social audit tool Evaluation of procurement tools
Name of initiative
Description (DPWH) Measures the “actual” cost or the value that the government actually paid for a certain item, versus the “true” cost or the value of the item in a fair, open and competitive market. Developed by the Procurement Watch Inc. (PWI), it assesses if procurement leads to purchase cost that is comparable to fair, open, and competitive market Developed by PIDS, the tools assess the different government programs or subsidies that affect the distribution of welfare to the poor. It determines if the government programs on housing, health or education are progressive or regressive
Differential Expenditure Efficiency Measurement
Benefit Incidence Analysis (BIA)
Government housing Public health Public education Social cost benefit analysis of government housing
Monitoring and Assessment of governmentcommitments Monitoring of government procurement and post-procurement efforts
Civil society assessment of the 2004-2010 MTPDP
Medicine Monitoring Tool
Government Budget Monitoring Satisfaction Surveys
Social Housing Watch
Social Weather Reporting System
The tool, developed by PIDS, compares the benefit of government housing to the cost of implementation. It deducted the social benefits (subsidies, better sanitation, social cohesion) from the social costs (interest subsidy, guarantee coverage, tax exemption, administrative costs) Developed by CODE-NGO, the approach compares and assesses the accomplishments and planned actions of the Gloria Macapagal-Arroyo administration vis-à-vis the stated commitments in the 2004-2010 Medium-Term Philippine Development Plan Developed by G-Watch, the tool monitors the procurement and delivery of textbooks through tapping civil society organizations, parent-teachers’ associations and other community-based organizations to observe the textbook procurement and report on the book delivery (quality and quantity) to local areas. The tool, developed by G-Watch, monitors the construction of school buildings through the use of indicators like adherence to procurement rules, quality of materials and building specifications. Developed by PWI, the tool monitors the procurement, delivery, quantity and quality of public school furniture. CSOs were tapped to fill-up monitoring forms including the checking of whether the purchase orders, order forms, and delivery forms tally The Coalition Against Corruption partnered with NAMFREL to implement the tool to guard against leakages and corruption in the procurement of goods and services in the DOH. Eight hospitals and three Centers of Health were monitored in terms of procurement of drugs, medical supplies, laboratory needs, infrastructure, equipment and supplies The Bantay Pabahay para sa Maralita is a local budget monitoring approach through the use of a step-by-step manual (written in Filipino) Developed by the Social Weather Station, the approach, 39
Type of social audit tool
Name of initiative
Description conducted through national surveys, covers an array of social concerns such as economic well-being, public safety and quality of governance. It includes indicators on self-rated poverty, gainers or losers, and optimists and pessimists in respect to quality of life and satisfaction with government officials’ performance. Developed by the La Salle Institute of Governance, the project develops a set of mechanisms for transparency and accountability in Philippine local governance. The indicators will be used in assessing transparency and accountability systems in 10 cities and municipalities.
Development of mechanisms
Transparency and accountability mechanisms in local governance in the Philippines
In his study on social audit, Segundo Romero provides seven criteria that may be used in choosing a social audit tool. These are the following: obtrusiveness, partnerability, maturity, routinization, replicability, expandability, and cultural acceptability. Romero points out that a viable social audit tool is one that is amenable to partnership with many actors, most especially with its main stakeholders (e.g. students, road users, health care users). It is one that is tried, tested and re-worked based on feedback. Moreover, depending on the objectives of the social audit, an initiative may be obtrusive or non-obtrusive in the operations of a government office. Romero warns, however, that the more an initiative is intrusive or disturbing, the more likely that it will be resisted by the office subject to audit. Recent efforts on social accountability and social audit suggest engaging in partnerships with the government office/agency being audited. These social audit efforts, being non-obtrusive, are often welcomed by government offices. Civil society organizations, for their part, see the advantages in these partnerships provided that measures and mechanisms are laid out so that the audited office does not exert undue influence on audit processes and results. Non-obtrusive social audits are beneficial in three ways. First, the data are available and accessible and thus are used for the audit initiative. For example, information on number and quality of books, furniture and building materials for delivery are made available to members of the Textbook Count, Bantay Eskwela, and Bayanihang Eskwela initiatives. Second, the results form part of the monitoring system of government offices and the problem areas are more easily acted upon. For instance, Bantay Lansangan tools are filled-up by citizen monitors, submitted to the Department of Public Works and Highways (DPWH), and become part of the monitoring system of the agency. Out of the monitoring reports, it is expected that roads with problem areas will be immediately addressed by DPWH field units. Third, policy initiatives emanating from social audit initiatives become
institutionalized. They form part of the guidelines of the offices or part of their policy initiatives. If PBEd wishes to undertake a social audit effort on the education budget then it may consider the following: What type of social audit tool will it undertake, evaluation (like this study) or monitoring? If it will undertake another budget evaluation, will it deepen and replicate this study in other case sites or will it evaluate other budget categories (capital outlay, personnel services)? If it will undertake a monitoring initiative, will it monitor the budget of a certain program (e.g. School-Based Management) or an aspect of the budget process (e.g. procurement)? What aspect of the education budget will it audit; transparency, participation of stakeholders, effectiveness, efficiency, or a combination of these aspects? Some of the prominent monitoring tools observe the transparency of processes and results as well as the actual delivery of government commitments. How would other education-sector stakeholders participate in the social audit process? Will they form part of the tool developers? Will they become evaluators or citizen volunteers/monitors? What would be the role/s of the Department of Education? What about other government agencies? Finally, what would be the source of fund? Evaluation efforts only need one-time budgets but monitoring activities are routinized and sustained. Usually, citizen monitoring efforts need a combination of institutional funding support and volunteer support in order to become sustainable.
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