ACTIVITY 1 FOR FINANCIAL MANAGEMENT IN SCHOOLS

THE NEXA FRAMEWORK 

SCOPE AND COVERAGE OF THE NEXA
The National Education Expenditure Accounts seeks to be exhaustive. Thus, it includes
expenditures for all forms of education that satisfy the standards and definitions outlined in the
Updated Philippine Standard Classification of Education (NSCB 1998) and prescribed by Batas
Pambansa Blg. 232 (Education Act of 1982). The term education is taken to comprise all organized
and sustained communication process designed to bring about learning. This definition is consistent
with the one adopted by the United Nations Educational, Scientific and Cultural Organization
(UNESCO), as well as in the revised International Standard Classification of Education (ISCED).
It must be emphasized that the NEXA definition does not equate education with learning.
While all education activities involve learning, many forms of learning, specifically informal
learning, may not be regarded as education as defined above. The Department of Education (DepEd)
defines informal learning as a process by which an individual acquires attitudes, values, skills, and
knowledge through day-to-day experiences, educative influences, and the resources of his
environment. The culture, arts, media, and sports sub-sectors are the most common channels of
informal learning. Expenditures to access these channels of learning ‘informally’ (i.e. outside of
organized learning environment) are excluded from the NEXA. However, expenditures for culture
and sports activities of DepEd are included.

SOURCES OF FUNDS FOR EDUCATION

The NEXA uses the typology of economic transactors prescribed by the 1993 UN System of
National Accounts (SNA) and adopted in the Philippine System of National Accounts (NSCB 2000)
to categorize the sources of education funds. These transactors in the economy are also referred to as
economic units or institutional units. In addition to being the centers of legal responsibility, these
institutional units are also centers of decisions for all aspects of economic life. When grouped
together according to their principal functions, they form the institutional sectors of the economy.
These include five resident institutional sectors:
 General government, which, beside its political responsibilities and its role in economic
regulation and in the redistribution of national income and wealth, produces principally non-
market services for individuals or collective consumption;
Households, which cover all individuals or groups of individuals in their capacity as
consumers of goods and services.
Financial corporations, which are primarily engaged in financial intermediation and auxiliary
financial services;
Non-financial corporations, which are institutional units principally engaged in the
production of market goods and non-financial services
Non-profit institutions serving households (NPISH), which are organized, private, legal, non-
profit distributing entities that are principally engaged in the production of non-market
services for households.

Aside from the above institutional sectors, another sector is considered when accounting for
all transactions in the economy. This is the rest of the world sector.
Rest of the world, which is the grouping of all non-resident economic units that carry out
economic transactions with resident units.

For purposes of the NEXA, these institutional sectors (except households and NPISH) are
further divided into sub-sectors deemed as relevant in the analysis of education financing.
The taxonomy of sources of funds in the main matrix was specifically selected to be
consistent with the Philippine SNA classification of institutions, and to allow the analysis of a
number of education financing issues. The classification scheme will allow the examination of the
following:
1. private versus government financing for education;
2. dependence on foreign versus local financing;
3. types of financing mechanisms (e.g., taxes, out-of-pocket, pre-need plans, etc.); and
4. risk-sharing in education sources of funds (i.e., out-of-pocket with low risk-pooling versus
government and pre-need plans with high degrees of risk-pooling).
 The supplementary matrices adopt more detailed categories of the sources of funds when the
breakdown of available data would allow it. For example, general government is further
disaggregated into specific sources including the DepEd, the Technical Education and Skills
Development Authority (TESDA), the Commission on Higher Education (CHED), and state
universities and colleges (SUCs).

USES OF FUNDS FOR EDUCATION

Following the SNA 1993 recommendation, the main matrix of NEXA makes use of a
functional classification (i.e., according to purpose or objectives) of the educational expenditures.
Experience has shown that a functional classification would provide information of general interest
to policy-makers and would be amenable to a wide variety of analytic applications (OECD and
UNSD 1998).
The functional categories of uses for the NEXA main matrix was formulated to be:
1. comprehensive;
2. analytically meaningful and relevant to Philippine policy-making;
3. consistent with existing Philippine education functional classification;
4. to a certain extent comparable with international perspectives on education and also
comparable with international education classification schemes; and
5. feasible given the constraints in available Philippine data.

Based on the above considerations, the functional classification or the main categories of
uses of education funds adopted in the NEXA are as follows:
Basic education, which constitutes formal pre-school, elementary and secondary education,
and non-formal and special education programs for the same levels of schooling;
Middle-level skills development, which includes post-secondary education that leads to
awards not equivalent to baccalaureate degree and other technical/ vocational training not
requiring a high school diploma;
Higher education, which includes college education, education that leads to a professional
degree (e.g., medicine and law degrees both requiring completion of a first university degree
for admission) and graduate level education (i.e. programs leading to post-graduate Diploma
or Certificate, Masters and Doctoral degrees);
 Job-related training programs, which refer primarily to staff and employee training programs
designed to upgrade work-related skills and knowledge;
Ancillary activities, which include activities that support, promote and facilitate the
production/provision and consumption of education services, e.g. general administration,
education research, library services and school transport services;
Other uses of funds, which is a ‘catch-all’ category for education expenditures that cannot be
classified elsewhere.

NATIONAL EDUCATION EXPENDITURE ACCOUNTS (NEXA) 

GENERAL GOVERNMENT

DATA SOURCES
The data for the estimation of the education expenditures of the general government sector
were culled from three different source documents. These include the Annual Financial
Report of the National Government (AFR Volume I) and the Annual Financial Report of
Local Governments (AFR Volume III) of the Commission on Audit (COA), which report the
total actual expenditures of national government agencies (on a per department/agency basis)
and the corresponding total for local government units (by sector/function).
Also used as a data source was the General Appropriations Act (GAA), the preparation and
passing of which was spearheaded by the Department of Budget and Management (DBM).
The GAA provides data on government appropriations by department/agency, by
program/project/activity, and by budget item.

COVERAGE AND ESTIMATION

Expenditures included under general government are those spent by national government
agencies (NGAs) and local government units (LGUs) for the following:
1. education services provided through government-run schools;
2. non-degree training programs offered by government agencies;
3. job-related training and seminar expenses for government personnel;
4. overall administration of public-education programs by the government;
 5. construction of facilities for use in public education programs; and
6. government counterpart funding for foreign assistance loans and grants for education-
related projects.

For NEXA purposes, NGAs were broadly classified into two groups. ‘Take-all’ agencies are
those performing purely education-related functions, while ‘partial-budget’ NGAs are those
whose mandates are not purely education-related, but perform education-related activities in
the course of the implementation of their mandated functions.
Agencies whose expenditures are considered ‘take-all’ for education are the following:
1. DepEd (including the Office of the Secretary, Commission on the Filipino Language,
Philippine High School for the Arts, and National Library);
2. TESDA;
3. CHED;
4. All state universities and colleges;
5. Local Government Academy and Philippine Public Safety College under the
Department of Interior and Local Government;
6. National Maritime Polytechnic under the Department of Labor and Employment;
7. Philippine Military Academy and National Defense College of the Philippines under
the Department of National Defense;
8. Philippine Science High School and Science Education Institute under the
Department of Science and Technology;
9. Statistical Research and Training Center under the National Economic and
Development Authority;
10. National Book Development Board and National Computer Center under other
executive offices; and
11. Department of Education of the Autonomous Region in Muslim Mindanao.

For these take-all agencies, the general procedure followed was to use the COA data on total
actual expenditures and to apply the GAA structure for the distribution of expenditures based
on the NEXA classification. The data were tabulated by agency and by individual SUC, and
the planned expenditures from the GAA were individually reclassified to conform to the
NEXA disaggregation.
The government’s counterpart funding for foreign-assisted projects was obtained from the
GAA. Projects of take-all NGAs that were not intended for the improvement of the provision
and consumption of education services were excluded.
For most partial budget agencies, the education expenditures covered by the NEXA were
limited to those spent on training activities undertaken for their own staff development. The
data on total expenses on training and seminars conducted by NGAs was obtained from the
COA AFR Volume I. Since this was the total for all agencies, expenses of the DepEd, SUCs
and the other take-all NGAs for their own staff development and which were separately
accounted for had to be subtracted from the total training and seminar expenses as reported in
the AFR. The resulting net figure was then considered the training and seminar expense of
the partial budget agencies for their own staff development.
Special attention, however, was given to the training expenses of the Armed Forces of the
Philippines as derived from the GAA and adjusted based on the COA levels. These were
included under job-related training expenditures.
Another agency given special attention because of the capital outlay for buildings and
structures was the Department of Public Works and Highways (DPWH) for its school
building program for the DepEd. These were accounted for under other uses of funds in the
NEXA, which included other capital outlays. Data were derived from the BESF table on the
infrastructure program of the government.
For the total education expenditures of local government units, the data from the COA AFR
Volume III were only reported by sector and function; hence, disaggregation based on the
NEXA classification of uses of funds was not possible.
Education projects funded under the Countrywide Development Fund (CDF) of senators and
congressmen are also covered in the COA report and expenses for these projects can be
directly derived as they are specifically labeled as education expenditures. These were
included in the NEXA matrix under other uses of funds because these could not be properly
classified in any of the other rows.
QUESTIONS:
1) What is National Education Expenditure Accounts (NEXA)?
The National Education Expenditure Accounts (NEXA) is a framework for the
compilation of information on the country's education sector financing. The NEXA is an
important ingredient in addressing major policy issues on education as it provides a tool for
analyzing expenditures on education. The NEXA estimates form part of the much larger set
of education statistics and indicators regularly produced by government agencies and may
therefore be used in combination with such data for policy analysis.
The National Education Expenditure Accounts seeks to be exhaustive. Thus, it
includes expenditures for all forms of education that satisfy the standards and definitions
outlined in the Updated Philippine Standard Classification of Education (NSCB 1998) and
prescribed by Batas Pambansa Blg. 232 (Education Act of 1982). The term education is taken
to comprise all organized and sustained communication process designed to bring about
learning. This definition is consistent with the one adopted by the United Nations
Educational, Scientific and Cultural Organization (UNESCO), as well as in the revised
International Standard Classification of Education (ISCED).

2) What are the sources of funds for education?

These include five resident institutional sectors:
General government, which, beside its political responsibilities and its role in
economic regulation and in the redistribution of national income and wealth, produces
principally non-market services for individuals or collective consumption;
Households, which cover all individuals or groups of individuals in their capacity as
consumers of goods and services.
Financial corporations, which are primarily engaged in financial intermediation and
auxiliary financial services;
Non-financial corporations, which are institutional units principally engaged in the
production of market goods and non-financial services
Non-profit institutions serving households (NPISH), which are organized, private,
legal, non-profit distributing entities that are principally engaged in the production of
non-market services for households.
 Aside from the above institutional sectors, another sector is considered when
accounting for all transactions in the economy. This is the rest of the world sector.
Rest of the world, which is the grouping of all non-resident economic units that carry
out economic transactions with resident units.

3) What are the different expenditures included under general government?

Expenditures included under general government are those spent by national
government agencies (NGAs) and local government units (LGUs) for the following:

education services provided through government-run schools;

non-degree training programs offered by government agencies;
job-related training and seminar expenses for government personnel;
overall administration of public-education programs by the government;
construction of facilities for use in public education programs; and
government counterpart funding for foreign assistance loans and grants for education-
related projects.

4) What government agencies handle the country’s education expenditure?

Agencies whose expenditures are considered ‘take-all’ for education are the
following:
1. DepEd (including the Office of the Secretary, Commission on the Filipino Language,
Philippine High School for the Arts, and National Library);
2. TESDA;
3. CHED;
4. All state universities and colleges;
5. Local Government Academy and Philippine Public Safety College under the
Department of Interior and Local Government;
6. National Maritime Polytechnic under the Department of Labor and Employment;
7. Philippine Military Academy and National Defense College of the Philippines under
the Department of National Defense;
 8. Philippine Science High School and Science Education Institute under the
Department of Science and Technology;
9. Statistical Research and Training Center under the National Economic and
Development Authority;
10. National Book Development Board and National Computer Center under other
executive offices; and
11. Department of Education of the Autonomous Region in Muslim Mindanao.
For these take-all agencies, the general procedure followed was to use the COA data
on total actual expenditures and to apply the GAA structure for the distribution of
expenditures based on the NEXA classification. The data were tabulated by agency and by
individual SUC, and the planned expenditures from the GAA were individually reclassified
to conform to the NEXA disaggregation.
The government’s counterpart funding for foreign-assisted projects was obtained
from the GAA. Projects of take-all NGAs that were not intended for the improvement of the
provision and consumption of education services were excluded.
For most partial budget agencies, the education expenditures covered by the NEXA
were limited to those spent on training activities undertaken for their own staff development.
The data on total expenses on training and seminars conducted by NGAs was obtained from
the COA AFR Volume I. Since this was the total for all agencies, expenses of the DepEd,
SUCs and the other take-all NGAs for their own staff development and which were
separately accounted for had to be subtracted from the total training and seminar expenses as
reported in the AFR. The resulting net figure was then considered the training and seminar
expense of the partial budget agencies for their own staff development.
Special attention, however, was given to the training expenses of the Armed Forces of
the Philippines as derived from the GAA and adjusted based on the COA levels. These were
included under job-related training expenditures.
Another agency given special attention because of the capital outlay for buildings and
structures was the Department of Public Works and Highways (DPWH) for its school
building program for the DepEd. These were accounted for under other uses of funds in the
NEXA, which included other capital outlays. Data were derived from the BESF table on the
infrastructure program of the government.
5) What are the education expenditures (by used funds) made by the government?
The functional classification or the main categories of uses of education funds
adopted in the NEXA are as follows:
Basic education, which constitutes formal pre-school, elementary and secondary
education, and non-formal and special education programs for the same levels of
schooling;
Middle-level skills development, which includes post-secondary education that leads
to awards not equivalent to baccalaureate degree and other technical/ vocational
training not requiring a high school diploma;
Higher education, which includes college education, education that leads to a
professional degree (e.g., medicine and law degrees both requiring completion of a
first university degree for admission) and graduate level education (i.e. programs
leading to post-graduate Diploma or Certificate, Masters and Doctoral degrees);
Job-related training programs, which refer primarily to staff and employee training
programs designed to upgrade work-related skills and knowledge;
Ancillary activities, which include activities that support, promote and facilitate the
production/provision and consumption of education services, e.g. general
administration, education research, library services and school transport services;
Other uses of funds, which is a ‘catch-all’ category for education expenditures that
cannot be classified elsewhere.