Assessing the Effectiveness of LEE Manual

as a Public Enterprise Decision Tool Using Data Analytics

A Research presented to
the Faculty of the
Carnegie Mellon University Australia

In Fulfillment of the
Requirements for the Independent Study
As a part of the Short Course Program in
PUBLIC POLICY AND MANAGEMENT

KEITH C. CENSORO
December 2020

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 Table of Contents

INTRODUCTION ............................................................................................................................................3
OBJECTIVE AND RESEARCH QUESTIONS..............................................................................................4
HYPOTHESIS OF THE STUDY ....................................................................................................................5
SCOPE AND LIMITATIONS OF THE STUDY ............................................................................................5
SIGNIFICANCE OF THE STUDY .................................................................................................................6
CONCEPTUAL FRAMEWORK ....................................................................................................................7
REVIEW OF RELATED STUDIES................................................................................................................8
METHODOLOGY .........................................................................................................................................11
RESPONDENTS OF THE STUDY .......................................................................................................................12
REQUIREMENT GATHERING .......................................................................................................................... 12
DATA GATHERING INSTRUMENT ...................................................................................................................12
DATA ANALYSIS PROCEDURE .......................................................................................................................13
STATISTICAL TOOLS .....................................................................................................................................14
ANALYSIS OF RESULT ...............................................................................................................................15
RECOMMENDATIONS ................................................................................................................................22
REFERENCES ...............................................................................................................................................23

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 INTRODUCTION

According to Republic Act No. 7160, otherwise known as the Local Government Code
(LGC) of 1991, Local Government Units (LGUs) are mandated to create an accountable,
efficient, and dynamic organizational structure and operating mechanism that meets the priority
needs and service requirements of its communities. This may include the establishment and
operation of local economic enterprises (LGC, 1991).

Jones (1982) and World bank (1995), defined that local economic enterprise (LEE) are
ventures or business-like entity, wholly or partially owned by the government that generates
revenue/income through sales of services and goods to meet a perceived public demand. The
earlier studies of Manasan and Castel (2009), further defined that economic enterprise is
primarily concerned with public markets and shopping centers, bus terminals, cemeteries,
waterworks, slaughterhouses, and other establishments commercially operated which are
created by the legislative through a local ordinance.

However, the study conducted by Pardo and Zipagan (2008), revealed that many local
government units failed to optimize this modality of service delivery for several reasons.
Existing LEE performance revealed that most operate at a loss and require heavy subsidies
from the general fund since the majority of LEEs are only established for administrative and
political reasons specifically in addressing the overwhelming labor force which often resulted
in exceeding personnel services (PS) capacity that can be associated to poor public financial
management. Most LEEs also operate on inappropriate practices that fail to consider local
development priorities and unstable public demands resulting in substandard quality and
improperly priced public service.

To address this market failure, the Department of Budget and Management (DBM) has
crafted a manual for setting up and operating local economic enterprises per Local Budget
Circular (LBC) No. 111 dated 10 June 2016. This circular is issued to encourage LGUs to adopt
the LEE Manual as a guide in identifying, establishing, and operating viable LEEs (DBM,
2016).

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 Given the LEEs' critical role in the development of LGU and its effective good
governance, this independent study entitled "Assessing the Effectiveness of LEE Manual as
a Public Enterprise Decision Tool Using Data Analytics" seeks to understand the
effectiveness of the rolled-out manual as a practical guide and a decision tool for local
governments in creating and/or operating existing LEEs based on the given parameters and
identified success indicators. There is no other study that has been done to assess the
effectiveness of the LEE manual.

The result of this study is expected to provide some impactful analysis and
recommendations that may support local public utilities and services meets the public needs,
transparency and accountability are provided, opportunities for citizen involvement is
heightened, and revenue generation is mobilized. Moreover, the result can be used by the
Department to revisit the crafted manual and enhance its roll-out strategies more effectively.

OBJECTIVE AND RESEARCH QUESTIONS

The objective of this study is to understand the effectiveness of the manual as a guide
and decision tool in the creation and operation of local public utilities and services and in
meeting the public needs in a transparent and accountable manner, for greater citizen
involvement and revenue generation. Specifically, this study sought to answer the following
questions:
1. What is the profile of the local government units in terms of LGU type, income
class, awareness on the LBC No. 111, adoption of the LEE Manual, the
existence of the economic enterprise, and preparedness of business plan?

2. What is the level of LGU’s understanding of the effectiveness of the local

economic enterprise manual as a guide and decision tool for local government
in creating and operating public utilities?

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 3. Is there a significant difference in the level of LGU’s understanding of the
effectiveness of the local economic enterprise manual as a guide and decision
tool for local government in creating and operating public utilities?

HYPOTHESIS OF THE STUDY

Because of the reality that there was no existing study has been published in the
assessment of the effectiveness of the LEE manual, the DBM as an oversight agency does not
have any data to support that the roll-out was effectively done and the manual was of great help
to the local government for the creation and operation of local enterprises. Moreover, with the
absence of relevant information, the DBM has no evidence on hand whether the local
government’s understanding of the effectiveness of the LEE manual was poor or high. This
scale was so important for an agency to further evaluate their processes on policy introduction.
Thus, the agency was not confident that local governments have used the manual to guide them
in making purposeful economic enterprises.

SCOPE AND LIMITATIONS OF THE STUDY

This study mainly focused on understanding the effectiveness of the Local Economic
Enterprise (LEE) Manual rolled-out by the Department of Budget and Management (DBM) for
local government units (LGUs). An assessment was undertaken through a survey questionnaire
crafted as a research instrument to recognize the acceptability of LGUs towards the manual
and the effectiveness of the manual in the creation and operation of local economic enterprises.

The survey tool was materialized using an online platform and disseminated to all local
governments in Western Visayas (Region VI), Philippines, composed of 6 provinces, 2 highly
urbanized cities, 14 component cities, and 117 municipalities. The researcher has provided a
limitation on the number of respondents based on the collected responses. Sixty-one (61) out
of 139 local governments responded to the survey. Moreover, a key informant interview was

5
conducted with chosen government employees and officials to essentially capture LGU's
perspectives towards the introduction of this policy reform on economic enterprise.

The analysis and recommendations were only limited to the interpretation based on the
gathered information from the conducted survey and interview. Thus, the result does not reflect
the effectiveness of the manual from a country-wide perspective.

SIGNIFICANCE OF THE STUDY

The significance of this study was ideal to capture information concerning the
effectiveness of the rolled-out LEE Manual on the creation and operation of economic
enterprises in local governance. By this, a rating scale was used to measure its effectiveness
based on the identified success indicators.

To the Department of Budget and Management Regional Office VI (DBM RO VI), this
study significantly contributed a positive and innovative strategy in dealing with the roll-out of
the manual. The result has provided the Agency a room for improvement on how to effectively
conduct policy reform presentation for the local government to adopt or follow.

To the Local Government Units, this study provided the local government a feedback
mechanism. By this, results were analyzed, interpreted, and provided with the
recommendation. Thus, the future roll-out of policy reforms will be further enhanced and the
crafted LEE manual will be revisited for revision if any. This study also determined how LGU
proactively adopted such reforms and used them to attain sound public financial management.

To the citizens, this study addressed not just transparency and accountability, but also
provided citizens opportunities to attain better public utilities and social services, good
governance, and strong citizen engagements.

To the future researcher, this study helped other researchers widened their knowledge
in improving financial management specifically in the operation of economic enterprises. Since

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the study mainly focused on the effectiveness of the Manual, future researchers can broaden
the scope for more responsive recommendations.

CONCEPTUAL FRAMEWORK

INPUT PROCESS OUTPUT

-LGU type, -Gathering of data -Response of the

-Income Class -Key Informant Respondents
-Existing LEEs Interviews -Understanding and
-LEE Manual -Survey Questionnaire Effectiveness scale
• Awareness -Simple Analysis using based on LGUs’
• Adoptability statistical treatment perspectives
-Effectiveness of LEE - Analysis based on the
Manual present data from
• Usability survey
• Applicability to -Statements from key
LGU Setting informant interviews
• Revenue -Recommendation
Generation based on the result of
Improvement analysis
• Sustainability
• Impact

Figure 1. Conceptual Framework

Figure 1 described the conceptual framework of the study wherein the input was
composed of the following: LGU type, Income class, Existing LEEs, LEE Manual based on
awareness and adaptability, and Effectiveness of LEE Manual based on usability, applicability
to LGU setting, revenue generation improvement, sustainability, and impact.

On the other side, the process being used was through data gathering, questionnaires,
key informant interviews, and simple analysis using a statistical tool such as percentages,
scales, and tallies. The output was the analysis based on the level of effectiveness of the LEE
manual on the creation and operation of economic enterprises. Also, the recommendations were
highly emphasized.

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 REVIEW OF RELATED STUDIES

The review of conceptual and research literature, both foreign and local, about the local
economic enterprises provided a clear background for a better understanding of the study. In
the international literature, the term “state-owned enterprise” (also known as public enterprises,
public sector enterprises, government business enterprises, parastatals, or government-owned
and/ or controlled corporations) was used to refer to government-owned or government-
controlled economic entities that generate the bulk of their revenues from selling goods and
services (e.g., Jones 1982, World Bank 1995). This definition emphasized two distinct
characteristics of SOEs, namely: the public dimension and the enterprise dimension. The
enterprise dimension relates to government ownership, control, and/ or management. On the
other hand, the enterprise or “marketedness” dimension limits the application of the term to
entities that produce marketable outputs (i.e., goods and services for which prices/fees may be
charged). The enterprise dimension implicitly relates to the achievement of some level of cost-
recovery, if not profit-orientation, and the potential for the enterprise to earn a return on
investment. In a more restricted sense, the enterprise dimension was sometimes used to refer
to production entities that “operate according to commercial principles.” Shirley (1989),
however, clarified that since many entities that have the potential to be financially viable may
also have non-commercial objectives, sometimes with the latter dominating the commercial
objectives, SOEs may have to be categorized in terms of “their potential to earn a positive
return as well as the way such enterprises commonly operate elsewhere.” In other words, the
term public enterprise or SOE may refer to entities that have both social and commercial
objectives.

However, Manasan & Castel (2009) stated that LEEs was meant to be self-sustaining,
if not revenue-generating units, many of them incur losses continuingly. Current practice in
many LGUs does not engender a clear appreciation of the true cost of the local economic
enterprise. COA has documented many cases where the operation of LGU economic
enterprises was not treated as special accounts in the General Fund contrary to the provisions
of the Local Government Code (LGC) of 1991. The less than transparent reporting of the actual
financial condition and profitability of these enterprises may have some adverse effects on
decisions taken by LGU officials. On the one hand, economic enterprises were oftentimes
used as the vehicle for charging casual employees who are utilized elsewhere in the LGU
the system to circumvent the 45%-55% limitations on personal services (PS)

8
expenditures of LGUs. On the other hand, part of the cost of LEE operation and
management is sometimes charged under other offices in the LGU. Overall, the less than
a business-like approach to local enterprise management has resulted in large arrearages
and low collection efficiency.

To help LGUs in establishing purposeful LEEs and to get rid of these pre-existing
enterprise problems, the assistance of the government’s inter-agencies is heavily needed. In
the website of the Department of Budget and Management, one of the functions of the agency
was to oversee Local Government Units' implementation of Public Expenditure Management
(PEM) policies and to undertake capacity building and skills upgrading of LGUs in
coordination with the DBM Regional Offices (DBM, Functional Statement, 2020). According
to Jarzabkowski and Kaplan (2015) and Rigby and Bilodeau (2015), when faced with problems
or challenges, organizational leaders often experimented with a multitude of ideas in the hope
of discovering a favorable solution. One solution that management scholars and consultants
have recommended to leaders in the use of decision tools, contending that all organizations
should make them a central element of strategizing. Clark (1997), stated that decision tools
have been defined as ‘techniques, tools, methods, models, frameworks, approaches, and
methodologies which are available to support decision-making within strategic management’.

In the current management literature, the terms decision tools (Clark, 1996), decision-
making tools (Harfield et al., 2001), strategy tools (Cheng and Havenvid, 2017; Jarzabkowski
et al., 2013; Knot, 2006), strategic management tools (Afonina, 2015; Afonina and Chalupský,
2013; Hansen, 2011; Williams and Lewis, 2008), management tools (Pors, 2008; Rigby and
Bilodeau, 2005; Rigby, 1993), strategic management tools (Clark, 1997), and strategic
planning tools (Aldehayyat, 2011; Kalkan and Bozkurt, 2013) were used interchangeably when
referring to the same tools and techniques that were aimed at helping with strategizing. Oxford
Dictionary stated that a manual is a book of instructions, especially for operating a machine or
learning a subject, a handbook. This instructional book is also used as a decision tool.

According to Abad (2016), the Department of Budget and Management, in consultation

with the other oversight agencies and the LGUs, developed the Manual for the Setting Up and
Operation of Local Economic Enterprises (LEE Manual). The introduction of the LEE Manual
was a practical guide to help LGUs decide whether or not to use LEEs as a model of service
delivery. It encapsulated the state policies, rules, and regulations affecting LEEs, and provided

9
detailed procedures for the establishment and operation of LEEs, including their divestment. It
was an instructive “how-to” guidebook, which paved the way for LEEs that were relevant and
self-sustaining (DBM, Manual on Setting-up and Operation of Local Economic Enterprise for
LGUs, 2016).

Several research efforts have focused primarily on policy implementation and

improving innovative actions to address disaster risks. Discussions were ongoing on how to
measure the effectiveness of policy implementation at the local level (Pradhan, N.S., Su, Y.,
Fu, Y. et al., 2017). Zotova, et al. (2016), the urgency to study the problem was caused by the
necessity to make management decisions in terms of reducing the goods' life cycle, reducing
the profitability of production, increasing the speed of technological progress. In this context,
this article aimed to identify and elaborate the tools for integrated diagnostic of strategy
efficiency, taking into account the relationship of parameters which characterized various
spheres of enterprise activity, and to formulate an integral indicator of strategic effectiveness,
which was accepted as the criterion for evaluating the effectiveness of strategic development.
The leading approach to the study of this problem was the systems approach, used in the
development of methods for efficiency evaluation of strategic development, it allowed us to
identify priority factors of the strategic development of the company. The article substantiates
the use of the value approach to management as a methodical basis of diagnostics of the
effectiveness of the strategic development of the industrial enterprises; the matrix tool was
developed, supplementing the information-analytical foundation of management. The results
of the research work may be useful for effectiveness evaluation of the strategic development
of industrial enterprise and for identifying priority strategic development factors and making
recommendations to improve the value of the business.

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 METHODOLOGY

This qualitative and quantitative descriptive research was conducted to determine

LGU’s understanding of the effectiveness of the local economic enterprise (LEE) manual in
creating a self-reliant local economic enterprise.

According to Best and Khan (1993; as cited in Catane, 2000), the descriptive method
of research dealt with the relationship between variables, testing of hypothesis, and
development of generalizations, principles, and theories that have universal validity. It was
concerned with functional relationships. It attempted at finding out generalized attributes of
present conditions that were particularly appropriated in the behavioral sciences. This was
because so many types of behavior that a researcher has wished to study were not possible due
to some ethical considerations. For instance, when a particular stimulus was harmful or
threatened human subjects, such a study was prohibited. Extreme care on the treatment of
subjects was required in the behavioral sciences. It used a qualitative method to describe “what
is”, describing, recording, analyzing, and interpreting conditions that exist. It involved some
type of comparison or contrasts in an attempt to discover relationships between existing non-
manipulated variables and some statistical analysis to describe the results of the study.
According to Gay (1997; in Albar, et al., 2005), the descriptive method involved the collection
of data to test hypotheses or to answer questions concerning the current status of the subject of
the study. He added that this method was designed for the investigator to accumulate
information about present existing conditions.

The respondents’ input on local governance type, income class, awareness on the
introduction of the manual, Number of LGUs with existing economic enterprises, its
adaptiveness to the new policy, and success indicators in measuring the level of effectiveness
of the LEE manual such as Usability, Applicability to LGU Setting, Revenue Generation
Improvement, Sustainability, and Impact were the independent variables. While the
effectiveness of the LEE Manual in creating a self-reliant local economic enterprise was the
dependent variable.

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Respondents of the Study

The sixty-one (61) local government units in Western Visayas Region that participated
in the survey phase were the respondents of the study. Respondents from each of the local
governments were represented by a local budget officer who was then in-charged to answer the
online survey form. Also, an additional seven (7) public servants were subjected to online
interviews.

Requirement Gathering

The researcher invested in time management to the cognizance of a specific task to

accomplish within the time frame. One of the tasks was to identify the desired research topic
where the researcher managed to reach-out to some experts specifically the Chief Budget and
Management and the DBM-VI Regional Director who provided insightful content for the
finalization of the research topic. The topic was further discussed and approved by one of the
faculty of the Carnegie Mellon University Australia, Professor Danura Miriyagalla, who also
served as the researcher’s adviser.

The collection of additional data and information from online books, journals, and
articles took place. Also, the presence of the LEE manual has provided comprehensive
information on the content and how it can be effective to the LGUs.

The survey questionnaire was crafted with strong collaboration from professionals and
experts in the Agency workplace and the academe. The dissemination of survey questionnaires
using Google Form as an online platform made the gathering of data more efficient and real-
time. Also, key informant interviews took place to capture personal sentiments, ideas, and some
best practices of local government in the operation of their economic enterprise.

Data Gathering Instrument

The main instruments such as a survey questionnaire were used to gather the necessary
information that was separated into two (2) parts.

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 Part I was intended to gather the LGU profile as provided by the respondents. It was
composed of a brief instruction of what the study was all about. The local budget officers as
respondents were asked to indicate local governance type, income class, awareness on the
introduction of the manual, the existence of economic enterprises, list of economic enterprises,
its adaptiveness to the new policy, and preparedness of business plan.

For Part II, a set of questions were crafted to emphasize some success indicators that
were used to measure the effectiveness of the LEE manual as a guide and decision tool in the
creation and operation of purposeful economic enterprises. The questionnaire was composed
of 6 items to identify the manual’s Usability, Applicability to LGU Setting, Revenue
Generation Improvement, Sustainability, and Impact. A scale of 1 to 5 was utilized, five (5)
being the highest and one (1) as the lowest. The levels were Strongly Agree, Agree, Neither
Agree Nor Disagree, Disagree, and Strongly Disagree.

Scale Description
4.51 – 5.0 Excellent
3.51 – 4.50 Very high
2.51 – 3.50 High
1.51 – 2.50 Fair
1.0 – 1.50 Poor

Data Analysis Procedure

In collecting the data for this study, all necessary ethical procedures were followed. As
the research instruments were set and finalized, Independent Study Contract was submitted and
permission to conduct the study was secured from one of the faculty of Carnegie Mellon
University Australia who also served as the researcher’s adviser. The researcher distributed the
questionnaires to the respondents in an online form and interviews were done through web and
mobile. The gathered data were retrieved, tallied, and subjected to statistical treatment.

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Statistical Tools

The data gathered were subjected to computer-processed statistics employing the

Statistical Package for the Social Sciences (SPSS) Software. The following statistical tools
were used to analyze and interpret the data:
Frequency Count. Frequency count was used to determining the profile of the
respondents based on LGU Type, Income Class, Awareness of LBC 111, Existence of LGU
LEE, Adoption of LEE Manual, and Preparedness of Business Plan.
Percentage Analysis. The Percentage analysis was used to determine the proportion of
respondents in each category.
Mean. The Mean was used as an indicator of the respondents’ understanding of the
effectiveness of the LEE Manual as a guide and decision tool for LGU in setting-up and
operating economic enterprises.
To interpret the scores, the researcher used the following scale:
Scale Description
4.51 – 5.0 Excellent
3.51 – 4.50 Very high
2.51 – 3.50 High
1.51 – 2.50 Fair
1.0 – 1.50 Poor
Standard Deviation. Standard deviation was used to determine the homogeneity or
heterogeneity of the respondents’ understanding of the effectiveness of the LEE Manual as a
guide and decision tool for LGU in setting-up and operating economic enterprises.
ANOVA. This was used to determine the differences in the respondents’ understanding
of the effectiveness of the LEE Manual as a guide and decision tool for LGU in setting-up and
operating economic enterprises.
Post-Hoc Test. This was used to determine the significance of the respondents’
understanding of the effectiveness of the LEE Manual as a guide and decision tool for LGU in
setting-up and operating economic enterprises.
t-test, ANOVA, and Post-Hoc Test were utilized since the assumption for use of
parametric tests was met.
The margin of error was set at 0.05.

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 ANALYSIS OF RESULT

Table 1 Profile of the Respondents

Variable N Frequency

Entire Group 61 100.00

LGU Type
Municipality 52 85.20
City 6 9.80
Province 3 4.90

LGU Income
First Class 15 24.60
Second Class 12 19.70
Third Class 11 18.00
Fourth Class 18 29.50
Fifth Class 5 8.20

Awareness of LBC No. 111

Yes 50 82.00
No 8 13.10
Maybe 3 4.90

Existence of LGU LEE

Yes 41 67.20
No 20 32.80

Adoption of LEE Manual

Yes 27 44.30
No 25 41.10
Maybe 9 14.80

Preparedness of Business Plan

Yes 19 31.10
No 36 59.00
Maybe 6 9.80

___________________________________________________________________

Table 1 showed that the majority of the LGU type was a municipality (52 or 85.20%),
belonged to the fourth class LGU (18 or 29.50%), were aware of LBC 111 (50 or 82%), there
was an existing LGU LEE (41 0r 67.20%), adopted LEE Manual (27 or 44.30%), and has no
prepared 5-year business plan (36 or 59.00%).

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 It can be glimpsed that LGU awareness on the imposed policy concerning setting-up
and operation of public enterprises per Local Budget Circular (LBC) No. 111 was very
promising. This only meant that the LEE manual for LGUs was successfully introduced and
information on its legality was properly disseminated. However, an interesting fact revealed
that less than half of the local governments have not adopted the said manual. Moreover, the
local government’s readiness to prepare a 5-year business plan was minimal. These results can
be associated with the information provided by key informant interviews. According to Annie
Bedonia, Local Budget Officer-LGU Anilao, politics was bigger than political will. The lack
of a political will cannot give an impactful result especially in the readiness of LGU for
establishing LEE that would address public needs. In an interview with Dir. Alfonso Bedonia,
Retired DBM VI Regional Director, mentioned that LEE should have a legal basis for its
existence thru an ordinance enacted by the Sanggunian (Legislative body). There should be a
business plan to map out how it should operate and of course a budget for its operation.
It can be observed that the majority of LGUs have public enterprises. Dir. Bedonia also
said that LEEs existed to deliver public goods whether market, cemetery, waterworks, or health
services. These public goods or services were mandated by the Local Government Code (RA
No. 7160) – meaning that whether LGUs like or not they have to provide for these and
appropriate funds for the purpose because these were affected by public interest.

Table 2 Effectiveness of LEE Manual

Compared Groups N Mean SD Description

Entire Group 61 4.17 .59 Very High

LGU Type
Municipality 52 4.22 .65 Very High
City 6 3.89 1.26 Very High
Province 3 3.83 .64 Very High

LGU Income
First Class 15 4.45 .66 Very High
Second Class 12 4.25 .49 Very High
Third Class 11 4.40 .74 Very High
Fourth Class 18 3.82 .51 Very High
Fifth Class 5 3.87 .54 Very High

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Awareness of LBC 111
Yes 50 4.30 .57 Very High
No 8 3.48 .53 High
Maybe 3 3.89 .92 Very High

Existence of LGU LEE

Yes 41 4.30 .62 Very High
No 20 3.89 .59 Very High

Adoption of LEE Manual

Yes 27 4.38 .64 Very High
No 25 3.99 .55 Very High
Maybe 9 4.05 .74 Very High

Preparedness of Business Plan

Yes 19 4.40 .69 Very High
No 36 4.06 .59 Very High
Maybe 6 4.08 .52 Very High

Scale Description

4.51 – 5.0 Excellent

3.51 – 4.50 Very high
2.51 – 3.50 High
1.51 – 2.50 Fair
1.0 – 1.50 Poor

Table 2 showed that as an entire group and in all categories of LGU Type, LGU Income,
the existence of LGU LEE, adoption of LEE Manual, and preparedness of Business plan, the
effectiveness of LEE Manual was “Very High” with means ranging from 3.82 to 4.45; except
for those that were not aware of LBC 111 with a mean of 3.48 (High).
Survey result revealed that the minimal rate of LGUs on the adoption of the LEE
manual and the preparedness of business plans as a concern in Table 1 has no contribution that
could negatively affect the effectiveness of the LEE manual in the creation of self-reliant public
enterprises. The majority of the LGUs believed that the manual introduced by DBM was an
effective tool for decision making. The local government’s understanding of effectiveness does
not vary on LGU type or even its income class. There was a uniformity in the understandability
of the local governments that the manual was considered effective with a “Very High” remark.
Some LGUs that were not aware of the LBC No. 111 even provided a positive result in the
effectiveness of the LEE manual with a remark of “High”. This can be observed when local

17
governments were not aware of the legality, in this case, the publication of LBC No. 111,
behind the crafting of the enterprise manual for LGUs.
The Municipal Administrator of LGU Calinog, Mrs. Rachel Manero, believed that the
LEE manual served as a guide, present a template to follow, and understand the total operation
so that the initiative rendered a success. Also, Mrs. Emma Bastolero, Local Budget Officer-
LGU Sibalom, highlighted that the LEE manual was an effective tool, but there should be a
continuing education especially for that LEE personnel to have a grasp of the importance of
preparing a business plan. Elected officials should not meddle with the operation also.
The local government’s understanding of the effectiveness of the LEE manual
introduced by the Department of Budget and Management was extremely remarkable. It
showed that local governments have dissected the importance of the manual based on their
usability, applicability to LGU Setting, revenue generation improvement, sustainability, and
impact. Thus, simply showed that the said manual has proven its primary purpose. Niño Bronze
Armada, Municipal Accountant- LGU Calinog, emphasized that the LEE manual was
important to guide the LGUs in implementing the LEEs. The manual helped LGUs to
effectively manage and operate an existing LEE or has guided LGUs in establishing a LEE.
Moreover, A. Bedonia of LGU Anilao, further emphasized during the interview that LGUs to
better understand LEE operations needed a manual for operations, capacity building activities
like pieces of training and workshops, and benchmarking activities. Most LGUs do not even
have personnel who knew how to make and appreciate business plans and feasibility studies.

Table 3 ANOVA Results for the Differences of the Effectiveness of LEE Manual when
classified as to LGU Type, LGU Income, Awareness of LBC 111, Adoption of LEE Manual,
and Preparation of Business Plan

Variables Sum of Squares df Mean Square F Sig. Decision

LGU Type
Between Groups .950 2 .475 1.183 .314 Accept Ho
Within Groups 23.299 58 .402
Total 24.250 60

LGU Income
Between Groups 4.466 4 1.116 3.160 .021* Reject Ho
Within Groups 19.784 56 .353
Total 24.250 60

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Awareness of LBC 111
Between Groups 4.857 2 2.429 7.264 .002* Reject Ho
Within Groups 19.392 58 .334
Total 24.250 60

Adoption of LEE Manual

Between Groups 2.110 2 1.055 2.764 .071 Accept Ho
Within Groups 22.140 58 .382
Total 24.250 60

Preparation of Business Plan

Between Groups 1.515 2 .758 1.933 .154 Accept Ho
Within Groups 22.734 58 .392
Total 24.250 60

*significant at 0.05 alpha

The ANOVA Test result in Table 3 revealed significant differences in the level of
effectiveness of the LEE Manual of the LGUs when classified as LGU Income (p-value=.021)
and awareness of LBC 111 (p-value=.002). The p-value was lesser than 0.05. This implied that
the differences of the LGU in their income and awareness of LBC 111 significantly influenced
their perspective on the effectiveness of the LEE Manual; therefore null hypothesis in this
regard was rejected.
On the other hand, results also showed non-significant differences in the level of
effectiveness of the LEE Manual of the LGUs when classified to LGU Type (p-value=.134),
Adoption of LEE Manual (p-value =.071), and Preparedness of Business Plan (p-value =.154).
The p-values were greater than 0.05 which means that, despite their numerical differences, the
level of effectiveness of the LEE Manual as perceived by the LGUs was practically the same.
It indicated that the LGUs’ differences in LGU Type, Adoption of LEE Manual, and
Preparedness of Business Plan do not significantly influence their perceived effectiveness of
LEE Manual; therefore null hypotheses in this regard were accepted.

19
Table 4 Post-Hoc test in LSD of the Differences of the respondents when classified as to
LGU Income and Awareness of LBC 111

Compared Groups Mean Difference Sig (p-value)

A. LGU Income

First Class
Second Class .20 .37
Third Class .06 .80
Fourth Class .63* .00
Fifth Class .59 .06
Second Class
Third Class .14 .56
Fourth Class .42 .06
Fifth Class .38 .23
Third Class
Fourth Class .56* .01
Fifth Class .53 .10
Fourth Class
Fifth Class .42 .88

B. Awareness of LBC 111

Yes
No .82* .00
Maybe .41 .58
No
Maybe .41 .39

*significant @ 0.05 alpha

The Post-Hoc Test in LSD result in Table 4 revealed a significant difference in the level
of effectiveness of LEE Manual of the LGUs between first-class and fourth class (p-
value=.00) and between third class and fourth class (p-value=.01). The table also revealed
significant differences in the level of effectiveness of the LEE Manual of the LGUs between
those that were aware and were not aware of LBC 111 (p-value = .00). The p-value was lesser
than 0.05 therefore null hypotheses in this regard were rejected. No other significant differences
were noted.
According to Mrs. Susana Casalem, City Planning and Development Coordinator-LGU
Kabankalan City, the losses in LEE were incurred because there was no overall supervision of

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the project, the assigned personnel has just been terminated and local management might have
not reported the actual sales or personnel were more than their income. She also added that she
has not seen the manual and who has it in their LGU. Manuals were guided to operations which
helped how things were done.
The result of the ANOVA and Post-Hoc tests revealed that LGUs' understanding of the
effectiveness of the manual may significantly differ based on their awareness of the circular as
published by DBM. Thus, local governments that were not aware of the Local Budget Circular
No. 111 have not provided a high understanding of the effectiveness of the LEE manual. In
reality, LGUs with lower-income classes can’t afford to create a public enterprise due to their
limited Internal Revenue Allocation (IRA). They cannot employ additional staff and subsidize
economic enterprise operations.

Table 5 t-Test Results of the Differences of the Effectiveness of LEE Manual when classified
as to Existence of LEE

Compared Groups N Mean t df sig Decision

Existence of LEE
Yes 41 4.30 2.48 .59 .016* Reject Ho
No 20 3.89

*significant @ 0.05 alpha

The t-Test result in Table 5 revealed a significant difference in the level of effectiveness
of the LEE Manual of the LGUs when classified as the Existence of LEE (t= 2.48, p-
value=.016). The p-value was lesser than 0.05. This implied that the differences of the LGU in
the existence of LEE significantly influence their perspective on the effectiveness of the LEE
Manual; therefore null hypothesis in this regard was rejected.
The result of the t-Test revealed that local governments with no existing local economic
enterprise have a significant difference in LGU’s understanding of the effectiveness of the
economic enterprise manual as a guide and decision tool for local governments in the creation
and operation of public enterprise and services. This was true in a local level scenario due to
the limited information on LEE’s concept, lack of technical personnel to operate public

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enterprises LGU capacity to establish a LEE, and the intervention of politics. According to
Mrs. Manero, Proper training, goal setting, strategic planning helped ensure operations under
the Local Economic Enterprise be productive. Placing the right people and implementing the
right procedures that were politics-proof in the LEE ensured success in its operation.

RECOMMENDATIONS

Based on data analytics, the researcher has provided a clear understanding of the analysis of
the result and significantly identified some key areas needed for improvement. The successful
interpretation has guaranteed a purposeful feedback mechanism for the oversight agencies such
as the DBM on how to further enhance the roll-out process and encourage local governments
to seriously operate a local enterprise based on rigorous studies, transparency, and
accountability. Below are some of the recommendations.

1. It is recommended that DBM should create a framework to further encourage local

governments on the adoption of the local economic enterprise manual. Also, guidance
must be provided by concerned agencies like DBM on the expenditure side, BLGF on
the revenue side, and COA for accountability.

2. It is recommended that the oversight agencies like DBM, BLGF, and COA should
create a training module to capacitate LGUs especially personnel under the LEE
operations in terms of expenditures, revenue generation, accountability, and
transparency. Scheduled training-workshops and onsite visits for benchmarking should
also be considered. Elected officials should also take part in the Seminar-workshop so
that they will know how their interventions affect the operation of the LEE in the local
setting positively and negatively.

3. It is recommended that DBM should strengthen its bond with the LGUs with a lower-
income class so that full-support and technical assistance can be provided. Further
information sharing on LBC No. 111 (Manual on Setting-up and Operation of Local
Economic Enterprise) should also be considered.

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 4. It is recommended that DBM should develop a monitoring and assessment template in
the evaluation of local enterprises. This will serve as a guide for local governments to
prepare an outcome-based action plan to immediately address post-existing issues.

5. It is recommended that the local government units should invest in a detailed and
rigorous study, deep understanding of the guidelines, and procedure stated in the
manual through technical assistance being provided by oversight agencies. Also, LGUs
should examine their capacity on how to further provide effective and efficient public
services.

6. It is recommended that the local government should adopt the manual by passing a
legislative resolution to further understand the effectiveness of the manual as a guide
and decision tool in the creation and operation of local public utilities and services and
in meeting the public needs in a transparent and accountable manner, for greater citizen
involvement and revenue generation.

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