The People’s Budget

IV. Basics of Budgeting


34 .

activities. expenditures are the implementation costs of programs. In this situation. The government’s income is composed of tax and non-tax revenues. value-added tax on the sale of goods and services. government resorts to borrowing from domestic and foreign sources. it is in budgeting where the government seeks to put its money where its mouth is. Income. W the government’s income is not hen sufficient to finance the expenditures. Budgeting enables the government to plan and manage its scarce financial resources in order to support the priority programs and projects aimed at promoting economic growth and providing basic services to the people. among others. regulatory or service functions. and projects. Basics of Budgeting a. special taxes such as the motor vehicle tax and travel tax. The national budget consists of the estimated income and planned expenditures in a given year. Deficit. the benefits of which extend beyond the fiscal year and which add to the government’s assets. Tax revenues include individual and corporate income taxes. non-tax revenues also include the privatization of government assets. 35 . Expenditures may be classified as operating expenses or those incurred in the exercise of government administration. In other words. government incurs a fiscal deficit. Meanwhile. charges and other collections of government in exchange of services it rendered. Expenditures. among others. or capital expenses that refer to the purchase of goods and services. In certain cases. penalties imposed.The People’s Budget IV. Non-tax revenues come from fees. The National Budget The National Budget is the financial translation of approved government plans and programs which are to be supported by government resources (revenues and borrowings).

L U’ IRA) are automatically appropriated. Commission on Elections. Programmed appropriations are those which are supported by corresponding resources. as Gs well as to government-owned or –controlled corporations (GOCCs) and government financial institutions (GFIs). The National Budget for a given year is composed of the following: New General Appropriations – this is legislated by Congress and enacted by the President for every fiscal year as the General Appropriations Act (GAA). interest payments. Three-Year Perspective. while unprogrammed appropriations refer to stand-by authority which can only be released when revenue collections exceed revenue targets. Currently. the s government takes account of future costs of approved and ongoing programs as well as valid commitments. and the Commission on Audit. Even as the National Budget is prepared annually. Components. The national budget covers the totality of the budgets of national government agencies: not only those of the Executive branch. in particular.Basics on Budgeting Coverage. This process ensures that in managing its resources. Uing the Forward Estimate process. certain types of expenditure (e. Automatic Appropriations – under specific laws. the government adopts a three-year perspective. The National Budget Cycle 36 .g. Gs Continuing Appropriations – these are unexpended/ nreleased balances of previous u year’s GAA which continue to be valid until the subseq ent year. the Internal Revenue Allotment (IRA). The national budget also covers the budgetary support that the national government gives to local government units (L U). but also of the Lgislative and J dicial e u branches as well as other Constitutional bodies such as the Civil Service Commission. The GAA enacts both programmed and unprogrammed general appropriations. b. u appropriations for capital outlays and maintenance and other operating expenditures have a validity of two years. the National Government acts strategically and not in a shortsighted manner.

policy guidelines and procedures for the preparation of the agency budget proposals. Execution – Agencies utilize their approved budgets. These phases overlap in continuing cycles every year. 2. while the Executive is implementing the budget for the current year. These consultations are done at the national level and regionally via the Regional Development Councils (RDCs). 4. the execution and accountability phases are implemented simultaneously throughout the year. and ends with the President’s submission of the proposed budget to Congress. For instance. The DBM also conducts Budget Fora with agencies and other stakeholders to further explain and discuss the budget parameters. 2. 1. Meanwhile. This phase of the Budget Cycle starts with the issuance of a Budget Call. the Department of Budget and Management (DBM) issues the National Budget Call to all agencies (including state universities and colleges) and a separate Corporate Budget Call to all GOCCs and GFIs. Budget Preparation. Legislation – Congress authorizes the General Appropriations Act. Accountability –Executive monitors and evaluates the use of the budget. The Budget Call contains budget parameters (including macroeconomic and fiscal targets. Preparation –Executive prepares the proposed National Budget. and policy guidelines and procedures in the preparation and submission of agency budget proposals. 3.0 The Budget Call – At the beginning of the budget preparation phase. it is also preparing the budget for the next fiscal year or defending it before Congress.0 Stakeholder Consultations – As a new feature of the budget preparation process. 37 . and agency budget ceilings) as approved by the Development Budget Coordination Committee (DBCC).The People’s Budget There are four phases in the management of the National Budget: 1. departments and agencies have been tasked to consult with civil society organizations (CSOs) and other citizen-stakeholders in preparing their budget proposals. Consultations with RDCs have also been introduced in order to incorporate regional development plans in the agency budget proposals.

Starting with the preparation of the proposed 2012 National Budget. 2010 January 6. DBM Officials and Staff iii. Deadline of Submission of FY 2012 Budget Proposals 8. 2011 AM January 7. Technical Budget Hearings with Agencies 9. Budget of Expenditures June 29-July 6. DBM-RO/Agency ROs Budget Forum on the FY 2012 National Budget 4. Staffing Summary. B. 2011 AM January 7. 2011 June 16-17. 2011 April 8. DBCC Deliberation 11. 2011 13. and the submission of the President’s budget a day after the State of the Nation Address (unlike before when it is done at the latter part of the 30-day period that the Constitution prescribes). Corporate Budget Forum 3. Issuance of Budget Call 2. C . 2011 June 29. 2011 38 .P. Submission of the President’s Budget to Congress July 8-21. 2011 April 11-22. FY 2012 BUDGET PREPARATION CALENDAR ACTIVITY 1. 2011 January 28. Presentation to the President and the Cabinet of the FY 2012 Proposed Budget Levels of Department/Agency/Special Purpose Funds DATE December 30. 2011 May 9-31. 2011 July 22. Consultations with Regional Development Councils/Civil Society Organizations of Agencies’ On-going Programs and Projects 6.Basics on Budgeting New Budget Preparation Calendar. Printing of FY 2012 Budget Documents 15. Finalization of National Expenditure Program (NEP). Form No. National Government Agencies ii. 2011 July 26. DBM Budget Review 10. 2011 and Sources of Financing (BESF) Tables. Budget Message. Submission of the FY 2012 Budget Documents to the President 16. Deadline of Submission of B. Organizational Performance Indicator Framework (OPIF) Book 14. Details of Selected Programs/Projects. 2011 March 15. 201 A. 2011 PM January 10 & 11. Confirmation of Budgets with Agencies 12. 2011 June 21-22.Past Year’s Actual Obligation and Current Year Appropriation 7. 2011 February. Issuance of Indicative Budget Ceilings and Macroeconomic Assumptions and Fiscal Targets 5. the DBM has established a new Budget Preparation Calendar which moves the process earlier: The Budget Call issuance to January (versus around April in the past). Budget Forum i.

Validation and Confirmation.The People’s Budget This new process. During these hearings. DBM then consolidates the recommended agency budgets and recommendations into a National Expenditure Program and a Budget of Expenditures and Sources of Financing (BESF). 3. These are then presented before an Executive Review Board.0 Consolidation. the DBM prepares and finalizes the budget documents to be submitted to Congress. After this. After the President and Cabinet approve the proposed National Expenditure Plan. vis-à-vis the priority agenda of the national government. together with the DBCC.0 Technical Budget Hearings and Executive Review. all Undersecretaries and Assistant Secretaries. Part of the consolidation process is the deliberations by the DBCC to determine the agency and sectoral allocation of the total expenditure ceiling approved in line with the macroeconomic and fiscal program. 4. Deliberations before the Executive Review Board entail a careful prioritization of programs and corresponding support. 5. Implementation issues are also discussed and resolved. The heads of major departments may be invited to this meeting. Technical Budget Hearings are conducted. After departments and agencies submit their Agency Budget Proposals to the DBM. the DBM bureaus review the agency proposals and craft recommendations. to the President and Cabinet for further refinements or reprioritization. was piloted in the preparation of the proposed budget for 2012.0 Presentation to President and Cabinet. composed of the Secretary. agencies defend their proposed budgets before CSO and RDC Consultations: Pilot Departments and GOCCs Department of Education Department of Health Department of Social Welfare and Development Department of Public Works and Highways Department of Agriculture Department of Agrarian Reform National Food Authority National Housing Authority National Home Mortgage and Finance Corporation a technical panel of DBM on the basis of performance indicators or output targets and absorptive capacity. 39 . The proposed budget is presented by DBM. which seeks to create greater space for citizens in the budget process.

It then crafts the General Appropriations Bill (GAB).0 The President’s Budget. BUDGET LEGISLATION PROCESS House Hearing/ Debate (Aug-Nov) House approval and Submission to Senate (Nov) Senate Hearing/ Debate (Aug-Nov) Senate Approval (Dec) Conference Committee (Dec) President signs the GAA (Dec) Budget Legislation. The legislation or authorization phase starts upon the House Speaker’s receipt of the President’s Budget and ends with the President’s enactment of the General Appropriations Act. containing the details of spending of each department and agency by program. Details of Selected Programs and Projects – This contains more detailed disaggregation of key programs. The Committee and its Sub-Committees then schedule and conduct hearings on the budgets of the departments and agencies and scrutinize their respective programs and projects. this document contains the macroeconomic assumptions. d. 40 . projects and activities in the NEP to flesh out lump-sum allocations in terms of project listing and their locations.Basics on Budgeting 6. National Expenditure Program (NEP) – This document. The House of Representatives. in plenary. The budget preparation phase ends with the submission of the proposed national budget—the “President’s Budget”—to Congress. Staffing Summary – This contains a summary of the staffing complement of each department and agency. the current and the previous years. including number of positions and amounts allocated for the same. House Deliberations. c. 1. e. Budget of Expenditures and Sources of Financing (BESF) – Mandated by the Constitution. The President’s Budget consists of the following documents. assigns the President’s Budget to the House Appropriations Committee. which help legislators analyze the contents of the proposed budget: a. activity or project. is submitted in the form of a proposed General Appropriations Act. public sector context (including overviews of LGU and GOCC financial positions). President’s Budget Message (PBM) – This is a document where the President explains the policy framework and priorities in the budget. b. breakdown of the expenditures and funding sources for the budget year.

they will each constitute a panel to the Bicameral Conference Committee. to come up with the final GAB to be submitted to the President. the GAB is the only legislative measure where the President can effect a line-veto (usually. The budget legislation phase ends when the General Appropriations Act (GAA) is signed by the President into law. When the GAA is not enacted before the fiscal year starts. through votation. In other words. But for expediency. As this process of reenactment is tedious and prone to abuse. Ideally. the GAB is approved on Second and Third Reading before transmittal to the Senate. Budget deliberations in the Senate formally start after the House of Representatives transmits the GAB. Once both Houses of Congress have finished their deliberations. Once submitted to the President for his approval. a law is either approved or vetoed in Reenacted Budgets. the Senate conducts its own committee hearings and plenary deliberations on the GAB. full). activities and projects remain the same. As in the House process. Else. 3. (Note. The President and DBM then review the GAB and prepare a Veto Message. Funding for programs or projects that have been terminated already is realigned for other expenditures. for ratification. The Committee submits its proposed amendments to the GAB to plenary only after it has been formally transmitted by the House. the budgets of agencies for their programs. 41 . Senate Deliberations. The Harmonized or “Bicam” version is then submitted to both Houses. Bicameral Deliberations and Ratification.The People’s Budget In plenary session. Veto and Enactment. the Aquino Administration—with the support of Congress—has committed to ensure a fresh GAA enacted on time every year. 4. as necessary. enactment should happen not later than December 31 of the GAA’s fiscal year. This committee will then discuss and harmonize the conflicting provisions of the House and Senate versions of the GAB. or worse. presented and defended by the Appropriations Committee and Sub-Committee Chairmen. the GAB is sponsored. the previous year’s GAA is automatically re-enacted until such time that a new GAA is enacted. Under the Constitution. A Senate Version is thereafter approved on Second and Third Reading. the GAB then is considered as enrolled. the First Reading is when the GAB is assigned by the House Speaker to the Appropriations Committee) 2. the Senate Finance Committee and Sub-Committees usually start hearings on the GAB even simultaneously as House deliberations are still ongoing. Enrollment. As in all other laws. After which. the previous year’s budget is reenacted in part. in full if no new budget is approved. a harmonized version of the GAB is produced.

for the public to scrutinize. 100 percent of agency allotments that do not need prior clearance have been released to agencies. and list of obligations which are not yet due and demandable. These BEDs include: physical and financial plan.Basics on Budgeting Reforms in Executing the 2011 Budget. 42 . As soon as the GAA is enacted. This new policy was also intended to jumpstart budget execution early. the DBM prepares an Allotment Release Program (ARP) to set the maximum allotment that can be issued to an agency and on the aggregate. A Cash Release Program (CRP) is also formulated alongside that. the DBM issued reforms to expedite the release of the budget for critical programs and projects. the DBM has mandated the posting of accountability reports submitted by agencies. monthly cash program. 1. in particular. to set a guide for the level of disbursement for the year and for every month/quarter. the Budget Execution Document by February 15 and the quarterly Budget Accountability Reports (Please see sub-section on the Budget Accountability Phase). agencies are required to submit their BEDs. To ensure that releases are within the approved Fiscal Program. no release. No report. causing delays in implementation. Transparency. and projects. Budget Execution Documents (BEDs). the government can implement its priority programs. At the beginning of budget execution. In line with the new transparency provisions in the 2011 GAA. to tighten agencies’ compliance with transparency and accountabilty requirements. After the 2011 Reform Budget was enacted. In the past. Full Release of Agency Budgets. The ARP of each agency corresponds to the total amount of the agency-specific budget under the GAA. The budget execution phase begins with DBM’s issuance of guidelines on the release and utilization of funds. and Automatic Appropriations. DBM issued a policy that additional funds will not be released to agencies if they do not comply with regular reportorial requirements. as well as their compliance with reportorial requirements. and even before they receive their respective Agency Budget Matrices (Please see sub-section on Allotment Release). Release Guidelines and Program. The DBM authorized agencies to undertake the bidding and award of contracts for items already spelled-out in the GAA. This is where the people’s money is actually spent. 25 percent of items classified as such were withheld pending Agency Performance Review in the third quarter. (Please see sub-section on Allotment Release) Authority to Incur Overdrafts. at the same time. 2. For the first time in many years. estimate of monthly income. These documents outline the agencies’ plans and performance targets. This corresponds to some P717 billion or 74 percent of the GAA net of automatic appropriations. Budget Execution.

NCA. a SARO is issued. to utilize the income collected by their foreign posts to cover for their operating requirements but not to exceed the released allotment to the said post. Non-Cash Availment Authority (NCAA) and Cash Disbursement Ceiling (CDC). As NCAs cover cash disbursements. ABM.” The ABM serves as the comprehensive allotment release document for appropriations which are “not needing clearance” or those which have already been itemized and fleshed-out in the GAA. There are various ways that an agency “obligates:” for example. Items which are categorized as “needing clearance are those which. The release of NCAs by DBM is based on the submission by the agency of its Monthly Cash Program and other required budget execution documents. The release of an allotment means that the appropriated budget of each agency is made available to them for their use. This document is a cash authority directy issued periodically by the DBM to operating units of agencies (central. the DBM issues a disbursement authority in the form of a Notice of Cash Allocation (NCA). 43 . electricity. Once approved. agencies incur liabilities on behalf of the Government. NCAs for operating expenditures have been issued for a six-month period but with monthly breakdown. under specific laws and regulations. such as the Department of Foreign Affairs and Department of Labor and Employment. The SARO is a specific authority issued to an agency to incur obligations not exceeding a given amount during a specified period for the purpose indicated. require the approval of the DBM or the President or are subject to compliance with certain documentary requirements. Incurring Obligations. This is an authority issued by the DBM to departments with overseas operations. or enters into a contract with an entity for the supply of goods or services. when it hires staff (an obligation to pay salaries). CDC. etc. 4. with supporting documents. To pay the obligations incurred by agencies. The NCAA is a document issued by DBM to a government agency to account for the cash equivalent of loan proceeds availed of through suppliers’ credit or constructive cash. activities and projects. SARO. as the case may be (for instance. regional and provincial offices) to cover their cash requirements. 5. The ABM is prepared by the DBM in consultation with the agencies concerned. lump sum funds and confidential and intelligence funds). The allotments are released through the Agency Budget Matrix (ABM) and Special Allotment Release Orders (SAROs): documents that authorize the agency to enter into an obligation or commitment. Allotment Release: ABM and SARO.). The NCA specifies the maximum amount of cash that an agency can withdraw from a government servicing bank for the period indicated. This document disaggregates all the programmed appropriations for each agency into two main expenditure categories: “not needing clearance” and “needing clearance. NCAA. For such items. Obligations are liabilities legally incurred and committed to be paid for by the government either immediately or in the future. an agency needs to submit a Special Budget Request to the DBM.The People’s Budget 3. In implementing programs. Settlement of Obligations/Disbursement. Starting 2010. avails of utilities (water. NCAAs cover for what are referred to as non-cash disbursements.

as well as revenue generation. and monthly report of disbursements. These BARs include: quarterly physical and financial reports of operations. determining the budgetary levels of agencies and addressing issues in the use of public funds. quarterly report of income. The APR assesses agency performance in terms of its financial utilization. The BEDs and BARs are used by DBM as basis in conducting the APR. Agencies are required to submit monthly and quarterly BARs.performance assestment .do - } Budget Accountability Reports (BARs). This phase of the budget cycle happens alongside the budget execution phase. suggestions for improvement. Audit. The APR will give DBM information as to how and what cost government provides for goods and services to the public to track resource leakages and implementation delays and identify possible solutions thereon. assesses agency performance and provides a vital basis for budget preparation and policy. the supreme audit authority of the government. It also serves as guide in deciding whether reallocation of funds or additional release is necessary. The conduct of audit is not the responsibility of the DBM but of the Commission on Audit (COA). physical accompishment of targeted outputs.and reforms-making. obligations and balances. a tool to measure agency performance. recommendations Budget Accountability. It is a crucial phase. Quarterly Financial Report of Operation (BAR 2) 3. Budget Accountability Reports Budget Accountability Repor ts REPORT 1. The DBM uses the COA’s audit reports in confirming agency performance. audit is an important step in ensuring the agencies’ accountability in the use of public funds. Statement of Allotments. 44 . Quarterly Report of Income (BAR 3) 4. for it is where the DBM monitors the efficiency of government’s fund utilization. Obligations and Balances (BAR 4) 5. which are reports on how the agencies have utilized funds released to them and their corresponding physical accomplishments.Evaluation of request for fund release .Basics on Budgeting Report Budget Accountability Scheme Under Results oriented Budgeting required to be submitted (BEDs & BARs) Review of agency reports by the DBM to be used for: . Nonetheless. monthly statement of allotments. Quarterly Physical Report of Operation (BAR 1) 2.input for budget preparation Report on agency performance. Monthly Report of Disbursements DUE DATE On or before the 10th day of the following quarter -do-doOn or before the 10th day of the following month FREQUENCY Quarterly -do-doMonthly .

Sign up to vote on this title
UsefulNot useful