FINANCIAL MANAGEMENT IN

EDUCATION INSTITUTIONS
EDUC 609

ROSALIE J. MACALOS
 TAXATION AND
SOURCES OF
SCHOOL FINANCE
Principles of Taxation
A glimpse…..
Taxation is the mode of raising revenue for
public purposes.
Taxes – Cooley’s Definition
• Enforced proportional contributions
from persons and property
• Levied by the state by virtue of its
sovereignty for the support of the
government and for all its public needs
Taxes….
• Not arbitrary exactions but contributions
levied by authority of law
• Rule of proportion intended to insure
uniformity of contribution and just
apportionment of the burdens of the
government
Characteristics:
• Enforced contributions – compulsory on
the government , obligation of the citizen
• Proportional in character- ability to pay
• Levied by authority of the law.
• Generally payable in money
• Levied by the state which has jurisdiction
over the subject or object of taxation
• Levied by the legislative –deemed to be
the direct representative of the taxpayers
themselves
• Levied for public purposes- form of benefit
for the greater majority
Purposes of Taxation
1. Revenue or Fiscal – provide funds or
property to promote general welfare and
protection of the citizens; finance the
multifarious activities of the government
2. Non- revenue or regulatory- employed for
regulation or control, which comes in these:
 a. Imposition of tariffs on imported
goods to protect local industries
b. Adoption of progressively higher
tax rates to reduce inequalities in wealth
and income.
c. Increase or decrease of taxes to
prevent inflation or ward off depression
Sumptuary purpose of taxation
A device for regulation which
government foresee effects or conditions
envisioned may be achieved.
Tax incentives to protect and promote new
and pioneer industries. A form of protectionist
purpose of taxation as it intends to protect new and
fledging companies by exempting them from paying
taxes for a given time agreement.
Theories
1. Life blood or necessity theory – existence of
the government is a necessity, and cannot
continue without the means to pay its expenses;
thus compel its citizens and property within its
limit to contribute
2. Benefit- received theory- symbiotic relation,
reciprocal duties of protection and support
between the state and its inhabitants
Tax differentiated from other terms
1. Tariff/Duties- of Custom, taxes imposed
on goods exported from and imported into
a country
2. License fee- legal compensation or
reward for specific services imposed for
regulation, while tax is levied for revenue
Tax differentiated from other terms
3. Regulatory tax- Ex.: motor vehicle
registration fee, sugar levy, coconut levy,
regulation of non useful occupations
4. Special assessment v. tax – an enforced
proportional from owners of lands specially
or peculiarly benefited by public
improvements
Reasons for paying taxes and at the right
amount:
1.They ensure that we receive our basic needs.
2. They help keep us safe.
3. They keep business costs low.
4. They help ensure a better future for our
children.
5. They help the poorest of the poor.
Philippine Budget
 Educational Financing
Funding of the public school system is
the primary responsibility of the government
while government-recognized private
educational institutions have to find their
sources of funding to sustain their educational
operation.
 Funding the Public Schools
The primary source of financing for
government schools is the allocation for
education in the national budget as stated in
the annual General Appropriation Act passed
by the Philippine Congress.
 1987 Philippine Constitution
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. ( Art. XIV, Sec. 5 (5)
 Special Education Fund
Republic Act 5447 passed by Philippine
Congress in September 25, 1968 deriving from:
1. Annual additional tax of one (1) percent
on the assesses value of real property in
addition to the real property tax regularly levied
thereon under existing laws; Provided, That
when the entire total assessed valuation of real
property assessable to any one person is not in
excess of three thousand pesos, the additional
tax thereon shall not be collected ; Provided,
further, That the total real property tax shall not
exceed a maximum of three per centum ( Sec. 4
RA No. 5447)
2. A certain portion of the taxes on Virginia-
type cigarettes and duties on imported leaf
tobacco.
Municipal or City Treasurer in the place where
the property is situated collects the tax of one
percent on the assessed value of real property.
 Local School Board
• Administers the Special Education Fund
• Provincial school board, city school board,
municipal school board
• Composition:
Chairman- local chief executive
Committee on education chairman
Treasurer of the local govt.
Pederasyon ng mga Sangguniang Kabataan rep.
PTA president
Teachers’ organization representative
Non-academic personnel of public school rep.
Functions:
1. Determine in accordance with DECS the
annual supplementary budgetary needs for the
operation and maintenance of public schools
within the province.
2. Authorize the treasurer to disburse funds from
SEF in accordance to existing rules.
3. Serve as advisory committee
4. Recommend changes in the names of public
schools within the territorial jurisdiction.
DECS consult the LSB on the appointment
of division superintendents, district supervisors,
school principals, and other school officials.
 LSB Budget
1. Construction, repair and maintenance of
school buildings and other facilities of public
elementary and secondary schools.
2. Establishment and maintenance of extension
classes where necessary
3. Sports activities at the division, district,
municipal and barangay levels.
 Other Sources
The 1987 Phil. Constitution allows
educational institutions to receive grants,
endowments, donations or contributions which, if
used actually, directly, and exclusively for
educational purposes, shall be exempts from tax
( Art. XIV Sec. 4 (4)
 Cash Based Budgeting
System that limits contractual obligations
and disbursing payments to goods delivered
and services rendered within the fiscal year.
Obligation – Based Budget
Disburse payments as obligations or
commitments that may not necessarily
be delivered within the same year.
Budget Management – Issues and Concerns

Procurement
Budget Allocation

Cash Based Budgeting

SBM