C HOOL FI NA NC E

EDUC 203- S
F FU N D S FO R
SOURCES O
EDUCATION
INTRODUCTION
BY LAW, THE BIGGEST SHARE OF THE NATIONAL BUDGET GOES TO THE EDUCATION
SECTOR, WHICH COVERS FUNDING FOR THE DEPARTMENT OF EDUCATION (DEPED),
COMMISSION ON HIGHER EDUCATION (CHED), TECHNICAL EDUCATION AND SKILLS
DEVELOPMENT AUTHORITY (TESDA), AND STATE UNIVERSITIES AND COLLEGES (SUCS).
FOR FISCAL YEAR 2022, DEPED ALONG WITH ITS ATTACHED AGENCIES RECEIVED 633.32
BILLION OR 80.32% OF THE TOTAL EDUCATION SECTOR’S BUDGET. THIS BUDGET
SUPPORTS ALL THE DEPARTMENT’S EXISTING PROGRAMS, ACTIVITIES, AND PROJECTS
WHILE PUTTING SPECIAL ATTENTION TO PROGRAMS THAT CONTRIBUTE TO THE
IMPLEMENTATION OF BLENDED LEARNING MODALITIES AND THE SAFE AND GRADUAL
RETURN TO FACE-TO-FACE SCHOOLING, SUCH AS FLEXIBLE LEARNING OPTIONS (FLOS),
SCHOOL MAINTENANCE AND OTHER OPERATING EXPENSES (MOOE), GOVERNMENT
ASSISTANCE AND SUBSIDIES (GAS), AND THE DEPED COMPUTERIZATION PROGRAM (DCP).
 OBJECTIVES
- TO IDENTIFY SOURCES OF FUNDS AND THE SIGNIFICANCE OF
SOURCES SHARING IN EDUCATION.

a.GENERAL APPROPRIATION ACT (GAA )

b.LOCAL GOVERNMENT FUNDS
c. SPECIAL EDUCATION FUND ( SEF)
CONTENT
A.GENERAL APPROPRIATION ACT (GAA)
• WHAT IS GENERAL APPROPRIATIONS ACT?
• THE GENERAL APPROPRIATIONS ACT (GAA)IS ONE OF THE MOST IMPORTANT
LEGISLATIO0NS THAT CONGRESS ANNUALLY PASSES. IT DEFINES THE ANNUAL
EXPENDITURE PROGRAM OF THE NATIONAL GOVERNMENT AND ALL ITS
INSTRUMENTALITIES. THE EXPENDITURE PROGRAM INCLUDES ALL PROGRAMS
AND PROJECTS THAT ARE SUPPOSED TO BE FUNDED OUT OF GOVERNMENT
FUNDS FOR THE YEAR.

• FOR FISCAL YEAR 2022, DEPED ALONG WITH ITS ATTACHED AGENCIES RECEIVED
633.32 BILLION OR 80.32% OF THE TOTAL EDUCATION SECTOR’S BUDGET.
• THE SUSTAINED FUNDING FROM THE NATIONAL GOVERNMENT ENSURES THAT
EDUCATION CONTINUES DESPITE THE COVID-19 PANDEMIC. FOR 2022, THE
DEPARTMENT OF EDUCATION RECEIVED 631.77 B OR AROUND 12.58% OF THE
TOTAL NATIONAL BUDGET OF 5.02 T. THIS BUDGET SUPPORTS ALL THE
DEPARTMENT’S EXISTING PROGRAMS, ACTIVITIES, AND PROJECTS WHILE
PUTTING SPECIAL ATTENTION TO PROGRAMS THAT CONTRIBUTE TO THE
IMPLEMENTATION OF BLENDED LEARNING MODALITIES AND THE SAFE AND
GRADUAL RETURN TO FACE-TO-FACE SCHOOLING, SUCH AS FLEXIBLE
LEARNING OPTIONS (FLOS), SCHOOL MAINTENANCE AND OTHER OPERATING
EXPENSES (MOOE), GOVERNMENT ASSISTANCE AND SUBSIDIES (GAS), AND
THE DEPED COMPUTERIZATION PROGRAM (DCP).
81.28% OF THE DEPARTMENT’S BUDGET OR
513.48 B IS ALLOCATED TO PERSONNEL
SERVICES (PS) TO COVER THE PAYMENT OF
SALARIES AND BENEFITS OF EMPLOYEES,
BOTH TEACHING AND NON-TEACHING
POSITIONS. WHILE 15.50% OF THE BUDGET
OR 97.92 B IS ALLOCATED TO
MAINTENANCE AND OTHER OPERATING
EXPENSES (MOOE). THE REMAINING 3.22%
OF THE BUDGET, AMOUNTING TO 20.37 B, IS
ALLOCATED FOR CAPITAL OUTLAY (CO).
ALLOCATION OF THE BUDGET OF
THE DEPARTMENT OF EDUCATION
 BUDGET ALLOCATED TO
PERSONNEL SERVICES (PS)
PERSONNEL SERVICES (PS) REFER TO AN
EXPENDITURE CATEGORY/EXPENSE CLASS FOR
THE PAYMENT OF SALARIES, WAGES, AND
OTHER COMPENSATION (E.G., MERIT, SALARY
INCREASE, PERSONNEL ECONOMIC RELIEF
ALLOWANCE, HONORARIA, AND COMMUTABLE
ALLOWANCES, ETC.) OF PERMANENT,
TEMPORARY, CONTRACTUAL, AND CASUAL
EMPLOYEES OF THE GOVERNMENT.
BUDGET ALLOCATED TO
MOOE
MAINTENANCE AND OTHER OPERATING
EXPENSES (MOOE) REFER TO AN
EXPENDITURE CATEGORY/EXPENSE CLASS
FOR SUPPORT TO THE OPERATIONS OF
GOVERNMENT AGENCIES SUCH AS EXPENSES
FOR SUPPLIES AND MATERIALS;
TRANSPORTATION AND TRAVEL; UTILITIES
(WATER, POWER, ETC.) AND THE REPAIRS.
 WHAT IS THE CAPITAL OUTLAY OF THE
DEPARTMENT OF EDUCATION?

BASED ON THE DEPARTMENT ORDER 75, S. 2016 –

IMPLEMENTING GUIDELINES ON THE USE OF CAPITAL
OUTLAY FUND FOR SCHOOLS EFFECTIVE FISCAL
YEAR 2016 AS STATED IN PARAGRAPH 2, “THE CO
FUND AIMS TO ENABLE SCHOOLS TO FINANCE SMALL
CO REQUIREMENTS, SUCH AS FURNITURE AND
EQUIPMENT, WHICH CANNOT BE CHARGED AGAINST
THEIR REGULAR OPERATING BUDGETS OR AGAINST
THEIR MAINTENANCE AND OTHER OPERATING
EXPENSES ALLOCATIONS.
 B. LOCAL
GOVERNMENT
FUNDS
LOCAL GOVERNMENT FUNDS
MANY DEVELOPING COUNTRIES HAVE DEVOLVED
THE RESPONSIBILITY FOR EDUCATION SERVICES
TO LOCAL GOVERNMENTS TO IMPROVE
EDUCATIONAL QUALITY AND MAKE PUBLIC
SPENDING MORE EFFICIENT. ADVOCATES OF
DECENTRALIZATION HAVE ARGUED THAT BRINGING
DECISION MAKING CLOSER TO SCHOOLS MAKES
PUBLIC POLICY MORE RESPONSIVE TO LOCAL
NEEDS, STRENGTHENS ACCOUNTABILITY, AND
FOSTERS INNOVATION.
 LEGAL BASES
THE 1991 LOCAL GOVERNMENT CODE DEVOLVED
RESPONSIBILITY FOR MANY BASIC SERVICES TO LOCAL
GOVERNMENT UNITS (PROVINCES, CITIES,
MUNICIPALITIES, AND BARANGAYS1) INCLUDING PRIMARY
HEALTH CARE, HOSPITAL CARE, SOCIAL WELFARE
SERVICES, AND A RANGE OF ENVIRONMENTAL AND
AGRICULTURAL SERVICES. LOCAL GOVERNMENTS’
RESPONSIBILITIES IN THE FIELD OF EDUCATION WERE
LARGELY LIMITED TO MAINTAINING BASIC EDUCATION
INFRASTRUCTURE AND FUNDING SPORTS ACTIVITIES. THE
FUNDING THAT EACH LOCAL GOVERNMENT USES TO
FULFILL ITS BASIC EDUCATION RESPONSIBILITIES COMES
PRIMARILY FROM A SURCHARGE ON LOCAL PROPERTY
TAXES THAT GOES INTO A SPECIAL EDUCATION FUND (SEF)
MANAGED BY A LOCAL SCHOOL BOARD (LSB).
LOCAL GOVERNMENT TRENDS IN EDUCATION
SPENDING HAVE TRANSLATED INTO
DECLINING LEVELS OF FUNDING FOR EACH
BASIC EDUCATION STUDENT. BETWEEN 2003
AND 2013, LGU SPENDING PER STUDENT
DECLINED FROM PHP 951 TO PHP 744, A FALL
OF OVER 20 PERCENT IN REAL TERMS. THIS IS
IN STARK

CONTRAST TO NATIONAL GOVERNMENT

FUNDING, WHICH ROSE BY 35 PERCENT FROM
PHP 9,500 TO PHP 12,800 OVER THE SAME
PERIOD.
LOCAL GOVERNMENT SUPPORT FOR EDUCATION HAS
DECLINED EVEN THOUGH LOCAL REVENUE FOR
EDUCATION HAS INCREASED CONSIDERABLY. EACH
PROVINCE, CITY, AND MUNICIPALITY IN THE
PHILIPPINES HAS A SPECIAL EDUCATION FUND (SEF),
WHICH IS THE SOURCE OF THE MAJORITY OF ITS
SPENDING ON BASIC EDUCATION. THESE SEFS ARE
FUNDED BY A 1 PERCENT SURCHARGE ON PROPERTY
TAXES RAISED BY THE LOCAL GOVERNMENT
 LOCAL GOVERNMENT SUPPORT
FOR PUBLIC SCHOOLS THROUGH
SPECIAL EDUCATION FUND (SEF)
What is Special Education Fund (SEF) ?

ON TOP OF THE BASIC TAX ON YOUR REAL PROPERTY, YOU WILL FIND
ANOTHER ITEM CALLED “SPECIAL EDUCATION FUND” (SEF). IT IS AN
ADDITIONAL ONE PERCENT TAX ON THE ASSESSED VALUE OF YOUR
REAL PROPERTY COLLECTED BY THE LOCAL GOVERNMENT THAT
GOES TO FUND THE NEEDS OF PUBLIC SCHOOLS WITHIN YOUR CITY
OR MUNICIPALITY.
WITHIN EACH PROVINCE, CITY, AND MUNICIPALITY, A
LOCAL SCHOOL BOARD (LSB) IS RESPONSIBLE FOR
THE ALLOCATION AND USE OF LOCAL
GOVERNMENT EDUCATION FUNDS. ITS MAIN
FUNCTION IS TO DEVELOP AN OVERALL PLAN AND
BUDGET FOR LOCAL GOVERNMENT FUNDING OF
BASIC EDUCATION IN THEIR LOCALITY, INCLUDING
FUNDING FROM THE SE
https://news.abs-cbn.com/focus/04/18/17/misuse-of-multi-billion-peso-school-fund-takes-its-toll-on-quality-education
LEGAL FRAMEWORKS
LEGAL FRAMEWORK FOR THE ROLE PLAYED BY LGUS AND THEIR LOCAL SCHOOL BOARDS IN BASIC
EDUCATION THE LOCAL GOVERNMENT CODE (LGC) ISSUED IN 1991 (REPUBLIC ACT 7160) SET OUT THE
LEGAL FRAMEWORK FOR THE ROLE OF LGUS IN BASIC EDUCATION. IT INITIATED THE CREATION OF THE
PROVINCIAL, CITY, AND MUNICIPAL LOCAL SCHOOL BOARDS (LSBS) AS THE MAIN BODIES FOR MAKING
DECISIONS OVER THE USE OF LOCAL GOVERNMENT EDUCATION FUNDS. EACH LSB IS CO-CHAIRED BY
THE HEAD OF THE LOCAL GOVERNMENT AND EITHER THE DEPED’S SCHOOL DIVISION SUPERINTENDENT
(FOR PROVINCIAL AND CITY LSBS) OR THE PUBLIC SCHOOL DISTRICT SUPERVISOR (FOR MUNICIPAL LSBS).
MEMBERS OF THE PARENT-TEACHER ASSOCIATIONS AND REPRESENTATIVES OF TEACHERS AND NON-
TEACHING STAFF ARE ALSO REPRESENTED ON THE LSB. THE MAIN FUNCTIONS OF THE LSBS ARE:
(I) TO DEVELOP THE ANNUAL SCHOOL BOARD BUDGET IN ACCORDANCE WITH THE AMOUNT OF REVENUE
IN THE SEF AND WITH THEIR DETERMINATION OF THE SUPPLEMENTARY MAINTENANCE AND OPERATING
NEEDS OF PUBLIC SCHOOLS COVERED BY THE LSB;
(II) TO AUTHORIZE SEF DISBURSEMENTS.
(III) TO ACT AS AN ADVISORY COMMITTEE FOR THE LOCAL COUNCIL; AND
(IV) TO RECOMMEND SCHOOL NAME CHANGES.
THE LGC AND A SERIES OF JOINT CIRCULARS FROM DEPED, THE DEPARTMENT OF MANAGEMENT AND
BUDGET, AND THE DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT HAVE SET OUT THE MAIN
PRIORITIES FOR THE SPECIAL EDUCATION FUNDS, INCLUDING THE PROVISION OF ADDITIONAL TEACHERS,
THE CONSTRUCTION AND REPAIR OF SCHOOL BUILDINGS, OTHER CAPITAL INVESTMENTS FOR SCHOOLS,
EDUCATIONAL RESEARCH, THE PURCHASE OF BOOKS AND INSTRUCTIONAL MATERIALS, EQUIPMENT
PURCHASES, SPORTS, AND OTHER EXTRACURRICULAR ACTIVITIES. SOURCES: GOVERNMENT OF THE
PHILIPPINES REPUBLIC ACT 7160, (1991). “AN ACT PROVIDING FOR A LOCAL GOVERNMENT CODE.” MANILA;
MANASAN, R. G., A.B. CELESTINO, AND J.S. CUENCA (2011). “MOBILIZING LGU SUPPORT FOR
THE BULK OF LOCAL GOVERNMENT SUPPORT FOR SCHOOLS
IS PROVIDED IN THE FORM OF GOODS AND SERVICES RATHER
THAN CASH (FIGURE 5). IN-KIND CONTRIBUTIONS ACCOUNT
FOR 90 PERCENT OF TOTAL LGU SUPPORT FOR ELEMENTARY
SCHOOLS AND 98 PERCENT OF LGU SUPPORT FOR HIGH
SCHOOLS. IN PROVIDING SPECIFIC IN-KIND SUPPORT, LOCAL
GOVERNMENTS MUST HAVE DETAILED KNOWLEDGE OF WHAT The Use of LGU support
SCHOOLS NEED AND OF WHAT SUPPORT THEY ARE ALREADY
RECEIVING FROM OTHER SOURCES. FOR EXAMPLE, IN THE
AREA OF CONSTRUCTION AND REHABILITATION ACTIVITIES,
LOCAL GOVERNMENTS NEED TO ENSURE THAT THEIR
EFFORTS SUPPLEMENT RATHER THAN DUPLICATE DEPED’S
PLANS FOR SCHOOL INFRASTRUCTURE DEVELOPMENT. WHEN
THERE IS AN OVERLAP, THIS CONSTITUTES INEFFICIENT USE
OF EDUCATION FUNDING. THE ALTERNATIVE TO LOCAL
GOVERNMENTS PROVIDING SCHOOLS WITH IN-KIND
CONTRIBUTIONS IS TO GIVE THEM CASH THAT COULD BE
FACTORED INTO THEIR ANNUAL IMPROVEMENT AND
PROCUREMENT PLANS. HOWEVER, LESS THAN 10 PERCENT
OF LGU CONTRIBUTIONS ARE PROVIDED IN THIS FORM.
POLICY D I R E C T I O N S F O R
IM P R O V IN G L O C A L
GOVERN M EN T S U PP O R T
FOR B A S IC E D U C A T I O N
 S F OR IM P R O V IN G L O C A L
POLICY DIRECTION A S IC E DU C A T ION
O R T F O R B
GOVERNMENT SUPP
, LO C AL GOV ER NM EN TS HAVE FAILED
AT, IN RECENT TIM ES
•THIS NOTE HAS SHOWN TH LE C TE D IN T HE IR SP EC IAL EDUCATION
AT THEY HAVE C OL
TO SPEND THE REVENUE TH T EX IS TI NG LEVE LS O F PUBLIC EDUCATION
VE SHOWN TH A
FUNDS. OTHER STUDIES HA E Q UA LI TY OF SE RV ICES OUTLINED IN
E TO DELIV ER TH
SPENDING ARE INADEQUAT . W H IL E LO C A L G O VE RN MENT FUNDING
S AND STANDARDS
EXISTING NATIONAL NORM RA LL ED U CA TI ON SP EN DING IN THE
CENTAGE OF O VE
CONSTITUTES A SMALL PER ES E FU N DS SH OU LD BE USED TO SUPPORT
TIVE THAT AL L TH
PHILIPPINES, IT IS IMPERA L GO V ER NM EN T NE EDS TO STRENGTHEN
TS. THE NA T IO NA
EDUCATION IMPROVEMEN S EF SU R PL U SE S AND TO CONSIDER
GOVER N M EN T
ITS MONITORING OF LOCAL PL U SE S TO EN SU R E T HAT THE VAST
VEL OF THESE S UR
PUTTING A CAP ON THE LE EDUCATION.
ES E FUN DS AR E SP EN T ON
MAJORITY OF TH
 BUILDING ON EARLIER ATTEMPTS TO PROMOTE GREATER LOCAL

The Seal of
GOVERNMENT TRANSPARENCY AND ACCOUNTABILITY IN THE USE OF
PUBLIC FUNDS, THE NATIONAL GOVERNMENT INTRODUCED THE SEAL
OF GOOD LOCAL GOVERNANCE IN 2014. TO RECEIVE THE SEAL,

Good Local
LOCAL GOVERNMENTS MUST DEMONSTRATE GOOD PERFORMANCE
IN THREE CORE AREAS (GOOD FINANCIAL HOUSEKEEPING, DISASTER
PREPAREDNESS, AND SOCIAL PROTECTION) AND IN AT LEAST ONE

Governance
ESSENTIAL AREA (BUSINESS FRIENDLINESS AND COMPETITIVENESS,
PEACE AND ORDER, AND ENVIRONMENTAL MANAGEMENT). SUPPORT
FOR BASIC EDUCATION FALLS UNDER SOCIAL PROTECTION. FOR A
LOCAL GOVERNMENT TO RECEIVE THE SEAL, IT MUST DEMONSTRATE
THAT IT HAS COMPLETED 70 PERCENT OF THE LOCAL SCHOOL
BOARD’S ANNUAL PLAN AND THAT THE PLAN IS ALIGNED WITH THE
SCHOOLS’ OWN IMPROVEMENT PROGRAMS. THE DEPED
SUPERINTENDENT CURRENTLY CERTIFIES THE ACHIEVEMENT OF
THESE TWO CONDITIONS. RECIPIENTS OF THE SEAL ARE ALSO
ELIGIBLE FOR THE PERFORMANCE CHALLENGE FUND (PCF), WHICH
PROVIDES ADDITIONAL FUNDING FOR LOCAL GOVERNMENTS TO
PURSUE THEIR OWN PRIORITIES. IN 2015, 41 OF THE 80 PROVINCES,
28 OF THE 143 CITIES, AND 170 OF THE 1,491 MUNICIPALITIES WERE
AWARDED THE SEAL.

Source: Department of the Interior and Local Government (2014). “Seal of Good Local Governance.” Circular
No. 2014-39. Manila.
 O C A L G O V E R N M EN T S U P P O RT
IMPROVING L N D IN G S AND
FOR BAS IC E D U C A T IO N FI
A T IO N S B A S E D O N T H E S TU D Y
RECOMMEND O R L D B ANK.
COND U C T ED B Y T H E W
SE S S IN G T H E R O L E P L A YED B Y
ENTITLED “AS R T IN G B ASIC
M EN T IN S U P P O
LOCAL GOVERN P H IL IP P IN ES”
EDU C A TIO N IN T H E
 REFERENCES
• HTTPS://WWW.DEPED.GOV.PH/WP-CONTENT/UPLOADS/2022/03/2022-BUDGET-BRIEFER-SOCMED VERSION_03092022.PDF

• HTTPS://WWW.DEPED.GOV.PH/WP-CONTENT/UPLOADS/2021/05/2021-DEPED-BUDGET-MAG-BUDGET_052121-PAGES.PDF

• LOCALFUNDS HTTPS://DOCUMENTS1.WORLDBANK.ORG/CURATED/EN/468611468569289731/PDF/106955-REVISED-PH-PETS-QSDS-NOTE-7.PDF

• HTTPS://NEWS.ABS-CBN.COM/FOCUS/04/18/17/MISUSE-OF-MULTI-BILLION-PESO-SCHOOL-FUND-TAKES-ITS-TOLL-ON-QUALITY-EDUCATION