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Philippines: Local Government Financing and Budget Reform (Financed by the Japan Special Fund)

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Philippines: Local Government Financing and Budget Reform (Financed by the Japan Special Fund) Technical Assistance Consultant’s Report Project Number: 39516 TA 7019-PHI May 2010 Philippines: Local Government Financing and Budget Reform (Financed by the Japan Special Fund) Prepared by: POYRY IDP Consult, Inc. Manila, Philippines For: Department of Interior and Local Government This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design. ADB TA 7019-PHI LOCAL GOVERNMENT FINANCING AND BUDGET REFORM (LGFBR) PROJECT FINAL REPORT Volume One: Main Report and Appendices Pöyry IDP Consult, Inc. 19 May 2008 – 14 May 2010 Abbreviations and Acronyms ADB _ Asian Development Bank AIP _ Annual Investment Program BGPMS _ Barangay Government Performance Monitoring System BLGD – Bureau of Local Government Development BLGS – Bureau of Local Government Supervision BLGF _ Bureau of Local Government and Finance CAR _ Cordillera Autonomous Region CBMS _ Community-Based Monitoring System CCD _ Coordinating Committee on Decentralization CDP – Comprehensive Development Plan CIDA _ Canadian International Development Agency CLUP – Comprehensive Land Use Plan CPI _ Consumer Price Index DA – Department of Agriculture DBM – Department of Budget and Management DENR – Department of Natural Resources DILG – Department of Interior and Local Government DOF – Department of Finance DOH – Department of Health DSWD – Department of Social Welfare EA – Executing Agency EC _ Executive Committee ELA _ Executive Legislative Agenda ENR _ Environment and Natural Resources EO _ Executive Order ESWM _ Ecological Solid Waste Management HLURB – Housing and Land Use Regulatory Board HOR _ House of Representatives ICC _ Investment Coordination Committee IRA _ Internal Revenue Allotment JICA _ Japan International Cooperation Agency JMC – Joint Memorandum Circular LCP – League of Cities of the Philippines LDC _ Local Development Council LDIP _ Local Development Investment Plan LGC – Local Government Code LGFBR – Local Government Financing and Budget Reform LGFPMS – Local Government Financial Performance Monitoring System LGOOs – Local Government Operations Officers LGPMS – Local Government Performance Management System LGUs – Local Government Units LMP – League of Municipalities of the Philippines LnB – Liga ng mga Barangay LPDO _ Local Planning and Development Office LPP – League of Provinces of the Philippines LOGODEF _ Local Government Development Foundation MLGOO _ Municipal Local Government Operations Officers MOU _ Memorandum of Understanding NEDA – National Economic and Development Authority NG _ National Government NGAs – National Government Agencies NSO _ National Statistics Office NVA _ National Valuation Authority PBUSS _ Philippine Basic Urban Services Sector PDF _ Philippine Development Forum PBGS – Performance Based Grant System PHCO _ Philippine Country Office PVS _ Property Valuation Staff RLPS – Rationalized Local Planning System RPS – Rationalized Planning Systems SEF _ Special Education Fund SLDR _ State of Local Development Report SLGPR _ State of Local Governance Performance Report SLGR _ State of Local Governance Report SMV _ Schedule of Market Values TA – Technical Assistance TOR – Terms of Reference UBOM – Updated Budget Operations Manual ULAP – Union of Local Authorities of the Philippines UP-NCPAG _ University of the Philippines National College for Public Administration and Government VRA _ Valuation Reform Act WB – World Bank TABLE OF CONTENTS Page No. Executive Summary i Volume 1 – Main Report I. Introduction and Overview 1 II. Issues and Objectives of the Project 2 A. Component A 2 B. Component B 7 C. Component C 8 III. Project Deliverables: Rationale and Performance 9 A. Component A 9 B. Component B 15 C. Component C 22 III. Project Deliverables: Rationale and Performance 9 A. Component A 9 B. Component B 15 C. Component C 22 IV. Outcome and Assessment of Project Deliverables 25 A. Component A 25 B. Component B 28 C. Component C 29 V. Recommendations for Next Step 30 A. Component A 30 B. Component B 30 C. Component C 31 VI. Summary of Resources Used: 32 Table 1 Component A - Summary of Project Deliverables (As of May 15, 2010): 9 Actual Vs. Expected Table 2 Component B - Summary of Project Deliverables: Actual Vs. Expected 16 Table 3 Summary of Training Activities under Component B 19 Table 4 Component C - Summary of Project Deliverables: Actual Vs. Expected 23 Table 5 Component A - Deliverables, Expected Outcome, Actual Outcome and 25 Assessment Table 6 Component B - Deliverables, Expected Outcome, Actual Outcome and 28 Assessment Table 7 Component C - Deliverables, Expected Outcome, Actual Outcome and 29 Assessment Table 8 Component A – Next Steps: Activities and Expected Outputs (Up to 30 Project End) Table 9 Component B – Next Steps: Activities and Expected Outputs 31 Table 10 Component C – Next Steps: Activities and Expected Outputs 32 Table 11 Summary of Level of Effort Usage (As of May 14, 2010) 32 Table 12 Summary of Equipment and Workshop Resources Used (As of 33 November 2009) Appendix A: Component A Outputs Appendix B: Component B Outputs Appendix C: Component C Outputs Volume 2: Finalized CDP Training Modules Volume 3: Finalized Enhanced Guide to Comprehensive Development Plan (CDP) Preparation Volume 4: Guide to Ecological Profiling Volume 5: Rationalizing the Local Planning System Volume 6: Study on the Local Planning Database Management System Volume 7: Local Governance Performance Management System (LGPMS) User’s Manual and Sample Output Volume 8: Legislative Agenda for the Comprehensive Study on the Status of Decentralization. ADB TA 7019: Local Government Financing and Budget Reform Project Final Report May 2010 Executive Summary 1. This final report for ADB TA 7019-PHI: Local Government Financing and Budget Reform Project summarizes the project’s accomplishments from May 19, 2008-May 14, 2010 which concludes all activities for Component A, B and C, originally planned and additional requested, and outlines the recommendations for the next steps for the concluded activities. The contents of this final report were described in the project’s consolidated fourth and fifth quarter report submitted last October 2009 and agreed upon in the second variation approval which was approved in November 2009. 2. This main report is divided into six sections. The first section is the introduction and provides a brief overview of the project as presented in the Inception Report. The second section discusses the issues and the objectives of the project also as reported in the Inception Report. The third section discusses the project deliverables, the rationale or relation to the objectives of the project and their performance in the project. The fourth section discusses the project outcomes – what were the assumed to be, what actually happened, and their implications. The fifth section provides the conclusions and the next steps. The final section presents a report of the use of consultant and workshop/consultation resources up to the writing of this report. 3. Under the Inception Report, the focus of Component A is to 1) facilitate the creation or institutionalization of the Coordinating Committee on Decentralization; 2) provide technical support for the CCD Policy Agenda; and 3) facilitate the creation of the CCD technical secretariat to replace the project support team. It was determined during project design and reconfirmed during the inception period that there was a need for a coordinating body composed of the oversight central government agencies – the Department of the Interior and Local Government (DILG), the Department of Finance (DOF), the Department of Budget and Management (DBM) and the National Economic and Development Authority (NEDA)—and the local government leagues – the League of Provinces of the Philippines (LPP), the League of Cities of the Philippines (LCP), the League of Municipalities of the Philippines (LMP), the Liga ng mga Barangay (LnB), and Union of Local Authorities of the Philippines (ULAP) to address interrelated issues in fiscal decentralization, local financial management, local expenditure management and planning, local revenue generation, and local governance. Although under the Local Government Code of 1991, such a coordinating body was created, it met very rarely, with last recorded meeting held in 2005, and was difficult to organize due to the size of it’s membership which spanned all levels of government including the legislature. It was determined that a smaller body composed of the abovementioned agencies could address a majority of the local government issues and could elevate the more difficult ones to the LGC created body or Oversight Committee on Devolution (OCD). In order to further support this new body, technical support and assistance for the creation of a technical secretariat was needed. 4. The focus of Component B is to provide 1) a deeper appreciation by the DILG Local Government Operations Officers (LGOOs) and other key actors in the extension of planning assistance to LGUs, e.g., Provincial Planning and Development Coordinators and HLURB field personnel at the regional and provincial levels of the concepts and principles of the rationalized local planning system and the JMC No. 001 series of 2007;Improved competencies of the DILG LGOOs to exercise their functions as coaches/trainors for LGUs in the preparation of CDPs, and as collaborators/facilitators
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