The Finance of Education by Local Governments

February 2016 TABLE OF CONTENTS

1. Sources of Revenues of the EdGE Alliance ………………………………………………………………………….... 2 2. The Finance of Education ……………………………………………………………………………………………………… 5 2.1 Where does the Education Budget Go? ……………………………………………………………………….. 5 2.2 Self-Assessment of LSBs on Education Finance ……………………………………………………………… 6 3. Improvements in SEF Collection ……………………………………………………………………………………………. 8 4. Augmenting the SEF to Finance Education ……………………………………………………………………………. 12 5. SEF Expenditures ………………………………………………………………………………………………………………….. 14

List of Tables

Table 1. Distribution of Total Revenues of Local Governments in the EdGE Alliance, 2013 ...... 3 Table 2. Distribution of Local Revenues in EdGE Communities …………………………………………………… 3 Table 3. LGUs in the EdGE Alliance with the Highest SEF Collection, Total and Per Capita, 2013 … 4 Table 4. Performance of LSB in Education Finance, 2014 ...... 6 Table 5. Distribution of LSBs by Cluster on How they Perform in Education Finance, 2014 ...... 6 Table 6. SEF Collection of 52 LGU-Partners of EdGE in 2013 and 2014 ...... 8 Table 7. List of LGUs by Amount of SEF Collection and Changes in SEF Collection in 2014 ...... 11 Table 8. Total Amount of Education Spending by Selected LGUs and their Ratio to the Total LGU Budget ...... 13 Table 9. Largest MOOE Subcategories, Based on Percent of Total National SEF Spending ...... 16

List of Figures

Figure 1. Distribution of Total Revenues of LGUs in the EdGE Alliance, 2013………………………………. 2 Figure 2. Distribution of Local Revenues in EdGE Communities, 2013 ………………………………………… 4 Figure 3. Average Distribution of SEF Expenditures in EdGE Communities, 2013 ………………………… 5 Figure 4. Distribution of LGUs by Percent Change in SEF Collection from 2013 and 2014 ...... 8 Figure 5. Regional Distribution of 2014 Total SEF (PHP) ...... 9 Figure 6. Distribution of the 13 LGUs whose SEFs shrank between 2013 & 2014 ……………………….. 10 Figure 7. Number of Municipalities in Each Cluster …………………………………………………………………….. 10 Figure 8. Percent Change the SEF Collection between 2013 and 2014, by Cluster ...... 10 Figure 9. Distribution of LGus by Percentage Increase in Education Spending Between 2013 and 2014 ...... 12 Figure 10. Distribution of LGus by How much Education Spending in Relation to their Total Budget, 2013 and 2014 ...... 13 Figure 11. Distribution of the Total Spending of LGUs on Education in 2014, by Cluster ...... 13 Figure 12. Percent Change in the Amount Spent for Education from 2013 to 2014, by Cluster .... 14 Figure 13. Total 2014 SEF Spending Breakdown Across Clusters and Nationally ...... 14

Annex

Appendix A. Rapid Appraisal on How LGUs Finance Education ...... 17

The Finance of Education by Local Governments

1. Sources of Revenues of the EdGE Alliance. More than one-half of the revenues of the local governments in 2013 were from external sources, i.e. their Internal Revenue Allotment (IRA), or their share from the Bureau of Internal Revenue (BIR) tax collection. Local government units (LGUs) from Metro Manila were the least dependent on external sources while those from Muslim Mindanao were the most dependent on their IRA share. The ARMM LGUs only generated 3% of their revenues internally.

Figure 1. Distribution of Total Revenues of LGUs in the EdGE Alliance, 2013 100.0%

90.0%

80.0% 41.0% 53.0% 70.0% 59.0% 60.0% 73.0% 60.0% 96.6% 50.0% External Sources 40.0% Local Source

30.0% 59.0% 47.0% 20.0% 41.0% 40.0% 27.0% 10.0%

0.0% 3.4% Northern Central Luzon Metro Manila Visayas ARMM Non-ARMM Luzon

Table 1. Distribution of Total Revenues of Local Governments in the EdGE Alliance, 2013

Central Non- Northern Metro Types of Income Luzon, ARMM ARMM Luzon Manila Visayas Philippines Rs IV & V Total Income Total Local 41.0% 26.7% 59.0% 40.2% 3.4% 46.6% 45.5% Revenues Local Taxes 52.3% 48.6% 81.1% 75.9% 24.5% 77.3% 76.4% Other Local 47.7% 51.4% 18.9% 24.1% 75.5% 22.7% 23.6% Income External Sources (IRA & 59.0% 73.3% 41.0% 59.8% 96.6% 53.4% 54.5% Others)

The real property tax contributed 23% to the LGUs’ local sources of revenues. The basic real property tax raised Php1.73 billion while the SEF tax raised Php 1.43 billion in 2013. On the average, the SEF accounted for 19.2% of the total local taxes with a range of 10.7% for LGUs from Central and Southern Luzon to 23.4% for LGUs from Visayas. The SEF revenues, which come from the imposition of one percent tax on the assessed values of real properties, are earmarked for education. The SEF is budgeted and disbursed by local school boards.

Table 2. Distribution of Local Revenues In EdGE Communities, 2013

Central

Norther Luzon, Metro Non- Visayas ARMM Philippine n Luzon Rs IV & Manila ARMM s V Total Local Revenues 41.0% 26.7% 59.0% 40.2% 3.4% 46.6% 45.5% Local Taxes 52.3% 48.6% 81.1% 75.9% 24.5% 77.3% 76.4% RPT (Basic) 35.2% 8.7% 18.7% 31.0% 19.4% 20.9% 23.3% SEF 11.9% 10.7% 18.2% 23.4% 21.2% 17.7% 19.2% Other Local Taxes 53.0% 80.6% 63.1% 45.6% 59.4% 61.4% 57.4% Other Local Income 47.7% 51.4% 18.9% 24.1% 75.5% 22.7% 23.6%

Figure. 2. Distribution of Local Revenues in EdGE Communities, 2013

Among the LGUs in the EdGE alliance, Valenzuela City generated the highest SEF collection at P308.8 million in 2013. However, given that the city supports almost 80,000 students, its SEF budget on a per student per day basis is only P13.48. Caloocan City ranks second to Valenzuela City in terms of total SEF collection. Since it has nearly twice as many students compared to Valenzuela, it can only allocate P5.94 from its SEF per capita.

Iloilo City has the highest per capita SEF allocation at P15.09 while Malabon City, Malolos City and Bacolod City can only allocate less than P 6.00 per student from SEF and Navotas with only P3.44. Clearly, this points out to the need for greater efforts on the part of LGUs to mobilize more resources for education.

Table 3. LGUs in the EdGE Alliance with the Highest SEF Collection, Total and Per Capita, 2013

Number of Number Per Capita SEF per Municipality / City SEF(In P) Students of Schools day VALENZUELA CITY 284,455,104 79,947 39 13.48 CALOOCAN CITY 274,422,870 174,997 37 5.94 ILOILO CITY 216,178,792 54,256 52 15.09 CAGAYAN DE ORO CITY 69,530,915 91,882 70 6.99 BACOLOD CITY 112,513,767 73,987 45 5.76 MALABON CITY 81,707,152 52,829 28 5.86 VICTORIAS CITY 44,463,088 13,981 19 12.05 CITY OF MALOLOS 39,294,258 27,390 45 5.43 CITY OF BALANGA 35,061,044 13,348 18 9.95 (CAPITAL) NAVOTAS CITY 32,770,587 36,043 15 3.44

2. The Finance of Education. While the SEF is the major funding source for education, other LGUs use part of their general fund to finance education programs. Valenzuela City took P12.85 million that it spent for education from its General Fund. There are other LGUs in the alliance (45 of them) which supplemented their SEF collection from the General Fund. The top 10 are the following:

Cagayan de Oro City 13,662,362.00 Caloocan City 12,959,494.00 Valenzuela City 12,857,194.00 Malabon City 9,007,320.00 San Fernando City 4,900,007.10 Navotas City 4,611,021.00 Iloilo City 3,487,842.32 Pulilan 3,267,259.87 Bacolod City 2,573,022.31 La Trinidad 2,378,609.25

On the average, LGUs in the EdGE alliance spent 7% of their total budget for education, with an average of P16.64 million a year. The highest spenders are LGUs from Central Luzon and Southern Luzon that allocated 9% of their budget for education, or an average of P63.41 million. The lowest spenders are LGUs from ARMM that spent less than 1.0% of their budgets for education or an average of P240, 000. Those from Northern Luzon spent only 3.0 percent of their budget on education.

2.1. Where does the Education Budget Go? On the average, 34% of the LGU budget for education in 2013 went to personal services and 66% went to MOOE.

Figure 3. Average Distribution of SEF Expenditures in EdGE Communities, 2013

Thirty six of the 76 LGUs reported devoting 100% of their education budget for MOOE. Forty LGUs used 32% of their SEF on personal services. Normal expenditure items such as utilities, communication, travel expenses, office supplies, travel expenses and other MOOE expenses eats up most of the expenses of most LGUs. A few LGUs spent on trainings, textbooks and repair and maintenance of school building.

The Personnel Expenses were expended for salaries of teachers who were hired by the LSBs and the compensation of other personnel like janitors and security guards.

2.2. Self-Assessment of LSBs on Education Finance. In addition to analysing the budgets of the LGUs, an assessment tool1 was developed to find out how the LSB members look at how they finance education. The tool was administered to LSBs members who participated in the training in 2013. Eighty- three LSBs or 91% of the EdGE alliance completed the survey form.

Most of the LGUs affirmed that they collected the SEF tax except some LGUs from ARMM. The LGUs that have not collected the SEF tax are Balindong and Taraka of Lanao del Sur, Barira, Buldon and Datu Blah Sinsuat of Maguindanao, and Simunul, Tawi-Tawi. Funding for their education programs is drawn from their general fund. They pointed to difficulties in collecting the tax. These include the lack of land titles by property owners and the peace and order problem in ARMM.

Seventy-one municipalities (86%) reported that they augmented their SEF from the general fund. Del Carmen and Upi reported sourcing their financing from various sources, notably by obtaining grants. On the average, the LSBs gave themselves a score of 2 or showing improvement in education finance.

Table 4. Performance of LSB in Education Finance, 2014

CLUSTER NUMERICAL RATING QUALITATIVE RATING VISAYAS 2 Shows improvement

NORTHERN LUZON 2 Shows improvement

ARMM 2 Shows improvement

CENTRAL LUZON AND NCR 2 Shows improvement NON-ARMM 2 Shows improvement PHILIPPINES 2 Shows improvement

Table 5. Distribution of LSBs by Cluster on How they Perform in Education Finance, 2014

NO. CL R IV & NON- % PERFORMANCE RATING VISAYAS ARMM TOTAL LUZON NCR ARMM DISTRIBUTION OUTSTANDING 5 - PERFORMANCE ------PERFORMING 4 0% WELL ------SATISFACTORY 3 25% PERFORMANCE 9 3 3 3 3 21 SHOWS 2 75% IMPROVEMENT 23 13 16 7 3 62 Needs 1 0% improvement ------TOTAL LSB 100 RESPONDENTS 32 16 19 10 6 83

1 Please see Appendix A for a copy of the assessment tool.

There were 19 or 23% of the EdGE alliance members that rated their performance with a score of 3, or performing satisfactorily in education finance. These are the following:

1. Dumangas, Iloilo 2. Estancia, Iloilo 3. Iloilo City 4. Lambunao, Iloilo 5. Victorias City, Negros Occidental 6. Silay City, Negros Occidental 7. Dalaguete, Cebu 8. Tuba, Benguet 9. Bacnotan, La Union 10. Solano, Nueva Vizcaya 11. Paglat, Maguindanao 12. Parang, Maguindanao 13. Upi, Maguindanao 14. Balanga City 15. Mamburao, Mindoro Occidental 16. Caloocan City 17. Alabel, Sarangani 18. Cagayan De Oro City 19. Del Carmen, Surigao del Norte

They scored themselves as performing very well in two areas: 1) allocating the SEF proceeds; and 2) dissemination of information on how SEF is disbursed. Victorias City; Tuba, Benguet; Bacnotan; Solano, Nueva Vizcaya; Parang and Upi in Maguindanao; Mamburao , Mindoro Occidental; Del Carmen, Surigao del and Cagayan de Oro City rated themselves as Outstanding in opening the SEF budgeting to public participation. The normal practice of allocating the budget is for the Superintendent/ Supervisor and the local chief executive to decide on the SEF budget allocation.

Bacnotan, La Union; Solano, Nueva Vizcaya; Parang, Maguindanao; Upi, Maguindanao; Del Carmen, Surigao del Norte, and Balanga City rated themselves as performing well in disseminating how SEF is budgeted. In addition to posting the budget in their website and in public places, the budget is discussed in public assemblies.

The sore thumb in transparency is the failure of school officials to share information on their MOOE budget with the LSBs. Sixty-four (64) out of 83 LSBs or 77% reported that they were not informed of the school’s MOOE. Of those LSBs that reported having information about the MOOE budget, three were unaware of how the MOOE was disbursed.

More than one-half of the respondents said that they have formulated an Education Plan. Seventy one (71%) percent reported that LSBs took part in the development of Annual Investment Plan (AIP) and 23 or 24% admitted that they had no participation in the development of the of their AIP.

3. Improvements in SEF Collection. Synergeia tracked changes in education funding from 2013 to 2014 using budget reports of 52 LGUs or 57% of the EdGE alliance. The findings are summarized in the table below:

Table 6. SEF Collection of 52 LGU-Partners of EdGE in 2013 and 2014

2013 SEF 2014 SEF Change in SEF % change in SEF (PHP) (PHP) between 2013 between 2013 and and 2014 (PHP) 2014 Total 1,273,840,006 1,338,352,963 64,512,957 5.06% Municipal Average 24,496,923.20 25,737,556.98 1,240,633 18.12%

NCR & CL Total 770,173,960.17 850,105,307.82 79,931,347.65 10.38% Northern Luzon Total 57,310,319.22 60,628,202.68 3,317,883.46 5.79% Visayas Total 257,104,639.51 255,791,142.53 -1,313,496.98 -0.51% ARMM Total 1,151,918.75 1,208,948.55 57,029.80 4.95% Non-ARMM Total 188,099,168.51 170,619,361.58 -17,479,806.93 -9.29% Cluster Average 254,768,001.23 267,670,592.63 12,902,591.40 2.26%

Their SEF collection increased by P64.5 million, or 5.06% from 2013 to 2014. This represents an average increase of 18.12% in SEF collection per LGU. However, this does not translate to uniform changes across the 52 municipalities surveyed. The distribution of the percentage change in SEF collected between 2013 and 2014 in individual LGUs is shown below:

Figure 4. Distribution of LGUs by Percent Change in SEF Collection from 2013 and 2014 16

# of Municipalities # 0

70% 10% 20% 30% 40% 50% 60% 70% 80% 90%

60%

50% 40% 30% 20% 10%

------

100% 110% 120% 130% 140%

------

- - - - -

10%

10% 20% 30% 40% 50% 60% 70% 80%

60% 50% 40% 30% 20%

90%

70%

80%

- - - - -

100% 110% 120% 130% % Change in SEF Collection

Thirteen (13) of the 52 municipalities reported that their SEF decreased by as much as 74.07%. In the municipality of Hadji Panglima Tahil, their SEF dropped from P1, 762.22 to P456.90 between 2013 and 2014. The remaining 75% of LGUs surveyed reported that their SEF increased by as much as 139%. Two municipalities more than doubled their SEF between 2013 and 2014: Ivisan and Mina, whose SEFs increased by 117.16% and 139%, respectively. More than seventeen percent (17.31%) of the municipalities saw their SEFs increase by over 50% (including Ivisan and Mina).

In most LGUs, fluctuations in SEF collection between 2013 and 2014 were far smaller: 38.46% of LGUs collected SEF that grew by 10%; 26.92% reported an increase in SEF collection by less than 10%, and, 11.54% reported that their SEF shrank by less than 10% over the one year period.

However, having the greatest increase in SEF does not correlate to having the largest SEF. As could be expected, the 13 municipalities whose SEFs shrunk between 2013 and 2014 had the highest and the lowest peso amounts collected in 2014. These include Iloilo City and Cagayan de Oro that had the 3rd and 4th largest SEF collections in both 2013 and 2014. However, they experienced a 5.49 and 10.07% decrease in Special Education Taxes collected between those years, respectively. Because they started off with such a large investment on education, it is not surprising that the amount they collected in following years was not quite so large in comparison to their baseline. On the other hand, LGUs that had small SEF collection in 2013 were also prone to exhibiting extreme percentage decreases in SEF collections; 5 of the 13 municipalities that lost money between 2013 and 2014 had the lowest peso amounts collected in both 2013 and 2014. Because their SEF was so small to begin with, any reduction in its size has a massive impact on the percent change.

Another notable characteristic of the data is the Figure 5. Regional Distribution of 2014 geographic distribution of the LGUs. The NCR Total SEF (PHP) and Central Luzon cluster accounted for 63.52% of the total amount of money collected in 2014, NCR & CL but only accounted for 17% of municipalities 0.09% surveyed. It is also the only cluster where no 12.75% LGU experienced a decrease in SEF size NORTHERN between 2013 and 2014. Luzon has the lowest LUZON CLUSTER 19.11% total SEF collected in 2014 and unsurprisingly, is VISAYAS CLUSTER home to 5 of the 13 LGUs whose SEFs shrank 63.52% between 2013 and 2014. ARMM 4.53% NON-ARMM

Figure 6. Distribution of the 13 LGUs Figure 7. Number of Municipalities whose SEFs shrank between 2013 & 2014 in Each Cluster

NCR & CL 0 NCR & CL

7 9 3 NORTHERN NORTHERN LUZON CLUSTER LUZON CLUSTER 5 7 VISAYAS VISAYAS CLUSTER CLUSTER ARMM 15 ARMM 3 14 2 NON-ARMM NON-ARMM

Totalling across all their constituent municipalities, Visayas and the Non-ARMM clusters had smaller SEFs in 2014 than they did in 2013, by 0.51% and 9.29%, respectively.

Figure 8. Percent Change the SEF Collection between 2013 and 2014, by Cluster 15%

10%

5% NCR & CL

Northern Luzon Cluster 0% Visayas Cluster

% Change % ARMM -5% Non-ARMM

-10%

-15%

Table 7 summarizes the municipalities with the largest and smallest SEFs, changes in SEF, and percent changes in SEF.

Table 7. List of LGUs by Amount of SEF Collection and Changes in SEF Collection in 2014

Largest SEF in 2014 (PHP) Largest Increase in SEF (PHP) Largest % Increase in SEF Valenzuela City 319,747,922 Valenzuela City 35,292,717 Mina 139.00% Caloocan City 312,383,796 Navotas 28,800,077 Ivisan 117.16% Iloilo City 219,010,365 Caloocan City 6,816,970 Siasi 77.48% Cagayan De Oro 159,768,322 Pavia 4,251,739 Navotas 75.43% Malabon City 89,625,926 San Fernando 2,931,132 Alimodian 73.04% Navotas 66,979,388 Pulilan 2,802,814 Padre Garcia 69.35% Balanga City 37,300,480 Balanga City 2,239,436 San Joaquin 60.95% San Fernando 24,444,154 Balamban 1,790,014 Guimbal 57.85% Pulilan 16,117,347 Mina 1,521,446 Pavia 52.34% Pavia 12,375,042 Malabon City 1,441,475 Santa Fe 46.61%

Smallest SEF In 2014 (PHP) Largest Decrease In SEF (PHP) Largest % Decrease In SEF Jolo 317,925 Villaverde -44,216 Villaverde -7.50% Santa Fe 298,668 Dao -51,273 Dao -7.68% Del Carmen 293,531 Diffun -76,365 Diffun -9.60% Siasi 218,103 Parang -114,238 Cagayan De Oro -10.07% Parang 215,359 Diadi -115,904 Kayapa -12.57% Kayapa 179,621 Siayan -128,178 Diadi -15.62% Siayan 139,049 Claveria -262,890 Parang -34.67% Talipao 66,585 La Trinidad -321,885 Talipao -35.53% Taraka 13,840 Iloilo City -12,718,416 Siayan -47.97% Hadji Panglima Tahil 457 Cagayan De Oro -17,898,880 Hadji Panglima Tahil -74.07%

4. Augmenting the SEF to Finance. Figure 9. Distribution of LGus by Percentage Increase in Education. As earlier explained, Education Spending Between 2013 and 2014 LGUs tap other funding sources to finance their education programs. They allocate part of their 14 Development Fund from their internal Revenue Allotment for 12 education. Other LGUs tap grants or inter-LGU transfers. 10

The local budgets of 58 LGUs that are members of the EdGE alliance 8 were analyzed to determine their expenditures on education. In 6

2014, education spending ranged Municipalities # between 0.02% and 14.77% of the LGU’s budget. This range is 4 comparable to the 2013 figures, which spanned from 0.01% to 2 14.66%. Between 2013 and 2014,

the average percent of the total 0

government budget that an LGU ...

20% 20%

60% 40% 40%

80%

20% 60% 80%

- -

spent on education went up from -

120% 140% 160% 180% 220% 260% 280% 300%

240%

100%

- -

200% 200%

- -

2680%

------

3.07% to 3.75% -- an increase of -

0% 0%

40% 40% 60%

0% 0%

20% 20%

80% 60%

80%

- -

40% 40% 220%

0.68 percentage points. 100%

100% 100% 120% 140% 160% 200% 240% 260% 280%

180% 2660% 2660% On the average, an LGU member of the EdGE alliance increased its % Increase in Education Spending education spending by 96.77%. The mean figure is skewed by an outlier – Taraka, whose educational spending increased from P94,116 to P2,614,655 (a 2678.11% increase). A more telling measure is the median, which is an increase of 20.6%. Of the 58 LGUs participating in the study, 15 spent less on education in 2014 than they did in 2013. Thirteen spent 20% more on education in 2014, and the remaining 30 had more than a 20% increase in their education spending.

Figure 10. Distribution of LGus by How 18 municipalities spent a lower percentage of their much Education Spending in Relation to total government budget on education in 2014 than in their Total Budget, 2013 and 2014 2013. Additional 10 LGUs allotted less than 0.2% more of their total budget to education in that one year period. The remaining 30 LGUs increased the ratio of Decreased by educational spending to total spending by more than 5% more than 1% 0.2 percentage points. Of these 30 LGUs, 24 also had a 24% 14% 20%+ increase in the peso amount spent on Decreased by education. The remaining six LGUs tended to have a between 0.2% - lower overall budget in 2014 than in 2013, thus 12% 1% making the relative percentage spent on education Decreased by less seem bigger even if the peso amount did not increase. 28% 17% than 0.2%

Increased by less than 0.2%

The table below summarizes the total changes in educational spending across the 58 LGUs:

Table 8. Total Amount of Education Spending by Selected LGUs and their Ratio to the Total LGU Budget

Amount Spent on Education % Change % of Gov’t (PHP) in Amount Budget Spent Spent on on Education 2013 2014 Education 2013 2014 Total 971,612,237.6 1,288,449,458 32.61% 7.36% 8.55% Municipal Average 16,751,935.13 22,214,645.83 96.77% 3.07% 3.75%

It is interesting to note the role of geography in education Figure 11. Distribution of the Total Spending of LGUs on spending. The graph to the right Education in 2014, by Cluster shows the distribution of the PHP 1.28 billion spent on education in 2014 across the 5 1% 16% NCR & CL regions where the 58 LGUs are Northern Luzon located. Notably, NCR accounts Visayas for 60% of the total money 19% spent on education in 2014. 60% ARMM Non-ARMM However, this is due in part to the fact that NCR has the highest 4% total government budgets for

13 both 2013 and 2014.Thus, while this region spent the most on education, and had the highest percent change in educational spending, it is actually the only region to spend a lower percentage of their total government budget on education in 2014 than in 2013.

Figure 12. Percent Change in the Amount Spent for Education from 2013 to 2014, by Cluster

25.00%

20.00%

NCR and CL 15.00%

Northern Luzon 10.00% Visayas

Percent ARMM 5.00% Non-ARMM

0.00% Change in Educational Spending Change in Ratio of Educational to -5.00% Total Gov't Spending

5. SEF Expenditures. The breakdown of total SEF spending nationally and regionally in 2014 is as follows: Figure 13. Total 2014 SEF Spending Breakdown Across Clusters and Nationally 100% 90% 80% 47.94% 70% 60.77% 55.97% 61.22% 60% 77.19% 87.43% 50% 6.32% 40% 7.70% 5.22% 5.28% Percent of SEF of Percent 30% 20% 4.70% 45.74% 34.01% 36.33% 33.50% 10% 18.11% 6.35% 0% 6.22% NCR & CL NORTHERN VISAYAS ARMM NON-ARMM TOTAL LUZON CLUSTER CLUSTER

Personal Services School Buildings Repair and Maintenance Total Maintenance and Other Operating Expenses

The pattern of spending the SEF has almost remained the same compared to the baseline or the allocation of SEF budget in 2013. Sixty percent (61.22%) of the SEF went to MOOE and 33.5 were allocated for Personal Services. LSBs assist schools by paying for teacher-volunteers to handle classes where no teachers have been assigned by DepEd. LSBs are requested by schools with small MOOEs to pay for janitorial and security services. A major difference that has been noted between the baseline data and the 2015 data is the allocation of 5.28% of the SEF for the construction of school buildings. Spending for school buildings has been notable for LSBs in Northern Luzon which devoted almost 8% of their SEF for school construction.

It is difficult to compare Maintenance and Other Operating Expenses (MOOE) spending across clusters. Most of the municipalities combined all their MOOEs into one lump sum. LGUs that provided details included the following categories under MOOE spending:

 Travelling Expenses  Rent Expenses  Training and Scholarship Expenses  General Services  Office Supplies Expenses  Representation Expenses  Food Supplies Expenses  Security Service  Drugs and Medicines Expenses  Transportation and Delivery Expenses  Medical , Dental and Laboratory  Repairs and Maintenance Supplies Expenses  Land Improvements  Gasoline, Oil and Lubricants Expenses  Office Buildings  Textbooks and Instructional Materials  Other Structures  Other Supplies Expenses  Office Equipment  Water Expenses  IT Equipment and Software  Electricity Expenses  Motor Vehicles  Telephone Expenses (Both Landline and  Donations and Grants Mobile)  Miscellaneous Expenses  Internet Expenses  Taxes, Duties, and Licenses  Cable, Satellite, Telegraph and Radio  Insurance Expenses Expenses  Depreciation Expenses  Membership dues and Contributions to  Discounts Organizations  Interest Expense  Printing and Binding  And Other MOOE

Based on these subcategories, patterns in MOOE spending do emerge. Across all five clusters (and, therefore, nationally), the single largest MOOE subcategory was “Other Maintenance and Operative Expenses,” which accounted for between 11-32% of total cluster spending, and 19% of total national SEF spending. The second largest MOOE subcategory – again, across each individual cluster – was “Depreciation Expenses,” which was between 1-10% of total cluster spending and 9% of national spending. These are the only two subcategories that totalled more than 1% of SEF expenditures across all five clusters; all other subcategories of MOOE were of varied importance in each cluster, with one

15 region reporting a high expenditure in the category, but other regions reporting little to no spending there. The following table reveals the percent of expenditure in the 10 largest MOOE subcategories at the national level:

Table 9. Largest MOOE Subcategories, Based on Percent of Total National SEF Spending

MOOE Subcategory % of Total National Notes Spending Other MOOE 19% Largest MOOE subcategory in all 5 clusters Depreciation Expenses 9% Second-largest MOOE subcategory in all 5 clusters Security Services 9% This is driven entirely by NCR spending, where it made up 10% of the total SEF spending. In all other regions, no SEF money was spent specifically on Security Services Electricity Expenses 5% This was driven mostly by NCR and Visayas spending, where Electricity Expenses accounted for 5% and 3% of total SEF spending, respectively. In ARMM and Non- ARMM clusters, Electricity Expenses accounted for less than 0.2% of total SEF spending. Other Supplies 3% This includes all supplies except Office Supplies, Food, Expenses Medicine, Gasoline, Oil, Textbooks and Instructional Materials Water Expenses 3% This is driven almost entirely by NCR spending. All other clusters spent less than 0.01% of their total SEF spending on water. Training and 1% This is driven largely by the Northern Luzon and Visayas Scholarship Expenses clusters, which both spend 8% of their total SEF budget on training and scholarships. Textbooks and 1% NCR was the only cluster to spend any of their SEF Instructional Materials specifically on textbooks and instructional materials; they spent 1% of their total SEF budget here. Office Supplies 1% This is driven mostly by the Visayas cluster, where 8% of Expenses the total SEF budget was spent on office supplies. Printing and Binding 1% This is driven solely by the NCR cluster.

All other MOOE subcategories account for less than 1% of the total national SEF spending in 2014.

Appendix A RAPID APPRAISAL ON HOW LGUS FINANCE EDUCATION

Note: This is not an assessment but an exploratory survey to identify areas that we need to work on together to improve the financing of education.

Please check the answer that best applies to your locality.

If there is specific information that is being requested, please write the information on the blanks provided.

1. Do you have an SEF collection? ____ Yes ____ No

2. Are there other sources of funds aside from the SEF that are used to finance your education programs? ____ Yes ____ No

3. If your answer to no. 1 is yes, please name these sources of funds: ____ General fund ____ Trust funds, please specify ______Share from the Provincial SEF, please specify ______Grants, please specify ______Loans, please specify ______Others, please specify ______

4. How do you determine the distribution of the SEF funds? (Check all the answers that apply) _____ The Supervisor/Superintendent recommends budget allocation. _____ The Local Chief Executive (LCE) decides the allocation. _____ The budget is done by the LCE in consultation with the school officials. _____ Committee meetings are held to formulate the SEF budget. _____ The budget is open to the participation of the parents and other community members. _____ Others, please specify ______

5. Does the Local School Board deliberate on how the SEF will be budgeted? _____ Yes _____ No

6. Does your LGU have an Education Development Plan? _____ Yes _____ No

7. Do school officials participate in developing the LGUs’ Annual Investment Program? _____ Yes _____ No

8. Do school officials inform the LGU of the MOOE that is distributed by the Department of Education? _____ Yes _____ No

9. Do school officials inform the LGU of how the MOOE has been disbursed? _____ Yes _____ No

10. Does the LSB inform the public on how the SEF is disbursed? ____ Yes ____ No

11. If the LSB informs the public on how the SEF was disbursed, please check how it does this. Please check all applicable answers. _____ a. The budget is posted in the website _____ b. The budget is posted in public places, Please enumerate these public places: ______c. The LGU presents the SEF budget in meetings or assemblies, please enumerate these meetings and assemblies ______

Municipality______