Public Disclosure Authorized Public Disclosure Authorized PHILIPPINES: Public Disclosure Authorized Making Education Spending Count for the Children of the Autonomous Region in Muslim Mindanao Public Expenditure & Institutional Review for ARMM Basic Education Public Disclosure Authorized A JOINT REPORT BY DFAT AUSTRALIA AND THE WORLD BANK Cover photo courtesy of GOV.ph http://www.gov.ph/2014/08/22/australian-govt-funded-program-turns-over-24-newly-rehabilitated-classrooms-in-sulu/ PHILIPPINES: Making Education Spending Count for the Children of Autonomous Muslim Region of Mindanao Public Expenditure & Institutional Review for ARMM Basic Education A JOINT REPORT BY AUSTRALIA DFAT AND THE WORLD BANK Preface his ARMM Public Expenditure and Institutional Review (PEIR) resulted from a request by the Governor Mujiv Sabbihi Hataman for assistance in improving public resource useT and basic educational outcomes in the region. We would like to thank the Governor and his office for their openness to carry forward a frank and forward looking effort to improve governance and performance in the region’s basic education sector. In particular, Executive Secretaries Attys. Anwar Malang and Laisa Alamia provided support and guidance during the process. ARMM Secretary of Education Jamar Kulayan, Assistant Secretaries Noor Mohammad Saada and Maisara Latiph, Alfadar Pajiji (Chief of Staff ), Mosbicak Ibrahim (Budget Chief), Analee Biruar (Accountant), Rosana Hassan (Cashier), Virginia Besana (Planning), and Marjuni Maddi (SPCO Managing Director) all spent a great deal of time assisting the team. In addition, many other officials from DepEd ARMM, school division and district administrators and individual staff and teachers gave their time and enthusiasm during both research and workshop activities. In DepEd National Under-Secretary Francisco Varela, Assistant Secretary Jesse Mateo, and Assistant Secretary Armando Ruiz participated in the project workshop on strategic budgeting and offered their time and expertise on DepEd National policies and procedures. In DBM, special thanks are due to Director Tina Rose Marie Canda (BMB – D), Grace de los Santos (Division Chief in charge of ARMM), and Assistant Director Dante de Chavez (BMB-B in charge of DepEd National) for their participation and provision of key data. The Consortium of Bangsamoro Civil Society (CBCS) ably implemented the schools survey under challenging circumstances. Without the efforts of Guiamel Alim, Wahab Guialal, Tarhata Sambutuan, Amier Dodo and over 90 dedicated enumerators from all parts of the ARMM, the study would have been impossible. We also thank all the respondents in individual schools who gave their time during the survey. The BE-PEIR project is overseen by Teresita Felipe (Education Specialist, Australian Embassy Manila), Kai Kaiser, Lynnette Perez, and Matthew Stephens (WB). The report was produced by Hamish Nixon, Alma Mariano, Futoshi Yamauchi, Roy Tordecilla, Pinky Esguerra, Miro Capili, Carole Belisario, and Lea Neri. The following reviewers gave helpful comments: Samer Al-Samarrai, Elizabeth King (Sector Director, HDNED), Yongmei Zhou (Manager, Fragile and Conflict-affected Countries Unit (OPCS)), Daan Pattinasarany (Senior Economist, EASPI), Francisco Varela (Undersecretary for Finance, Department of Education), Bruce Stacey (Advisor, Performance Informed Budget (PIB), DBM), Prof. Paul Hutchcroft (Adviser, Australian Embassy Manila), Sam Chittick (Adviser, Australian Embassy Manila), Evelyn Daplas (Portfolio Manager, Australian Embassy Manila), and Assistant Secretary Noor Mohammad Saada (DepEd-ARMM). Financial support for the exercise came from a joint Australia WB Philippines Development Trust Fund and the World Bank State and Peacebuilding Fund. Table of Contents Acronyms i EXECUTIVE SUMMARY iii KEY FINDINGS IV SUMMARIZED RECOMMENDATIONS V TOWARDS BANGSAMORO IX CHAPTER ONE: INTRODUCTION 1 STRUCTURE OF THE BE-PEIR PROJECT 3 CHAPTER TWO: ARMM DEVELOPMENT & BASIC EDUCATION CONTEXT 5 HISTORICAL DEVELOPMENT OF THE ARMM 5 STRUCTURE OF THE AUTONOMOUS REGION IN MUSLIM MINDANAO 7 ARMM DEVELOPMENT CONTEXT 9 WIDESPREAD CONFLICT 9 WEAK GOVERNANCE 9 ARMM EDUCATION CONTEXT 11 EDUCATION OUTCOMES 12 CHAPTER THREE: PUBLIC EXPENDITURE MANAGEMENT IN ARMM 16 FRAGMENTED PUBLIC EXPENDITURE MANAGEMENT OF ARMM RESOURCES 17 POOR INTEGRATION OF ARMM REGIONAL AND NATIONAL BUDGET PROCESSES 22 INCONSISTENCY BETWEEN ARMM REGIONAL “DEVOLUTION” AND NATIONAL DECENTRALIZATION 25 WEAK STEWARDSHIP AND ACCOUNTABILITY IN HANDLING PUBLIC FUNDS 27 CHAPTER FOUR: BUDGETING FOR BASIC EDUCATION IN ARMM 29 AGGREGRATE BASIC EDUCATION SPENDING LEVELS IN THE ARMM 29 NON-GOVERNMENT BASIC EDUCATION SPENDING 29 GOVERNMENT SPENDING ON BASIC EDUCATION 32 COMPOSITION OF GOVERNMENT SPENDING ON BASIC EDUCATION 33 PERSONAL SERVICES 35 MOOE AND THE “ROUTINE OPERATIONS AND MAINTENANCE GAP” 37 TEXTBOOKS 42 OTHER PROGRAMS 43 CAPITAL OUTLAY 47 LOCAL GOVERNMENT UNIT CONTRIBUTIONS 49 THE ARMM PEM SYNDROME AND DISTORTIONS IN BUDGET COMPOSITION 50 CHAPTER FIVE: ISSUES IN BUDGET EXECUTION AND SERVICE DELIVERY 55 BUDGET EXECUTION AND THE ARMM PEM SYNDROME 55 PERSONAL SERVICES AND PAYROLL MANAGEMENT 56 MOOE 60 EXECUTION PROCESSES OF CENTRALLY-MANAGED FUNDS 61 FRONTLINE SERVICE DELIVERY: THE SCHOOLS SURVEY 63 TEACHER ABSENCE AND GHOST TEACHERS 65 PUPIL ABSENCE 66 CHALLENGES IDENTIFIED BY SCHOOLS 71 INCONSISTENT AND INEQUITABLE LGU AND COMMUNITY CONTRIBUTIONS TO EDUCATION 72 CHAPTER SIX: CONCLUSIONS AND RECOMMENDATIONS 74 SUMMARY ASSESSMENT OF THE PEM SYSTEM FOR BASIC EDUCATION IN ARMM 74 INABILITY TO LINK POLICY PLANNING AND BUDGETING 74 LACK OF BUDGET COMPREHENSIVENESS, INTEGRATION AND PREDICTABILITY 76 SLOW AND INEFFECTIVE BUDGET EXECUTION 76 WEAK ACCOUNTABILITY AND REPORTING 77 IMPROVING PUBLIC EXPENDITURE MANAGEMENT FOR BASIC EDUCATION IN ARMM 79 ENSURING QUALIFIED TEACHERS ARE BUDGETED, PAID, AND PRESENT 80 CORRECTING THE “ROUTINE MOOE GAP” 80 INTEGRATING CENTRALLY-MANAGED PROGRAMS WITH ARMM’S EDUCATION BUDGET 81 IMPROVING ARMM PUBLIC EXPENDITURE MANAGEMENT 83 STRENGTHENING THE INTRA-ARMM BUDGET PROCESS 83 INTEGRATING REGIONAL AND NATIONAL BUDGET SYSTEMS 85 DEVELOPING A FRAMEWORK OF HORIZONTAL AND DOWNWARD ACCOUNTABILITY 86 CONSIDERATIONS FOR BANGSAMORO 89 THE IMPORTANCE OF IMPLEMENTATION 89 FISCAL MANAGEMENT AND INTER-GOVERNMENTAL FRAMEWORK 89 FISCAL FRAMEWORK FOR LGUS AND REGIONAL AUTONOMY 90 COORDINATION BETWEEN BTC, ARMM AND NATIONAL GOVERNMENT 90 PRINCIPLES FOR FUTURE ENGAGEMENT 91 REFERENCES 93 Tables Table 1: Indicative Action Plan viii Table 2: LGUs in ARMM 8 Table 3: Principal sources of government funds to ARMM Thousands Pesos) 21 Table 4: PAP structures for Basic Education in National Government and ARMM 24 Table 5: Indicative key donor education sector support to ARMM (thousand Pesos) 30 Table 6: Aggregate government education expenditures in ARMM (thousand Pesos) 32 Table 7: Locus of control of government spending by economic category, FY 2013 34 Table 8: Centrally-managed fund allocations for ARMM, FY 2013 44 Table 9: Budgeting basis for education components 51 Table 10: Reasons for school closure during survey 64 Table 11: Provincial/division teacher absence rates 65 Table 12: Presence by teaching grade 66 Table 13: Absence rates (%) of students in classes in session by province, division and gender 67 Table 14: Student absence (%) by grade and gender 69 Table 15: Frequency of top challenges mentioned by school heads 71 Table 16: Summary of key weaknesses in the basic education PEM system 78 Table 17: Indicative ARMM regional budget preparation calendar (FY 2014) 84 Table 18: Indicative Action Plan 88 Figures Figure 1: A framework for improvement x Figure 2: ARMM Government Organization 7 Figure 3: Net enrolment rate (%), SY 2011-12 12 Figure 4: Educational Attainment of Females in ARMM and selected regions (2008) 13 Figure 5: Educational Attainment of Males in ARMM and selected regions (2008) 14 Figure 6: Funds flowing to ARMM by locus of budget control (PHP Millions) 18 Figure 7: Household Expenditure on education, 2009 (percent by region) 31 Figure 8: Nominal vs. Real government education expenditures in ARMM, 2009-12 33 Figure 9: PS per pupil by region (SY 2011-12 enrolment, FY 2013 budget) 36 Figure 10: Primary and secondary teacher-student ratios by region (SY 2011-12) 37 Figure 13: Per pupil MOOE in regular operations budgets by region (SY 2011-12 enrolment, FY 2013 budget) 40 Figure 14: Lack of operating and maintenance resources 41 Figure 15: Textbook budget comparison per pupil (SY 2011-12 enrolment, FY 2013 budget) 43 Figure 16: Total allotment for “Madrasah Education” by region, FY 2013 45 Figure 17: Planned ALS Allocation per Target Learner 2013 (PHP per Learner) 46 Figure 18: Basic Education Facilities Fund (BEFF) allotment per pupil by region, FY 2012 47 Figure 19: DepEd national and overall ARMM education expenditure composition, FY 2012 49 Figure 20: % LGU spending on education, culture & arts, and manpower development (2011) 49 Figure 21: The two main channels of ARMM education budget preparation 52 Figure 22: Payroll Cheque Collection in ARMM 58 Figure 23: Prevalent pupil absence 67 Figure 24: Teacher and student presence (%) by division 69 Figure 25: Improving ARMM education 79 Figure 26: Transition to ARMM responsibility for centrally-managed education funds 82 Figure 27: Relationship between national and regional budgeting guidelines 83 Figure 28: Decentralization and the service delivery framework 86 Figure 29: A framework for improvement 91 Boxes Box 1: Selected provisions of the