Wednesday, December 1, 2010

Office of the President of the Philippines gives clarifications on Budget Cuts to SUCs

On Demand for Larger Budgets for State Universities and Colleges (SUCs)

1. How much is the proposed budget for SUCs? Is there a budget cut?
The proposed SUCs budget for 2011 is P23.4 billion, which is P2.4 billion higher than the P21.0 billion National Expenditure Program (NEP) in 2010; but lower by P438 million than the allocation of P23.85 billion under the General Appropriations Act (GAA) of 2010.

However, P2.8 billion of the GAA allocation for SUCs (details in the latter portions) are considered Congressional Initiatives (CIs) which are subjected to a conditional veto in the 2010 GAA by the previous President. The conditional veto says that CIs can only be released subject to new revenue measures passed by Congress.

2. What made the difference in the SUC budget for next year compared to the budget for this year?
There is a higher allocation for Personal Services (PS) by P2.5 billion to support the requirements for the Salary Standardization Law 3.

Meanwhile, when compared with the 2010 GAA, Maintenance and Other Operating Expenditures (MOOE) and CO (Capital Outlay) decreased by P1.1 B and P1.8 B, respectively.
The difference is explained by the CIs for SUCs in 2010 amounting to P1.0 B for MOOE and P1.8 B for CO. As a general rule in preparing the 2011 budget, these CIs were not considered since the bulk were vetoed, having been sourced from realignments from interest payments.

3. What is the DBM’s position on clamor to increase SUC budget?

In a memo for the President, Secretary Butch Abad recommend that we maintain the SUCs budget for 2011 at P23.4 billion due to the following reasons:

a. First, SUCs have a total of P19.1 billion in cash balances as of the end of 2009, that the SUCs could and should use.

The average SUC had P65.8 million in cash balances, equal to 41.3 percent of their expenditures. The largest, P11.9 billion, belonged to the University of the Philippines , the smallest P191,046.78 (absolute figure), to Mountain Province State Polytechnic College .

To note, SUCs are authorized to retain and utilize their income. The Higher Education Modernization Act of 1997 (RA 8292) had enabled the governing boards of chartered state universities and colleges to retain and disburse any income generated by the university or college from tuition fees and other charges.

The SUC Boards are authorized to fix the tuition fees and other necessary school charges and at the same time adopt and implement a socialized scheme of tuition and school fees for greater access to poor but deserving students.

b. On a more fundamental level, the utilization of public funds for tertiary education is highly regressive, and with the scarcity of funds, others more pressing needs that will benefit—such as basic education which benefits more poor students—had to be priorities.

According to the latest Philippine Public Expenditure Review (PER) by the World Bank (WB), the distribution of public school enrollment becomes increasingly skewed in favor of richer households as the level of education rises.

According to the study, while around 48.6 percent of public elementary school pupils come from the three poorest deciles, the comparative figure falls to 35.3 percent for secondary school and significantly dropped to only 17.3 percent in state universities and colleges (SUCs).

Hence, the data shows that while the distribution of public school enrollment is progressive at the elementary level, it is less so at the secondary level and becomes regressive at the tertiary level.

4. Aside from direct state subsidy, are there any other funding that the SUCs could avail of from the government?

Aside from the direct appropriations from the national government, SUCs can avail from the Higher Education Development Fund (HEDF) which CHED uses to support projects which are intended to promote centers of excellence in both public and private sectors. Some P750.8 million was provided to CHED under the HEDF for 2011.

An analysis of the HEDF as of August 31, 2010 indicates that out of the total amount of P11.11 billion remitted to the Bureau of the Treasury under Fund 151 since its creation, only P8.99 billion was programmed and released by the DBM, leaving a balance of P2.12 billion. Moreover, CHED also reported that out of the total HEDF released as financial assistance, only P1.98 billion went to the various SUCs while the balance amounting to P7.0 billion was used to assist private higher educational institutions.

Given the foregoing findings, the DBM is in discussions with CHED on the possibility of having the allocation of HEDF geared more towards the SUCs since it is a government fund.

Prepared by: Department of Budget and Management

(Source: Office of the President of the Philippines)

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