Tuesday, January 11, 2011

2012 National Budget Preparation, including U.P.'s and other SUCs budgets has already begun - DBM

The 2011 budget of the University of the Philippines
including the Philippine General Hospital

(To enlarge the graphic, just click
on it. Source: Official Gazette)

(To enlarge the graphic, just click
on it. Source: Official Gazette)

The Aquino government has established an early start in the execution of the 2011 national budget and in the preparation of the 2012 national budget that will be proposed this year, the Department of Budget and Management (DBM) announced last January 7.

DBM has issued the 2012 National Budget Call and has conducted National Budget Fora within DBM and with departments, agencies and government corporations on January 6 and 7. New budget execution guidelines for the newly-signed 2011 General Appropriations Act have also been discussed during the Forum.

“Upang makabangon ang ating bansa mula sa kahirapan at magising ito sa bangungot ng baluktot na pamamahala ng nakaraan, sinisiguro natin ang kagyat at napapanahong pangangasiwa sa kaban ng bayan (We are ensuring the prompt and timely management of the country’s coffers, so that our nation can rise from poverty and wake up from the nightmare of past crooked governance),” Abad said.

“The first budget of this administration has been passed on time after more than a decade of tardiness, and is now being implemented early. And so that our subsequent national budgets will be enacted and implemented in a timely manner, we are putting in place a new tradition of early budget preparation,” he stressed.

The issuance of the National Budget Call marks the start of the 2012 budget preparation process. The 2012 National Budget Call, or “first budget call,” fleshes-out the budget preparation framework and process, including the budget preparation calendar. A “second budget call” to be issued next month will set the indicative budget ceilings and macroeconomic assumptions.

The new budget calendar sets the submission of the 2012 NEP a day after the President delivers his State of the Nation Address on July 25. In the past, the National Budget Call is issued in April or May of the year prior to the fiscal year of the budget being prepared; and the proposed budget is submitted to Congress in August.

Meanwhile, to start the execution of the 2011 GAA and ensure the early implementation of critical government programs and projects within the first half, NBC No. 528, the “Guidelines on the Release of Funds for FY 2011,” has been issued on January 3.

U.P. insiders are criticizing the Aquino Administration for undertaking what they say is a unilateral budget cut. Marjoraha Tucay, an editor at U.P. Diliman's Philippine Collegian said in an analysis on his Facebook page that compared U.P.'s 2011 to its 2010 budget, there really was an overall budget slash in 2011 despite increases in funding for the ERDT project and Maintenance and other Operating Expenses (see: http://www.facebook.com/note.php?note_id=486449406858&id=1423964052).

On the other hand, former National Treasurer and National College of Public Administration and Governance Professor Leonor M. Briones has told the Diliman Diary in an earlier interview that many of the new building projects in U.P. Diliman, such as the National Engineering Complex and the National Science Complex were a once-in-a-lifetime capital expenditure projects that were expensed in 2010 and therefore U.P. could not replicate or justify these budgetary requests once the buildings were completed because they were not periodic and recurring expenses. Nevertheless, Professor Briones said that there was a need to increase U.P.'s budget in 2012 given its huge commitments.

However the embedded 2011 U.P. summary budget above shows there is not much detail to go on and so it becomes more difficult for different interest groups to press the DBM and Congress for an increase in U.P.'s budget in 2012 in the critical first part of 2011 if more details of U.P.'s 2011 budget are difficult to come by.

Budget Secretary Florencio "Butch" Abad said DBM will once again negate U.P.'s 2011 budget as the premise for the preparation of U.P.'s 2012 budget under the "zero-based budgeting" approach where a previous year's assumptions are thrown out of the window and an agency or SUC has to justify every individual expenditure.

Under the circumstances, the administration of U.P. President Emerlinda R. Roman needs to show more transparency in revealing to the public the extensive details of U.P.'s 2012 budget which it should already be preparing for submission to DBM. DBM will require an accounting of existing U.P. revenues, including moneys raised from university-affiliated foundations, interest incomes from financial instruments, lease contracts with corporations and justifications for increases in MOOE.

Secretary Abad has said in the past that DBM looks at COA reports as a partial basis for determining a particular government agency's proposed budget. The unilateral cutting of the budgets of SUCs was partially one way of slashing the effects of government corruption within SUCs which has been extensively documented by COA (see http://diliman-diary.blogspot.com/2010/11/state-universities-and-colleges-are.html). However, Abad has also said that other causative factors in cutting SUCs budgets  was a need to devote more resources to primary and secondary institutions. Additionally the Aquino Administration has made a budget of PhP 21 billion for conditional cash transfers in 2011 a cornerstone of its economic policy, which tended to put more pressure on cutting the budgets of SUCs.

DBM said that land grant universities such as U.P. are in the best position to meet any budgetary shortfalls by deriving revenues from its real estate and other assets. However, the devil would be in the details as nobody except the U.P. Administration really knows how much revenue U.P. generates, and is capable of generating, as well as what are the line item proposed expenditures in 2012 so that pressure can be brought on to bear on the Philippine government by not just the U.P. System but by other groups to increase U.P.'s 2012 budget, while giving a detailed basis. The consequences of a budgetary shortfall remain unknown to the general public, because since there is no detailed budget available for public scrutiny for 2011 or even 2012, the consequences of the subjective allocation by DBM of scarce funds to the U.P. System also remain unknown.

(By Chanda Shahani)

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