Publicus Js Ncpag Budget Process

8/3/2019 Publicus Js Ncpag Budget Process

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Jumps ta r t i ng

t he New Leg is la t o rsin t he 15 t h Congress

The Budget Proc ess: ALegisla t or ’s Perspec t ive

Eleu te r io Z . Ledesm a2:00-3:30 pm , J uly 20, 2010

NCPAG, Univers i t y of t he Phi l ipp ines



Objec t ives

To learn t he budget c onc ept s used in

t he Phi l ipp ine Budget proc ess

To underst and t he Congressm an’s ro le

in t he budget ing proc ess.

To k now how t he budge t becom es a

l a w .



Objec t ives

To unders t and som e o f the t e rms used in

governm ent budget ing

To he lp part i c ipant s see w here and w hen

oppor tun i t ies ex is t fo r a c ongressm an’s

in te rvent ion in t he budget .

To k now t he proc edures for ident i fy ing, fund

sourc ing, and subm iss ion of Congressm an’s

pr io r i t y pro jec t s



Summary

Budgeting Concepts, Approaches and

Format

The Budget Formulation Exercise

The Dynamics of Budget Legislation Fund Releases and Disbursements

Congressman’s Intervention in the

Budget Process

Understanding Common Budget Terms

The Legislative Power of the Purse: Amyth?



What is a Budget ?

In genera l , a governm ent budgetis t he f inanc ia l p lan of agovernm ent fo r a g iven period ,

usua l ly fo r a f i sc a l year , w h ic hshow s w hat i t s resourc es a re ,and how t hey w i l l be generat ed

and used over t he f isc a l per iod .The budget i s t he governm ent 'sk ey ins t rum ent for prom ot ing i t s

soc io -ec onom ic ob jec t ives .



Signi f ic anc e o f t he

Nat ional Budget

Developm ent Plan ex pressed

in Pesos

Sing le m ost im por t ant p iec e o f

leg is la t ion



Legal bas is

Const i tu t iona lProvis ions

Sec t ion 22. The Pres ident sha l lsubm i t t o t he Congress , w i t h int h i r t y days from t he opening o f every regu lar sess ion as t he bas isof t he genera l appropr ia t ions b i l l , abudget o f ex pend i t u res andsourc es o f f inanc ing, inc lud ingrec e ip t s from ex is t ing and

proposed revenue m easures.



Budget Law

PD 1177 - Budget Reform Dec ree of

1977 ---inst i t u t ional izat ion of budget ary

innovat ion

EO 292 Adm inis t rat ive Code. Most

Prov is ions of PD 1177 w ere inc orporat edin E-O 292



Budget Form atRA 6670 Modi f ied Per form anc e Budget

" Sec . 30. Co n t e n t o f t h e Ge n e ra l A p p r op r i at i o n s A c t . —

The General Appropr ia t ions Ac t shal l be present ed in t he

form of budget ary program s and pro jec t s for eac h agenc yof t he governm ent , w i t h t he c orresponding appropr ia t ions

for eac h program and projec t , inc lud ing st at u t ory

prov is ions of spec i f ic agenc y or genera l app l ic abi l i t y .

The General Appropr ia t ions Ac t sha l l c ont a in an

i t em izat ion of personal serv ic es w hic h shal l be prepared by

t he Sec ret ary before enac t m ent of t he GeneralApp ropr ia t i ons Ac t ."



Budget ing Approac hes

Per form anc e budget ing

Planning, Program m ingBudget ing (PBB)

Zero Based Budget ing

L ine i t em Budget ing



PERFORMANCE BUDGET Requires development of work standards (e.g. implementation

capability: oblig/SARO; disbursements /NCA; performance overperiod of time)

Focus on achievement of work results (efficiency in project

execution)

Relates line-item budgets to functions and activities;

Presents expenditures in three fiscal years: Past, Actual,

Estimates & Proposed Strength:

Tells how well appropriated funds are spent to achieve objectives

emphasis on work-cost measurement or performance-oriented

programs

Weakness:

Does not tell whether expenditures respond to public needs

Does not select the “best” program from many alternatives measurement of productivity in government proved elusive

backward looking (record of prior performance)

Pl i P i



Planning –Program m ing

Budget ing Syst em

The planning-programming-budgeting system (PPBS) isa concept that stresses the importance of establishing astrong linkage between planning and budgeting.

It emanates from the policy of the government toformulate and implement a national budget that is aninstrument of national development, reflective of national objectives, strategies and plans.

Under the PPBS concept, the budget is anchored on thedegree by which the accomplishment of economic plansand the attainment of target contained in the Medium-Term Philippine Development Plan (MTPDP) and the

Medium-Term Public Investment Program (MTPIP) aresupported.

Pl i P i &



Planning, Program m ing &

Budge t ing (PBB)

Budgeting is integrated with long range plans

Cost-benefit analysis is applied to each identified possible

alternative Highest benefit ratio is most rational choice

Strength:

Results to better coordination of policies Subjects programs to questions as which public policies should be

pursued

Forward-looking; considered a planning device

Weakness:

Efficiency analysis is done prior to budget legislation

virtually impossible to identify all possible programs / projects and attach

cost-benefit to each



ZERO-BASE BUDGETING (ZBB) All spending for each program/project to be justified every fiscal year

Challenges principle of incrementalism

Questions the need of a program at each funding level

Each package is evaluated and given a ranking order, then arranged indecreasing order and cut-off point is set

Strength:

Provides a means of eliminating low-priority programs and projects

Allows resources to be shifted to high-impact projects

Can be easily assimilated into any budget procedure being adopted

Weakness: Administrators fear ZBB approach cuts on-going public service midstream of

the program if found to be low-priority

Tedious budgeting process



LINE-ITEM BUDGETEmphasis is on control function

Appropriated funds may not be transferred fromone object of expenditure to another (e.g. from

salaries to office rental)

Strength:

Tight control

Weakness:

Not related to agency goals, objectives, programs &

projects, so does not indicate if money is spentwisely



Budget Reform s

Organizat iona l Per f romanc e Ind ic at or

Fram ew ork (OPIF)

Medium Term Ex pend i tu re Framew ork (

MTEF)

Forw ad Est im at es

Paper on Budget St ra t egy



Relat ed PFM Reform s

Nat iona l Government Ac c ount ing

System

Rat ional i zat ion Plan BIR At t r i t ion Law

EVAT In t egrat ed Financ ia l Managem ent

In form at ion Syst em (IFMIS)



Budget

Authorization

Budget

Execution

Budget

Accountability

BUDGET CYCLE

Budget

Preparation



Budget Preparation



K ey Const i t u t ional

Provis ions President has exclusive right to propose a budget;

Congress can only reduce or re-allocate appropriations

in the proposed budget but not increase totalbudget;

President can use a line-item veto;

Previous year’s budget is automatically “re-enacted” if the budget is not passed prior to the start of the fiscalyear;

• President and Heads of Agencies with fiscal autonomycan augment any appropriations from savings in otherappropriations.



Budget DesignGeneral Appropriation , which lapse at theend of the fiscal year;

Automatic , which do not requireauthorization in the annual budget; or

Continuing , which allows appropriations tobe utilized beyond the Fiscal Year.



Classi f ic a t ion o f

t he Budget I t em s

Programmed and Unprogrammed

Funds

Special Purpose Funds

Special Provisions (SP) and

General Provisions (GP)



(UN)PROGRAMMED

Programmed appropriations are appropriations with

definite/identified funding as of the time the budget isprepared.

unprogrammed appropriations are those which provide

standby authority to incur additional agency obligationsfor priority programs or projects when revenuecollection exceed targets, and when additional grants orforeign funds are generated.



Spec ia l Purpose Fund

Special Purpose Funds (13 SPF s) are lump sumfunds within programmed appropriations

Examples:

• Priority Development Assistance Fund (PDAF)• Agriculture and Fisheries Modernization Fund•

Calamity fund• Contingent Fund• Miscellaneous Personnel Benefit Fund



Com ponent s of t he Budget

Current operating expenditures (COE) refer toappropriations for the purchase of goods and services

for current consumption or within the fiscal year,including the acquisition of furniture and equipmentnormally used in the conduct of government operations,

and for temporary construction for promotional,research and similar purposes.

Capital outlays or "capital expenditures" refer to

appropriations for the purchase of goods and services,the benefits of which extend beyond the fiscal year andwhich add to the assets of Government, including

investments in the capital of government-owned orcontrolled corporations and their subsidiaries.



Break dow n of COE

Personal Services – Provisions for the payment of

salaries, wages, and other compensation (e.g. merit,salary increase, PERA, Additional Allowance, RATA, etc)

Maintenance and Other Operating Expenses (MOOE)refer to expenditures to support the operation of

government agencies such as expenses for supplies and

materials, transportation, travel, utilities, rents, repairs.



Cost Cat egor ies

The national government budget is broken down into

the following cost categories:

1) general administration andsupport;

2) support to operations, and3) projects.

General Adm in is t ra t ion and



General Adm in is t ra t ion and

Support

General Administration and Support are thosespent for general management and supervision,

human resources development, and forproductivity incentive benefits

Support to operations refers to those activitiesthat facilitate the performance of the agency'smandated functions and services. Examples of

expenditures under this category are those thatare meant for policy formulation and planningservices; for program/project coordination,

monitoring and evaluation; and for informationmanagement support system.



Ex pendit ures for Operat ions

Expenditures for operations are those that go to regular

activities directly addressing the agency's mandates. They include expenditures for programs involving the

production of goods;

delivery of public services; regulation of societal activities;

conduct of basic governance;

or provision of general management and supervision of the entire



Pro jec t Ex pendi t ures

Project expenditures are those that fund activities which

result in the accomplishment of identifiable outputswithin a designated period. Project expenditures may besourced from foreign assistance or from local funding.

The categorization of the budget by functional costcomponents allows for a better analysis of governmentexpenditures to focus on more priority needs thusimproving the quality of government spending.



One Fund Conc ept

What is the "one-fund" concept?

The "one-fund" concept is the fiscal management policyenunciated through PD 1177 which requires that all

income and revenues of the government must accrue tothe General Fund and thus subject to the budgetingprocess . This means that they can be freely allocated to

fund programs and projects of government asprioritized.



One Fund Conc ept

The one-fund concept is significant in that it serves asan avenue through which fiscal authorities may properlyallocate scarce government resources in accordancewith the priorities in the over-all program of economicdevelopment.

It likewise provides a mechanism to control draw downson pooled resources. Regularly, the level of fundsdisbursed are monitored against the level of revenues

generated. This way, we are able to stick to thetargeted level of disbursement for a given period andavoid incurring a deficit. It also alerts us of possible

revenue shortfalls.



Budget Preparat ion T im et ab le

March-April DBCC formulates the Macro Economic

Parameters and Budget Framework

May DBM issues Budget Call

May Budget forum

Regional Budgeting (RDC Recommendations)

June Departments and agencies submit their

budget proposals

June DBM Technical Budget Hearings July DBM Executive Review Board finalizes

recommended levels of spending

Early August Appeals by Departments and agencies Late August Submission to Congress



Budget Legislation



Budget Doc um ent s

The President submits the National Budget toCongress 30 days after the opening of Congress

(4th Monday of July): President’s Budget Message

National Expenditure Program (NEP)

Budget ofExpenditures and Sources of

Financing (BESF) Tables,

Staffing Summary,

Details of Selected Programs/Projects

Organizational Performance Indicator Framework (OPIF) Book of Outputs



President's Budget Message - summarizes the budgetpolicy thrusts and priorities for the year.

National Expenditure Program- presents the details of

the government ‘s proposed program

Budget of Expenditures and Sources of Financing (BESF)

–Includes information on Macro Economic Assumotions,Expenditures presented in various formats. Also data ongovernment financing and outstanding debt.



Spec ia l Appropr ia t ions

A special appropriations bill shall specify the purpose forwhich it is intended, and shall be supported by funds

actually available as certified by the National Treasurer orto be raised by a corresponding revenue proposaltherein.

A typical appropriations proviso to circumvent aboveConstitutional provision:

The amount necessary to carry out the provisions of this Actshall be charged against the current appropriations of

________. Thereafter, the funds needed for the

continued operation of the ______ shall be included inthe annual General Appropriations Act.



Fisc a l Aut onom y

Fiscal autonomy shall be enjoyed by the Judiciary,

Constitutional Commissions, Office of the Ombudsman,Local Government and Commission on Human Rights.

Appropriations for these agencies may not be reducedby the legislature below the amount appropriated for theprevious year and, after approval, shall be automatically

and regularly released.

Savings from Appropriation may be used to augment

other items in the appropriation.



PERFORMANCE BUDGET

Requires development of work standards (e.g. implementationcapability: oblig/SARO; disbursements /NCA; performance overperiod of time)

Focus on achievement of work results (efficiency in project

execution) Relates line-item budgets to functions and activities;

Presents expenditures in three fiscal years: Actual, Estimates & Proposed

Strength:

Tells how well appropriated funds are spent to achieve objectives

emphasis on work-cost measurement or performance-oriented

programs Weakness:

Does not tell whether expenditures respond to public needs

Does not select the “best” program from many alternatives

measurement of productivity in government proved elusive

backward looking (record of prior performance)

General Appropr ia t ions Bi l l



General Appropr ia t ions Bi l l

(GAB) Fir st Reading

The Appropriations Committee lifts the new appropriations

portion of the NEP into the General Appropriations Bill.The Committee usually introduces only minormodification of the NEP figures.

There is no discussion in plenary upon its introduction inthe House (First Reading). The Secretary General Reads

title of the GAB only. The budget proposal isimmediately referred to the Committee on

Appropriations.

B d t A l T i t b l



Budget Approva l T im et ab le

July President’s State of the Nation Address (SONA) August President’s Budget proposal submitted to the House

of Representatives

August- House Appropriations Committee budget Hearings

September (First Reading of the Budget)

October House deliberates in Plenary Session

(Second and Third Reading of the General

Appropriations Bill)House-approved budget proposal introduced in Senate

December Senate amends and approves the budget proposal

Bicameral Conference Committee meets toReconcile House and Senate versions

December House and Senate approve the reconciled Budget

President signs budget into law with line-item veto

Com m i t t ee on Appropriat ions



Com m i t t ee on Appropriat ions

Del iberat ions

Mother Committee

I DBCC is heard on General Principles and Macro

Economic Indicators(DBM, NEDA, DOF (BIR and BOC), NEDA, Central Bank)

II Departments

Presided by the Committee Chairman Department Secretaries must Attend and supported by

all Officals including Regional Offices

Attended by all members of the Committee. Non-Committee members are welcome.

Lasts about 2 weeks

Committee on Appropriations



Committee on Appropriations

Deliberations

Sub Committee Deliberations

20Sub-Com composed of 10 to 15

membersPresided/chaired by Vice Chairman

Secretaries and heads of Attached Agencies must attendDetailed scrutiny of the budgets of the

Department and attached agenciesLast about 3 weeks



Com m it t ee Repor t

After the Committee budget hearings the Committee:

Report is prepared and submitted for plenary deliberations.

The report includes essential Committee amendmentsbut seldom detailed or specific budget amendments onagency budgets.



Plenary Del iberat ions

Plenary Budget Deliberations (2nd Reading)

Sponsorship by Appropriations Chairman and Three ormore Vice Chairmen

Deliberation on DBCC followed by budgets of Departments and Agencies

Special Purpose Funds

Interpelations (Alternate Minority and Majority) by

Department/ Agency Turno En Contra

Approval on 2nd Reading

Note: Department Secretaries and heads of agencies mustattend



Plenary Del iberat ions

Approval on Third Reading

Nominal Voting by Congressmen and

may explain votes

If certified as urgent administration bill

then 2nd and 3rd reading can be on thesame day



Bic am eral Conferenc e

Bicameral Conference Committee (Bicam) is convened toreconcile the difference in the Senate and House

versions of the GAB. The time needed to reach anagreement varies greatly and in some cases nocompromise is reached and thus no budget passes the

Congress. The deliberations in the Bicam are not open to the

public . Any agreement reached in the Bicam is

approved by the House and Senate in plenary,traditionally without debate. Sometimes issues areraised regarding amendments introduced in the Bicamthat have not been discussed in either the House or

Senate earlier.



Vet o Message

President signs the budget with a veto messsage.

Typical Format

1. General Comments

2. Items for direct Veto3. Items for conditional veto

4. General Observations

5. Increases in Appropriations and New Budgetary Items6. Closing Statement



The Re-enac t ed Budget

The immediate prior year budget is reenacted if not budgetis passed by congress at the beginning of the fiscal year.

The president may realign budget allocation for projectsthat have already been completed.

No new programs and projects can be ndertaken



Analyzing t he Budget

Macro-Economics and General Principles: Magnitude of the Budget VS Revenues

Historical trends in Budget size

Reliability of revenue forecast Issues on the economic targets (inflation, exchange

rates,GDP)

Order of Budget Priorities Treatment of Debt Service

Issues on the Budget Formats (line-item demanded)

Typic a l Issues in Analyzing



Typic a l Issues in Analyzing

t he Agenc y Budget

Total Budget: Percentage increase Decrease

Increase /decrease in specific expense items Duplication of functions/projects

Performance: Past Year and Target for theBudget Year

Relating budget and performance

Current Issues affecting the Agency

Parochial Issues: District Projects,

appointments, local issues rel to agency Issues from COA Audit Report



Congress ional Inser t ions

What is a CongressionalInsertion/Initiative?

What is an Agency Initiative?What is a Congressional

amendment?How are they released?



Budget Execution



Fund Release Doc um ent s Agency Budget matrix – a disaggregation of the

agency budget showing the needing clearance and notneeding clearance to determine the items to be issuedSpecial Allotment Release Order (SARO) as well as theamount to be released comprehensively.

Special Allotment Release Order - a specificauthority issued to incur obligations during a specifiedpurpose for a given period.

Notice of Cash Allocation – cash authority issuedby the DBM to cover the cash requirements of agencies.



Valid i t y o f Appropria t ions /

A l lo tment Personal Services – One year or at the end of the Fiscal

year. Maintenance and Operating Expenses and Capital

Outlays – Two years in Past GAAs but for 2010 GAA its

3 years but vetoed by the President. No clear decisionyet as to its validity.

Appropriations – Two years

Allotments must be obligated to extend its validitybeyond the prescribed deadline (ex. Beyond two years

for MOOE,CO)



“ Pork Barre l ”

How much is the Pork Barrel?

Soft - Priority Development Assistance Fund(PDAF)

Hard Infrastructure (DPWH)

Congressional Initiative



Ac c ount s Payable

Accounts Payable – Obligations /comitments of national

government agencies, whether current year and prioryears for which services have been rendered/goodshave been delivered or projects have been complitedand accepted.



Hard Inf rast ruc t ure (DPWH)

Construction/ Repair/ Rehabilitation of the

following: Roads and Bridges

Flood Control

School Buildings and other Educational FacilitiesHospitals

Health Facilities

Public Markets Multi-Purpose Buildings

Multi-Purpose Pavements

Note: Please indicate scope of work (Construction,Rehabilitat ion, repair, etc)

PDAF



PDAFProject Menu is listed in the Special Purpose Fund of the

2010 General Appropriations Act page 989

Common Projects

Program/ Project Implementing/ Agency

IT Equipment - DepED/TESDA/

CHED/SUCS/LGUs

Assistance to Indigent DOH Hosp./ Heart,Patients in DOH Hospitals Kidney& Lung Centers,

UP-PGH, WVSU

CIDSS DSWD

PHILHEALTH PHILHEALTH?LGU

Motor Vehicles- firetrucks, DILG,LGU

Patrol cars, Vans, Multi cabs

Projec t Ident i f ic a t ion and



Projec t Ident i f ic a t ion and

Moni tor ing Coordinate w ith the implementing agency

especially the LGUs as to w ill igness and

capability, polit ics

LGU Release need not indicate specific projects

Ascertain project and implementing agency

identification to avoid realignment of projects

Identify scope of work (Construction,rehabilitat ion, repair)

Monitor NCAs and SAROs before they lapse

Check balances of funds released to Hospital andDSWD



Sam ple Request Form at

With Covering Letter

Attachment:

Program/ Project Location Program/ Project Implementing

Description Cost Agency



Real ignm ent o f Pro jec t s

Realignment of projects may be allowed provided

that: Funds are not obligated

Appropriation has not lapsed

Requisite Supporting Documents

Letter request

Details of realignment (project to be realigned, coveringSARO, new project with cost and location, implementignagency.

Certification from Accountant/Treasurer noted by the ehadof agency that fund is unobligated and available.



Budget

Accountabilty



This is the last stage of the budget process

whereby the financial and physical performanceof the agencies are monitored, recordedvalidated and evaluated purposely to assess

whether performance is in accordance withtargets or budget plans.

Any negative deviations from planned targetsare provided with corrective actions during this

phase of the budget cycle.

Budget Accountability



Budget Ac c ount abi l i t y

APR - Agency Performance Review

Auditing Function of the COA

Oversight Committees of Congress

Aft Th ht



Who has the Power of the

Purse?

Must Congress assert itspower? How?

After Thought



Thank you!

Publicus Js Ncpag Budget Process

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