Cut or un-cut? Student activists protest against the alleged cut in the budgets of state colleges and universities, but the government insists there was none. SANDINO NARTEA

Much has been said, written and broadcast about the alleged cut in state universities and colleges’ (SUCs) funding. As is often the case with such stories, the media inadvertently acted as a battleground for opposing sides and was full of claims, counter-claims, allegations and comment for weeks – all of which left people puzzled and still asking after the truth. Was there really a cut in the SUCs or not?

Ultimately this shows up the need for greater public finance literacy among all –not least among observers, reporters and commentators. Yet increasingly ordinary citizens can find out and decide for themselves so long as they know where to look, what to look for, and what questions to ask.

As was heavily reported at the time, the last Tuesday of 2010 saw President Benigno Aquino III sign the PhP 1.6 trillion (USD 36.3 billion) 2011 national budget into law. The national budget, also known as the General Appropriations Act of 2011, focuses heavily on social services including financial handouts to the poor.

The Department of Education (DepEd) takes a substantial chunk, receiving no less than PhP 207 billion (USD 4.7 billion). The DepEd in turn allocates funds to different projects, groups and institutions. It also provides funding for the Commission on Higher Education (CHED), an autonomous body which oversees tertiary education.

Education budget for 2011

The budget for DepEd has gradually increased since 2007. As the following chart demonstrates, its budget surged by around PhP 32 billion (USD 727 million) in just one year. This increase is what many officials point to when arguing against budget reduction claims.

EDUCATION BUDGET 2009-2011

^{Source: General Appropriations Act 2007-2011 http://www.dbm.gov.ph/}

But the DepEd budget mainly supports primary and secondary education. Funding for SUCs is allocated separately.

In an interview in the Philippine Daily Inquirer, Education Secretary Armin Luistro explained the bulk of the education budget is to be allotted to public kindergartens. DepEd has been fervently campaigning for an additional two-year extension in the current 10-year elementary cycle.  However this does not automatically translate to additional funding for tertiary education since SUCs draw their budgets from a different allocation.

President Aquino inadvertently started the word war over the SUC budget when he announced last August 24 during his budget message to Congress that he was “gradually reducing the subsidy to SUCs to push them toward becoming self-sufficient and financially independent.” The figures appear to back this up as the PhP 21.7 billion (USD 493.1 million) subsidy for 2011 is clearly lower than the PhP 22.4 billion (USD 509 million) subsidy for 2010.

OVERALL STATE SUBSIDY OF STATE UNIVERSITIES AND COLLEGES

^{Source: General Appropriations Act 2007-2011 http://www.dbm.gov.ph/}

^{*The most recent figure, as stated in the DBM website}

The above table shows the gradual increase of state subsidy and particularly during 2009 when then President Gloria Arroyo supported the Engineering Research and Development for Technology (ERDT) projects in the SUCs. Yet closer inspection reveals that the actual SUC budget for 2010 was actually smaller than the original projection.

The SUC budget for 2010 appears higher because of congressional insertions/congressional initiatives. Congressional initiatives (CI) are fund insertions made by lawmakers that provide additional support for social services deemed to be in need. Every lawmaker – senators and congressmen alike – has the power to appropriate funds to any unit of their choosing. CI is passed precisely to help augment the scarce resources of different agencies and social services. It is however subject to approval by the President.

And in the event, the CIs for 2010 were never released by President Arroyo. The actual SUCs budget for 2010 thus totaled just PhP 21.034 billion (USD 478 million). In a statement released last November 27, Budget and Management Secretary Florencio Abad explained: “While the 2010 budget allocate[d] P23.845 billion for SUCs, P1.0 billion for maintenance expenditures and P1.8 billion for capital outlay [were] Congressional Initiatives.”

CHED Chairperson Patricia Licuanan stated in an interview that there has been no budget cut and that in fact the budget for SUCs this year actually increased by PhP 683.3 million (USD 15.52 million).

Budget breakdown of SUCs

SUCs acquire funding from the government. Each year, every state university or college receives a particular sum which is used for the operation and development of the school.

SUCs’ operations are divided into three categories: Capital Outlay, Maintenance and Other Operating Expenditures (MOOE), and Personal Services (PS). The Capital Outlay holds the budget for providing new buildings and infrastructures as well as expanding school facilities. MOOE, meanwhile, takes care of the upkeep and everyday operations of the school. This fund covers payment of utilities such as electricity and water, maintenance of facilities, wages of contractual employees and scholarships among others. Personal Services covers the salary of faculty and other university staff. As the pie chart shows, staff costs are by far the highest part of the budget.

Total: P22,402,271,000    |    Actual Budget: P21,034,000,000

Total: P21,717,421,000

^{Source: General Appropriations Act 2010, 2011 Department of Budget and Management}

^{*Budget according to the GAA 2010; unreleased CI funds not included in the graph.}

^{**Budget according to the GAA 2011 version published in the DMB website}

The two pie graphs above indicate the discrepancy between the 2010 and 2011 budget allocation. For 2011, the allotment for Personal Services went up. MOOE had a significant decrease while there was no allocation for Capital Outlay. However, comparing the overall 2010 actual budget with the 2011 appropriations would reveal that this year’s budget increased.

The overall budget increase is attributed partly to the implementation of the Salary Standardization Law III. Approved in 2009 by Arroyo, the Salary Standardization Law III seeks to upgrade the compensation of government employees in all levels. If one probes into the SUC budget allocation though, it is evident that the fund increase is for the Personal Services. There is also no funding allotted for the new infrastructures, as stated in the zero value of capital outlay. The budget cut then is the decreased budget for MOOE.

In an interview with the Philippine Public Transparency Reporting Project, Prof. Leonor Magtolis-Briones explains the lack of allotment for capital outlay and the importance of MOOE. “Ikaw, may bahay ka. you need money to maintain your house. You decided to build an annex so lumaki ang gastos mo kasi you’re building the annex. Natapos na annex mo, nawala na ‘yun sa overall budget mo. Kasi tapos na. You realize you cannot use your annex unless may tubig at ilaw (You have a house. You need money to maintain your house. You decided to build an annex thus your expenses increased. Your annex is now finished, it is no longer part of your overall budget, because it is already done. But you realized you cannot use your annex unless it has water and electricity.).”  Briones teaches at the University of the Philippines National College of Public Administration and Governance. She is also a convener of Social Watch Philippines.

Implications of MOOE reduction

Last December 1, students, faculty and different SUC personnel marched in the streets to call for the restoration (if not increase) of the budget for capital outlay and MOOE. Days after the demonstration, Senator Alan Peter Cayetano managed to propose a bill allotting PhP 146 million (USD 3.3 million) for MOOE.

The following chart is the budget allotment for MOOE, including Senator Cayetano’s amendment.

SUC MOOE 2000-2011

^{Source: Kabataan Party list
***Projected real value of state subsidy base on estimated Consumer Price Index according to its percentage increase from 2009 to 2010}

The figures above indicate the reduction of budget for MOOE. These funds would be further distributed into different schools all over the country.

The table below shows the complete list of schools affected by MOOE budget reduction:

SCHOOLS AFFECTED BY MOOE BUDGET REDUCTION

Click the image above to view the full list.

^{*Figures in thousands}

^{Source: MOOE budget for state schools, General Appropriations Act 2011,
Department of Budget and Management
Compiled by Kabataan Party list}

SUCs relying on MOOE for their schools’ maintenance and operation now need to find other means for sustenance. Zero Capital Outlay means that there are no funds provided for new infrastructures and classroom expansion.

Kabataan Party list has expressed concern over potential tuition hikes and dubious miscellaneous fees. To make up for the budget deficit on MOOE and sustain school operations, SUCs might lay the burden on students, and parents, in effect.

Palace spokesperson Edwin Lacierda and Budget Secretary Abad both suggested finding different means to augment SUC funds. Income-generating partnerships with the private sector were recommended.

The option to turn to Higher Education Development Fund was also offered. This fund was established under Republic Act 7722, utilizing contributions from professional registration fees, travel taxes and lotto gross sales.

As such, Prof. Briones highlights a more pressing issue, “Whether there is a cut or not – the question is whether the budget is sufficient.”

For as the figures show, the overall budget for SUCs has actually increased – but the same is not so for all individual components within it: Staffing costs have clearly increased – but equally a clear reduction in funds for actual operation and maintenance is also seen. Ultimately then, both sides can present different figures to back up their claim to be speaking the truth. Philippine Public Transparency Reporting Project

(The author is a teacher and a freelance writer.)