Must-read updates!

In my post last Oct 10th (Waived items in the 2010 NEP), I mentioned that three (3) PS costs were retained as waived items from the 45%-55% PS limitation. My source of information was the 2010 National Expenditures Program (NEP), otherwise known as the President's Budget, particularly, Section 87, General Provisions which was posted in the DBM Central Office web site. The printed hard copy of the same document, however, revealed that their are two (2) other PS costs added as waived items. These are: (a) retirement gratuity and terminal leave benefits of retiring LGU personnel; and (b) in the case of barangays, the Year-end Bonus of mandatory barangay officials up to P1,000 for the Punong Barangay and P600 each for the Kagawad, Barangay Secretary and Treasurer.

Before they went on recess last October, the House of Representatives approved on second reading the 2010 Budget (General Appropriations Bill). The waived items mentioned were carried in the House approval. It is expected that when the Senate resumes session today, November 9th, the budget bill will be among those that the body will tackle.

Revision of 20% Development Fund usage. In the next few weeks, a joint circular will be issued by the DILG and DBM revising Joint Circular No. 2005-1, prescribing the guidelines on the utilization of 20% Internal Revenue Allotment for development projects.

The revised guidelines will be issued in response to the requests of LGUs stricken by the recent calamities. In particular, projects related to disaster response, mitigation and preparedness will be added as among those that can be funded by the 20% Development Fund. These include: construction or rehabilitation of evacuation or relocation centers; purchase or repair of area-wide calamity-related alarm or warning system; purchase or repair of calamity-related rescue operations equipment; construction or rehabilitation of local roads and bridges; and purchase of dump trucks, graders and pay loaders.

The joint circular was drafted by the DILG, and in our coordination meeting today, the regional directors were asked to come up with the DBM comments and suggestions.

P 12 B Calamity Fund: The tale of two versions.

When Congress resumes session on November 9th, the Bicameral Conference Committee will try to reconcile the House and the Senate versions of Joint Resolution No. 48, setting aside P12 B to augment the already depleted Calamity Fund of the national government.

House version. The P 12 B will be sourced from the Unprogrammed Fund. Said Fund is among the Special Purpose Funds in the yearly GAA. DBM releases the money once the Bureau of Treasury certifies that the revenue back up has been collected. With the collection of our main collecting agencies, the BIR and BoC on a downtrend, that money is illusory. Thus, the House authorized the President to resort to borrowings. This means too that the money is not readily available because the government will have to look for investors for its blond flotation or schedule a series of treasury bill auctions.

Senate version. On the other hand, the Senate identifies the government's share from the Malampaya natural gas project as the funding source for the calamity fund augmentation. It is not clear though if the money is already available that is, the government share from the natural gas extraction has already been sold and the proceeds deposited in the National Treasury.

Time is of the essence considering that more relief operations are needed and massive rehabilitation efforts have yet to be started in areas affected by the typhoons "Ondoy", "Pepeng" and the previous typhoon "Frank".

Waived items in the 2010 NEP.

When Joint Resolution No. 4 (JR 4) was signed and the corresponding SSL 3 1st tranche guidelines (Executive Order No. 811) was issued by the President, the apprehension of many LGUs that they cannot implement the first tranche became a reality.

Position papers were prepared and submitted to Congress appealing to our legislators to amend Section 7 of JR No. 4 which provides that the determination by the local sanggunian of the salaries and wages of local government personnel shall be subject to the PS limitation prescribed under Section 325(a)of RA 7160. One such position paper was prepared by the Iloilo MBOs Association (IMBOA) which was adopted by the Iloilo League of Municipalities, and later on by the LMP Visayas. Nothing's been heard about Congress' response to the position paper.

What's closer to reality? It seems Congress is not keen on amending that disputed section of JR 4. We suggested that another tack may be employed by LGUs - which is to lobby to their respective Congressmen for the retention of Section 88, General Provisions of the 2009 General Appropriations Act (GAA). The said section enumerates the PS items that can be waived from the 45%-55% PS limitation, among them, the continued implementation of SSL.

The 2010 Budget submitted by the President is being deliberated upon by both Houses of Congress. As gleaned from the said budget (2010 National Expenditure Program), particularly, the last paragraph of Section 87 of the General Provisions - only three (3) PS costs are proposed to be waived from the PS limitation, namely:

- PS costs of mandatory positions specified in RA 7160;
- PS of NG personnel devolved to LGUs, and
- PS of hospital services transferred to new cities from the provinces

The other PS costs which used to be part of the waived items were deleted. These include: continued implementation of SSL; terminal leave; monetization of leave credits; magna carta benefits of PHWs; and honoraria and cash gift of barangay officials.

I am positive it's never too late to mount a concerted effort of lobbying with our legislators. Every LGU from Aparri to Jolo should contribute to the effort. Otherwise, LGU personnel, especially those employed in lower class LGUs will be left out in the cold.

Implementing the 1st Tranche of SSL 3 for LGUs.

I was supposed to post this story right after the issuance of the circular but the series of trainings on the roll-out of the revised IRR of the GPRA starting the third week of September, and the Executive Forum on the implementation of Internal Audit System for EC pilot provinces - have kept me pretty occupied.

Better late then never. Local Budget Circular No. 2009-92 has already been issued to implement the first tranche of SSL 3 for LGUs starting January 1, 2010. LGUs have been waiting for this and the timing of its issuance coincided with the finalization of local annual budgets. By this time, LGUs may already have decided whether or not to include in their annual budgets the funds to implement the first tranche.

This will now dispel any speculation that the much-awaited circular will ease the restrictions imposed by the mother SSL 3 issuance, JR No. 4. Not quite. LBC 2009-92 cannot amend the basic issuance. And so, the restrictions stay. LGUs can implement the first tranche if (a) they have not exceeded the PS limitation prescribed under Section 325(a) of RA 7160; (b) the implementation is confined to the modified salary schedule corresponding to their economic classification; and (c) subject to availability of funds.

LBC 2009-92, aside from prescribing a separate modified salary schedules for each class of LGUs (Annexes "A1" to "A8")- also spelled out the guidelines on the implementation of reallocated classes positions like Nurses, teachers, medical officers.

PERA and AdCom now combined per JR 4.

The DBM has recently issued Budget Circular No. 2009-3, prescribing the revised Rules and Regulations on the Grant of Personnel Economic Relief Allowance (PERA).

BC 2009-3 was issued to implement certain provisions of the Congress Joint Resolution No. 4 (SSL 3), particularly, on the categorization of compensation and other benefits authorized for government personnel, now termed as Total Compensation Framework (TCF). Under the TCF's enumeration of "Standard Allowance and Benefits", the PERA of P500 per month and the Additional Compensation (AdCom) of P1,500 per month are now combined as simply PERA. In effect, the PERA that government are entitled to is P2,000 per month.

BC 2009-3 is the second of a series of issuances that DBM has issued so far to implement JR 4.

Bayanihan spirit: The Sibalom way

I took this video in July 2008, a few weeks after the onslaught of Typhoon Frank. Barangay officials of the 76 barangays of Sibalom, Antique took turns in piling up sand bags along the bank of Sibalom river that served as temporary break water.

One year hence, it seems the rehabilitation of Sibalom river has not yet become a priority in the immediate rehabilitation works of the government. An inquiry from the DPWH revealed that the Sibalom project is in the list of the P5.876 B "Bangon Panay" project or the so-called Paglaum Fund. The money is be sourced from the proceeds of the Simplified Net Income Taxation System (SNITS) bill pending with the Senate Ways and Means Committee chaired by Sen. Lacson.

Meanwhile, Sibalom residents with the help of municipal and barangays officials have to fend for themselves, mustering their own resources to mitigate the damage every time the water level rises along the river bank.

I hope the President get to visit the area soon just as she did last Monday here in Iloilo where she ordered the release of an additional P100 M to augment the initial P481 M for the rehabilitation efforts in Panay.

Still on the National government's debt to GSIS.

This is an addendum to my post yesterday regarding the debt that the DepEd owes the GSIS representing arrears in premium on the insurance coverage of teachers and other personnel.

Practically, the entire bureaucracy including LGUs have incurred prior years' obligation with the GSIS since 1997. How did these obligations came about? In the case of national government agencies (I'll make a post on the case of LGUs later)- that "utang" was attributed to the 2.5% increase in the national government share in the premium rate from 9.5% to 12.5% starting July 1997 to December 1998. The premium deficiency was not paid because the appropriations in the GAA during the said period for the Retirement and Life Insurance Premium (RLIP) of state employees were computed at the rate of 9.5% only.

The reconciliation as to the actual amount of deficiency went on for several years. When the figures were finally established, the mode of settlement became another issue. The first option was for the DOF to issue a fixed rate treasury bond in favor of the GSIS. A MOA to that effect was executed between the DOF and DBM representing the national government, and the GSIS. For undisclosed reasons, the settlement did not push through. The second option which also did not materialize was for the national government to turn over to the GSIS a governmnent-owned property in exchange for the writing off of the debt. On the third settlement attempt, Congress agreed to appropriate the amount of P3,299,791,000 as part of the supplemental appropriation for 2006 through RA 9358 (the national government then was operating on a reenacted budget).

Joint Memorandum Circular No. 2007-1 signed by GSIS President Winston Garcia and DBM Secretary Rolando Andaya, Jr., was issued to implement the said appropriation. In gist, the joint circular prescribes that:

1) The DBM shall release the appropriated amount of P3,299,791,000 to the GSIS as payment of the deficiency in government share on the premium contribution from July 1997 to December 1998. The GSIS shall apply said payment on the principal amount only, not on any interest that it has imposed thereon;

2) The DBM shall post in its website the amount of increase in RLIP per agency as computed by the GSIS;

3) The GSIS shall post to the individual account of the GSIS retirees and members the said payment. Any interest imposed by the GSIS shall not be charged against the retiree/member but shall be subject to separate discussion by the DBM and GSIS;

4) The GSIS shall pay the members the amount pertaining to the adjustment in retirement benefits and basic monthly pension as well as refund the full amount deducted from the active members whose matured policies and salary/policy loans were reduced.

The issue of the settlement of the RLIP deficiency (principal amount) should be put to rest, that is, if the GSIS has fully complied with its commitment as drawn in the joint circular. But the matter of the interest imposed by the GSIS that it insists should be paid by the national government, is left hanging as negotiation between the former and the DBM has not been finalized yet.

Since this is a government to government negotiation, why can't the GSIS condone the said interest charges? The HDMF (PagIBIG) has resorted to this time and again.

Thinking aloud, but disturb: the DepEd debt to GSIS.

The perenial problem on the unremitted GSIS premium contributions of DepEd has again resurfaced. Inquirer.net ran this story on this debt which already balloned per GSIS estimates, to P21.3 B. Said debt consisted of unpaid insurance premiums of P7.39 B and corresponding interest charges of P13.9 billion for the period July 1997 to December 2007.

DepEd has refuted the claim saying that the figures were incorrect. And so the impasse remains to the detriment of DepEd personnel most specially, the teachers who have consequently bore the brunt of deductions from their salary loans including those who have already retired, in which case, the proceeds of their retirement benefits have likewise been emasculated.

The story did not mention whether there was partial settlement of the disputed debt. But I supposed this was in part paid off (at least insofar as the unpaid premiums are concerned) by the P3.299 B which the DBM has remitted to the GSIS in 2007. As can be recalled, in year 2006, Congress appropriated through a supplemental budget (RA 9358), the said amount to cover the deficiency in premium contributions (principal only) from July 1991 to December 1998. The penalties (interests and surcharges) will be settled separately between the DBM and the GSIS.

Update on EO 366

As of June, 2009 the DBM has approved the Rationalization Plans (RPs) of 54 agencies consisting of seven (7) department-level entities; 18 attached agencies; 15 executive offices; and 14 GOCCs. The seven (7) departments with approved RPs are CSC (among the first to implement in 2006), Office of the President, Office of the Vice President, DOLE, DOST DOT, and DBM (RP approved on May 8th).

The RPs of eight (8) departments with complete submission namely: DAR, DepEd, DOH, DND, DPWH, DTI, NEDA, OPS - are still under evaluation. In addition six (6) other departments: DA, DENR, DOF, DOJ, DILG and DOTC have partially submitted their respective RPs. DFA, DOE and DSWD are not required to submit their RPs as these departments have already implemented their own rationalization programs prior to EO 366.

The long-awaited SSL3 - NOW NA!

The President, before leaving for an official visit to Japan on June 17th, signed two (2) very important issuances: Joint Resolution No. 4 and Executive Order No. 811. Both issuances dwell on the same subject matter - the Modified Compensation and Position Classification System commonly referred to as SSL 3.

Joint Resolution No. 4 is the the duly enacted harmonized version (after having gone through the Congressional bicameral conference committee) of Joint Resolution No. 36 of the House of Representatives and Joint Resolution No. 26 of the Senate. EO No. 811, on the other hand, implements the first tranche of the rounds of salary increases authorized under JR No. 4.

Four-gives starting July 1st for NG personnel. This means national government personnel are already assured of the first tranche of their pay hike starting July 1st this year. EO 811 has prescribed a salary schedule for this. The salary differential is computed: adjusted salary rate in the modified salary schedule (same grade, same step) minus salary rate as of June 30, 2009 divided by 4.

Why January 1, 2010 for LGU personnel? The sponsorship speech of Senator Angara on the Senate version of the joint resolution revealed that local officials themselves lobbied before Congress for the deferment of the implementation of SSL 3 to January 1st of 2010.

The details of how EO 811 will be implemented shall be spelled out by the DBM in the corresponding budget circulars.

SSL 3 in the offing.

Congress has finally completed the finishing touches on the Modified Compensation and Position Classification System or SSL 3, shortly before its scheduled recess on June 5th.

The salary standardization measure officially known as Joint Resolution No. 36, was passed by the House of Representatives on May 21st. The same measure was passed by the Senate on May 28th with a few but significant revisions. After which the bicameral conference committee met to harmonize both versions of the Joint Resolution. The bicameral conference committee report by June 3rd.

Here are some of the most important features of the Joint Resolution:

Title - "JOINT RESOLUTION AUTHORIZING THE PRESIDENT OF THE PHILIPPINES TO MODIFY THE COMPENSATION AND POSITION CLASSIFICATION SYSTEM IN THE GOVERNMENT AND TO IMPLEMENT THE SAME INITIALLY EFFECTIVE JULY 1, 2009, AND FOR OTHER PURPOSES". The word "AUTHORIZING" was inserted in lieu of "URGING" as originally proposed, the reason being that the power to prescribed a standardized compensation scheme is vested with Congress but is being delegated to the President.

Salary Schedule - The 33 salary grade system is maintained with the same eight (8) steps per salary grade (SG-1 is just the same, allocated to Utility Worker 1 and SG-33 being assigned to the President). From the original proposal of P8,000 monthly minimum rate, JR 36 increases said minimum rate to P9,000 per month.

Effectivity - For the national government, GOCCs and GFIs, the salary increase takes effect July 1, 2009. For LGUs, the effectivity is moved to January 1, 2010. This is surprisingly different from the DBM proposal as contained in the draft joint resolution which is July 1st.

Mode of Implementation - For the national government, the implementation of the salary difference (present rate of the incumbent vis-a-vis the adjusted rate in the same step and salary grade in the revised salary schedule) shall be spread equally in four (4) years. In the case of GOCCs, GFIs and LGUs, the same computation of salary differential shall be applied except that the implementation period shall be dependent on their finances but should at least be carried out in four (4) years. This means that GOCC, GFI and LGU personnel would be able to receive in full their salary increase beyond the four- year period as their finances warrant and that the salary differentials may vary from year to year.

Total Compensation Framework - The joint resolution classifies the compensation received by government personnel into four (4) categories namely: Basic Pay including Step Increments, Standard Allowances and Benefits, Specific-Purpose Allowances and Benefits and Incentives.

No diminution in pay - The joint resolution guarantees that there will be no diminution in benefits being received and those yet to be received by government personnel. Some benefits however, such as hazard pay, need to be rationalized.

Reinvention of some benefits - The step increment due to meritorious performance shall be revived but the Productivity Incentive Bonus (PIB) will be done away with. In the same manner, the "Extra Cash Gift" or "Performance Bonus" shall be replaced by "performance Enhancement Incentive". The CNA incentive is retained but this will no longer be charged against savings. As introduced by Sen. Mar Roxas, the funds needed to pay CNA Incentive shall be provided for in the yearly budget.

Bad news for LGUs - As initiated in the House of Representatives and concurred by the Senate, the salaries of LGU personnel shall be determined by their respective Sanggunians, and if their finances warrant, salary or wage increase may be granted subject to the personal services limitation prescribed in the 1991 Local Government Code.

UBOM 2008 Edition Roll-out

The Department of Budget and Management Regional Office VI in coordination with the Association of Local Budget Officers (ALBO VI) is conducting a series of Seminar-Workshop on the roll-out of the Updated Budget Operations Manual (UBOM) for LGUs.

The seminar-workshop is being conducted for municipalities by province. A similar training will be conducted separately for provinces and cities combined. Invited to participate are members of the Local Finance Committee (LFC), Accountants, Sanggunian members and department heads. Schedule of the seminar-workshop are as follows:

- Iloilo municipalities -- May 6-8
- Negros Occ. municipalities -- May 12-14
- Aklan and Capiz municipalities -- May 19-21
- Antique and Guimaras municipalities -- May 26-28
- Provinces and cities -- June 3-5

Invited participants may coordinate with the DBM Regional Office VI or the Provincial Budget Office, Province of Iloilo for further information.

Reflections for the Lenten season.

The Lenten season marks a forty day period. It begins on Ash Wednesday and ends on Good Friday for Protestants while Catholics end the season on the Thursday before Easter.

Lent is the season of fasting, self-denial, Christian growth, penitence, conversion, and simplicity. Lent, which comes from the Teutonic (Germanic) word for springtime, can be viewed as a spiritual spring cleaning: a time for taking spiritual inventory and then cleaning out those things which hinder our corporate and personal relationships with Jesus Christ and our service to him.

eHow.com has come up with a few suggestions that Christians like us can do to observe the lenten season. Just click this link.

Signed on Friday the 13th, to take effect April fool's . .

The heading is borrowed from my co-employee, Edge. It refers to the General Appropriations Act (GAA) for 2009 or RA 9524. It was signed by the President on April 13th, Friday and by operation of the law, takes effect on April 1st.

The DBM has already issued National Budget Circular No. 519, prescribing the guidelines on the releases of funds appropriated in the new GAA. As usual, this would entail first, the preparation of Agency Budget Matrix (ABM) disaggregating the agency appropriations into "This Release", "Not Needing Clearance" "Needing Clearance", etc. Upon receipt of the approved ABM, the agency concerned will have to prepare their respective Cash Program.

The Buzz for LGUs

Here are some of the latest development affecting LGUs:

- The Supreme Court has recently affirmed its earlier decision declaring as unconstitutional the conversion of 16 municipalities into cities. This would mean that this unfortunate 16 will revert as municipalities, giving up their IRA shares as cities. For the existing cities, this is a long awaited welcome news as they stand to reap a windfall in terms of IRA adjustment. For the municipalities, this SC final decision is a sad reality for they will be giving up part of their IRA shares in favor of the 16 which will soon be back in the fold.

- The DBM is set to release the financial assistance (FA) to LGUs whose IRA shares last year suffered a reduction due to he adoption of the 2007 Census of Population. Said FA shall be charged against the Kilos Asenso Support Fund. A total of Php 1.4 B has been set aside for the purpose corresponding to two (2) months share. Per DBM's policy guidelines, LGUs with computed share of less than Php 100T will receive the amount without need of further request. Those with Php 100 T or more will have to accomplish a prescribed form (KA Form No. 1) which will then be submitted to DBM as basis for the release. For Region VI, provinces, cities and municipalities will received a total of Php 113.248 M.

Implications of the Reclassification of LGUs

Since the Memorandum Circulars of the Bureau of Local Government Finance (BLGF) on the new reclassification of local government units were circulated, I received a number of queries on how such reclassification would affect the present status of concerned LGUs.

As a backgrounder, the BLGF has issued a series of MCs reclassifying LGUs on the basis of their average income from 2004 to 2007. Said reclassification is done every four (4) years pursuant to Executive Order No. 249 authorizing the Department of Finance (DOF) to review the income ranges of LGUs that serve as basis for their income classification. Said task has been delegated to the BLGF, an operating bureau under the DOF tasked to supervise LGUs, particularly their treasury and real property tax assessment. To carry out the reclassification, the BLGF prescribes an income bracket by class (1st class to 6th class), for each level of LGUs (provinces, cities and municipalities). For example, a province with an average annual income for the last four years of P450 M or more is classified as 1st class.

How LGUs in Region VI fared. All the six (6) provinces in the region retained their present classification that is, Capiz, Iloilo and Negros as 1st class; Aklan and Antique as 2nd class; and Guimaras, 4th class. Seven (7) of the 16 cities were affected. Himamaylan moved up to 3rd class along with Escalante at 4th class; cities (5) were downgraded - San Carlos as 2nd class; Sagay, 3rd class; and Passi, Talisay and Victorias down to 4th class. the remaining nine (9) cities retained their respective income class: Bacolod, Iloilo and Kabankalan at 1st class; Bago and Cadiz, 2nd class; Roxas and Silay, 3rd class; and La Carlota as well as Sipalay as 4th class. The region now boasts of 19 1st class municipalities; 17 as 2nd class; 26 as 3rd class; 37 as 4th class; and eight (8) others as 5th class. There are no 6th class municipalities in Region VI anymore.

Effects of reclassification. One Municipal Mayor called us up relaying his apprehension that since his municipality was downgraded from 3rd to 4th class, the IRA share will correspondingly be reduced. Not true. The reclassification of the LGU whether to a higher or lower class does not affect the IRA computation. There is no direct correlation between the two. The IRA computation is based on a different set of formula as provided for in the 1991 Local Government Code (RA 7160): 50% based on population; 25% based on land area and 25% equal sharing. A higher IRA though may result in a higher reclassification of the particular LGU in the future.

Still another Mayor informed us that he refuses to accept the new classification of his municipality from 4th class to 3rd class arguing that it does not in any way translate into a better financial position (meaning increase in IRA or monetary reward). The municipality he reasoned out, stands to lose as it has to set aside additional funds to implement a higher salary schedule for the employees in accordance with the salary standardization law; and a higher representation and transportation allowances (RATA) for the officials, from the mayor himself down to assistant department heads.

So what's the beef? The mayor's allegation though short sighted is true. But a point is missed here. While there may be no immediate financial rewards for LGUs that were reclassified to a higher bracket, this periodic round of classification serves as a psychic reward or recognition for the LGU's efforts and capability to improve their financial condition. In the long run, it can trigger more economic activities in the locality ( business expansion, new investment, etc.) because of business confidence conferred upon the LGU that eventually may result in bigger tax collection (business permits, real property taxes, etc.).

Errata on the 2007 Census of Population

The National Statistics Office (NSO) has submitted to the Office of the President last December, 2008, the corrected 2007 Population count. If approved by the President, the revised population count of the Philippines will be brought to 88,572,996 from the originally proclaimed figure of 88,574,614 - or a reduction of 1,618.

The correction was due to the errata in the population count of the province of Pampanga; two (2) municipalities in Maguindanao; one (1) barangay in Kalookan City; and nine (9) barangays in the provinces of Nueva Ecija, Bulacan, Albay, Cebu, Leyte, Davao del sur, Sultan Kudarat and Compostela Valley.

Since the corrected population figure involves only an adjustment of 1,618, this will minimally affect the computation of the Internal Revenue Allotment (IRA) of LGUs across the country.

HAPPY NEW YEAR!

If we go by the Chinese astrology, year 2009 happens to be the "Year of the Ox". Everyone has his own expectation for the new year. Lots of predictions and analysis have made about what's going to happen in this "Year of the Ox", more so that we are in the midst of a global financial crisis.

Here's an interesting analysis about this year that may realistically apply to us bureaucrats: This year will no doubt bear fruit, but the motto is: "No work, no pay!" Time waits for no man; if we are too lazy to sow then we can blame no one if we have nothing to reap. We will find a great many things requiring our attention, and the list of what needs to be done will seem endless. The Spartan influence of the Ox will be a constantly cracking whip over our heads. Better to apply oneself diligently than waste time arguing with the authorities. They will prevail, as the year of the Ox favors discipline.

Most conflicts this year will arise more from a lack of communication and refusal to give in on small technicalities than anything else. But hang on and be patient. Everything will be sorted out and we will be rewarded for our efforts--so long as we remember to do things the conventional way. This is no time for tricky shortcuts.

Details about this analysis can be viewed from this site.

HAPPY NEW YEAR to all Fiscal Ad spacers!