Updates on DBM Regulations A Presentation for the

Updates on DBM Regulations (A Presentation for the 26 th Dep. Ed National Seminar/Workshop on the Preparation and Reconciliation of the CY 2011 Year-End Financial Reports) By: Assistant Secretary Luz M. Cantor January 30, 2012 Grand Astoria Hotel, Zamboanga City

Outline of Presentation A. Dep. Ed FY 2012 Budget per RA 10155 B. Budgetary Reforms 1. Budget Preparation 2. Budget Authorization & Approval 3. Budget Execution 4. Budget Accountability C. Reiteration of Existing Policies 1. Flexibilities allowed under CY 2012 GAA 2. Emphasizing the “No-Report, No-Release” policy 3. Important Timelines D. Way Forward 1. Government Integrated Financial

A. Dep. Ed FY 2012 Budget per RA 10155

A. Dep. Ed FY 2012 Budget (FY 2012 GAA, RA 10155) a. Budget Level P 216, 353, 685* (in thousand pesos) * includes attached agencies, RLIP and SBP

A. Dep. Ed FY 2012 Budget (FY 2012 GAA, RA 10155) a. 5 Budget Level (in thousand pesos)

B. Budgetary Reforms

I. BUDGET PREPARATION Objectives of 2013 Budget Preparation § Deepening of On-going PEM Reforms § Fiscal consolidation § Budgeting for 5 KRAs § Continuance of 3 Pillar Reforms: MTEF, OPIF, ZBB § Disaggregation of remaining lump sum funds § Expanding Participatory Budgeting § Greater CSO participation § Reviving RDC involvement § Introduction of Bottom-up Budgeting 7

I. BUDGET PREPARATION Public Expenditure Management Reform Goal: Establish Performance-Based Budgeting Aggregate Fiscal Discipline * Allocative Efficiency * Operational Efficiency MTEF Medium. Term Expenditure Framework OPIF Organizational Performance Indicator Framework ZBB Zero-Based Budgeting Approach

I. BUDGET PREPARATION Integrating OPIF into NEP(NBC 532) Refine MFOs to capture mandates/business lines of department Have an integrated set of performance indicators (PIs) w/c cover quantity, quality, timeliness, cost Restructure PAPs to establish links with MFOs for better cost estimation and expenditure Prioritization Develop standards for OPIF throughout government by applying common

I. BUDGET PREPARATION Continue to Focus on the Social Contract (E. O. No. 43) 1. 2. 3. 4. 5. Transparency, accountability and open governance; Poverty reduction and empowerment of the poor and vulnerable; Rapid, inclusive and sustained economic growth; Just and lasting peace and the rule of law; and Integrity of the environment and climate change adaptation and mitigation

I. BUDGET PREPARATION Fleshing out of Lump Sum Funds Target: All remaining lump-sum funds in departments are fleshed out in the FY 2013 budget Rationale: Improve transparency & regional distribution Facilitates early implementation Strategy: Participative budgeting with - Poor municpalities - CSOs - RDCs

I. BUDGET PREPARATION Participation of CSOs and Other Stakeholders for M & E • FY 2012 Budget Preparation (6 Depts. and 3 GOCCs) • • Social Sector (Dep. Ed, DOH, DWSD) Economic/Infra (DA, DAR, DPWH) GOCC (NFA, NHA and NHMFC) FY 2013 Budget Preparation (6 more Departments) • • Social (DOLE) Economic (DOTC, DOT, DENR) Gen. Public Service (DOJ, DILG) GOCCs (NEA, NIA, LRTA)

I. BUDGET PREPARATION Bottom-Up Budgeting to Consider Needs of Target Poor Communities § 609 target poor municipalities chosen by HDPR Cluster § Pilot the bottom up approach in budgeting in 300 municipalities with HDPR & NAPC § Foster convergence between the needs of 300 poor municipalities, funds available from LGUs and the programs to be delivered by NGAs § Assist departments to flesh out lump sum funds § Strengthen CSO participation in participative budgeting § Agencies to be included in the pilot are DA, DAR, DENR, DSWD, DOH, DEPED, PHIC § Role of local planning committees as venue for LGU-NGA coordination 13 13 § HDPR and Good Governance Clusters to resolve issues

I. BUDGET PREPARATION Bottom-up Budgeting January to March: Target municipalities to develop & finish LGU plans, inputting poverty and gap studies & discussion with barangays, CSOs & reps from marginalized groups. ◦ ◦ January- ACOs to issue participation guidelines to AROs - DILG & DBM to brief target municipal core teams & AROs - NAPC & DSWD to work with CSOs, municipal focal persons to organize grassroot groups to engage with LGU & NGAs March- W/ DILG & DBM, Municipal Development Councils to engage w NGAs 14

I. BUDGET PREPARATION Bottom-up Budgeting April to May: AROs with HDPR to work for incorporation of projects requested by target municipalities in NGA budget for 2013. ARO can meet with other AROs to ensure convergence of service delivery. May to July: HDRP to track decisions on projects. LDCs and grassroots orgs to ensure convergence of agreed projects with LGU AIPs HDPR to establish tracking, alliance building & capacity building to keep target municipalities engaged in budget legislation & execution.

II. BUDGET AUTHORIZATION AND APPROVAL Timely approval of the budget

III. BUDGET EXECUTION DBM Issuances v NBC No. 534 dated Dec. 8, 2011 Agency Preparation and Submission of Budget Execution Documents (BEDs) – CY 2012 Plans/Targets v NBC No. 535 dated Dec. 29, 2011 Guidelines on the Release of Funds for CY 2012 v CL No. 2011 -15 dated Dec. 26, 2011 Validity of Notice of Cash Allocation

III. BUDGET EXECUTION Submission of CY 2012 Agency Plans/Targets NBC No. 534 calls for the early submission by agencies/operating units (OUs) of the CY 2012 BEDs (with modified formats) containing their plans/targets, to wit: * Financial Plan * Monthly Cash Program * Program of Monthly Income * Physical Plan * List of Not Yet Due and Demandable Obligations FY 2011 Basis Deadline FY 2012 CY 2011 GAA level February 15, 2011 CY 2012 NEP level -- December 22, 2011 -- January 16, 2012 (ext. )

III. BUDGET EXECUTION CY 2012 Fund Release System per NBC Budget Execution • submission of BEDs by the agencies. • issuance of spending authorities (for obligation and disbursement) by DBM to agencies. • implementation of programs and projects by the agencies, out of the authorities issued by DBM 535 Budget Accountability • submission of budget accountability reports (BARs) by the agencies. • review of agency performance by DBM.

III. BUDGET EXECUTION Comparative Procedures in the Release of Funds FY 2012 FY 2011 1. Approval & Effectivity of the GAA Approval - December 27, 2010 Effectivity - January 1, 2011 Approval - December 15, 2011 Effectivity - January 1, 2012 2. Appropriation Cover R. A. 10147 Jan. 1 to Dec. 31, 2011 operations R. A. 10155 Jan. 1 to Dec. 31, 2012 operations 3. Validity of Appropriation Available for release and obligation up to December 31, 2012, with the exception of PS. Available for release and obligation up to December 31, 2013, with the exception of PS.

III. BUDGET EXECUTION How is the Agency Specific Budget Disaggregated? - thru the Agency Budget Matrix (ABM) FY 2011 FY 2012 Authorized Appropriation = v Not Needing Clearance (NNC) This Release PS MOOE CO = This Release PS MOOE CO 100% v Needing Clearance (NC) same = 100% v Needing Clearance (NC)

III. BUDGET EXECUTION ABM (continuation) FY 2012 FY 2011 Approval of ABM - Jan. 2, 2012 ü Approval of ABM - Jan. 31, 2011 ü ü Pending approval of ABM, agencies WERE AUTHORIZED to incur overdraft in obligations for regular operating requirements. ü With the early approval of ABM, agencies ARE NOT authorized to incur overdraft in obligations for regular operating requirements. ü Overdrafts in obligations were adjusted/charged against the comprehensive allotment released thru the ABM. ü Actual obligations shall be charged against the comprehensive allotment thru the ABM. ü Comprehensive release of allotment by allotment class, broken down by sub-object of expenditure. ü Comprehensive release of allotment by allotment class.

III. BUDGET EXECUTION Comprehensive Release of Allotment - NNC of ABM Personal Services (PS) FY 2011 FY 2012 v Filled Positions of NGAs v ---------- XX v Lump-sum for PS under Dep. Ed q Equivalent Records Forms q Conversion to Master Teacher Positions q Reclassification of Positions q Hardship Pay

III. BUDGET EXECUTION Comprehensive Release of Allotment - NNC of ABM MOOE and Capital Outlay FY 2011 FY 2012 v Quick Response Funds (DSWD, DND, DOH, DA, Dep. Ed, DPWH) ------------- X v Lump-sum for Repair and Maintenance of Schools Buildings of Dep. Ed v CMIs of agencies (with list of implementing units)

III. BUDGET EXECUTION Budget Items Comprehensively Released, but subject to Conditional Obligation v For Dep. Ed: Lump-sums for PS / Lump-sum for Repair and Maintenance of School Buildings v Procurement of motor vehicles and motorized equipment v Provisions for Supplies and Materials and Office Equipment Subject to submission to DBM, of the CY 2012 Annual Procurement Plan for Common-Use Supplies and Equipment pursuant to CL 2011 -6/6 -A. v Lump-sum appropriations or Centrally-managed Items Subject to identification of specific projects and other requirements per Special Provision of their respective budgets, list of IUs and allocation per IU. v Research and Development Consistent with the Master Plan of the DOST and DA. v Others: Computers and IT equipment; Communication equip; firearms; books procured other than TNL exceeding 5 copies; on-going FAPs; and grants, subsidies, contributionssubject to clearances from agencies concerned & certain conditionalities.

III. BUDGET EXECUTION NC portion of ABM – for Issuance of SARO FY 2011 FY 2012 v Lump-sum appropriations or CMIs (w/o details as of ABM preparation) v Unfilled positions v --------- X v Other budgetary provisions: q Additional amounts for existing programs and projects q ----------X q New items in the budget q q Items/provisions for Conditional Implementation Items / provision for Conditional Implementation

III. BUDGET EXECUTION Disbursements – Issuance of NCAs FY 2011 FY 2012 v NCAs for 1 st semester regular operating requirements (Jan. June) comprehensively released based on: tentative MCP prepared by DBM. v NCAs for 1 st semester regular operating requirements (Jan. June) comprehensively released based on: MCP submitted by the agency v Tentative MCP is updated based on the submitted agency MCP as well as SARO releases made. v Succeeding NCAs for 3 rd and 4 th quarter requirements, shall be contingent on the submission of BEDs and Budget Accountability Reports by the agency/OU. v Succeeding comprehensive NCAs were issued based on the updated MCP.

III. BUDGET EXECUTION Validity of NCAs FY 2011 v Regular MDS Account q 1 st to 3 rd Quarter NCA programmed for a specific month is valid until the last working day of the said month. q 4 th Quarter NCA credited for the month shall be valid until the last working day of the quarter. FY 2012 v Regular MDS Account q Effective Jan, 2012 per CL No. 2011 -15 NCA programmed and credited for a specific month is valid until the last working day of the said month.

III. BUDGET EXECUTION Flexibilities Allowed per CY 2012 GAA v Use of Savings under Agency Specific Budget q Augmentation of any item under PS and MOOE, except CIF q Priority payment of PS deficiency. v Use of Fees and Excess Income q Fees collected from seminars, trainings and conferences; q Proceeds from sale of publications for cost of printing/dissemination; q Proceeds from sale of non-serviceable, obsolete & unnecessary equipment; q Service fees collected from BIR, GSIS, HDMF, PHIC and mutual benefits associations/cooperatives for the operation of a Provident Fund; q Excess Income realized and deposited with the BTR.

IV. BUDGET ACCOUNTABILITY Transparency - Disclosure in the Website v GP No. 89 - Depts/agencies implementing infrastructure projects shall post in their websites, certain data/information prior to start of bidding for the project/s, such as: q Project title, detailed description for each project (nature & location) q Cost breakdown for materials, labor and overhead expenses v GP No. 93 – Agencies shall maintain a transparency seal to be posted in their websites which shall contain the following: q Agency’s mandate, functions, its officials w/ position/designation & contact information q Annual reports for the last three years q Respective approved budgets and corresponding targets q Major programs and projects categorized in accordance with the 5 Key Results Areas q Evaluation and/or assessment reports q Annual procurement plan, contracts awarded and the name of contractors/suppliers

IV. BUDGET ACCOUNTABILITY What is the state of agency compliance to BEDs & BARs ?

IV. BUDGET ACCOUNTABILITY Improving agency compliance of BEDs and BARs to DBM v Remind agencies thru call-up letters / phone; v Encourage on-line submission of reports i. e. SAOB; v Close coordination with agencies and provide technical assistance, if necessary; v Post in the DBM website, the reports submitted by agencies and highlight the agencies with no submission; v Implement the “no-report, no-release” policy.

IV. BUDGET ACCOUNTABILITY

IV. BUDGET ACCOUNTABILITY Review of Agency Performance What ? Why ? How? When ?

IV. BUDGET ACCOUNTABILITY Performance review shall : v be based on the following documents/reports of agencies: - BEDs for plans/targets; - BARs for accomplishments; - Monthly flash reports (consolidated by dept. ) v cover financial utilization, physical accomplishments and revenue generation; v serve as guide of DBM in deciding whether reallocation of fund or additional release is necessary and basis in reporting the status of the budget to the President, on a monthly basis.

IV. BUDGET ACCOUNTABILITY Performance review will determine: v Budget Execution and Accountability HOW much and WHAT cost the govt. provides for goods and services to the public? WHAT is the level of department/agency performance, in terms of physical outputs and financial accomplishment ? In case performance is below target WHY are the targets/plans not attained and what factors and events influence the level of performance? HOW to catch-up and What necessary/improvements shall be undertaken to catch-up with or even surpass the dept. /agency plan? v Budget Preparation How much is the appropriate level of agency budget, based on actual performance?

IV. BUDGET ACCOUNTABILITY Important Dates to Remember v Submission of BEDs December 22, 2011 / January 16, 2012 (extension) v Submission of BARs On the dates prescribed under NBC 507/507 A; Consolidated Flash Reports (Financial and Physical Reports) Every 10 th day of the month v Submission of request for realignment of released allotment under the FY 2011 budget June 30, 2012 v Submission of requests that will require issuance of SARO and NCA in FY 2012 November 15, 2012

C. Way Forward

I. Government Integrated Financial Management Information System (GIFMIS) PFM Reforms Roadmaps GIFMIS Committee Resolution 01 -2011 Signed by the PFM/GIFMIS Committee on January 19, 2011. § Approved by the PFM/GIFMIS Principals by February 9, 2011. § Presented the PFM Reforms Roadmap to the President during the Philippine Development Forum (PDF) Meeting on February 26, 2011. §

I. Government Integrated Financial Management Information System (GIFMIS) Executive Order No. 55 Directing the Integration and Automation of Government Financial Management Systems § Signed by the President on September 6, 2011 40

I. Government Integrated Financial Management Information System (GIFMIS) Executive Order No. 55 Salient Provisions: § Installation of PFM systems within the term of the President (2011 -2016), including: GIFMIS o Treasury Single Account (TSA) o Efficient budget release system o Regular in-year budget execution reporting system o Timely year-end audit reporting o Systematic recording and reporting of liabilities of government o 41

I. Government Integrated Financial Management Information System (GIFMIS) GIFMIS TRACK 1 Objective and Time Frame § To meet the government’s immediate need for a functioning GIFMIS with minimum changes in or slightest reengineering of PFM business processes and reassignment of roles and responsibilities over financial transactions. § To be completed in 8 months from PMO establishment.

I. Government Integrated Financial Management Information System (GIFMIS) GIFMIS TRACK 2 Objective and Time Frame § § To support fundamental reforms of PFM business processes, reassignments of roles and responsibilities over financial transaction processing, oversight and reporting, and corresponding organization structural changes. To be done in 5 years. 43

On Reforms…,

“Only accountants can save the world! --- through peace, goodwill and reconciliation”

THANK YOU FOR YOUR KIND ATTENTION Department of Budget and Management 3 rd Flr. , Boncodin Hall, General Solano St. San Miguel, Manila 1005 Philippines www. dbm. gov. ph 46