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HIGHLIGHTS OF THE 2018 NATIONAL BUDGET Primer on the Unified Reporting System SARO now online

HIGHLIGHTS OF THE 2018 NATIONAL BUDGET

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pr 2017jan17 bwb 1

Department of Budget and Management Secretary Benjamin E. Diokno holds a press briefing in DBM on January 17, 2018.

          

          DBM Secretary Benjamin Diokno categorically stated that he is “not opposed to the increasing the salaries of our teachers” in a press conference this morning at the DBM Central Office.

          “I understand the crucial role teachers have in nation-building and I do believe they should be rewarded accordingly,” he said.

 

Teachers’ Compensation with SSL and TRAIN

          According to the budget chief, the take-home pay of teachers has already increased this year with the implementation of the Third Tranche of Salary Standardization Law (SSL). Furthermore, government personnel, including teachers, may expect another round of salary adjustments with the Fourth Tranche of SSL set to be implemented in 2019.

          Currently, an entry-level public school teacher (Teacher 1), having Salary Grade 11 under Tranche 3 of the SSL, earns a monthly salary of P20,179. Annually, he/she will enjoy bonuses and allowances of P74,358[1]. This rounds up the monthly compensation package of teachers to P26,375. By 2019, their monthly salaries will increase to P20,754 and their total annual bonuses and allowances will increase to P75,5081, rounding up their monthly compensation package to P27,046, or P671 more per month.

          At the same time, the significant reduction in taxes with the lower personal income tax rates imposed by TRAIN will significantly increase the take-home pay of teachers. In fact, a Teacher 1 is tax-exempt under the TRAIN law as his/ her annual taxable income falls below P250,000.  Additional take home pay due to lower taxes for Teacher 1 will amount to P35,537, 176% of his/her monthly salary.

The combined effect of the increase in salary from the SSL and lowered tax rates due to the implementation of TRAIN law will result to an additional take home pay of P43,363 per year. In 2019, annual tax savings will increase to P37,262 as it is indexed to salary. Additional take home pay due to SSL and TRAIN increase to P45,312.

 

Budgetary Impact of Doubling the Salaries of Teachers

          The DBM estimates that doubling the salaries of teachers in 2018 will require an additional P343.7 billion in Personnel Services (PS) costs. In the 2018 GAA, the programmed PS costs for teaching positions is set at P381.1 billion. Doubling the salaries of teachers will require PS costs of about P724.8 billion, implying a financing requirement of P343.7 billion.

The DBM Secretary cited the budgetary impact as the reason behind previous statements in which he cautioned against the doubling of teachers’ salaries. He clarified that the President’s instruction is “to look into increasing their salaries, not doubling them”. “We have to ensure that our public sector deficit remains manageable,” the Budget chief said. “Financing this P343.7 billion may require hiking the deficit from 3% of GDP to 5% of GDP, and it may put at risk the excellent international financial standing the Duterte Administration has built over the past 18 months,” the DBM Secretary said.

“Alternatively, we may raise more taxes or reduce other expenditure items,” Sec. Diokno mentioned. “Raising P343.7 billion is a monumental task,” he said. “Consider that Package 1A of TRAIN is expected to deliver about P90 billion in revenues, yet this is only about one-fourth the amount needed to finance the doubling of salaries of teachers,” the Secretary added.

On the other hand, the DBM Secretary also cautioned against sacrificing spending for other Budget priorities such Build Build Build, Free College Tuition, Marawi Rehabilitation, the Cash Transfer Programs of the government, among other things. “We must think and prioritize long-term solutions for our country’s development and for the people’s general welfare.” Sec. Diokno said.

 

Public School Teachers’ Salaries vs Private Sector

          Secretary Diokno also cited two recent studies done in 2015 and 2016 by Towers Watson as commissioned by the DBM and by Dr. Rosario G. Manasan, respectively. Both studies show that the pay for public school teachers are significantly higher than their private sector counterparts. Towers Watson shows that an entry level teacher makes 46% more than his/her private sector counterpart. Meanwhile, Dr. Manansan found that pay in public schools is much more stable and constant across regions compared to private schools.

At around First Quarter of 2019, the DBM will commission an independent firm to do a benchmarking on the salary of teachers and other government personnel such as doctors, nurses, and lawyers. Based on the results of this study, the DBM will propose the appropriate level of compensation for government workers.

“We recognize the important role of our teachers. However, we would prefer to let the third and fourth tranches of SSL run their course before we propose a new scheme,” the Secretary said.

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[1] amount excludes Performance-Based Bonus (PBB)

 

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pr 12 Jan 2018

The Department of Budget and Management (DBM) hosted the first official meeting of the Participatory Governance Cluster (PGC) of the Cabinet for 2018 on January 11 at the DBM Library.

DBM Secretary Benjamin E. Diokno, as PGC Co-Chair, facilitated the proceedings of the meeting. The meeting, held two months earlier than the Cluster’s prescribed meeting schedule, aimed to flesh out upcoming activities for the development of the expanded PGC Performance and Projects Roadmap (PPR), the blueprint that outlines the key reform programs and initiatives of the Duterte Administration in pursuit of participatory governance.

“We have called this special meeting to present to you some developments and proposals for approval before the roll out of our proposed series of events,” said Sec. Diokno.

During the meeting, he also welcomed the newly appointed Department of the Interior and Local Government (DILG) Officer-in-Charge, Mr. Eduardo Año, as the new PGC Co-Chair.

Said meeting was the second official meeting of the members of the Cluster since it was created by virtue of Executive Order No. 24 entitled, “Reorganizing the Cabinet Clusters System by Integrating Good Governance and Anti-Corruption in the Policy Frameworks of All Clusters and Creating the Infrastructure Cluster and Participatory Governance Cluster,” issued on May 16, 2017.

High-level officials and staff from 12 PGC member agencies attended the meeting to discuss some concerns arising from the first official meeting including, among others, the status of the potential amendment of EO No. 24 to expand the Cluster membership to include other agencies that are directly involved in achieving the goals of the PGC.

At present, PGC member agencies include the DILG as Chair, Office of the Executive Secretary, Office of the Cabinet Secretary (OCS), National Anti-Poverty Commission (NAPC), Presidential Management Staff, Finance (DOF), Department of Trade and Industry (DTI), National Economic and Development Authority (NEDA), Presidential Communications Operations Office (PCOO), Commission on Higher Education (CHED), Presidential Legislative Liaison Office (PLLO), and the DBM as co-Chair and Secretariat.

Director Rolly Toledo of the DBM’s Fiscal Planning and Reforms Bureau (FPRB), which serves as the PGC Secretariat, presented the updates and upcoming activities of the PGC, including the conduct of a survey to map out existing participatory governance efforts under the present Administration. Director Toledo also shared the status of the initiatives of member agencies anchored on the PGC-PPR, with the DBM having been rated with “Good Performance” for its Open Budget Index score and shepherding of the Budget Reform Bill.

Director Toledo also cited the awards and recognition of the Cluster, namely, the Philippines’ recognition as the sole country to meet international standards in extractive industries governance and the DBM as the Freedom of Information (FOI) Champion at the 2017 FOI Awards.

Key policy decisions made from the meeting are the following: 1) creation of an Inter-Agency Working

Group on Citizen Engagement and CSO Accreditation to be led by the NAPC; 2) implementation of the PGC Mapping Survey; and 3) approval of the concept note and roll out of the series of regional dialogues on the crafting of the PGC Roadmap Phase 2.

The next PGC meeting is tentatively set on March 2018 to be chaired by the DILG. 

 

       President Duterte has fulfilled his campaign promise to increase the salaries of cops and soldiers when he signed into law the Congress Joint Resolution modifying the Base Pay Schedule for Military and Uniformed Personnel (MUP) yesterday at Malacañang Palace.

       Congress Joint Resolution (JR) no. 1, s. 2018 doubles the base pay of a Police Officer (PO) I in the Philippine National Police or a Private in the Armed Forces of the Philippines (AFP), and equivalent ranks in the Bureau of Jail Management and Penology (BJMP), Bureau of Fire Protection (BFP), Philippine Public Safety College (PPSC), Philippine Coast Guard (PCG), and the National Mapping and Resource Information Authority (NAMRIA). A PO I and those with equivalent rank will enjoy a 100% increase resulting to a monthly base pay of 29,668 pesos. Overall, the salary adjustments results to a 58.7% average increase for all MUP ranks, effective January 1, 2018.

        The resolution also allows for a second Base Pay Schedule to be implemented beginning January 1, 2019. This will further increase the Base Pay of MUP ranks starting from First Chief Master Sergeant in the AFP and those with equivalent rank up to the rank of General in the AFP and those with equivalent rank. By FY 2019, the average increase will be 72.18% for all ranks.

        According to National Budget Circular no. 574 dated January 10, 2018,   the increase in the base pay will be charged against the budgets of the agencies concerned, and, in case of deficiency, can be funded by the Miscellaneous Personnel Benefits Fund (MPBF) upon the request of an agency. The increase in base pay costs approximately P64.2 billion.

      For more information, you may refer to National Budget Circular No. 574, the issuance outlining the rules and regulations for the implementation of Congress JR no. 1, s. 2018, at www.dbm.gov.ph.

 

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President Rodrigo Duterte vetoed a number of provisions in the FY 2018 General Appropriations Act. In sum, four provisions were directly vetoed, 28 provisions were placed under conditional implementation, and four provisions were met with general observations, out of the 176 provisions and new revisions introduced by Congress.

       The President’s veto actions prohibit the unauthorized use of income by government agencies, besides the utilization of earmarked revenues as governed by special laws.

Four special provisions have been subjected to Direct Veto, rendering such provisions “inoperative”. These items are:

(a)  OEO-MTRCB Special Provision No. 2 “Monitoring Expenses of Board Members”

(b)  General Provision No. 87 “Collection of Fees in Relation to the Retention or Reacquisition of Philippine Citizenship”

(c) DepEd- OSEC Special Provision No. 14 “Use of School MOOE for Payment of Items that may be classified as CO

(d) OEO-ERC Special Provision No. 2 “Use of Income”

The first three provisions are deemed unconstitutional, thus meriting the president’s direct veto. The OEO-ERC Special Provision No. 2 “Use of Income” results to a double programming of income sources, and as such, it was recommended that the ERC should instead ensure the efficient use of its GAA and automatic appropriations.

Meanwhile, twenty-seven special and general provisions have been placed under Conditional Implementation. Conditional implementation requires issuance of guidelines in the implementation of the provision in question.

Two provisions, the creation of the revolving fund for DOST Research and Development Institutes and the use of collections by the Dangerous Drugs Board, were placed under Conditional Implementation for possible “double programming”, or use of income that has already been identified as  funding sources for the budget. Use of income may be allowable for these agencies in the event of excess revenue.

Other items under Conditional Implementation are those identified by DBM as requiring compliance with conditions or submission of requirements prior to release of allotment.

All increases and decreases in the appropriations and new budgetary items introduced by the Congress are subject to special budget release. As a consequence, agencies are directed to adjust the outputs and outcomes that correspond to such items.

The efficient use of the budget remains as a top priority of the President as he has once again adopted one year validity of appropriations.

This requires that any unused funds at the end of one fiscal year by government agencies should revert back to the general fund, driving the agencies to spend their budget with a greater sense of urgency.

          As one of the final points in the message, the President reiterated his trust in the Congress to implement in faithful observance the constitutional mandate of salary standardization and prohibition on grant of additional or double compensation to government personnel. He also directed the Executive Branch and the Constitutional Fiscal Autonomy Group (CFAG), such as the Judiciary, the Commission on Audit, the COMELEC, and the like, to exercise shared fiscal responsibility over the budget.

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Telephone: (+632)-735-4847
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