Friday, October 18, 2013

Illegal sources of DAP

By Benjamin E. Diokno
Malaya
‘I have yet to see, on the DBM website, a formal budget issuance (a budget circular or a national budget memorandum), creating the DAP circa 2011.’
Noynoy-and-Abad.2The highly controversial, arguably unconstitutional P85.5 billion Disbursement Acceleration Fund (DAP) may have been funded from spurious sources. It would appear that the Department of Budget and Management (DBM) and Budget secretary Abad were too cavalier in their appreciation of the term “savings.”
In an interview with Malou Mangahas of the Philippine Center for Investigative Journalism Mr. Abad said: “DAP releases are usually funded from unreleased appropriations under Personnel Services, as is the case when positions are either not filled up or filled up late.”
Abad added “the releases may also be funded from the Unprogrammed Fund—due to revenues generated beyond the target, such as GOCC dividends—carry-over appropriations unreleased from the previous year, as well as budgets for slow-moving items or projects that have been realigned to support faster-disbursing projects.”
The term “savings” is defined clearly in the General Appropriations Act: It refers to portions or balances of any programmed appropriations in this Act free from any obligation or encumbrance which are: (i) still available after the completion or final discontinuance or abandonment of the work, activity or purpose for which the appropriation is authorized; (ii) from appropriations balances arising from unpaid compensation and related costs pertaining to vacant positions and leaves of absences without pay; and (iii) from appropriations balances realized from the implementation of measures resulting to improved systems and efficiencies and thus enabled agencies to meet and deliver the required or planned targets, programs and services approved in this Act at a lesser costs.
The biggest potential source of savings from unreleased appropriations under Personnel Services is the special purpose fund called Miscellaneous Personal Benefits Fund (MPBF), with an appropriation of P70.6 billion. The Fund is for payment of miscellaneous personnel benefits to or in behalf of national government officials and employees.
As an example, if the Aquino administration committed to Congress to hire 100,000 new teachers, yet hired only 50,000, it stands to reason that the unspent appropriations for hiring should not be treated as ‘savings’.
Actual disbursement for the MPBF was P59.4 billion, or a difference of P11.3 billion. May the DBM use the difference to augment the appropriations for hiring of more nurses and doctors? Plausibly yes. May DBM use it to augment a newly identified roads project? No, because it’s new and totally unrelated to salaries, wages and employee benefits. May DBM use it to finance additional assistance to the MILF? No, because it’s totally unrelated to personal services.
Being a special purpose fund, with no detailed list of beneficiaries, any ‘savings’ or unobligated allotment and unreleased appropriations, at the end (not in the midst) of the fiscal year, may not be used to augment any item, program, activity or project in the General Appropriations Act.
Being a Special Purpose Fund, its use must be limited for the purposes for which it was appropriated. Otherwise, the President might deliberately bloat it to increase his flexibility in executing the budget.
The use of the Unprogrammed Fund (UF) is a mystery to me. The UF by its nature is a contingent appropriation, It is not part of the Programmed Appropriation. It may tapped only when the revenue collections exceed the original revenue targets submitted by the President, including savings from programmed appropriations for the year.
But in 2011, as in previous years, actual revenue collections was less than the original target. The original revenue target was P1,410,000,000 while actual collections was P1,359,942,000.
Some components of total revenues, say PAGCOR collections, may be higher than target: P11.4 billion actual vs. P10.9 billion target. But for purposes of using the Unprogrammed Fund that’s irrelevant. The GAA talks of revenue collections rather collections for specific tax or non-tax sources.
One exception in the use of the Unprogrammed Fund is in the case of newly approved loans for foreign assisted projects (FAPs). If a loan agreement for FAPs was already perfected during the fiscal year, a SARO covering the loan proceeds may be issued charged against the UF.
In 2011, the total unprogrammed appropriations for “support to foreign-assisted projects” was P10.8 billion; I doubt if FAPs worth that much were perfected in 2011.
A budget reordering of this size (P85.5 billion), and its subsequent releases, is not possible without the explicit approval of the President.
The uncertainty on the sources and uses of the P85.5-billion DAP would be cleared only if Mr. Abad were to disclose his Memorandum for the President seeking the creation of the DAP, including all the special allotment release orders (SAROs) issued under its umbrella.
I have searched long and hard but I have yet to see, on the DBM website, a formal budget issuance (a budget circular or a national budget memorandum), creating the DAP circa 2011. And I thought we had a transparent administration.
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Dr. Diokno is professor of Economics at the UP School of Economics and was former Secretary of Budget and Management.

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