Aquino gets P500-B in lump sum funds in proposed 2015 budget

Angela Casauay

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Aquino gets P500-B in lump sum funds in proposed 2015 budget
The special purpose funds, mostly allocated upon the President's discretion, make up almost a third of the P2.6 trillion proposed national budget for next year

MANILA, Philippines – Malacañang on Wednesday, July 30, submitted to Congress the proposed P2.606 trillion ($59.943 billion) budget for 2015, an amount that is 15.1% higher than the 2014 budget. 

Of the total proposed amount, P501.7 billion ($11.54 billion) or 29% correspond to lump sum appropriations known as Special Purpose Funds (SPF), according to Budget Secretary Florencio Abad.

These appropriations include the Calamity Fund, Contingency Fund, Miscellaneous Personal Benefits Fund, Pension and Gratuity Fund, as well as the Internal Revenue Allotment (IRA) for local government units.  

The website of the Department of Budget and Management defines SPFs as:

“… budgetary allocations in the General Appropriations Act (GAA) allocated for specific purposes. These are usually lump sum in nature, as the recipient departments or agencies and/or the specific programs and projects have not yet been identified during budget preparation and legislation. These are then made available for allocation to agencies in addition to their built‐in appropriations during budget execution, pursuant to special provisions and conditions pertaining to the SPF.”

The funds typically have specified “socio‐economic purposes,” according to the DBM website. Some funds, like the Calamity and Contingency Funds, have to remain in lump sum form, the website explains, “due to the specific purposes that the funds serve.”

Some of these funds, like the “Budgetary Support to Government Corporations” and the “International Commitments Fund” are fleshed out in detail.

The IRA, on the other hand is distributed based on a formula specified by the Local Government Code.

Bad reputation

SPFs and other lumpsum allocations in the budget, however, have earned a bad name over the years due to abuses of some lump sum funds such as the Congressional Development Fund (now renamed Priority Development Assistance Fund).

The PDAF is essentially the legislator’s pork barrel. There have also been other lumpsum funds in the past that have essentially functioned as discretionary funds. In the past months, following the pork barrel scam, there has been an increasing clamor to disaggregate these funds.

Budget watchdogs and civil society groups have sought to abolish them, saying such funds are “vulnerable to reductions, transfers and adjustments.”

The proposed special purpose funds for 2015 is up from P310.1 billion ($7.134 billion) for 2014. 

Disaggregating lump sums

How the government can guarantee that there will be no irregularities in the lump sum funds has long been the subject of debate.

Asked about this, Abad indicated questionable adjustments would be less likely “To the extent that we have disaggregated this budget.”

“That’s why you see 6 volumes. It’s almost completely disaggregated with respect to some important programs in the community…. For the first time this year, we used a budget priorities framework that defines the investments of government,” the budget secretary said.

The proposed 2015 General Appropriations Act come in 6 volumes, compared to 4 volumes in 2014. 

Just like in 2014, social services will get the biggest chunk of the budget pie next year at P967.9 billion ($22.29 billion). 

Among governent agencies, the Department of Education will get the biggest budget at P365 billion ($8.41 billion). 

Definition of savings

As an effect of the Supreme Court decision declaring certain schemes in the government’s controversial spending program as unconstitutional, lawmakers are set to clarify the definition of “savings” in the 2015 GAA.

The high court declared 3 specific acts under the Disbursement Acceleration Program as unconstitutional, including the withdrawal of unused funds from certain projects and declaring them as savings prior to the end of the fiscal year so the President could realign them to other projects not approved by Congress.

To address issues raised by the Supreme Court, Malacañang asked Congress to consider two suggestions in the budget proposal: 

  • to impose a one-year validity on appropriations, which would prohibit agencies from using budget intended for the year to carry over to the succeeding year 
  • to allow the declaration of savings by the end of the first semester  

Abad said Malacañang is preparing a draft bill that will address the issues raised by the high court.

Speaker Feliciano Belmonte Jr reiterated Congress has the power to legislate the definition of savings. 

“The term savings has no constitutional definition. It is up to us to legislate it. We now have a legal group researching details such as to how far we should extend it, whether our proposed law extends to the use of unprogrammed funds, and at what point can you use it,” the Speaker said.

Proposals from lawmakers  

In 2013, the multi-billion-peso pork barrel scam rocked the halls of Congress, forcing lawmakers to abolish the Priority Development Assistance Fund (PDAF) and realign the P25.2 billion ($579.78 million) appropriation originally intended for it to 6 government agencies.

In November 2013, the Supreme Court declared the entire PDAF scheme as unconstitutional. The decision barred lawmakers from intervening or participating in any of the post-enactment stages of the budget process. 

Lawmakers, however, are still free to recommend projects while the budget process is ongoing. 

Asked if there will be a ceiling amount for proposals, Abad said this issue was “not a consideration in this budget.” 

“We have abolished the PDAF. For representatives who legitimately have concerns, we refer them to the agencies. I really don’t think that would be necessary because the way we have structured the budget is these are all district-based,” Abad said. 

Under the abolished PDAF scheme, House members were awarded with P70 million discretionary fund while senators were given P200 million each year. 

Belmonte earlier proposed the creation of a new committee in the House that will audit and scrutinize how government agencies are spending their budget.  

The proposed GAA from Malacañang, meanwhile, proposed the creation of a joint oversight committee of both chambers of Congress to monitor government expenditure.

$1 = P43.45

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