Senate, House eye compromise on savings definition in budget

Fritzie Rodriguez
Senate, House eye compromise on savings definition in budget
The bicameral conference committee approves in principle a definition that allows the declaration of savings before the end of the fiscal year – but only under specific circumstances

MANILA, Philippines – The bicameral conference committee on Thursday, December 4, approved in principle the definition of “savings” in the proposed 2015 budget bill.

The proposed definition allows the President and heads of agencies to declare savings before the end of fiscal year – but only under limited circumstances.

The committee members will present the proposed definition of savings to their colleagues in the Senate and House for approval.

Senate finance committee chairman Senator Francis Escudero and House committee on appropriations chairman Representative Isidro Ungab are confident the proposed version will be acceptable to both chambers. 

The bicameral committee is expected to approve the definition in the next meeting on Monday, December 8. 

The proposed definition is “in consonance with the Supreme Court ruling on DAP (Disbursement Acceleration Program) but gives the President enough elbow room,” said a committee member.

 

In July, the Supreme Court declared as unconstitutional certain executive actions under the DAP, the Aquino administration’s controversial spending scheme.

 

Where the House prevailed

The House prevailed in its bid to allow government offices to declare savings and use them for other projects before the end of the fiscal year provided that the government offices submit a regular semestral report on how the savings were used.

The Senate version wanted savings to be declared only at the end of the fiscal year. 

 

The recommendation of the committee reads: “The report shall indicate, among others, the amount of savings generated, the sources and grounds used therefor, and the existing program, activity or project in their respective appropriations augmented. They shall likewise ensure that said reports are posted on their respective official websites.” 

While the phrase “at any time” was removed “to avoid controversy” because “a lot of issue was placed on the phrase at any time,” according to Escudero, it is clear in the draft that savings may be declared before the end of the fiscal year. 

Where Senate prevailed

The Senate prevailed in limiting the use of savings. Savings may arise from released funds as opposed to the House version that allows savings to be declared from the unreleased but obligated funds.

 

Released funds refer to funds already downloaded to the agencies.

Unreleased but obligated funds refer to items in the budget but not downloaded to the agencies. This movement was one of 3 schemes declared illegal under the DAP scheme.  

Meaning of savings 

Savings may be declared from several circumstances including the “final discontinuance or abandonment” or “non-commencement” of projects “due to causes not attributable to the fault or negligence of the said agency which would not render it possible for the agency to implement the said project during the validity of the appropriations.” 

Savings may also be declared from unused compensation, unutilized pension, differences between the approved budget for the contract and the contract award price. 

The High Tribunal had declared the following schemes under the DAP illegal based on the the definition of savings in the budget law:

  • The withdrawal of unobligated allotments from the implementing agencies and the declaration of the withdrawn unobligated allotments and unreleased appropriations as savings prior to the end of the fiscal year and without complying with the statutory definition of savings contained in the General Appropriations Act
  • Cross-border transfers of savings of the executive department to offices outside the executive department
  • Funding of projects, activities, programs not covered by appropriations in the General Appropriations Act

The committee’s draft definition of savings relaxes the first scheme but respects the two others. 

It doesn’t allow cross-border transfers of savings of the executive department to offices outside the executive department, and does not allow the use of savings to fund projects not identified in the budget law. 

Bicam recommendation

Below is the draft definition of savings and rules on its use based on the bicameral conference committee recommendation:

Sec. 67. Use of Savings. The President of the Philippines, the Senate President, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, the Heads of Constitutional Commissions enjoying fiscal autonomy, and the Ombudsman are hereby authorized to use savings in their respective appropriations to augment actual deficiencies incurred for the current year in any item of their respective appropriations. 

The foregoing constitutional officers authorized to use savings shall be responsible for ensuring that a semestral and annual report on their respective use of savings shall be submitted to the Senate Committee on Finance and the House Committee on Appropriations, copy furnished the DBM. The report shall indicate, among others, the amount of savings generated, the sources and grounds used therefor, and the existing program, activity or project in their respective appropriations augmented. They shall likewise ensure that said reports are posted on their respective official websites.

Sec. 68. Meaning of Savings. Savings refer to portions or balances of any RELEASED appropriations in this act which have not been obligated as a result of any of the following:

FINAL discontinuance or abandonment of AN ON-GOING program, activity or project (P/A/P) BY THE HEAD OF THE AGENCY CONCERNED DUE TO CAUSES NOT ATTRIBUTABLE TO THE FAULT OR NEGLIGENCE OF THE SAID AGENCY which would NOT render it  possible for the agency to implement the said P/A/P during the validity of the appropriations; 

Non-commencement of the P/A/P for which the appropriations is released. For this purpose, non-commencement shall refer to the inability of the agency or its duly authorized procurement agent to obligate THE RELEASED allotment AND IMPLEMENT THE P/A/P DUE TO NATURAL OR MAN-MADE CALAMITIES OR OTHER CAUSES NOT ATTRIBUTABLE TO THE FAULT OR NEGLIGENCE OF THE AGENCY CONCERNED DURING  THE VALIDITY OF THE APPROPRIATIONS; 

Decreased  cost  resulting  from  improved  efficiency  during  the  implementation or UNTIL, the completion by agencies of their P/A/Ps, PROVIDED, THAT THE AGENCIES WILL STILL BE ABLE to deliver the targets and services AS approved in this Act; AND

Difference between the approved budget for the contract and the contract AWARD price;

PROVIDED, HOWEVER, THAT SAVINGS may likewise refer to available balances arising from unused compensation and related costs pertaining to: (i) unfilled, vacant or abolished positions; (ii) non-entitlement to allowance and benefits; (iii) leaves of absence without pay; AND (IV) UNUTILIZED PENSION AND RETIREMENT BENEFITS ARISING FROM DEATH OF PENSIONERS, DECREASE IN THE NUMBER OF RETIREES, OR OTHER RELATED CAUSES.

PROGRAMMED APPROPRIATIONS WHICH HAVE NOT BEEN RELEASED OR ALLOTMENTS NOT OBLIGATED DUE TO THE FAULT OF THE AGENCY CONCERNED SHALL NOT BE CONSIDERED SAVINGS.

SEC.69. MEANING OF AUGMENTATION. Augmentation is the act  of THE HEAD OF OFFICES AUTHORIZED UNDER SECTION 67 OF THIS ACT TO USE SAVINGS IN THEIR RESPECTIVE APPROPRIATIONS TO PROVIDE ADDITIONAL FUNDING TO COVER AN ACTUAL DEFICIENCY INCURRED FOR THE CURRENT YEAR IN ANY EXISTING ITEM OF THEIR RESPECTIVE APPROPRIATIONS. A DEFICIENCY IN THE APPROPRIATION OF A P/A/P MAY RESULT FROM:

JUSTIFIED modifications or adjustments in the P/A/P AUTHORIZED IN THIS ACT; or

ADJUSTMENT IN THE COST OF IMPLEMENTING P/A/P DUE TO JUSTIFIED CAUSES.

In no case shall a non-existent P/A/P, be funded by augmentation from savings or by the use of an appropriations otherwise authorized in this Act. THE EXISTENCE OF AN APPROPRIATION FOR AN ALLOTMENT CLASS IN A P/A/P IS NECESSARY FOR THE PURPOSES OF AUGMENTATION.  AN ALLOTMENT CLASS AS USED HEREIN MAY EITHER BE PERSONAL SERVICES, MOOE OR CAPITAL OUTLAYS.

– Rappler.com

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