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Republic of the PhilippinesDEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT

DILG-NAPOLCOM Center, EDSA corner Quezon Avenue, QUEZON CITYTelephone Number 929.92.35 • 927.78.52

www.dilg.gov.ph

PCF CONSULTATION WORKSHOP WITH LCES ON THE PROPOSED INCENTIVE PACKAGE FOR 2014

-A POST ACTIVITY REPORT

I. RATIONALE/BACKGROUND

The Performance Challenge Fund (PCF) is an incentive system which aims to stimulate local government units (LGUs) to put premium on performance in order to avail themselves of financial support to jumpstart and sustain local economic development initiatives.

An incentive fund to LGUs which comes in the form of financial subsidy for Local Development Projects in the Annual Investment Program (AIP) of LGUs and consistent with national goals and priorities. As an objective, it shall seek to rationalize national government intergovernmental transfers to LGUs, and encourage alignment of local development initiatives with national government development agenda and priorities.

For the past two (2) years, eligible LGUs for the Performance Challenge Fund were passers of the Seal of Good Housekeeping (SGH). Said LGUs have no adverse audit findings from the Commission on Audit (COA); adhered with the Government’s Full Disclosure Policy involving revenues, expenditures, and procurement; complied with the Procurement Act (Functionality of BAC and Posting in Phil GEPS); and committed to the Anti-Red Tape Act implementation.

For CY 2014 onwards, the Performance Challenge Fund will be given to local government units that will pass the Seal of Good Local Governance (SGLG). Seal of Good Local Governance is the scaled up Seal of Good Housekeeping. The Seal of Good Local Governance that recognizes good performance of provincial, city and municipal governments, not only on financial housekeeping, but also on other areas that directly benefit the people. It is a continuing challenge for local governments to perform better, and ultimately, achieve a desirable condition where local governments: (a) sustain the practice of transparency and accountability in the use of public funds; (b) prepare for challenges posed by disasters; (c) demonstrate sensitivity to the needs of vulnerable and marginalized sectors of society; (d) encourage investment and employment; (e) protect constituents from threats to life and security; and (f) safeguard the integrity of the environment.

In recognizance of the purpose to frame and establish a meaningful incentive package for this year’s SGLG awardees, there is a need to conduct a consultative workshop for local chief executives to solicit feedback on developing a better performance incentive package.

II. OBJECTIVE

The consultative workshop aims to:

Hold conversations, where the views of local government units, in regard to developing an incentive package, are as important as the intent of the Department to promote good local governance;

Unveil the most workable arrangements, given the context, to define meaningful incentives for local governments and to help shape desirable behaviors;



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Explore options and test assumptions on how LGUs are able to better adhere to the tenets and practice of transparency and performance accountability all in pursuit of good local governance.

III. DATE AND VENUE

The consultation workshop was conducted by the Bureau of Local Government Development (BLGD), in partnership with Synergeia Foundation, on April 7 - 8, 2014 at the Ateneo Professional School, Rockwell Center, Makati City.

IV. PARTICIPANTS

The workshop was participated in by thirty-five (35) participants, all of which were selected based on the following criteria, to wit: 1. representation of all income class; 2. representation of all types of local government units, 3. equal representation per LGU; and 4. the frequency of being a Performance Challenge Fund recipient.

V. HIGLIGHTS OF THE SUMMARY OF ACTIVITIES

Day 1

The workshop was opened by Dr. Milwida “Nene” M. Guevara of Synergeia Foundation. Followed by the opening remarks of Undersecretary for Local Government Austere A. Panadero, thanking local chief executives and other local officials who were in attendance to impart their experiences and insights on performance-based incentives. Subsequently thereto, the Undersecretary laid down three (3) key questions, to wit: 1. how will first class LGUs respond to the expanded Seal of Good Local Governance? Will they still be supportive and interested, even if in past rounds of PCF grants, they were not given financial incentives, despite being SGH awardees? 2. if the Seal of Good Housekeeping has been expanded to a much wider set of performance criteria comprising now the Seal of Good Local Governance, should there be a corresponding change in the Performance Challenge Fund? What is considered to be a meaningful and reasonable incentive? What is considered fair, given the current resources? 3. what needs to be done to ensure integrity of local government assessments? How do we make our assessment processes credible at all levels, so as to generate equally credible assessment findings, validation, conferment, and grant of incentives? These questions were to be addressed during the consultation workshop.

Director Anna Liza F. Bonagua’s presentation was the implementation and accomplishments/status of the Seal of Good Housekeeping and Performance Challenge Fund for the past years. Local chief executives thereafter conveyed their experiences with regard to the Seal of Good Housekeeping as well as its impact and value on their respective localities before and after the implementation of the Performance Challenge Fund supported projects.

For other local chief executives in highly urbanized cities and first class municipalities, their financial viability hinges on the Seal of Good Housekeeping even without the financial incentive. It became imperative for them to get the seal in transacting various loans from local banks and other financial institutions. But, in order to get their net borrowing capacity from the Bureau of Local Government Finance, the Seal of Good Housekeeping



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must first be obtained. Thus, the SGH is as important if not a bigger incentive to jump start priority projects.

The sharing portion of the workshop was followed by a metacard activity citing a comparative analysis between performance recognition which is the seal and the performance fund that comes with the seal. Majority of the response from the local chief executives was that they would still work to obtain the seal for recognition purposes. The minority chose the performance fund along with the seal.

The afternoon session of the workshop began on BLGS Director Manuel Q. Gotis’ presentation of the new Seal of Good Local Governance, followed by an open forum in favor of the LCEs to inquire and give feedback on the new seal. A simulation activity was thereafter facilitated in order for the LCEs to gauge themselves on whether they can pass the standards of the seal, and on what incentive package can inspire LGUs to work for the seal.

Thereafter, Mr. Luigi Bernas, representing the private sector, gave his insights with regard to: the reallocation of PDAF for PCF, whether people satisfaction is factored in the seal; converting the Seal award into election victory; framing a menu of prizes at the option of the winners; and incentive for disaster preparedness.

In addition thereto, he posed qualificatory issues on technicals specifically on the independent package incentives (BuB, Salintubig, Pamana etc). He suggested that said incentive packages should be removed from the category as incentive packages. Otherwise, it would result to grade inflation.

Day 2

A review of other incentive packages, specifically the Provinicial Road Management Facility incentive was introduced during the workshop which aimed to enrich the incentive packages that the team of DILG is developing. Subsequently thereto, was another metacard activity soliciting feedback from local chief executives aside from their earlier recommendations (i.e. process of incentivizing, retention of the seal, managing the process of introducing the SGLG versus the SGH). The activity was based on suggested immediate actions DILG should do to be able to improve the structure and administration of the seal and the performance incentive fund.

The consultation workshop was capped off with the closing remarks of Director Anna Liza F. Bonagua, thanking everybody in behalf of DILG-BLGD and Synergeia



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VI. ISSUES AND CONCERNS

Performance Challenge Fund Seal of Good Local Governance

Criteria

Seal of Good Local Governance Administration based on the Seal of Good

Local Governance Assessment

.Increase PCF from P3-5M;

.Champions on core criterias;

.Socialized PCF according to need and income of LGU;

.More variety to meaningful incentives;

.Using the Performance Challenge Fund subsidy to develop land use plans and development plans;

.PCF support from local/international donors & other NGAs;

.Use of SGLG in prioritizing recipients of fire trucks and firearms;

.Provision of category on each incentive ;

.Use SGLG as basis for distributing funds that used to be PDAF;

.Translate SGLG eligibility into votes;

. Provision of menu of prizes and SGLG holders can choose

.Open Recognition (Media); and

.Increase access/rights to other government programs (e.g. increase program support to SGG holders by 150 %).

. Setting of minimum standards which are more realistic and doable;

.Flexibility and negotiability on SGLG criteria;

.Higher premium on the seal

.Add people satisfaction as part of the criteria; and

.Define some of the criteria, e.g. amount of support to PNP, coherence between LSB plans and School Improvement plans.

.Immediate processing of incentive package

.Communicating SGLG to all LGUs;

.Assessment must be neutral

.Study administrative and compliance costs of obtaining the seal against PCF subsidy;

.Raise the objectivity in the administration of the ARMM SGSwith the regional government

. Coordinate with LGUs with regard to specific gaps and/or deficiencies that have to be strengthened;

. Expedite release of certificate of award; and

. Retention of the title “Seal of Good Housekeeping”.

VII. RECOMMENDATIONS



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RECOMMENDATIONS TO IMPROVE INCENTIVES PACKAGE• “Cream of the Crop”, greater incentives• All recipients to be covered, smaller amount of fund subsidy • Equity vs. Performance

. Socialized (greater Incentives low-income LGUs) vs merit • Focus on the top rank (1st 500 LGUs or Top 20%)• Increase to a minimum substantive amount (P5M)• Separate PCF for each core/thematic area• Beep-up recognition (high profile, prestigious awarding and

marker)• Add people satisfaction as part of the criteria

OPTIONS BASED ON THE RECOMMENDATIONS

• Option 1: Elite group of SGLG-LGUs (top 20%) with high financial incentives

• Option 2: Inclusive group – All SGLG-LGUs to receive PCF• Option 3: Socialized Incentives (bigger for low-income class

LGUs)• Option 4: Thematic awards and incentives

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