Download - Philippine Budget System Efportillo
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1Ena Josel F. Portillo
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What is Budget?
A budget is a detailed financial program inwhich anticipated expenditures and
anticipated revenues, including receiptsfrom borrowings, are itemized and exactly
balanced.
- P.A.: The Business of GovernmentJose P. Leveriza
The budget ing systemincludes allcomprehensive process as well as thelaws, rules and practices observed by
government in planning and carrying out2
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assisting in planning expenditure to meet
policy requirements
policy implementation and control measuring and monitoring performance
to determine the total expenditure of the
organization and ensure that it is consistentwith total revenues
provide the basis for authorizing
expenditure and collection of fees and 3
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The Concepts of National
Budgeting System In The Country
Concept of Balance
Concept of Fiscal Control
Concept of Obligation Concept of Appropriation
Approaches to Budgeting1. The traditional budgeting approach
2. The new management/managerial
budgeting approach 4
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Top down
budgeting
Bottom up
budgeting
Line-item
budgeting 5
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Zero-based budgeting
(ZBB) Program based
budgeting
Priority-based
budgeting
Performance-based 6
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Understanding The
Budget Process(its four stages)
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CSO DBM Congress
COAOffice of the
President
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This starts with the Budget Call
and ends with the Presidentssubmission of the proposed
budget to Congress.
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1. The Budget CallAt the beginning of the budget
preparation year, the
Department of Budget and
Management (DBM) issues the
National Budget Call to all
agencies (including stateuniversities and colleges) and a
separate Corporate Budget Call
to all GOCCs and GFIs.
The Budget Call containsbudget parameters (including
macroeconomic and fiscal
targets and agency budget
ceilings) as set beforehand by 9
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Early Preparation
Under the Aquino Administration, theDBM has established a new tradition of
beginning the Budget Preparation phase
earlier, to ensure that the National Budget
is enacted on time. Under the new Budget
Preparation Calendar, the Budget Call is
issued in December (versus around April
in the past); and the submission of thePresidents budget a day after the State of
the Nation Address (in contrast to earlier
practice where it is submitted during the10
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2. StakeholderEngagement
A new feature in budget
preparations which seeks toincrease citizen participation inthe budget process,departments and agencies are
tasked to partner with civilsociety organizations (CSOs)and other citizen-stakeholdersas they prepare their agencybudget proposals. This new 11
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ORIGINAL SET (Piloted in2012)
Department of Health Department of Education Department of Social Welfare
and Development
Department of Public Works andHighways
Department of Agriculture Department of Agrarian Reform National Food Authority National Housing Authority
National Home Mortgage andFinance Corp.
NEW SET (Starting 2013) Department of Tourism Department of Transportation
and Communication Department of Interior and Local
Government
Department of Justice Department of Labor and
Employment Department of Environment and
Natural Resources Light Rail Transit Authority
National ElectrificationAdministration National Irrigation
Administration
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Note: All other departments and agencies arehighly encouraged to undertake the process.
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Bottom-Up Budgeting. For thefirst time in history, the National Budget for
2013 will be prepared using a breakthrough
bottom-up approach. As opposed to theconventional way of allocating resources
from top to bottom, grassroots communities
will be engaged in designing the National
Budget.
The Aquino government, through the
Cabinet Cluster on Human Development
and Poverty Reduction, has identified 300 to400 of the poorest municipalities and will
engage these in crafting community-level
poverty reduction and empowerment plans.
This initial salvo of bottom-up budgeting 13
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3. Technical Budget
HearingsThese are conducted after
departments and agencies
submit their Agency Budget
Proposals to the DBM. Here,
agencies defend their proposed
budgets before a technical panelof DBM, based on performance
indicators on output targets and
absorptive capacity. DBM 14
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4. Executive Review
The recommendations arepresented before an Executive
Review Board which is
composed of the DBM
Secretary and senior officials.
Deliberations here entail a
careful prioritization of
programs and correspondingsupport, vis--vis the priority
agenda of the national
government. Implementation 15
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5. Consolidation,
Validation, and
Confirmation
DBM then consolidates the
recommended agency budgetsand recommendations into a
National Expenditure Program and
a Budget of Expenditures and
Sources of Financing (BESF).
As part of the consolidating
process, the deliberations by the
DBCC will determine the agency 16
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6. Presentation to
President andCabinet
The proposed budget is
presented by DBM, togetherwith the DBCC, to the
President and Cabinet for
further refinements orreprioritization. After the
President and Cabinet
approve the proposed17
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7. The Presidents Budget
The budget preparation
phase ends with thesubmission of the proposednational budgetthePresidents BudgettoCongress. The PresidentsBudget consists of thefollowing documents, which
help legislators analyze thecontents of the proposedbudget:
Presidents Budget 18
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Budget of Expend i tures and Sources
of Financing (BESF)
Mandated by the Constitution, this
contains the macroeconomic
assumptions, public sector context
(including overviews of LGU and GOCC
financial positions), breakdown of theexpenditures and funding sources for the
fiscal year and the two previous years.
National Expend iture Prog ram (NEP)
This contains the details of spending for
each department and agency by program,19
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Detai ls o f Selec ted Programs and
Projects
This contains a more detailed
disaggregation of key programs,
projects and activities in the NEP,
especially those in line with the
national governments development
plan.
Staf fing Summary
This contains a summary of the 20
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Alternatively called the budget
authorization phase, this starts
upon the House Speakers
receipt of the Presidents
Budget and ends with thePresidents enactment of the
General Appropriations Act.
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1. House DeliberationsThe House of Representatives, in plenary,assigns the Presidents Budget to the
House Appropriations Committee. TheCommittee and its Sub-Committees thenschedule and conduct hearings on thebudgets of the departments and agencies
and scrutinize their respective programsand projects. It then crafts the General
Appropriations Bill (GAB).
In plenary session, the GAB is sponsored,
presented and defended by the Appropriations-
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2. Senate Deliberations
As in the House process, the Senate conductsits own committee hearings and plenarydeliberations on the GAB. Budget deliberationsin the Senate formally start after the House ofRepresentatives transmits the GAB. For
expediency, however, the Senate FinanceCommittee and Sub-Committees usually starthearings on the GAB even as Housedeliberations are ongoing.
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3. Bicameral DeliberationsOnce both Houses of Congress have finishedtheir deliberations, they will each constitute a
panel to the Bicameral Conference Committee.This committee will then discuss and harmonizethe conflicting provisions of the House andSenate Versions of the GAB. A HarmonizedVersion of the GAB is thus produced.
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4. Ratification and
EnrollmentThe Harmonized or Bicam
Version is then submitted toboth Houses, which will then
vote to ratify the final GAB for
submission to the President.
Once submitted to the
President for his approval, the25
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5. The Veto MessageThe President and DBM then review the GAB
and prepare a Veto Message, where budgetitems subjected to direct veto or conditional
implementation are identified, and where
general observations are made. Under the
Constitution, the GAB is the only legislativemeasure where the President can impose a
line-veto (in all other cases, a law is either
approved or vetoed in full).
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6. Enactment
When the GAA is not enacted before the fiscal
year starts, the previous years GAA is
automatically reenacted. This means thatagency budgets for programs, activities and
projects remain the same. Funding for
programs or projects that have already been
terminated is realigned for other expenditures.
Because reenactments are tedious and prone
to abuse, the Aquino Administrationwith the
support of Congresshas committed to ensurethe timely enactment of a new GAA every year.
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This is where the peoples
money is actually spent. As
soon as the GAA is enacted,
the government can implement
its priority programs andprojects.
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1. Release Guidelines and Program
The budget execution phase begins
with DBMs issuance of guidelines on
the release and utilization of funds.
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2. Budget Execution Documents
(BEDs)
Agencies are required to submit their BEDsat the start of budget execution. These
documents outline agency plans and
performance targets. These BEDs include
the physical and financial plan, monthly cashprogram, estimate of monthly income, and
list of obligations that are not yet due and
demandable.
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3. Allotment and Cash ReleaseProgrammingTo ensure that releases fit the approved
Fiscal Program, the DBM prepares anAllotment Release Program (ARP) to seta limit for allotments issued to an agencyand on the aggregate. The ARP of each
agency corresponds to the total amount ofthe agency-specific budget under theGAA, as well as Automatic Appropriations.
A Cash Release Program (CRP) is also
formulated alongside that to set a guidefor disbursement levels for the year andfor every month and quarter.
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4. Allotment ReleaseAllotments, which authorize an agency to enterinto an obligation, are either released by DBM to
all agencies comprehensively through the AgencyBudget Matrix (ABM) and individually via Special
Allotment Release Orders (SAROs).
This document disaggregates all programmed
appropriations for each agency into two mainexpenditure categories: not needing clearance andneeding clearance.
ABM. The ABM is the comprehensive allotment
release document for appropriations which do notneed clearance, or those which have already beenitemized and fleshed out in the GAA.
SARO.Items identified as needing clearance arethose which require the approval of the DBM or thePresident, as the case may be (for instance, lump32
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5. Incurring Obligations
In implementing programs, activities
and projects, agencies incur liabilities
on behalf of the government.
Obligations are liabilities legally
incurred, which the government will
pay for. There are various ways that
an agency obligates: for example,
when it hires staff (an obligation to
pay salaries), receives billings for the
use of utilities, or enters into a 34
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6. Cash
AllocationTo authorize an
agency to pay the
obligations it incurs,
DBM issues adisbursement
authority. Most of the
time, it takes the formof a Notice of Cash
Allocation (NCA); and
in special cases, the
Non-Cash Availment35
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NCA.This is a cash authority issuedperiodically by the DBM to the operating
units of agencies to cover their cashrequirements. The NCA specifies themaximum amount of cash that can bewithdrawn from a government servicing
bank for the period indicated. The releaseof NCAs by DBM is based on an agencyssubmission of its Monthly Cash Programand other required documents.
Others DisbursementAuthorities. In contrast to NCAs,NCAAs are issued to authorize non-cashdisbursements. CDCs are meanwhile 36
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7. Disbursement
This is the final step of the budget execution
phase, where government monies areactually spent. The Modified Disbursement
Scheme is mostly used, where
disbursements of national government
agencies chargeable against the Treasury
are made through government servicing
banks, such as the Land Bank of the
Philippines.
The budget process, of course, does not
end when government agencies spend
public funds: each and every peso must be37
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This phase happens alongside theBudget Execution phase. Through
Budget Accountability, the DBMmonitors the efficiency of fund
utilization, assesses agency
performance and provides a vitalbasis for reforms and new
policies.38
http://budgetngbayan.com/budget-101/budget-execution/http://budgetngbayan.com/budget-101/budget-execution/ -
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1. Performance and
Target Outcomes
Agencies are heldaccountable not only
for how these use
public funds ethically,
but also on how these
attain performance
targets and outcomes
using available
resources.39
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2. Budget
Accountability
Reports (BARs)Submitted by agencies on a
monthly and quarterly basis,
BARs are required reportsthat show how agencies
used their funds and identify
their corresponding physical
accomplishments. Theseinclude quarterly physical
and financial reports of
operations; quarterly income 40
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3 R i f A
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3. Review of AgencyPerformanceThe DBM regularly reviews
the financial and physicalperformance of agencies.Actual utilization of fundsand physical
accomplishments, asindicated in the agenciesBARs, are evaluated againsttheir targets. AgencyPerformance Reviews(APRs) are conductedquarterly or every semester,as the case may be. Anannual Budget Performance
Assessment Review (BPAR) 42
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4. AuditAuditing is not within
the DBMs jurisdiction,and is instead lodgedunder the Commission
on Audit (COA).Nonetheless, auditingis critical in ensuringagency accountability
in the use of publicfunds. The DBM usesCOAs audit reports inconfirming agency
erformance 43
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5. Performance-Based Incentive
SystemThe DBM is also in the process of
establishing a performance-based
incentive system which willrecognize and reward good
performance among government
employees to help improve theefficiency of service delivery across
all government institutions.44
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The Philippine budget is considered the most
complicated in the world, incorporating multipleapproaches in one single budget system: line-item
(budget execution), performance (budget
accountability), and bottom-up (budget preparation).
The Department of Budget and Managementprepares the National Expenditure Program and
forwards it to the Committee on Appropriations of the
House of Representative to come up with a General
Appropriations Bill (GAB). The GAB will go throughbudget deliberations and voting; the same process
occurs when the GAB is transmitted to the Philippine
Senate.
After both houses of Congress approves the GAB,45
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http://www.budgetngbayan.com
http://www.reports.dbm.gov.ph
http://www.termpaperwarehouse.com Leveriza, Jose P.,PA:The Business of
Government, 2nd Edition. National
Bookstore, Mandaluyong, City;1990.
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