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'~t

I NATIONAL BUDGET CIRCULAR ~NO. 523. .February 16, 2010

TO

SUBJECT:

All Heads of Deparbnentsl Agencies/State Universities andColleges. and Other Offices of the .National Government,Government Owned or Controlled Corporations and LocalGovernment Units; Budget Officers; Heads of Accounting Unitsand AllOthers Concerned

1.0Guidelines on the Release of Funds for FY2010

PURPOSE1.11.2

1.3

2.0

To provide the budgetary policies, rules and regulations on theimplementationof the FY2010 bUdgetunder R.A.No.9970;To prescribe the procedural guidelines on the release and utilizationof .funds for FY2010; and,To reiterate existing policiesand procedures on fund.release/utilizationaswellas, the requiredbudgetaryreports. .

COVERAGE

All government agencies, including Local Government Units (LGUS) andGovernment Owned or' Controlled Corporations (GOCCs) receiving budgetarysupport from the nationalgovernment in FY2010.3.0 GENERAL GUIDEUNES

3.1

3.2

3.3

The effectivity date of the FY2010 General. Appropriations Act (GAA),R.A.No. 9970 isonJanuary 1, 2010 as providedunder General ProvisionNo.98 of said law.To achieve the FY 2010 DSCCapproved Fiscal Program, allotmentreleases during the! year from all sources except from multi-userSpecialPurposeFundsor SPFsas defined under item 3.3 of this Circular,shall be withinthe FY2010AllotmentRelease Program(ARP). The ARPofeach national government agency shall be an amount equal to the total ofthe following:3.2.1 Agency specific budget under the FY 2010 GAAor NationalExpenditureProgram(NEP),whicheveris lower;and,3.2.2 Automatic appropriations i.e., Retirement and Life InsurancePremiums(RUP), SpecialAccountsin the GeneralFund(SAGF)andother items classifiedas such under the NEP.Multi-userSPFsare the fundingsource for expenditure itemswhichare notprovidedin the agency specificbudget such as: CalamityFund,Contingent1

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3.7

Fund, E-Government Fund, General Fund Adjustment, InternationalCommitments Fund, Miscellaneous Personnel Benefits Fund, NationalUnification Fund, Priority DevelopmentAssistanceFund and PensionandGratuity Fund (PGF). Releasesfrom these SPFsshall be consistentwiththe SpecialProvisionsgoverningthe useof the same.3.4 The appropriationsfor agency specific budget under FY2010 GAA, R.A.9970 shall be made available to the agency through the issuance of

Agency Budget Matrix (ABM) and SAROs. Considering the retroactiveeffect of the FY 2010 GAA, all SARO releases and other obligationalauthorities issued using the FY 2009 reenacted budget as appropriationsource, shall be considered in the preparation of the ABM.3.5 Pending issuance of their respective ABMs, agencies are authorized toincur overdraft in obligations. Upon receipt of the approved ABM,agencies shall immediately effect the necessary adjustments in theappropriate Registries, their recorded overdrafts in obligations authorizedunder this Circular as well as Circular letter (Cl) Nos. 2009-1 and 2.3.6 Notice of Cash Allocation (NCA) requirements of agencies authorized to be

credited to their Regular MDSAccounts shall be comprehensively releasedbased on their Monthly Cash Program (MCP) pursuant to guidelinesprovided under Cl No. 2008-11. To maximize the available NCAs of theagency, the Common Fund System policy shall continue to be used.Under this System, cash allocation balances of agencies under the RegularMDS Account may be used to cover payment of current year's accountspayable (A/Ps) i.e., goods and services which have been delivered duringthe year, regardless of the year when the covering obligations wereincurred, after satisfying their regular operating requirements asreflected/considered in their MCP.Release of funds (i.e., allotment and NCA) shall be based on the level ofagency performance in terms of physical outputs/targets, correspondingfunds needed and the period when the agency will undertake orimplement the same. Agency utilization of funds in the production/deliveryof goods/services to the public vis-a-vis plans/targets for a given periodshall be measured thru a periodic review by DBM of its performance.3.7.1 Under this concept, agencies are required to prepare and submit to

DBM, the Budget Execution Documents (BEDs) and BudgetAccountability Reports (BARs) prescribed under NBC Nos. 507and S07-A. Performance of the agency shall be evaluated bycorrelating its actual accomplishments contained in the BARsvis-a-vis plans and targets contained in the BEDs.3.7.2 To further strengthen performance evaluation, the DBM shallactively undertake its Inspectorate function (consistent with Cl No.2009-11) by conducting technical visits to government agencies toreview and verify the budgetary accounts recorded in their booksof accountswhich are the bases in the preparationof BARs. The

visits will also include validation of the status of priority programs,projects and activities of agencies in relation to their targets.3.7.3 Results of the agency performance review will be used as basis for

deciding the necessity of any of the following:

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3.7.3.13.7.3.23.7.3.33.7.3.43.7.3.5

Release of the balance of the "For Later Release"underNotNeedingClearanceportionof the approvedABM;Additionalrelease fromSPFs;Withdrawalof released allotment;Approvalof requests for realignment;or,Revisionof plans/targets as reflected in their submittedBEDs.3.7.4 In the release of additionalfunds, the "no report, no release" policy(as it applies to the submissionof BEDsand BARs)shall be strictlyenforced.

3.8 Agencies are authorized the following flexibilities under the GeneralProvisions(GP)of the FY2010GAA,R.A.No.9970:3.8.1 Use of agency savings under the agency specificbudget under theGAA, except savings from releases for RLIP, which is anautomaticallyappropriated item.

3,8.1.1

3.8.1.2

3.8.1.3

3.8.1.4

Augmentation of any item of expenditure withinMaintenance and Other Operating Expenses (MOOE)without prior approval of the DBMwith the exception ofconfidential and intelligence fund, per GP No. 63,Savings generated, however from amountsprogrammed, particularly for, petroleum, oil andlubricants as well as for water, illumination, powerservices, telephone, other communicationservices,andrent maybe realigned only in the last quarter aftertaking into consideration the agency's full yearrequirements for such items, consistentwithGP No.18.Payment of any deficiency in the actual requirementsfor authorized personnel benefits including Year-EndBenefits, Retirement Gratuity and Terminal Leavebenefits, pensions and other benefits shall be givenpriority in the use of savings as defined under GP No.62.Payment of honoraria in accordance with GP No. 49,BudgetCircularNos.2003-5, 2007-1, 2 and 3, NationalBudgetCircularNo. 2007-510and other guidelinesthatmay be issuedby DBM.Paymentof CollectiveNegotiationAgreement incentivesconsistent with the improved systems and efficienciesadopted, enabling the agencies to meet and delivertheir required plans/targets as reflected in their BEDsand BARs.

3.8.2 Useof Feesand Income3.8.2.1 Use of fees collected from seminars, trainings andconferences for the purpose of conducting saidactivities, consistent with GP No.9.

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3.9

3.8.2.2

3.8.2.3

3.8.2.4

3.8.2.5

Use of proceeds from sale of officialpublicationsfor thepurpose of defrayingthe cost of preparing, printinganddisseminating such publications provided that theagencywas not providedany amount or had insufficientfunds programmed under their regular budget for thesaid purpose, consistentwithGP No. 10.Use of proceeds of sale of obsolete, unnecessaryequipment for the purchase of new ones and therehabilitationof existingvitalequipment, consistentwithGP No. 11.Useof proceeds from sale of bid documents to fund thegrant of honoraria to the Bids and AwardsCommitteemembers and its support units, consistent withGP No.12 and BCNo.2007-3.Use of service fee collectionsfrom BIR, GSIS, HDMF,PHICand mutual benefits associations/cooperatives forthe operation of a ProvidentFundestablished infavor ofall its employees,consistent withGP No. 44.

3.8.3 Use of excess income realized and deposited with the Bureau ofthe Treasury pursuant to Special Provision No.9 of theUnprogrammedFund under R.A.No.9970 to augment agencies'operating requirements for the current year except PS.Agencies, however, which are already authorized by law to retainall or portion of their income collections for their operatingrequirements are no longer qualified to avail of use of excessincome.The followingbudgetary policiesare hereby reiterated:3.9.1 Validityof Funds

3.9.1.1

3.9.1.2

ContinuingAppropriationsfor MOOEand CapitalOutlay(CO) under the FY 2009 GAA, R.A. 9524 shall beavailable for release and obligation up to December31, 2010.Appropriations for PS, MOOEand CO under FY2010GAA, R.A. 9970 shall be available for release andobligationup to December 31, 2010.

3.9.2 Timelinesto be observed byagencies:3.9.2.1

3.9.2.2

3.9.2.3

Requests for realignment of allotment under the FY2009 Budget shall be submitted to DBMuntil June30, 2010.Deadline for submission of requests to DBMfor anyreleaserequiringissuanceof SAROand NCAnFY2010shall be on November 15, 2010.Deadline for submissionof BEDsshall be on April 15,2010 and BARson the dates prescribed under NBCS07/S07A.

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4.04.1SPECIFIC GUIDEUNES

Preparation of the ABM4.1.1 The ABM,which shall be prepared by DBM,in coordination andconsultationwith agencies (format shown in Annex A), shall bepresented by:

4.1.1.1

4.1.1.2

4.1.1.3

4.1.1.4

Fundingsource i.e.,0 Agency specific budget under the FY 2010 GAA;and,

,0 AutomaticAppropriations under the FY 2010 NEPi.e., RLIP,SAGFand other items classifiedas such.Operating unit (OU)i.e., agency receivingNCAdirectlyfromDBM;For certain department/agencies that would require thedetailed list of OUs and their corresponding budgetaryallocations(e.g., PENROsof DENRand PAROsof DAR),said informationshall be submitted to DBMon or beforeFebruary 28, 2010. This will give ample time forDBMto prepare the ABM.Programs/Activities/Projects (P/A/Ps) consistent with thepresentation under the FY2010 GAA;and,For ForeignAssistedProjects(FAPs)allocation,the ABMshould be further broken down into Peso Counterpart(PC)/Loan Proceeds (LP) andproject/category/componentper allotmentclass basis.Allotment class i.e., PS, MOOEand CO.

4.1.2 The ABMfor the agency specific budget under the FY2010 GAA,R.A.9970shallbe segregatedintoNeedingClearance(NC)and NotNeeding Clearance (NNC). The NC portion of the ABMshallconsist of the followingbudgetary provisionsin the agency specificbudgets:4.1.2.1

4.1.2.2

Items covered by SAROsissued prior to the approvalofthe 2010 GAAto accelerate implementationof priorityprojects (i.e., frontloadingof requirements); and,Items that shall be released upon complianceof certaindocumentary requirements:0 Confidentialand Intelligence Fund which is subjectto priorapprovalof the President of the Phil!ppines;

0 Procurement of motor vehicles and motorizedequipment whichare subject to priorapprovaleitherby the DBMor the President of the Philippines,as5

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the case maybe, pursuant to existing and otherguidelinesthat may be issued for the purpose;0 Lump-sum appropriations or centrally-manageditems (CMIs)under the agency's approved budgetcorresponding to items or activities which do nothave specific details thereby necessitating thesubmission of certain documentary requirementspriorto its release, such as:. Creationof new positions;Reclassificationof positions;Newlylegislated/establishedhighschools;Amount appropriated for the EquivalentRecordFormand MasterTeacher;Nationwide,region-wideand district-widelump-sum for infrastructure and non-infrastructureprojects;Special Purpose Funds of the RegionalGovernorand ViceRegionalGovernoras wellas the sharein internal revenue collectionsunder the budgetof the AutonomousRegionof MuslimMindanao;and,All other lump-sum amounts under the agencyspecificbudgets.

....

.

.0 Provisionfor unfilledpositions under the budgets ofagencies;0 Annually appropriated SAGF built-in under theagency budget;0 Budgetary support/assistance of thegovernment to the GOCCs'and LGUs; national

0 Budgetary provisions which provided additionalamounts for existingprogramsor projects;0 Budgetaryprovisionsfor new items in the budgetsof some departments, bureaus, offices andagendes; and,0 Budgetary items/provisions for ConditionalImplementation under the President's Vetomessage, which are subject to specificguidelinestobe issued by the appropriate agencies.

4.1.3 The NNCportion of the ABMrefers to items in the agency budgetunder the FY2010 GAAnot included under item 4.1.2 of thisCircular. This shall further be disaggregated into: "ThisRelease"which corresponds to the total allotments comprehensivelyreleased and "ForLater Release"which is the differencebetweenthe NNCand the "ThisRelease"columnsof the ABM.The allotments to be comprehensively released andreflected in the "This Release" of the ABMshall beequivalentto the following:

4.1.3.1

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4.1.3.2

0 For PS - 100/0 of the NNC portion of the ABM,pertaining to filled positions only. This releasedallotment shall also be used to cover the fundsneeded to implement the first tranche compensationadjustments authorized per E.O. 811 and NBC 521including corresponding adjustments in governmentpremiums for PHILHEALTH, ECIP, and RUP as wellas, deficiency resulting from filling up of vacantpositions. Agencies may submit to DBM, request foradditional release of allotment for any deficiencyafter payment of the said expenditures, to becharged against the appropriate funds for thepurpose.

0 For MOOE and CO - at least 75/0 of the NNCportion of the au's ABM. For appropriation itemscovering requirements of contracts entered intowhich cannot be made on a piecemealor by phasebasis,releasefor the samemay bemadein full.

The total amount of comprehensive release shall behighlighted in bold words on the last page of the ABMand brokendown by allotment class i.e., PS,MOOEandco.4.1.4 The following built-in appropriation items under the FY2010 GAA,although part of the comprehensivereleaseof the NNCportion ofthe ABM, can only be obligated by the au subject to compliancewith the requiredclearance/approval/documentation:

4.1.4.1

4.1.4.2

4.1.4.3

4.1.4.4

4.1.4.5

4.1.4.6

Computers and other information technology equipmentwhich need clearance/approved Information SystemsStrategic Plan from the National Computer Center underthe Commission on Information and CommunicationsTechnology of the Office of the President; .Communication equipment which require clearance fromthe National Telecommunications Commission;Firearms which need the prior approval of the PhilippineNational Polite;Researchand development in the natural, agricultural,technological and engineering scienceswhich has notyet been approved by the Department of ScienceandTechnologyand/or the Departmentof Agriculture;Books to be procured by agencies other than schoolsand The National Library exceeding the authorized five(5) copies per title, which need prior approval fromDBM;On-going FAPswhich require the attainment of certainconditionalities;and,

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4.2

4.3

4.1.4.7 Grants, subsidies and contributions which must besupported by details indicating among others, thepurpose, amount intended for each beneficiaryand thelist of recipients.Approvalof the ABM.The ABMsshall be signed/approved by the DBM Secretary or hisauthorized representative on or beforeMarch 31, 2010. The originalcopy of the approved ABMshall be issued by the DBMto the concernedOU.Release of SARO4.3.1 SAROsshall be issued byDBMfor the followingitems:

4.3.1.1

4.3.1.24.3.1.34.3.1.4

4.3.1.5

Appropriation items not included in the amountcomprehensively release thru the ABMi.e., "For LaterRelease"portion;"NC" portion of the ABM;Charges against multi-userSPFs;Adjustments between the NNCand NCPortions of theapproved ABM;and,Adjustments of SAROsissued prior to the approval ofthe FY2010 GAAwhich were charged against the FY2009 GAA,as reenacted. Consideringthe retroactiveeffect of the FY 2010 GAA, said SAROs shall bewithdrawnforchange in the appropriationsource.

.4.3.2.14.3.2 Proceduresto be observed in the release of SAROs:

4.3.2.2

The "For Later. Release" portion of the ABMshall bereleased subject to the results of the agencyperformance review conducted by DBM.Release of the items categorized under "NC"portion ofthe ABMshall be subject to the submission of SpecialBudget Requests (SBRs) duly supported with therequired documentary requirements cited under item4.1.2 of this Circular. In the case of CMIsor lump-sumappropriations under the agency specific budget, thefollowingprocedures shallbe observed:a Agencies concerned shall submit to DBM,theirSBRsupported with the following:

. Specific OUs identified to implement theproject and amount allocated to each OU;

. FinancialProgram i.e., ObligationalProgramand MCP;and,8

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4.3.2.3

4.3.2.4

4.3.2.5

. Physical targets to determine the specificactivities to be undertaken during projectimplementation.

0 DBM shall issue the SAROdirectly to the specificOUs implementingthe project as reflected in thelist submittedby the departments/agencies.For charges against multi-user SPFs, agencies shallsubmit to DBM, an SBR for expenditures eligible to becharged against the multi-user SPFs. DBM shall, afterthorough evaluation of the SBR, issue SARO consistentwith the Special Provisions of the SPFs.Adjustments between the NNC and NC Portions of theapproved ABM i.e., adjustment or revision in theamounts classified under the NNC and NC columns, willnecessitate the issuance of SAROby DBM. Requestforrealignments shall be submitted to DBM-Central Officeor the concerned DBM-Regional Office, as the case maybe.For the adjustments of SAROs issued prior to theapprovalof the FY2010GAA,DBMshall:0 Issue a SAROto cover withdrawal of the amount

charged against FY 2009 GAA, R.A. 9524, asreenacted;0 Issue another SARO chargeable against the FY

2010 GAA, R.A. 9970 for the same purpose andamount of the withdrawn SARO.4.4 Issuance of Disbursement Authorities

4.4.1

4.4.2

OUs shall submit to DBM, their MCPs reflecting the monthlyrequirements for the disbursement authorities needed in theimplementation of programs and projects such as:4.4.1.1

. 4.4.1.2Portion to be funded from the different types ofqisbursement authorities i.e.,NCA,NCAAand CDC;and,Breakdown of requirements by allotment class i.e., PS,MOOE and CO. Identification/segregation shall also bemade as to Regular Programs including Locally Fundedand Foreign Assisted Projects. For FAPs,the breakdownby PC and LP component portion should be reflected,with the LP portion further broken down into its cashand non-cash components.

Initially, OUs shall submit the MCPcorresponding to the following:4.4.2.1 Amount of allotment comprehensively released underthe AB.Mfor FY 2010. The MCP for this purpose shallreflect the monthly programmed disbursementrequirements. This will serve as basis of DBM in

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4.4.3

4.4.4

4.4.2.2adjusting the tentative cash program of the OUs i.e.,need for additionalrelease of NCA.Continuing Appropriation (CA) i.e., balances ofallotmentsas of December31, 2009whichare stillvalidfor obligationin2010. In this instance, copyof the lastpage of the Registries of Allotments and Obligationsshowing the CAfor MOOEand CO, prepared by theBudget Officer, should be submitted as supportingdocument.

Separate MCPsshall be submitted by the OUs for additional SAROsissued from:4.4.3.1

4.4.3.2

4.4.3.3

Specificagency appropriationsunder the FY2010 GAAparticularlythe amounts under the "For Later Release"and NCportionof the approvedABMiClaims against multi-user SPFs under the FY2010 GAAiand,Automatic Appropriations i.e., RLIPand SAGFs.

On the release of NCA4.4.4.1 The comprehensive NCAsto OUs under the RegularMDSAccount shall be based on their submitted MCP.Agencies shall prepare realistic MCP for theimplementation of their programs/projects, taking intoconsiderationthe following:

0 Theamountfor PSshouldfullyprovidefor all filledpositions inclusive of the government counterpartcontributions and timing of the grant of year-endbenefits and other similar items of expenditures,includingpensions for uniformed/militarypersonneland veterans.

0 Seasonal periods or peak and slack times in theprovision of MOOE (when the agencies'activities/workprogramwould require adjustment inoperating expenses).0 COmust likewisebe programmedin accordance

with scheduled worktargets e.g., initialconstructionactivities will only entail fifteen percent (15%)mobilization costs and the balance shall be inaccordance with the work program. Likewise,equipmentwillrequirecash only on the expecteddelivery date and not at the bidding andprocurement stages.0 ForFAPs,the releaseof the PCand LPcomponentsshall be synchronized. Moreover, the cash portionof the LP component shall be released only uponreceipt of the BTrcertification re: availabilityof LPfromthe foreign lendinginstitution.

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4.4.4.2

4.4.4.3

The cash requirements of prior year's accountspayable (AlPs) i.e., for goods, services, projectsdelivered/rendered/completed and accepted during theprevious years which remained unpaid up to the end ofDecember 31, 2009 shall followthe guidelinesprescribedunder CLNos. 2002-17, 2004-2 to 3 and 2005-2. Thefollowingprocedures on payment of prior year's AlPsareemphasized:0 The List of Due and Demandable AlPs as ofDecember 31, 2009 shall be submitted to DBMnotlater than January 31, 2010. Separate lists shallbe submitted for external and internalcreditors.0 Lists of prior year's due and demandable A/Ps notreceived by DBMwithinthe January 31 cut-off dateshall not be included in the special lane forpriority funding. Instead, said prior year's NPsshall be queued by the agency in the normalpayment procedure for current A/Ps i.e., chargeable

against the NCAs under the Regular MDSaccountusing the CommonFundScheme.Cash requirement for current year AlPs i.e., for goods,services and projects to be delivered/rendered/completedand accepted during the year (charged against FY2010and prior years' budget) shall be paid pursuant to theprocedures prescribed under the circularscited under item4.4.4.2 above.

4.4.5 On the release of NCAA,departments/agencies/OUs availing offoreign loan proceeds through direct payment (Le.,creditors/suppliers directly paid by the lending institution uponrequest of the ImplementingAgency)shall submit a request for theissuance of NCAA. It is understood that requests for issuance ofNCCAshall be used to cover the liquidationof actual obligationsincurredby the agencywithintheir availableallotments, pursuant toDBM-COA-DOF Joint Circular 2-97 and CLNo. 2003-12.4.4.6 On the release of CDC

4.4.6.1

4.4.6.2

CDCis an authority issued by DBMto DFAand DOLEtoutilize their income collected/retained by their foreignservice posts (FSPs) to cover its operating requirementsbut not to exceed the released allotmentto the said post.The agency shall submit a request for issuance of CDC,tobe supported with the following:

0 Accountabilityreports as consolidated by the DFAorDOLEHome Office; and,. FSPMonthly Report of IncomeFSP Status of Working FundProjected Annual Report of Income..11

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0 BTrcertificationon actual incomecollected.4.5 Conduct of the agency performance review

4.5.1

4.5.2

4.5.3

Consistent with the policy on performance-based budgeting, anevaluation of the agency performance shall be conducted by comparingagency plans and targets vis-a-vis actual accomplishments. Theperformance reviewshall cover the au's physical,revenue collectionandfund utilizationperformances.Results of the performance reviewwill be primarilyused as basis foradditional release or withdrawal of funds to the au, as input in theevaluationof agency budget proposalsduring budget preparation, and inreportingaccomplishmentsof departments/agencies to the President.The timely submissionby the agency of the followingreports is herebyemphasized:4.5.3.1 BEDs- to be submitted to DBMon or beforeApril 15, 2010.

0 FY 2010 Physicaland FinancialPlan (PFP) - reflects theau's physical and financial (budgetary allocation)performance/targets in FY2010 brokendown byquarter;0 MonthlyCash Program- reflects the monthlydisbursementrequirementsof the au bytype of disbursementauthority;and,0 Estimate of Monthly Income - reflects the estimatedmonthly incomeof the OUsfor the current year consistentwith the FY2010BESF.

4.5.3.2 BARs - to be submitted on the dates prescribed under NBC507and 507-A.0 Quarterly PhysicalReport of Operations - reflects the OUs'actual physical accomplishments for a given quarter, interms of the performancemeasures indicated intheir PFP.0 QuarterlyFinancialReportof Operations- reflects the OUs'actual obligations/expenditures incurred by PIAlP andallotment class for a given quarter, corresponding to thereported physicalaccomplishmentsfor the same period.0 QuarterlyReportofActualIncome- reflects the OUs'actualincomecollectionsfrom all sources for a given quarterbrokendownbymonth.0 Statement of Allotment,Obligationsand Balances- reflectsthe OUs' summary report of allotments received andcorresponding obligations/expenditures incurred during themonth, fromall sources by object of expenditure.0 Monthly Report of Disbursements - reflects all thedisbursements of the OUs during the month, arising from

NCA, NCAA, CDC issued.

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4.5.4 Actuql accomplishmentsof the agency per submitted Quarterly PhysicalReport of Operations and Financial Report of Operations (FRO) shall becompared/analyzedvis-a-vis the FY2010 Physicaland FinancialPlan. Inaddition, the Statement of Allotments, Obligations and Balances(whichreflects funds from all sources and the expenditure items) shall also beusedto validate the levelof obligationsreflectedin the FRO.4.5.5 Actual disbursements of the agency per Monthly Report of Disbursementsi.e., according to type of disbursement authority, shall be validated with theestimated disbursement requirements reflected in the MCP to determinevariances/adjustments to be made.4.5.6 The FY2010 Quarterly Reportof Incomeshall be comparedwith the sameperiodcoveredunder the Estimateof Monthly Income.

4.6 Useof ExcessIncome4.6.1 Excess income is generated once actual income collected and deposited bythe au with the Bureau of the Treasury (BTr) during the year exceeds therevenue estimates under the FY 2010 BESF.4.6.2 aus may submit to DBM a request for use of excess income once itstargeted revenuelevel for the year per FY2010BESFhasbeen realizedandexceeded. The reason(s) for generating excess revenues shall behighlighted in the request (e.g., collection of new fees and charges notconsideredin the original revenueestimate).4.6.3 DBM shall consider the following in determining excess income:

4.6.3.1 If collectionsof the au from existing fees and chargesexceed theannual revenue estimates reflected in the FY 2010 BESFdue toimprovedefficiencyin operationor upgradedservicedelivery;

4.6.3.2 If collections of the au come from new fees and charges due toimplementation of new or additional activity/program startedduring the year, hence not considered in the original incometargets per FY2010BESF;and,4.6.3.3 If the level of the 2010 revenue estimate of the au per FY2010BESFis consistent with the normal trend of increases in actual

collectionsfor the pastyears.4.6.4 In the event that the original revenueestimate of an au per FY2010 BESFwas reduced as a result of their representation during the finalization of

said budget document that they will be unable to maintain the normal trendof increases in their revenues, the request for use of excess income shall bereevaluated by DBM, to wit:4.6.4.1 DBM shall establish the trend of the actual revenue collections

generated from regular fees and charges/recurring incomeby theagency during the immediately preceding years i.e., FYs 2009,2008and 2007. .4.6.4.2 DBM shall re-estimate the appropriate revenue level for FY 2010 byapplying the established average growth rate of actual revenuecollections in said preceding years.

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5.0

6.0

4.6.4.3 In cases where the re-estimated revenue level of FY2010 is lowerthan the actual revenue collectionsof the immediatelyprecedingyear (FY2009),DBMshall use the higher level i.e., 2009actualrevenues, for'purposes of computing the amount of excess incomethat canbeavailedof bytheOUconcerned.RE$PONSIBILITY OF THE HEAD OF AGENCYThe Head of Agency/OU shall be held personally liable for any payment ofexpenditures not in accordance with the provisions of the Circular.EFFECnvrrvThese guidelinesshall take effect immediately.

RO