Last of Three Parts
IN ITS 2012 Annual Financial Report for National Government, the Commission on Audit (COA) said regular appropriation for programmed activities of the departments and agencies of the national government amounted to P868.92 billion.
The amount includes P11.28 billion in SAGF (Special Account in the General Fund) for specific programs provided in the Special Provisions of the General Appropriations Act or GAA. The total available allocation left was P857.64 billion that was supported by funds from two sources.
“Of this amount,” COA said, P12.03 billion of the regular appropriations of DOH (Department of Health) was transferred to SPF (Special Purpose Funds) particularly Budgetary Support to GOCCs.” In addition, it said, “transfers from Overall Savings of P12.78 billion were made.”
A distrustful mind may quickly ask: “Why get money out of health and into GOCCs?
Yet just as fast, a trusting heart may want to think that the GOCCs that took money out of the DOH were also servicing people’s health needs, and would wait a while, read up, research, and ask the Department of Budget and Management (DBM) for more data.
As late as a month ago, any chance of DBM releasing specific DAP data looked bleak. Earlier this week, however, the Budget Department suddenly issued a press release that said it was “now preparing a more detailed list of projects funded through the DAP.”
Those who cannot wait for DBM to make good on that promise, though, can opt to scrutinize various COA audit reports on the agencies that received DAP pesos. COA also has typically voluminous Annual Financial Reports (AFRs) and Annual Reports on Allotments, Obligations, and Disbursements (AODs) online.
At worst, these are post-facto financial audits published months or even a year after the budget monies had actually been spent, for good or ill. But at best, these reports offer broad hints of what could have gone wrong or right in DAP’s implementation.
What went wrong?
COA, in separate annual audit reports, had lamented the various irregular and unhappy downsides to DAP and DBM’s quickie approach to disbursing public funds. COA had noted:
- Funds released to “unprogrammed project/activities which were not supported by Physical and Financial Work Plan” on the specific activities to be undertaken, targeted outputs, and corresponding budget allocation.
- Funds that remain “idle” in certain agencies given sub-allotments from DAP because allotments for projects that would be completed and disbursed until December 2013 were already allotted in 2011.
- “Circuitous transfer of project funds” from one to another department or agency covered only by layers of memoranda of agreement signed by agency heads.
- DAP funds released in the last days of the year had given recipient agencies little time to process payments, hence funds have had to revert to the Treasury and be covered by continuing appropriation cover or appropriated again in the next year.
PCIJ’s own review of various COA annual reports and related documents reveal a tangled mess of funds and agencies on the DAP express lane.
COA’s 2011 AFR, for instance, reveal some numbers on how DAP funds had shifted the levels of allotments and obligations in recipient agencies that were significantly higher than their allotments enrolled in the GAA.
22 agencies in 2011
In all, in 2011, COA said only 22 agencies led by the Office of the President received DAP fund releases of P53.36 billion, including P32.39 billion in additional maintenance and other operating expenses and P20.96 billion in capital outlay.
Of the total amount, COA said these agencies reported obligations or spending of P45.66 billion, and retained a balance of P7.69 billion of their DAP monies.
COA’s AFR for 2011 said the following agencies received allotments from the “Disbursement Acceleration Program” on its launch year:
- Office of the President, P1,836,940,000
- Department of Agrarian Reform (DAR), P475,000,000
- Department of Agriculture (DA), P4,478,439,940
- Department of Budget and Management (DBM), P2,415,403,660
- Department of Education (DepEd), P3,965,810
- State Universities and Colleges (SUCs), P62,350,000
- Department of Environment and Natural Resources (DENR), P69,586,000
- Department of Finance (DOF), P19,872,398,300
- Department of Health (DOH), P787,555,000
- Department of the Interior and Local Government (DILG), P1,058,323,000
- Department of Justice (DOJ), P71,200,000
- Department of Labor and Employment (DOLE), P1,126,000,000
- Department of National Defense (DND), P298,127,000
- Department of Public Works and Highways (DPWH), P11,479,528,000
- Department of Science and Technology (DOST), P2,234,650,000
- Department of Social Welfare and Development (DWSD), P2,083,495,000
- Department of Tourism (DOT), P25,000,000
- Department of Trade and Industry (DTI), P28,000,000
- Department of Transportation and Communications (DOTC), P4,500,000,000
- Other Executive Offices, P82,350,000
- Commission on Audit (COA), P143,700,000
- Metropolitan Manila Development Authority (MMDA), P230,000,000
Leaders & laggards
A half-and-half picture of laggards and leaders — in terms of quick results on projects and service delivery — among these agencies emerges.
In COA’s report, eight agencies supposedly managed to obligate or liquidate their DAP shares at an excellent 100 percent rate: DAR, DepEd, SUCs, DoLE, DPWH, MMDA, DOT, and DOTC.
Six other agencies registered similarly impressive rates of obligating 63.6 percent to 97 percent of DAP funds they received: DBM, Office of the President, DOH, DOST, DoF, and DND.
Two agencies obligated zero shares of their DAP — DILG and COA — as of COA’s 2011 AFR.
Six agencies performed just as poorly, and obligated only two percent to less than 60 percent of their DAP funds — DSWD, DA, DTI, DOJ, DENR, and Other Executive Offices.
Not disbursement yet
Obligating is not exactly the same as disbursing the funds, however.
By DBM’s guidelines, “disbursement is the final step of the budget execution phase, where government monies are actually 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.”
What should follow “disbursement” should be a number of wonderful things — projects, activities, and programs completed and delivered, in the service of the people.
Not implemented
A number of the DAP-funded projects that the agencies said they had obligated in 2011 did not come true at all as of the 2012 release of COA’s Annual Financial Report for 2011.
One example is the P4-billion DAP share that COA’s report said was allotted to DOTC in 2011, and which the DOTC supposedly obligated 100 percent also in 2011.
On July 14, 2014, DBM released its list of 116 DAP-funded projects and there admitted that the P4.5-billion that DOTC had proposed for funding under Tranche 1 of DAP funds released in October 2011 for the purchase of 26 rail cars for the Metro Rail Transit (MRT) was “not implemented.”
Where the money ended up instead is not clear at this time. Also unclear is the discrepancy between COA and DBM’s figures — something that would happen again and again.
Disparate amounts
Another case is the P62.35 million DAP allotment for SUCs that appear in COA’s AFR for 2011. It is a mere shadow of the amount enrolled in DBM’s list of DAP-funded projects.
On Dec. 12, 2011, DBM released Tranche 2 of DAP monies with an entry for “Institutional Capacity Building of Leading State Universities” for CHED. Its stated total funding: P3.56 billion. DBM said the amount had been “released to the DPWH.”
This huge sum was supposed to support “infrastructure and facilities upgrade for instruction, research and extension of SUCs… address the challenge of providing access to quality higher education and to generate/adapt/transfer technologies for enhancing productivity, alleviating poverty and improving the country’s competitiveness.”
Also under DAP’s Tranche 2, DBM’s list said CHED received another P500 million for a “grant-in-aid program that will support the completion of a college degree by qualified students who come from the poorest of the poor families, as identified by the DSWD.”
The fund was supposedly to “cater to the sector of the society comprising ‘vulnerable youth’ who are not eligible for the CCT but are still considered ‘too poor’ to pursue gainful employment and meaningful life as productive citizens.”
This time around, the amount quoted in DBM’s list is nearly 900 percent more than P62.35 million reflected in COA’s report. DBM’s list also stated that this second amount was “released to DSWD.”
DBM’s list shows that the two amounts — or P4.28 billion in all — were credited to CHED but later released in parts to two other departments. For lack of absorptive capacity and real capability to implement the projects, CHED had to enter into memoranda of agreement with DPWH and DSWD.
In other words, what was supposed to be a quicker way to disburse funds and get things done was making the money go through several channels instead — thereby slowing and complicating the process.
Rules out the window?
Ironically, indications are rules had been thrown out the window precisely to speed things up under DAP.
At the very least, it is still a mystery whether or not DAP-funded projects were required to undergo the usual tedious process and documentation — actually the hallmarks of open, transparent, and accountable budget planning and execution — that comes with spending state monies.
DBM releases allotments to all agencies either through the Agency Budget Matrix (ABM) and to individual agencies via Special Allotment Release Orders (SAROs).
But there is a second, more important, document: the Notice of Cash Allocation or NCA, which certifies to the availability of funds and serves as actual trigger for the rollout of programs, activities, and projects or PAPs.
Until 2013, ABMs and SAROs were required before agencies could start implementing programs, activities, and projects, or before an agency could enter into an obligation or incur liabilities, i.e., when it hires employees, receives bills for the use of utilities, or enters into a contract with an entity for the supply of goods or services.
(In 2014, DBM adopted the “GAA as release document” policy for agency budgets. Agency budgets are considered released as allotments when the GAA takes into effect. SAROs are still required though for lump-sum funds, special purpose funds, and automatic appropriations.)
According to DBM’s “Budget 101” primer, “agencies are required to submit their BEDs (budget execution documents) at the start of budget execution. These documents outline agency plans and performance targets. These BEDs include the physical and financial plan, monthly cash program, estimate of monthly income, and list of obligations that are not yet due and demandable.”
Gaps in paper trail
These documents, however, seem to be missing from the DAP paper trail.
To be sure, the Budget Department may have come up with other measures to honor the process. But its penchant to hold details close to its chest have been less than assuring.
Nine months ago, PCIJ had precisely asked DBM for sets of data and documents relevant to an inquiry into DAP. In a letter dated Oct. 16, 2013, PCIJ had requested the following datasets:
- List of projects funded under the P85.5 billion DAP (as of mid-2012), including the following information: location of the project, date of release of the fund, name of endorsing legislator or implementing unit, and the status of the project;
- List of projects, including the location of the project and implementing unit, identified in FY 2011 and FY 2010 as “slow-moving projects and programs for discontinuance” that became one of the sources of funds for DAP;
- List of budget items for realignment in FY 2011 that became one of the sources of funds for DAP; and
- List of the “unexpected remittance of dividends from GOCCs, Government Financial Institutions, and sale of government assets.”
In PCIJ’s view, if DAP were a crime scene, the first and second sets of data — projects funded with DAP and slow-moving projects discontinued or realigned — could have been DAP’s “victors” and “victims.” The latter includes expense items with clear funding cover in the GAA from which funds may have been withdrawn in favor of DAP projects without clear funding cover in the GAA.
But for the last several months, the staff of DBM Secretary Florencio Abad said they could not give PCIJ the documents because DAP was at the time locked in dispute before the Supreme Court. It took DBM two weeks after the High Court had ruled on DAP on July 1, 2014 to release a general list of DAP-funded projects. And it is taking DBM forever to give all the other datasets and documents that PCIJ has requested.
What is disbursement?
To DPWH Secretary Rogelio Singson, though, the “disbursement” part of DAP is the most confounding about the controversial program. When the DBM releases funds under DAP, it seems to just want to have it reported that public spending is on the upswing. Indeed, state statisticians and economists seem to have been doing exactly that, prettifying figures for DBM’s rate of disbursement of public monies.
While “disbursement” of funds to government-owned and –controlled corporations and to cover personal services are clear and final disbursements in truth, such is not the case for projects under capital outlay and MOOE (maintenance and other operating expenses) cover.
Singson says that for civil works contracts, it takes three to six months to announce notice of bids, receive and award bids, and start construction, according to program of work signed with contractors. “Obligation” of project funds and “accounts payable” are concepts that seem to be more relevant in these cases, than DBM’s concept of “disbursement” under DAP.
Still and all, according to DBM’s Budget 101 primer, “the budget process, of course, does not end when government agencies spend public funds: each and every peso must be accounted for to ensure that is used properly, contributing to the achievement of socio-economic goals.”
Or as Singson puts it: “So what if you have disbursed money. Did people just pocket it or did it go to projects? Natapos ba ang proyekto? Nakaabot ba sa tao ang pera? (Was the project finished? Did people benefit from the money?)”