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The document discusses the budgeting process for private and public education sectors.
For private education, the board of trustees approves the budget which is prepared based on parameters set in terms of reference. Colleges and offices prepare budgets with situational analysis and three-year projections. Forms are used to consolidate the budget.
For public education, the budget process differs with Congress and the President approving the budget which government agencies then implement. Performance indicators are used to monitor implementation and control deviations from approved budgets.
The document discusses the budgeting process for private and public education sectors.
For private education, the board of trustees approves the budget which is prepared based on parameters set in terms of reference. Colleges and offices prepare budgets with situational analysis and three-year projections. Forms are used to consolidate the budget.
For public education, the budget process differs with Congress and the President approving the budget which government agencies then implement. Performance indicators are used to monitor implementation and control deviations from approved budgets.
The document discusses the budgeting process for private and public education sectors.
For private education, the board of trustees approves the budget which is prepared based on parameters set in terms of reference. Colleges and offices prepare budgets with situational analysis and three-year projections. Forms are used to consolidate the budget.
For public education, the budget process differs with Congress and the President approving the budget which government agencies then implement. Performance indicators are used to monitor implementation and control deviations from approved budgets.
PROCESS, IMPLEMENTATION & PERFORMANCE EVALUATION & CONTROL
MR. ADONIS P.BESA - Presenter
Introduction and the Merits of Budgeting • Budgeting is an important tool in management. For a budget to be meaningful, it has to be prepared with the institutional plan as its basis; for, after all, the budget is a reflection of the institutional plan. • Included as a component of the institutional plan is the definition and articulation of objectives that are convergent with the institutional vision/mission that should be fully appreciated by all the components of the academic community. • To operationalize the objectives contained in the institutional plan are specific programs and projects the implementation of which, by virtue of the funding provided in the budget, will redound to the greater enhancement of excellence in the educational operation of the institution. Introduction and the Merits of Budgeting • In the financial and resource constraints, priorities will have to be determined and the implementation of the budget entails compliance with the priorities as contained in the budget document. • Periodic monitoring and coordination during budget implementation is also desirable. When required, control mechanisms may be instituted to direct financial operations toward a desirable path consistent with the defined objectives and priorities. • As a result of the attainment of institutional objectives, performance indicators will demonstrate the department or officer responsible for project execution and the instrumental in achieving high levels of institutional productivity. • With the institution cognizant of high productivity, then a culture of excellence will prevail, which can be the basis for a system of meritocracy in the institution. Planning Function of Budgeting
• A starting point in the preparation of the budget is the knowledge
of the present state of the institution as contained in the institutional plan. The institutional strengths and weaknesses as well as threats and opportunities, have to be highlighted for the provision of a budget. • Having analyzed the existing situation, one has to be certain that the objectives are doable, and that their implementation is within the time frame of the budget while cognizant, all the time, of resource and financial constraints. Thus, an important document is a budget statement detailing the challenges faced by the educational institution, and its concerns and desired future for the educational institution. • Having completed the budget statement, the financial projections can be prepared with the identification of sources of revenues, and the definition of all expenditure items. Budget for Effective Coordination, Monitoring and Control • During the preparation of the budget, consultation with the relevant and involved offices is necessary in order for them to assist in the process, most especially in the articulation of urgent concerns and challenges. Budget as an instrument for Effective Realization of Goals and Objectives Within Financial and Resource Constraints • During the budget preparation, key performance indicators are defined. For each budget item, there is a corresponding indicator that the defined activity has been achieved. • There should also be a demonstration of the linkage of the performance to the institutional mission, goals, and objectives. • Finally, the fact that these were all achieved within the resource constraints of the institution should be of prime importance. Such, is the test of good implementation of the budget: that targets are achieved within the limits of the institutional resources. Achievements should be supported with concrete indicators of performance. Budget as a Basis in the Formulation of Performance Indicators and the Institution of an Effective Evaluation and Merit System • The budget document should contain performance indicators corresponding to the key budgetary items. • In education, the performance indicators for instruction are the number of student served, or the number of graduates who did well in the world of work. Another indicator would be a high percentage of graduates who pas their board examinations. In some institutions and for the members of the faculty, the performance indicators are the student contact hours, participation as thesis adviser or attendance in thesis- dissertation committees, and additional duties and responsibilities as committee member or head of the department. The Budgeting Process in the Private and Public Education Sector • The budget process in the government is different from that of the private sector. • In the private sector, the Board of Trustees or Board of Directors has the final approval of the budget. • In the government, it is the House of Representatives and the Senate of the Philippines that have the final say on the budget. Once approved by both houses of the Congress of the Philippines, the document is submitted to the Office of the President for the budget to take effect as a law and consequently for appropriate implementation by the line agencies of the Executive Department of the government, the Constitutional bodies such as the Commission on Audits, the Commission on Elections, and the Judiciary and the Legislative Department. Private Education Sector Budget Framework and Process
• The head of the institution, most likely with the approval of
the Board, promulgates the terms of reference contain the parameters of the budget preparation. • Such terms of reference contain parameters of the budget preparation, the Budget Committee and its members, the urgent concerns that the institution has to address in the forthcoming budget period, some assumptions with respect to enrolment level, faculty hiring, salary increases, merit and promotion, acquisition of capital equipment and physical plant expansion, procurement limitations and the allocation of 70% of tuition fee increases for salaries and wages and employee benefits, 20% for maintenance an operating expenses and 10% return on capital. • The schedule of budget preparation is also included in the terms of reference, together with the schedule of presentation to the Board of trustees or directors Budget Preparation and Programming • With the assistance form the finance office of the institution, the colleges and offices will prepare the budget, which should contain the following: • a.Situational Analysis • Review of the past year’s performance, analysis of strengths and weaknesses and threats and opportunities. Based on the review, identification of concerns and the budget theme for the forthcoming year. From the situation analysis, one will be able to lay down the basis for the budget which will provide resolutions to the challenges identified, a continuity of excellent programs that have been on stream, and the introduction of new programs consistent with the articulated needs of the clientele. Budget Preparation and Programming • B. Budget Projection • The basis of budgetary projection is the actual results of financial operations in the previous three academic years, the current year’s budget and the projection for the next three years. The projection is across all offices, colleges and departments. This is shown as Form B. • Before the consolidation of the budget as shown in Form B, a subsidiary document is necessary, which is the Enrollment Projection as shown as Form B-1 showing the past three years actual enrolment, the current year’s enrolment and the enrolment projection over the next three years. Present actual revenues for the last three years and estimate of the current year’s revenues in the space provided in Form B. • Then, with the enrolment projection in Form B-1 as basis, estimate the revenues for the next three years and place it in Form B. • In addition to Form B-1, there is also a need to fill in Form B-2, the Individual Time Allocation Schedule, and B-4, which is the Consolidated Time Allocation Schedule. Form B-2 and B-3 are necessary to be able to fill in form salaries and wages in Form B-3. • When Form B-3 is completed, then Form B-4 can be prepared. • With the completion of Form B, the Pro Forma Statement of Income and Expenses can be finalized, as shown in Form B-5. Consequently, the pro-forma Balance Sheet, as shown in Form B-6, can be prepared. Budget Implementation
• Upon the approval of the budget by the Board of
Trustees/Directors, the head or the president of the institution will issue a memorandum to all concerned that the respective college or office budget is duly approved for implementation. The corresponding performance indicators should be identified consisting of the following: • Indicators of Quality Teaching • Indicators of Quality Research • Indicators of Quality Extension Services Budgeting Monitoring and Control • Inflow of revenues and disbursements should be closely monitored by the appropriate officer, and each department should be properly informed of the results of the financial operations of each college or department. • There should not be any deviation from the approved budget, except for deviations that are within the authority granted to the dean, or head of the office, or to the President of the institution. • If there is any deviation, there should be an appropriate explanation as to the reason or causes of such deviation. If the deviation merits sanction, the head of the institution may institute the corresponding action. Public Education Sector Budget Framework and Process in the DepEd, CHED & TESDA
• As early as November of each year,
the Department of Management issues the Budget Circular for the year immediately after the succeeding year. Budget Framework and Process in the DepEd, CHED & TESDA • At the end of each calendar year, i.e. December 31, DepEd, TESDA, CHED, and state colleges and universities are provided with their budget balance. • All these offices will have to obligate said balance for any activities or projects that have been contracted and, therefore, the balance should already be obligated before December 31. • If the funds have not been obligated, the balance will revert to the central fund. If the budget balance has been obligated and duly supported with a daily signed contract, said document has to be submitted to the DBM. • Once the obligated items are approved by the DBM, the agency concerned is only given three months to disburse the obligated balance. If a government unit is not able to disburse its budget for the calendar year, it is taken as an indication of not being program of activities or implement a project. • This may be taken against the office concerned and thus minimize the chances for this office to get an increase in budget. Budget Framework and Process in the DepEd, CHED & TESDA • The basis of the budget is the National Plan as prepared by the National Economic Development Authority (NEDA). All programs and projects must be consistent with the education section of the national plan that contains the objectives and the strategies for the education sector. Budget Preparation
• The Budget Officer and the Planning Officer of DBM,
usually with the Rank of Director or Assistant Secretary, coordinates with the Budget Account Officer of DepEd or TESDA or CHED for any documentation, data, or information necessary for the preparation of the budget, while all units of the DepEd, TESDA, and CHED are given the necessary instructions with respect to the budget documents to be prepared, data to be generated, performance indicators, and justifications for any new project. Budget Preparation
• With respect to personnel services, the heads of the
offices are not so involved in the qualification. These are readily available in the accounting office. What will be subject matter for discussion with the Secretary, Undersecretaries, Chairman and Commissioners of CHED, or Director-General and Deputy Director-General of TESDA are the following: • Creation of Additional Teacher Items, Principals, and Superintendent • Developmental Intervention in the Continuing Education of Teachers • Foreign-Assisted Projects • Capital Expenditures Consultation Within the Respective Offices • Once all the offices have finalized their respective budgets, the Secretary, together with all the undersecretaries, assistant secretaries, assistant secretaries, and directors will discuss the budget. Questions may be raised to evaluate whether the estimates are quite realistic with respect to the three components: (1) Personal Services, (2) Maintenance and Other Operating Expenses, and (3) Capital Expenditures. Usually, the focus of the discussion is one various programs and projects of the various bureaus and offices. • After some revisions as agreed upon during the Department deliberations, the budget is presented to the DBM. There may be some suggestions on various aspects of the budget. If found to be in order, adjustments are accepted. In the meantime, the DBM, together with the Treasury, evaluates the feasible limit of the total budget of the government. Once the absolute figure is already arrived at, the DBM will issue a circular to all concerned on the budget limit of each department. The Department will have to present a revised budget to comply with the limits imposed by the DBM. Consultation with DBM
• Having complied with the budgetary limits set
by the DBM, the final department budget is presented to the DBM. After that, the DBM and the Presidential Management Staff will conduct a meeting with the representatives of all the departments. Consultation with the Regional Development Council (RDC) • The regional component of the budget of each line agency is discussed in the Regional Development Council in all the 16 regions of the country. The members of the RDC are the city mayors, governors, all regional directors of various national offices, representatives of the business sector, the Presidential Assistant on Regional Concerns, and others. Cabinet Discussion on the Budget • The consolidated Department budget is presented to the President who is the Chairperson of the National Economic and Development Authority in the presence of all cabinet secretaries. The deliberations usually involve aligning various department budgets to national concerns in order to create greater synergistic impact as a result of the implementation of the budget. Presentation of the Budget to Congress and Budget Hearings • Immediately after the State-of-the-Nation Address (SONA) of the President, the National Budget is presented to the Speaker of the House of Representatives and the Chairman of the Committee on Appropriation. • With the budget duly submitted, the Chairman of the Committee on Appropriation schedules a hearing of the budget of various departments. During the hearing, the members of the Appropriation Committee ask all kinds of questions. • These are mostly focused on the thrust of the budget and how the national and local concerns of the congressmen are reflected in the budget. Budget Presentation in Plenary Session • After the Committee hearing in the Appropriation Committee of the Congress of the Philippines and the Senate Education and Finance Committee, the budget is presented in a plenary session of both houses. • Only the Chairman of the Committee on Appropriation or, in the case of the Senate, the Chairman of the Finance Committee of the Senate, will answer all the questions of any of the Senators or Congressmen. However, officers of the DepEd , TESDA and CHED, and state colleges and universities should be present in their assigned places to provide some answers to questions raised, and the officer of the office concerned will give the answer to the Chair for the Chair to convey said answer to the body in plenary session. • Once the budget is approved on second reading, the document is presented to the Bicameral Committee consisting of 24 members with an equal number from the Senate and Congress of the Philippines. Deliberation in the Bicameral Committee • The Bicameral Committee is a very powerful committee. While they are deliberating, one should be around for any possible data or answers to questions raised, or else some items in the budget may be deleted. • The deliberation in the Bicameral Committee can sometimes time-consuming most especially if there are some intramurals between the majority and minority. • However, once there is a vote in the Bicameral Committee for submission of the budget for third reading, the action by the Congress of the Philippines and the Senate of the Philippines is final. Presentation for Final Approval
• Both houses of Congress in plenary session take
the final action of the budget and upon passage of the budget on its third reading by both houses of congress, it is submitted to the President of the Philippines. • The President may veto some items of the budget and send the reply to both houses of the items vetoed. Budget Programming and Implementation • After the approval of the budget by the President of the Philippines, who signs the Budget into appropriation Act, the DBM will identify the programmed items in the budget that will surely be funded in view of the revenue target of the Government. • The unprogrammed items are subject to availability of funds, which may only be released once there is a significant improvement in the revenue collection of the government. If the anticipated collection is not attained, the DBM may even issue 10% reserved for savings. Budget Monitoring, Evaluation, and Control • With the approved budget, DepEd, TESDA, and CHED monitor the implementation of the budgets of all offices under their jurisdiction. • The preparation of a cash flow statement is used as an instrument of monitoring. Budget Monitoring, Evaluation, and Control • With the approved budget, DepEd, TESDA, and CHED monitor the implementation of the budgets of all offices under their jurisdiction. • The preparation of a cash flow statement is used as an instrument of monitoring. Performance Budgeting System, Zero-Based Budgeting, PPBS and Strategic Budgeting Performance-oriented budgeting
• is a way to focus more on the expected
outcome for the financial resources being provided. Thus, the analysis is not so much of various items of the budget, but on how a certain budget being allocated will generate the expected outcome or performance expressed in terms of key budget indicators. Zero-based budgeting
• is a system where the focus of the presentation
is the full justification of the funding being provided. • In many instances, it is only the incremental budget being proposed that is provided with justification. • In zero-based budgeting, there has to be rationale for the whole project as a basis for its budgetary provision, and not only the incremental amount being proposed. Planning, Programming, Budgeting System (PPBS) • is a technique wherein all budgets must be based on a carefully prepared plan. • The plan should contain situation analysis or prevailing environment. • With a fully articulated plan analysis of the situation, programs, projects, and activities are identified with their rationale, objectives, processes and activities, schedules of implementation, priorities and the expected outcome of the project of the office. • The carefully prepared plan is the basis for the budget being proposed. With a budget based on a carefully prepared plan, programming is formulated in order to maximize the use of resources that will redound to the production of expected institutional outcomes. Strategic budgeting • is an amalgamation of good features of performance budgeting, zero-based budgeting, and PPBS. • Strategic budgeting, just like PPBS, requires in- depth analysis of the environment and the operation of the institution in such an environment. • In a way, strategic budgeting is like a zero-based budgeting because the whole project being proposed has to have an all-encompassing orientation in its rationale, so that the project being proposed for funding will redound to the achievement of performance that will satisfy the clientele being served. CONCLUSIONS
• The budget is also a means of instituting effective coordination,
monitoring, and control in the financial operations of the institution. • The budget is also used as a basis for formulating performance indicators that can be used in instituting an effective evaluation and merit system. Performance indicators may be in terms of the extent the institution has performed its teaching function, the quality of research, and community and extension services. • Budget processes in both public and private sectors are different from each other. • For effective budget monitoring and control, a cash flow statement should be followed. • A full understanding of the effective use of budgeting as a planning instrument for effective monitoring and performance evaluation leads to the attainment of the mission/vision and objectives for which the education sector has been established.