Philippines Education Note JUNE 2016 | NO. 7 Assessing the Role Played by Local Government in Supporting Basic Education in the Philippines Introduction Many developing countries have devolved the responsibility for education services to local governments in an effort to improve educational quality and make public spending more efficient. Advocates of decentralization have argued that bringing decision- making closer to schools makes public policy more responsive to local needs, strengthens accountability, and fosters innovation. In some countries, decentralization has gone further in that schools have been given responsibility for developing their own improvement plans and a degree of autonomy over the use of their resources. While the Philippines decentralized some public services to local governments in the early 1990s, basic education remains largely under the control of the national government. The 1991 local government code devolved responsibility for many basic services to local government units (provinces, cities, municipalities, and barangays1) including primary health care, hospital care, social welfare services, and a range of environmental and agricultural services. Local governments’ responsibilities in the field of education were largely limited to maintaining basic education infrastructure This note is part of a series outlining analysis and and funding sports activities. The funding that each results from the Philippines Public Expenditure local government uses to fulfill its basic education Tracking and Quantitative Service Delivery Study responsibilities comes primarily from a surcharge on conducted by the Department of Education and local property taxes that goes into a Special Education the World Bank with the support of the Australian Fund (SEF) managed by a local school board (LSB). Government through the Australia-World Bank Over time, LSBs have used SEF funding for a growing Philippines Development Trust Fund. range of purposes including, for example, employing WWW.WORLDBANK.ORG/PH 1 Assessing the Role Played by Local Government in Supporting Basic Education in the Philippines Box 1: The Philippines Public Education Expenditure Tracking and Quantitative Service Delivery Study The aim of the Philippines Public Education Expenditure and Quantitative Service Delivery Study has been to answer four main questions on the use of the public education budget: Resource flow, management, and control. What factors prevent resources from reaching their intended destination in a timely and transparent manner? 1. Existence, use, and financing of inputs at the school level. Do schools have access to essential inputs and how effective are the systems that govern their use? 2. Equity. How do the resources available to schools and the systems that manage these resources differ among regions and socioeconomic groups? 3. School performance and resources. How and why does the performance of schools differ and what drives those differences? The study has tracked over 80 percent of the national government education budget (including teacher salaries and training, school maintenance and operating expenses, construction, and learning materials) as well as local government spending on basic education. In order to assess how funds flow and how they are used at the school level, the study team conducted a nationally representative survey of government institutions and public schools in the last quarter of 2014. The Autonomous Region in Muslim Mindanao was excluded from the study because government funds for this region are managed separately and flow to schools through a different mechanism. In addition, integrated schools (which offer both elementary and high school education) and schools that did not have final grade elementary and high school students were excluded from the sample, primarily because the study aimed to measure outcomes at the end of elementary school and at the end of high school. The sample for the survey included all regional offices of the Department of Education (DepEd) and the Department of Budget and Management (DBM), 51 division and 113 district offices of DepEd, 54 district engineering offices of the Department of Public Works and Highways, 74 provincial and city/municipality local governments, 249 public elementary schools, and 200 public high schools. At the school level, interviewers administered a questionnaire to each parent-teacher association, assessed the competencies of approximately 1,500 teachers, and interviewed 2,200 student households. The data collected were used to explore the systems that govern the use of public funds and to assess how the availability of resources differed among schools. The study team combined information on the flow of funds to schools with information on school characteristics and quality to evaluate how financing and governance affected school performance. additional school-level staff and paying school utility sample of elementary and high schools, it explores the bills. However, responsibility for education policy, magnitude of the funding that local governments are standards, curriculum, and the hiring of teachers and the giving to schools and assesses the systems that govern bulk of education financing remains with the national the use of local government funds in the education sector government. (see Box 1). The policy note shows that local governments’ contribution to overall public education funding is small The purpose of this policy note is to assess the financing and highly inequitable. It also shows that the systems of basic education services by local governments in used to allocate and manage these funds are weak and the Philippines. Using data that the PETS-QSDS team that greater transparency and accountability over these has carefully collected from a nationally representative resources is urgently needed. 2 WWW.WORLDBANK.ORG/PH Trends in Local Government education student (Figure 1). Between 2003 and 2013, LGU spending per student declined from PHP 951 to PHP Financing of Basic Education 744, a fall of over 20 percent in real terms. This is in stark contrast to national government funding, which rose by Education makes up only a small share of local government 35 percent from PHP 9,500 to PHP 12,800 over the same spending and has not changed much over the last decade period. (Figure 1). The composition of local government spending is aligned with their devolved responsibilities, with the bulk of Local government support for education has declined funds being allocated to the provision of general public and even though local revenue for education has increased economic services as well as health, nutrition, and population considerably. Each province, city, and municipality in services. In 2014, only PHP 13.3 billion or 5 percent of local the Philippines has a Special Education Fund (SEF), government spending was devoted to education. which is the source of the majority of its spending on basic education. These SEFs are funded by a 1 Local government funding also represents a very small and percent surcharge on property taxes raised by the local declining share of overall public funding for basic education. government.2 Between 2007 and 2014 and partly as While spending on basic education by local government a result of increasing property prices, SEF income has units (LGUs) has fluctuated considerably over the last 10 years, risen in real terms by approximately 40 percent from in real terms, it appears to have been on a declining trend PHP 17 billion to PHP 24 billion (in constant 2014 prices). since 2007 (Figure 1). Combined with ever-increasing levels of However, over the same period, SEF spending actually national spending, the share of public basic education funding declined, from PHP 15 billion to PHP 12 billion. The accounted for by local government spending declined from accumulated surplus of unspent SEF funds since 2007 11 percent in 2006 to only 6 percent in 2013. amounts to over PHP 63 billion. While the reasons for this under-spending are likely to differ between local Local government trends in education spending have governments, earlier studies have pointed to problems translated into declining levels of funding for each basic with cash management and poor budgeting.3 Spending on Basic Education by Local Governments is Low and Has Been Declining Figure 1:  Total and per-student public basic education spending, 2003–2013 Total public spending Public spending per student 18 20% 14,000 PHP billion (2014 prices) 17 15% PHP (2014 prices) 10,000 16 10% 11 11 6,000 15 10 10 10 9 8 7 7 5% 14 6 6 2,000 13 0% 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 LGU spending on basic education National government spending per student LGU as % of total public spending (RHS) LGU spending per student Sources: National government spending – DBM National Expenditure Program. Local government education spending – Bureau of Local Government Finance. Enrollment – DepEd FACT sheet. GDP and GDP deflator - Philippines Statistics Authority. Notes: Student numbers include kindergarten. PHILIPPINES EDUCATION NOTE 3 Assessing the Role Played by Local Government in Supporting Basic Education in the Philippines There are Large Differences in the Amounts that Local Governments Spend on Education Figure 2:  Total and per student local government education spending by region, 2013 Total LGU spending LGU spending per student 8 4,000 6 3,000 PHP billions PHP 4 2,000 2 1,000 0 0 NCR Region IV-A Region III Region VI Region I Region VII Region X Region XI Region XII Region II Region IV-B CAR Region VIII CARAGA Region IX NCR Region IV-A Region I Region III CAR Region X Region VI Region XI Region VII Region XII Region II Region IV-B CARAGA Region IX Region VIII Region V Region V Sources: Bureau of Local Government Finance. Enrollment rates from DepEd FACT sheet. Notes: Student numbers include kindergarten. The aggregate patterns of local government education monthly basis and to make decisions on the basis of majority spending mask large disparities among regions, which voting, including the approval of the budget. The national are administrative units that do not have their own government sets broad priorities for how local government elected governments but encompass provinces, cities, funding should be used, largely related to supporting public and municipalities (Figure 2). The National Capital Region schools falling under the jurisdiction of the LSBs. (NCR), the region with the highest overall levels of property tax revenue, accounts for over 44 percent of total local Interviews with members of local school boards conducted government education funding in the Philippines. This is a as part of the PETS-QSDS study revealed that they meet very large and significant source of additional funding for less frequently than outlined in the Local Government the school system, equivalent to approximately PHP 3,500 Code. The study found that boards meet, on average, every in additional funding for each basic education student in quarter rather than every month as the code suggests. the region or about 28 percent over and above per student These meetings often focus on the overall finances of the funding from the national government. Disparities between board and the needs of schools, but the outcomes of these other regions are not as stark but still exacerbate funding meetings are rarely communicated to schools and their inequalities between schools in different locations. principals. For example, it became clear from the study team’s interviews with elementary and high school principals that more than one-third of them were not even aware Local Government Support when or how often the school board meets. Moreover, it did for Public Schools not appear that school principals and other stakeholders are given an opportunity to provide feedback to their boards. Within each province, city, and municipality, a local school Obtaining reliable and accurate information on the board (LSB) is responsible for the allocation and use of local amount of financial support that schools receive from local government education funds (see Box 2). Its main function is governments is difficult. While local governments report to develop an overall plan and budget for local government information on aggregate education spending in their funding of basic education in their locality, including annual accounts, these reports do not contain any detailed funding from the SEF.4 The LSB is supposed to meet on a information on the type and level of support given to 4 WWW.WORLDBANK.ORG/PH Box 2: Legal Framework for the Role Played by LGUs and their Local School Boards in Basic Education The Local Government Code (LGC) issued in 1991 (Republic Act 7160) set out the legal framework for the role of LGUs in basic education. It initiated the creation of provincial, city, and municipal local school boards (LSBs) as the main bodies for making decisions over the use of local government education funds. Each LSB is co-chaired by the head of the local government and either the DepEd’s School Division Superintendent (for provincial and city LSBs) or the Public School District Supervisor (for municipal LSBs). Members of the parent-teacher associations and representatives of teachers and non-teaching staff are also represented on the LSB. The main functions of the LSBs are: (i) to develop the annual school board budget in accordance with the amount of revenue in the SEF and with their determination of the supplementary maintenance and operating needs of public schools covered by the LSB; (ii) to authorize SEF disbursements; (iii) to act as an advisory committee for the local council; and (iv) to recommend school name changes. The LGC and a series of joint circulars from DepEd, the Department of Management and Budget, and the Department of the Interior and Local Government have set out the main priorities for the Special Education Funds, including the provision of additional teachers, the construction and repair of school buildings, other capital investments for schools, educational research, the purchase of books and instructional materials, equipment purchases, sports, and other extra- curricular activities. Sources: Government of the Philippines Republic Act 7160, (1991). “An Act Providing for a Local Government Code.” Manila; Manasan, R. G., A.B. Celestino, and J.S. Cuenca (2011). “Mobilizing LGU Support for Basic Education: Focus on the Special Education Fund,” Philippine Institute for Development Studies, Manila. individual schools. This makes it impossible to assess how a slightly greater proportion of elementary schools than funds are being used and how much local government high schools. These differences were large in urban areas education funding directly benefits public schools. where 53 percent of all elementary schools receive support compared to only 28 percent of high schools. Although To overcome this constraint, the PETS-QSDS study collected a greater proportion of elementary schools receive LGU detailed information on all sources of school revenue and support, a much greater share of total LGU funding goes expenditure from a nationally representative sample of to high schools. Direct funding of high schools by LGUs is elementary and high schools. Based on the World Bank’s equivalent to PHP 331,000 for every high school compared prior experience of collecting this information in the to only PHP 206,000 for each elementary school. Philippines and other countries, the study team developed a questionnaire that would capture all cash and in-kind Levels of direct support to education from local contributions received by schools from all national and governments tend to be higher in highly urbanized cities local governments (provincial, city, and municipal LSBs (HUCs) than in other cities and municipalities, particularly and barangays), members of Congress, parent-teacher in the case of high schools (Figure 3). LGUs in HUCs provide associations (PTAs), NGOs and any other sources. The study approximately PHP 1.6 million for each high school while also collected information on contributions from parents as LGUs in municipalities spend only PHP 256,000 per high well as funds received from income-generating projects like school. This is not surprising given that LGUs in highly the school canteen.5 urbanized cities include the National Capital Region, which has the largest SEF revenues (see Figure 2). Incidence and Overall Level of Local Government Support On average, LGU contributions make up a very small share to Basic Education of overall public school funding across the Philippines. A comparison of school revenue from all sources shows that The findings of this detailed exercise revealed that fewer public schools receive the majority of their funding from the than 50 percent of schools receive any kind of direct funding national government through the Department of Education from local governments (Figure 3). On the whole, local (Figure 4). Other sources such as contributions from private governments tend to provide direct financial support to individuals, NGOs, and school-level income-generating PHILIPPINES EDUCATION NOTE 5 Assessing the Role Played by Local Government in Supporting Basic Education in the Philippines Fewer than Half of All Schools Receive LGU Support, and the Amount of Funding Provided is Small Figure 3:  Percentage of schools that report receiving cash or in-kind contributions from local governments and average levels of support, 2013–14 Percentage of schools receiving LGU support Average level of LGU support per school (PHP 000s) 60% 2,000 1,500 40% 1,000 20% 500 0% 0 HUC Other Cities Municipalities All Schools HUC Other Cities Municipalities All Schools HUC Other Cities Municipalities All Schools HUC Other Cities Municipalities All Schools Elementary Schools High Schools Elementary Schools High Schools Source: PETS-QSDS national survey – school level. Note: The average level of support is only for schools that received LGU contributions in 2013–14. projects (such as school canteens) are significant sources of A comparison between levels of LGU direct school funding funding for elementary schools, having made up around 5 and total LGU education spending reported at the national percent of their total funding in 2013/14. LGU funding, on level suggests that significant amounts are not being spent the other hand, represent less than 4 percent of the cash and on activities that directly benefit schools. Rough estimates in-kind funding that schools receive directly from all sources. by the PETS-QSDS study team using carefully collected The Contribution of LGUs to Direct School Funding is Also Low Figure 4:  Composition of school funding for all schools and only schools that receive some LGU support, 2013–14 Composition of funding only in schools Composition of all school funding (PHP 000s) reporting LGU support (PHP 000s) 10,000 10,000 7,500 7,500 5,000 5,000 2,500 2,500 0 0 Elementary School High School Elementary School High School DepEd Barangay Local school boards Other Source: PETS-QSDS national survey – school level. Note: The left hand panel reports the composition of school funding across all schools while the panel on the right reports the composition only for schools that reported receiving LGU funding. 6 WWW.WORLDBANK.ORG/PH finance data from school visits suggest that LGU spending makes it difficult to discover exactly where the majority of on schools amounts to approximately PHP 9 billion. This the reported LGU spending went. represents only 58 percent of the PHP 16 billion that LGUs reported spending on education in 2013 (see Figure 1). Use of LGU Support by Schools There is little information on how the LGU funds that are The bulk of local government support for schools is not spent at the school level are being used. The study provided in the form of goods and services rather than cash team made considerable efforts to collect such information (Figure 5). In-kind contributions account for 90 percent of from the local governments directly and from the DepEd total LGU support for elementary schools and 98 percent supervisors who sit on local school boards. However, little of LGU support for high schools. In providing specific information was available and, even where it was, the data in-kind support, local governments must have detailed were patchy and did not correlate with the official aggregate knowledge of what schools need and of what support they spending figures reported by the LGUs. The study found that are already receiving from other sources. For example, in one destination for this indirect spending was additional the area of construction and rehabilitation activities, local allowances or bonuses provided by the LGUs to DepEd governments need to ensure that their efforts supplement teachers; one-quarter of provincial LGUs and 15 percent of rather than duplicate DepEd’s plans for school infrastructure city and municipal LGUs reported making these payments. development. When there is an overlap, this constitutes These payments are unlikely to have been recorded in the inefficient use of education funding. The alternative to local official school financial records. While this may account for governments providing schools with in-kind contributions the differences between actual and reported LGU spending, is to give them cash that could be factored into their annual it is not possible to estimate the magnitude of this kind of improvement and procurement plans. However, less than expenditure. The study also found that around one-quarter 10 percent of LGU contributions are provided in this form.6 of local governments had paid the utility bills of some of the schools in their jurisdiction. However, once again, the Few of these local government in-kind contributions relate magnitude of this support often went unrecorded, which to the provision of teachers and other staff. In 2014, the Most LGU Funding is Provided In Kind Figure 5:  Composition of LGU cash and in-kind contributions to schools (PHP), 2013–14 Elementary schools High schools 100,000 100,000 Revenue per school Revenue per school 80,000 80,000 60,000 60,000 40,000 40,000 20,000 20,000 0 0 In-kind In-kind In-kind Cash In-kind In-kind In-kind Cash construction other salaries construction salaries other Source: PETS-QSDS national survey – school level. Note: In-kind contributions refer to goods or services given to schools directly rather than as cash grants for the school to purchase the goods and services for themselves. Other in-kind contributions include school supplies, books, and instructional materials. PHILIPPINES EDUCATION NOTE 7 Assessing the Role Played by Local Government in Supporting Basic Education in the Philippines government decided to incorporate all local government Equity and Local Government Support funded teachers into the national teacher workforce funded directly by the national government. When the study team Local government education support is unevenly distributed fielded their survey at the end of 2014, a significant number across regions and is highly inequitable. Comparing regional of local government teachers had already been absorbed poverty rates and local government spending shows that, into the national network, and fewer than 2 percent of on the whole, poorer regions spend less on supporting teachers in elementary and high schools were funded by basic education (Figure 6). For example, less than 10 percent local governments. However, local governments continue of the population is poor in Region IV-A in Luzon, and it to provide some support to schools to fund the provision of spends an average of PHP 950 per basic education student. In contrast, over 35 percent of the population is poor in ancillary staff such as janitors and security guards. Region XII in Visayas, and it spends only around PHP 370 per The construction and rehabilitation of school infrastructure student. These large differences are primarily the result of differences in the amount of property tax revenue that local absorbs a much larger share of total LGU funding for high school boards are able to collect for their Special Education schools than of total funding for elementary schools. Funds. These findings are worrying since schools serving Around three-quarters of all LGU funding in high schools poorer children tend to need higher levels of funding in is devoted to construction and rehabilitation compared order to compensate for the more limited support that to only one-third for elementary schools. Of all projects disadvantaged children tend to receive outside the school. undertaken by local governments in 2013 and 2014, 68 percent involved the new construction of classrooms or Looking at the per-student distribution of local government water and sanitation facilities, with the repair of existing funding within regions reveals a different picture. Schools infrastructure accounting for the remaining projects. Most located in rural municipalities tend to receive significantly of the projects were completed on time, but satisfaction more per-student funding from LGUs than schools in urban rates were relatively low with 54 percent of school areas. For example, the average LGU per-student contribution principals saying that they were dissatisfied with these to high schools in highly urbanized areas is PHP 245 compared projects largely because of delays in implementation and with PHP 369 to high schools in municipalities. The key driver the poor quality of the completed projects.7 of this is the smaller size of rural schools.8 The Distribution of Local Government Education Spending is Inequitable Figure 6:  Total and per student LGU spending on basic education by region and poverty incidence, 2012–13 Total LGU spending (PHP billions) LGU spending per student (PHP) 8 4,000 LGU spending per student, 2013 3,500 Total LGU spending, 2013 6 3,000 2,500 4 2,000 1,500 2 1,000 500 0 0 0 10 20 30 40 0 10 20 30 40 Poverty incidence, 2012 Poverty incidence, 2012 Sources: Poverty incidence data from the Philippines Statistical Authority, LGU spending from the Bureau of Local Government Finance. 8 WWW.WORLDBANK.ORG/PH Patterns of Local Government Funding are Inequitable Figure 7:  Average per-student LGU funding (PHP), 2013–14 Elementary schools High schools 400 400 300 300 200 200 100 100 0 0 Poorest 20% of students Poorest 20% of students Wealthiest 20% of students Wealthiest 20% of students Source: PETS-QSDS national survey – school and student household levels. LGU contributions vary according to the socioeconomic status The PETS-QSDS study collected financial data on the of students in very different ways in elementary schools and Special Education Funds (SEFs) from the Bureau of Local in high schools (Figure 7). The PETS-QSDS survey included Government Finance (BLGF) at the national level and from a nationally representative sample of households of public LSB offices in cities, municipalities, and provinces. The team elementary and high school students. Using information then attempted to match these two sets of data, which collected by the survey on consumption and asset ownership, revealed significant inconsistencies between the nationally it is possible to rank these student households by their and locally reported spending aggregates. The team found estimated levels of household consumption per capita.9 This that the information reported at the national and local levels ranking shows that students from poorer households tend to was consistent in the case of only 16 percent of LSBs, while, attend elementary schools that receive less LGU per-student for 22 percent of LSBs, there were inconsistencies in the funding than is received by the elementary schools attended levels of spending reported at the national and local levels by students from wealthier households. In contrast, poor high and one-half of all LSBs did not report any SEF expenditure school students tend to attend high schools that have higher at the local level to compare with national data. levels of per-student funding than is received by the high schools attended by their wealthier counterparts.10 Taken as The information on those schools that received local a whole, the findings suggest that local government funding government support and on the kind of support that they tends to widen funding inequalities in elementary schools received also revealed discrepancies. The PETS-QSDS study and to narrow them in high schools. However, given that LGUs tracked the spending that local governments had reported provide relatively low levels of education funding, their impact providing to elementary and high schools within the schools on overall funding remains small. themselves. Depending on the type of funding in question, local governments reported providing funding to a large Transparency and number of schools under their jurisdiction. However, when the team checked this information at the school level, a Accountability of Local significant proportion of schools reported that they had not received these funds. For example, 24 percent of elementary School Boards schools to which local governments claimed to have provided in-kind support for salaries denied ever having Information on overall levels of annual local government received this support (Figure 8). education spending was often unavailable to the survey team at the local level, and what little data they were able The team found additional inconsistencies in reporting to find were inconsistent. This clearly limits the ability of between schools and local governments. For example, of stakeholders to hold local governments accountable. all the elementary schools that reported having received PHILIPPINES EDUCATION NOTE 9 Assessing the Role Played by Local Government in Supporting Basic Education in the Philippines Comparing Expenditures between LGUs and Schools Revealed Many Discrepancies Figure 8:  Percentage of schools where LGUs reported providing some funding but schools reported receiving none Elementary schools High schools 30% 30% 20% 20% 10% 10% 0% 0% In-kind salary Other in-kind Cash Construction In-kind salary Other in-kind Cash Construction Source: PETS-QSDS national survey – provincial, city and municipality local school boards. support from their local government, the LGUs themselves While reporting deficiencies prevented the study team from only reported providing support to approximately 40 making a completely accurate assessment, it is clear that a percent of them. relatively low share of local government education spending reaches schools. The funds that do reach schools are largely These findings demonstrate that local government reporting provided in-kind, which limits the control and flexibility that and accounting procedures for the use of education funds schools have to use the support according to their own are weak. This hampers the ability of schools, parents, and priorities. Providing a greater proportion of local government other stakeholders to assess the fairness and effectiveness of funding to schools in the form of cash, as is the case with spending priorities and resource allocations and to hold local the national government’s funding for school maintenance, governments accountable. operating, and other expenses (MOOE), would increase the autonomy of schools and provide them with greater flexibility Policy Directions for and predictability, all of which would increase the positive im- pact of local government funding on educational outcomes. Improving Local Government Both the revenue base and the allocations of local Support for Basic Education government education funding are inequitable. This policy note has shown that the revenues available to local This note has shown that, in recent times, local governments governments vary widely and are negatively correlated with have failed to spend the revenue that they have collected in poverty rates and other markers of disadvantage. Addressing their Special Education Funds. Other studies have shown that this issue will be difficult, but the national government existing levels of public education spending are inadequate should consider adjusting its own funding allocations to deliver the quality of services outlined in existing national to compensate for the inequalities arising from these norms and standards. While local government funding differences at the local government level. For example, the constitutes a small percentage of overall education spending national funding formula for school maintenance, operating, in the Philippines, it is imperative that all of these funds and other expenses (MOOE) could be adjusted to account should be used to support education improvements. The for differences in SEF revenues between localities.11 national government needs to strengthen its monitoring of local government SEF surpluses and to consider putting a This note has shown that local government spending tends cap on the level of these surpluses to ensure that the vast to favor better-off schools, at least in terms of support for majority of these funds is spent on education. facilities. Therefore, it is vital that the allocation of local 10 WWW.WORLDBANK.ORG/PH Box 3: The Seal of Good Local Governance Building on earlier attempts to promote greater local government transparency and accountability in the use of public funds, the national government introduced the Seal of Good Local Governance in 2014. In order to receive the Seal, local governments must demonstrate good performance in three core areas (good financial housekeeping, disaster preparedness, and social protection) and in at least one essential area (business friendliness and competitiveness, peace and order, and environmental management). Support for basic education falls under social protection. In order for a local government to receive the seal, it must demon- strate that it has completed 70 percent of the local school board’s annual plan and that the plan is aligned with schools’ own improvement programs. The DepEd superintendent currently certifies the achievement of these two conditions. Recipients of the Seal are also eligible for the Performance Challenge Fund (PCF), which provides additional funding for local governments to pursue their own priorities. In 2015, 41 of the 80 provinces, 28 of the 143 cities, and 170 of the 1,491 municipalities were awarded the Seal. Source: Department of the Interior and Local Government (2014). “Seal of Good Local Governance.” Circular No. 2014-39. Manila. government funding is improved to ensure a closer fit SEF guidelines by the national government, and the passing between funding levels and needs at the school level. of regulations requiring that these reports are published on Introducing a simple and transparent funding formula, LSB bulletin boards and school notice boards would also similar to the national funding formula for MOOE, could go a increase transparency. long way towards making the allocation of local government A recent initiative by the Department of the Interior and Local funding more equitable. The guidelines for LSBs on using Government (DILG) to encourage greater accountability local government funds also need to be consistent with and transparency has been an important first step. LGUs national guidelines to ensure that there is no duplication that perform well in several areas receive the Seal of Good and that local government spending complements national Local Governance as well as additional performance-based government funding. funds, and this scheme has provided LGUs with a strong The findings of the study also show that schools and school incentive to increase transparency and to improve the use of principals are rarely involved in local government funding SEF funds (Box 3). While the awarding of the Seal is already decisions. Unless LSBs take into account school planning conditional on whether the annual plan of the LSB is aligned processes, there is a significant risk that local government with the plans of the schools themselves, it could also be used funding will not help schools to meet their most pressing to address some other issues highlighted in this note. For needs. Increasing coordination between LSBs and schools example, the category of “good financial housekeeping” could themselves would mitigate this risk and provide LSBs with be expanded to include more detailed reporting and the more information on which to base their allocations of publication of how SEF funds are used and to set targets for support to basic education. Moreover, it would allow for the proportion of funds that should reach schools. greater coordination between local governments and Any changes in the way in which local governments use their other sources of school funding, which would prevent any SEFs will require agreement between DepEd, the Department potential overlaps and enable more efficient and equitable of Management and Budget (DBM), and the DILG, an updating use of all sources of funding. of the existing joint circular on the SEFs, and a set of clear The outcomes of the funding decisions of LSBs are operational guidelines. These guidelines will need to clearly not transparent, which makes it difficult for education articulate priorities for the use of SEF funds, to devise ways to stakeholders to hold local governments accountable. record the outcomes of school-level improvement plans, and There are no consistent reporting formats to document the to document clearly any elements of an LSB school funding amount of funds that LSBs allocate to schools, the amount formula to allocate resources. Moreover, the guidelines should that the schools receive, and the amount that the LSBs stress the need for local governments to devote the majority allocate to other education-related activities. Developing a of their funding to school-level activities and should include simple reporting format, to be issued as part of a revision of indicators to measure this. PHILIPPINES EDUCATION NOTE 11 Assessing the Role Played by Local Government in Supporting Basic Education in the Philippines Table 1: Improving Local Government Support for Basic Education Findings Policy suggestions A low share of local government • Raise the share of local government funding provided directly to schools funding reaches schools and • Introduce a formula-based funding model to allocate more cash directly to schools most is provided in-kind to support their annual improvement plans Local government funding is • Reduce inequalities between local school board areas by adjusting the national inequitable funding formula • Introduce a simple and transparent local government funding formula to strengthen the link between funding and school needs Schools are rarely involved in • Make better use of schools’ annual improvement and procurement plans in LSB funding decisions planning • Ensure that the link to school improvement planning in the Seal of Good Local Governance is properly measured and monitored Transparency and accountability • Improve reporting formats for the use of SEF funds and ensure that the results are for the use of funds is weak publicly disseminated • Build on the Seal of Good Local Governance and associated performance-based funding by, for example, requiring LSBs to report planned school level funding allocations. Endnotes 1 Barangays (or villages) are the smallest administrative unit in 8 Average school-level funding is indeed higher in urban areas. local government in the Philippines. Above them come the For example, the average high school in a highly urbanized municipalities and above municipalities come provinces/cities. city receives PHP 458,000 compared with the average of 2 In 2014, SEFs were the source of approximately 85 percent of approximately PHP 107,000 received by high schools located in municipality spending and 70 percent of province and city municipalities. spending on basic education. 9 The household questionnaire included a short module on 3 Manasan, R. G., A.B. Celestino, and J.S. Cuenca (2011). “Mobilizing consumption and a set of questions on assets that have been LGU Support for Basic Education: Focus on the Special Education used by the Department of Social Welfare and Development Fund,” Philippine Institute for Development Studies, Manila. (DSWD) to undertake a proxy means testing (PMT) approach to estimating household consumption per capita. The results 4 Within cities, the LSB allocates all of the funds within the SEF, reported here are based on information gathered using the PMT whereas municipal LSBs are required to give 50 percent of approach, and a full description is included in a separate note. their SEF revenue to their provincial LSB to provide resources for provincial spending. Some local governments also allocate 10 These findings are supported by the study team’s analysis of money from their own General Fund (GF) and other sources to school facilities. Elementary schools receiving LGU support provide additional support to education. tend to have better school facilities (such as IT equipment, playgrounds, clinics, and libraries) than those that receive no 5 A full description of the information collected in the PETS-QSDS funding. The opposite is true for high schools. study and the approach used to calculate total school revenue and expenditure is included in a set of additional annexes and 11 A fuller discussion of national government funding of schools tables accompanying the main PETS-QSDS report. through the maintenance, operating, and other expenses (MOOE) budget is provided in a separate note- Providing Schools with 6 The effectiveness of school-level planning and implementation Adequate Operating Expenses to Deliver Quality Education in the mechanisms is discussed in more detail in a separate note - Philippines. Assessing School-based Management in the Philippines. 7 The quality of school infrastructure and of national and local government projects is discussed in more detail in a separate note - Building Better Learning Environments in the Philippines. 12 WWW.WORLDBANK.ORG/PH