Philippines Education Note JUNE 2016 | NO. 6 Providing Schools with Enough Resources to Deliver Quality Education in the Philippines Introduction Providing schools with direct funding to meet their operational needs is the cornerstone of the government’s efforts to strengthen school-based management in the Philippines. Over the past five years, funds that the government has provided directly to schools to support their maintenance and other operating expenses (MOOE) have increased by 45 percent in real terms, demonstrating the government’s commitment both to increasing operational funding and to providing schools with the funding that they need to implement their own improvement plans.1 Evidence from the Philippines and elsewhere shows that increased school funding and effective school-based management (SBM) can lead to more efficient use of resources and, ultimately, to better education outcomes. Evaluations of a school-based management program in the Philippines have shown that this program coupled with the provision of school grants led to significant improvements in school performance.2 Over a three-year period, the introduction of SBM and the provision of grants improved the scores of Philippines students on the National Achievement Tests (NAT) by 4 to 5 percentage points (approximately 0.25 standard deviations).3 These findings echo similar results from other countries that, on the whole, show that school- This note is part of a series outlining analysis and based management reform, if implemented effectively, results from the Philippines Public Expenditure can improve education outcomes over time.4 Tracking and Quantitative Service Delivery Study conducted by the Department of Education and The aim of this policy note is to assess the current the World Bank with the support of the Australian systems that govern the allocation, transfer, and use of Government through the Australia-World Bank MOOE funds for schools. It uses data collected as part of Philippines Development Trust Fund. the PETS-QSDS study from a nationally representative WWW.WORLDBANK.ORG/PH 1 Providing Schools with Enough Resources to Deliver Quality Education in the Philippines sample of public elementary and high schools (see Box 1).5 MOOE funds in division offices and in schools. The findings It shows that a significant proportion of MOOE funds do not also highlight the need to strengthen the accountability reach schools and that schools serving better-off students mechanisms associated with the use of MOOE funds, tend to receive a larger share of their intended allocation particularly at the school and community levels. Addressing than other schools. While funding for school MOOE has these weaknesses is likely to significantly improve education and will continue to increase, these and similar findings outcomes and to support recent school-based management demonstrate the need to improve the systems that manage reforms 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: 1. Resource flow, management, and control. What factors prevent resources from reaching their intended destination in a timely and transparent manner? 2. 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? 3. Equity. How do the resources available to schools and the systems that manage these resources differ among regions and socioeconomic groups? 4. 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. 2 WWW.WORLDBANK.ORG/PH Levels of and Trends in has revealed that existing levels of school MOOE do not cover the full operating costs of public elementary and School Operational Funding high schools.8 The study reviewed existing DepEd service standards and norms for elementary and high schools and Over recent years, school MOOE funding has increased collected data and information on the funds needed to significantly in real terms even though its share in the overall meet each of these standards. After verifying its findings basic education budget has remained relatively stable. with DepEd staff and school principals throughout the The total school MOOE budget increased in real terms by Philippines, the study concluded that overall levels of over 50 percent between 2011 and 2015 (Figure 1).6 The elementary and high school MOOE funding will need to biggest increase during this period was associated with the more than double if existing service standards are to be met. introduction in 2013 of a new formula for allocating school MOOE funding. These large overall increases in the school Assessing the Systems that MOOE budget have translated into even larger increases in per-student funding levels. For example, between 2011 Govern the Allocation and and 2014, per student appropriations for elementary school MOOE increased from PHP 317 (US$7) to PHP 566 (US$13). Use of School MOOE Funds Public schools rely heavily on the school operating funds Allocation provided by the national government. The PETS-QSDS As in other countries, MOOE allocations in the Philippines study collected detailed information on all types of school are based on school and student characteristics. DepEd revenues. In 2013, MOOE allocations accounted for 68 introduced a funding formula for school MOOE allocations percent of all discretionary funding received by elementary for the first time in 2013 (Table 1). According to the new schools and 82 percent received by high schools. In the case formula, in 2013 the average elementary school was of over 10 percent of schools, their MOOE allocations were allocated approximately PHP 170,297 (US$3,720) and the the only source of operational funding that they received.7 average high school was allocated PHP 744,358 (US$16,180).9 Despite the importance of MOOE allocations to schools However, the amount of MOOE funds that is actually and despite recent increases, a detailed costing study allocated to each school is frequently different to the National MOOE Funding for Schools Has Increased Significantly in Recent Years Figure 1:  Total and per student appropriations for school MOOE, 2005-2015 (in 2014 constant prices) Total appropriations Appropriations per-student 16 10% 1,000 948 High School 876 Elementary School 825 792 % of total DepEd 8% 731 PHP billion (2014 prices) 12 budget (right axis) 750 % of DepEd budget PHP (2014 prices) 6% 566 482 8 500 442 397 4% 333 317 4 250 2% High School 107 Elementary School 0 0% 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Sources: National government appropriations from General Appropriations Act, various years. Enrollment data come from DepEd Fact Sheets, various years. PHILIPPINES EDUCATION NOTE 3 Providing Schools with Enough Resources to Deliver Quality Education in the Philippines Table 1: Components of the MOOE Allocation Formula 2013 to 2015 2016 Elementary High Schools Elementary High Schools Allocation component (PHP) (PHP) (PHP) (PHP) 1. Fixed 40,000 80,000 50,000 96,000 2. Per Student 200 400 250 480 3. Per DepEd Teacher 4,000 8,000 5,000 9,600 4. Per classroom 3,000 6,000 3,750 7,200 5. Per graduating student 250 250 313 300 Notes: Prior to 2016, the fixed component for technical and vocational high schools was PHP 160,000. DepEd follows a no diminution policy that, in any given year, prevents a school’s MOOE from being less than its level in the previous year. amount prescribed by the formula. For example, in 2013 the students in each school) is not published on DepEd’s website allocations of MOOE funds to elementary schools differed alongside the data on school-level MOOE allocations. This from the expected amount based on the formula by PHP prevents school officials from being able to understand any 7,000 or approximately 4 percent of the average allocation discrepancies in their MOOE allocations and reduces the for each school. In the case of a small number of schools, benefits, in terms of increased transparency, that a funding the allocation differed from the formula by as much as PHP formula can provide. 50,000.10 Possible reasons for these discrepancies include confusion over which types of classrooms are included in the The limited knowledge that education stakeholders have formula and DepEd’s “no diminution policy,” which prevents a of the funding formula reduces accountability for MOOE school’s MOOE funds in any given year from being less than allocations. While over half of all school principals claim the previous year’s level. However, it is difficult to identify to be aware of the MOOE formula, fewer than one in ten the main causes for each school because school-level data know the formula’s components and hardly any know on the formula components (for example, on the number of the funding associated with each component (Figure 2). Knowledge of the MOOE Formula among Education Stakeholders is Limited Figure 2:  Percentage of stakeholders who are aware of MOOE funding and its components DepEd sta Parents of students 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% Elementary school High school Division O cials Parents of elementary principals principals and high school students Reportedly knows MOOE formula Know schools receive MOOE Actually knows components of formula Received information on MOOE allocation Actually know the correct formula (out of those who know) Source: PETS-QSDS national survey - division, school, and household levels. 4 WWW.WORLDBANK.ORG/PH Box 2: Approach to Tracking In order to track the flow and use of MOOE funds, the study team obtained from official records maintained by Division offices the amount they received for school MOOE, and on the amount they reported downloading to each PETS-QSDS sample school and for each MOOE advance. The records also included details on the check number, the date of check, the date on which the check was collected by schools, and the date on which the corresponding liquidation report was submitted. The same set of information was collected from records maintained by schools. In addition, the team collected information on the types of expenditures for which the schools used their MOOE funds from school liquidation reports corresponding to each MOOE advance downloaded to the school from the division office. Knowledge of the allocation formula is also limited among analysis since they follow a different system for receiving and DepEd’s division officials. The study team’s interviews with reporting on funds. The survey used official records (such student households also revealed a lack of awareness among as notices of cash advancements, checks, and liquidation parents. Only 40 percent of parents were aware that schools reports) to record the receipt and downloading of funds receive MOOE funds, and the majority did not know how from each administrative level and to schools (Box 2). MOOE funds were allocated. With no knowledge of the formula, schools, division offices, and parents cannot confirm The main finding of this tracking exercise is that only 77 whether the schools are receiving the correct allocation and percent of the total allocations for elementary and non- are unable to seek redress in cases where their funding falls IU high schools ultimately reached those schools in 2013 below expectations. (Figure 3).11 In other words, elementary and high schools received only PHP 448 of the PHP 581 allocated for each Transfer of MOOE Funds to Schools student. Given that the guidelines stipulate that all school The PETS-QSDS study tracked MOOE funds from their initial MOOE funds should be downloaded to schools, this finding allocation in the DepEd central office all the way down to is a concern. It implies that about PHP 1.8 billion out of the their receipt by a nationally representative sample of schools. PHP 8 billion MOOE budget intended to be used by schools Implementing unit (IU) high schools were excluded from the in 2013 were not downloaded.12 A Significant Portion of the MOOE Allocations Do Not Reach Schools Figure 3:  Share of MOOE allocation downloaded and received by schools, 2013 Share of original allocation Proportion of schools downloaded and received, 2013 100% 100% 84% % of original allocation 77% 75% 50% 25% 0% Central MOOE MOOE downloaded MOOE received by Elementary Schools High Schools allocation to schools by schools from Less than full allocation Allocated amount division division Download exceeds allocation Sources: Data on allocations from DepEd central office. All other data from PETS-QSDS national survey – division and school levels. PHILIPPINES EDUCATION NOTE 5 Providing Schools with Enough Resources to Deliver Quality Education in the Philippines These aggregate findings can be explored further to identify Divisions Retain MOOE Funds to Spend on Figure 4:  the key stages where school MOOE funds are diverted. The Behalf of Schools first stage relates to differences between DepEd central Reasons why DepEd division offices retain MOOE funds (% of divisions), 2013 office allocations and how much DepEd division offices actually report downloading to schools. The second stage 60% relates to differences in the amount that DepEd division offices report downloading to schools and the amount that schools, through their records (for example, liquidation reports), report receiving. 40% Differences between DepEd central office allocations and the amount of MOOE funding that the division offices downloaded to schools account for the largest share of 20% funds that fail to reach schools. These differences account for 16 percent of the 23 percent of school MOOE funds that do not reach schools. The records show that DepEd 0% division offices failed to download the full allocation to over Procurement Payment of Payment for 80 percent of elementary and non-IU high schools in 2013 on behalf of utilities for division-organized schools some/all schools in-service (Figure 3). In many schools, these differences were large; in teacher training around 20 percent of elementary schools and 15 percent of Source: PETS-QSDS national survey – division and school levels. high schools, the amount downloaded by division offices Note: Only divisions that reported retaining funds are included. was less than half of the schools’ original allocation. These under-allocations were partly offset by over-allocations to some other schools; approximately 13 percent of schools monitor whether school MOOE funds are being used for were given amounts that exceeded their allocation.13 their intended purpose as schools have no way of verifying how the divisions used the retained funds. The retention of school MOOE by Division offices is the main factor behind differences between initial allocations and the Smaller discrepancies are also evident in the second stage funds downloaded to schools. While a 5 percent deduction of the flow of MOOE funds to schools. Of the 23 percent of by the Department of Budget and Management (DBM) for school MOOE funds that do not reach schools, 7 percent tax purposes explains part of the gap between the MOOE can be accounted for at this stage (Figure 3).15 However, the funds allocated and received, the bulk of the gap at this level poor quality of records at the school level makes it difficult is explained by division offices withholding funds. to make a full accounting of the extent of the funds diverted at this stage. While it is possible to compare the aggregate Although division offices are required to download funds to annual amount of MOOE funds downloaded by divisions to schools in full, the tracking exercise indicates that over 60 schools with the amounts that the schools received, gaps in percent of divisions held onto some MOOE funds in 2013.14 the records kept at the school level stymie efforts to identify They did so to procure items for schools, to pay their utility the sources of the discrepancies. For example, at the school bills, or to fund other services for schools (Figure 4). This is level, one-third of the entries recording the schools’ receipt the case even though DepEd explicitly prohibits divisions of the MOOE transfers do not include a check number, which from procuring items using school MOOE funds except makes it impossible to compare them with each individual in extreme cases where there is a demonstrated need for check sent by the division. Such gaps in documentation the division to do the procurement. This practice reduces emphasize the need to strengthen MOOE reporting the amount of discretion that schools have over the use processes at every level. of their own MOOE funds and has the potential to limit the effectiveness of ongoing school-based management Any delays by DepEd division offices in downloading MOOE reforms. Procurement by divisions also makes it difficult to funds to schools not only prevent schools from receiving 6 WWW.WORLDBANK.ORG/PH those funds in a timely manner but also reduces the total School Management of MOOE Funds amounts that they receive. For example, in 2013, while most division offices downloaded the first advances to The late downloading of MOOE funds by divisions is schools at the beginning of the calendar year, around 10 compounded by delays on the part of schools in collecting percent of schools did not receive their first advance of their MOOE checks. A comparison of the issuing and MOOE funds until the start of the school year in June (see collection dates of MOOE checks shows that only 40 percent Figure 5). Schools that receive their first advance late also of elementary school checks and 20 percent of high school checks were collected from the division offices on the day on tend to receive a smaller share of their total allocation. For which they are released. These collection delays can be quite example, elementary schools that received their first advance long. Over one-third of MOOE checks were collected more in February 2013 received approximately 80 percent of than two weeks after they were issued. In some cases, when their full allocation whereas schools that received their first transfers are delayed or unpredictable, school principals use advance after August received less than a quarter of their full their personal funds or raise money from teachers to cover allocation.16 the school’s operating expenses. School liquidation reports show that in 2013 over 60 percent of elementary school and Any irregularity in the downloading of MOOE funds makes 45 percent of high school principals paid for approximately school planning more difficult and potentially less efficient. 5 percent of their operating expenses from their own funds In 2013, 20 percent of elementary schools and 25 percent while they waited for their MOOE funds. of high schools received MOOE funds from division offices every month, but 34 percent of elementary schools and 30 School liquidation reports reveal that some schools find percent of high schools received only five advances in the it difficult to use all of the MOOE funds that they receive. whole financial year. In the remaining schools, downloading Although schools are required by law to spend all of the did not follow any regular pattern.17 MOOE funds that they receive, around 70 percent of schools Schools Often Do Not Receive their Full Allocation of MOOE Funds Because of Delayed and Figure 5:  Unpredictable Transfers by Division Offices Timing of first MOOE advance and share of overall allocation received, 2013 Cumulative share of schools by receipt of rst Share of total MOOE allocation received by month MOOE advance, 2013 of rst advance, elementary schools, 2013 100% 100% 95% 90% 75% 85% 80% 50% 75% 70% 25% Elementary Schools 65% High Schools (non IU) 60% 0% January February March April May June July August September October November December January February March April May June July August September October December Month of rst advance Source: PETS-QSDS national survey – school level. PHILIPPINES EDUCATION NOTE 7 Providing Schools with Enough Resources to Deliver Quality Education in the Philippines were unable to do so in 2013. On average, a quarter of MOOE spending their allocations. The lower allocation reflects the funds received by these schools went unspent. The under- smaller number of students in schools facing liquidation spending of available MOOE funds is especially concerning difficulties. Small high schools were also more likely to find because other studies have revealed the inadequacy of it difficult to spend their MOOE funds, but the differences current levels of MOOE to meet schools’ needs.18 However, between small and larger high schools were not statistically any efforts to persuade the government to raise the MOOE significant.20 budget will meet with only limited success unless these school liquidation difficulties are overcome. The management of MOOE funds is particularly demanding on school principals. In the 2014 school year, The main reason why so many schools find it difficult to principals reported spending six to eight hours a week on spend their entire MOOE allocation is because they have administrating MOOE funds, including procuring goods insufficient capacity and time to meet their reporting and and services and preparing liquidation reports (Figure 7). procurement requirements. Over a third of elementary It is possible that a key factor that determines the time schools and a quarter of high schools reported encountering needed to process MOOE funds is related to the location of such problems in 2013, and the lack of capacity to meet the school. For example, for schools far away from division reporting requirements was one of the most commonly offices and markets, it takes more time to collect their MOOE cited challenges (Figure 6). Other salient problems included checks and to find suppliers. However, the study team’s difficulties locating suppliers and canvassing.19 School analysis shows that this is not the case nor is it related to principals also reported having insufficient time to spend whether schools are located in rural or urban areas (Figure MOOE funds in general. Although fewer schools reported 7). The team’s findings suggest that the bulk of the time that facing such issues in 2014, their primary challenges remained school principals spend on managing MOOE funds goes on the same – a lack of time and insufficient capacity. activities that are common to all schools such as reporting and canvassing. Smaller elementary schools and those in rural areas are more likely to struggle to spend their MOOE resources. The difficulties that school principals experience in For example, the elementary schools that reported facing managing MOOE funds can result in significant delays in such issues had an average allocation of PHP 132,500 each their submission of liquidation reports as well as some compared with the average of PHP 191,600 for elementary misreporting of data. Although schools are usually required schools that reported experiencing no difficulties in to submit liquidation reports within 35 days of receiving Schools Do Not Have Enough Time or Capacity to Spend All of Their MOOE Funds Figure 6:  Challenges experienced by schools in spending MOOE funds, 2013/14 school year 50% Elementary Schools 40% Non-IU High Schools 30% 20% 10% 0% Di culties with Insu cient time to Di cult to identify Canvassing di cult and Required items not meeting reporting liquidate funds suppliers/located time-consuming available from the DBM requirements too far away procurement service Source: PETS-QSDS national survey – school level. Notes: Only schools that reported experiencing difficulties in spending their MOOE allocations are included. 8 WWW.WORLDBANK.ORG/PH Managing MOOE Funds at the School Level is Time-consuming Figure 7:  Average hours spent on MOOE administration per week by schools’ distance to division office, 2014 school year Elementary Schools Non-IU high schools 12 12 10 10 9 hrs 9 hrs 8 hrs 8 hrs 8 8 6 hrs 6 hrs 6 hrs 6 6 4 hrs 4 4 2 2 0 0 Less than 30–90 More than Average Less than 30–90 More than Average 30 minutes minutes 1.5 hours 30 minutes minutes 1.5 hours Time to travel to Division o ce from school Time to travel to Division o ce from school Source: PETS-QSDS national survey – school level. Note: The label above the bars shows the average number of hours taken to administer MOOE funds by schools located at different distances from their division office. an MOOE advance only about half of all elementary school elementary and high school students. Using information advances and one-third of high school advances were collected on consumption and asset ownership collected submitted within this period.21 Some schools submit reports in the survey, it is possible to rank student households by as long as three months after the initial advance was made. estimated levels of per capita household consumption.22 This indicator of household welfare reveals that Moreover, division officials report that these delays are a elementary students from poorer households are more leading cause of their own delays in downloading MOOE likely than students from wealthier households to attend funds to schools. This is the case because schools are not schools that have higher per capita allocations of MOOE allowed to receive their next MOOE transfer unless they funds (Figure 8). This is not because the MOOE funding submit a complete and correct liquidation report on how formula provides additional funding to schools serving they spent the previous transfer. Of the 37 percent of division poorer groups. Instead, this is partly a reflection of the fact officials who reported delays in downloading MOOE funds that wealthier students are more likely to attend schools to elementary schools in 2014 and the 31 percent who in urban areas where student-classroom and student- reported delays in transferring MOOE funds to non-IU high teacher ratios are higher, thus leading to lower per-student schools, over half of them cited late liquidation reports as MOOE funding (Table 1). High schools serving the poorest the reason, while more than a third (for elementary schools) students also have higher per-student allocations than and a quarter (for high schools) mentioned problems with those serving the wealthiest students, but the difference is previous liquidation reports. not statistically significant. However, in elementary schools, the pro-poor allocation Equity of School virtually disappears in terms of the amount of MOOE MOOE Funding funding that the schools actually spend. The result is that, in practice, students from different socioeconomic Schools serving poorer and more marginalized groups groups attend schools that receive similar levels of are provided with higher levels of MOOE funding for each per-student MOOE despite the large differences in their student. The PETS-QSDS survey included a nationally original allocations. This is a missed opportunity to use representative sample of the households of public school MOOE as a way to narrow the very large differences PHILIPPINES EDUCATION NOTE 9 Providing Schools with Enough Resources to Deliver Quality Education in the Philippines The MOOE Funds that Schools Receive Do Not Reduce Inequalities in Overall School Funding Figure 8:  Elementary school per-student funding by source, 2013 and 2013/14 school year Per-student MOOE amount in elementary Per-student non-MOOE funds in elementary schools, 2013 schools, 2013–14 700 400 Allocated PHP 600 556 Received 300 500 PHP 433 200 400 PHP 344 PHP 321 100 300 200 0 Poorest 20 percent Wealthiest 20 Poorest 20 percent Wealthiest 20 of households percent of households of households percent of households Source: PETS-QSDS national survey - school and student household levels. Notes: Non-MOOE sources are all other cash contributions received by schools directly (e.g. local government, Parent Teacher Associations, fees) and school based management grants. A full description of the funding sources included and the approach to estimating overall school revenue is contained in additional tables to the full PETS-QSDS report. in school revenue among schools serving different socioeconomic groups (Figure 8). Oversight and Monitoring The PETS-QSDS findings also suggest that, among of the Use of MOOE Funds elementary schools, a larger share of the MOOE allocations Schools’ liquidation reports show that they spend only for schools in poorer areas is not reaching the schools. It a small proportion of their MOOE funds on prohibited might be expected that division offices are managing a items. Over 80 percent of school MOOE expenditures are larger share of the resources of poorer schools given that spent on allowable items (Table 2 and Figure 9). However, they are likely to lack the capacity to manage the funds in 2013, elementary schools used 5 percent of their themselves (Figure 4). Since there is little information on MOOE funding to purchase equipment and instructional how the division offices spend school MOOE funds, it is not materials prohibited under current guidelines, while high possible to establish whether poorer schools receive their schools used 2 percent of their funding on prohibited full allocation after any procurement by the division offices items. Approximately 10 percent of total school MOOE is factored in. This significantly reduces the transparency expenditures were not reported on liquidation reports so it of and accountability for MOOE funds and may be fueling was not possible to assess whether those expenses unintended inequalities in levels of school funding. were eligible. Table 2: Allowed and Prohibited Spending Categories for MOOE Funds Allowable expenses Ineligible expenses Supplies for teaching, utility payments, minor repairs, travel, Textbooks and instructional materials (such as publications, wages for janitorial services, teacher training, graduation periodicals, or review materials), furniture and equipment, ceremonies, and other activities identified in the School and teacher salaries. Improvement Plan (SIP). 10 WWW.WORLDBANK.ORG/PH Most MOOE Funds Are Spent in Accordance with Existing Guidelines Figure 9:  Percentage of total MOOE expenses by item of expenditure, 2013 Elementary Schools Non-IU high Schools 35% 30% 30% 25% 25% 20% 20% 15% 15% 10% 10% 5% 5% 0% 0% Supplies Repairs Utilities Printing/ copying Other Travel Instructional materials Teacher training Janitors/security wages Equipment Supplies Travel Repairs Utilities Other Printing/ copying Teacher training Janitors/security wages Equipment Instructional materials Source: PETS-QSDS national survey – school level. The schools’ records also reveal that the proportion of funds However, as of 2014, fewer than two-thirds of schools had that they used to purchase items directly related to learning a transparency board containing information on MOOE was relatively low. For example, elementary schools spent only expenditures (see Figure 10). Moreover, the information 3 to 4 percent of their total MOOE expenditures on teacher posted on about a third of transparency boards was more training and only 4 percent on purchasing instructional than three months old. materials such as periodicals or review materials. Another factor that contributes to weak monitoring is While there are regulations in place that aim to strengthen the lack of knowledge among stakeholders of the rules the transparency over MOOE use, compliance with these governing MOOE funds. Although schools are legally regulations is low. The Anti-Red Tape Act (2007) mandates required to publicly disclose how they use their funds, there public schools to maintain a transparency board or bulletin is no specific law requiring them to post information on board detailing how they are using their MOOE funds. their expenditures on allowable and prohibited items. Not Schools’ Compliance with the Transparency Board Requirement is Low Figure 10:  Percentage of schools that had transparency board displaying MOOE information in 2014 Elementary Schools Non-IU high Schools 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% Has transparency Transparency board Has transparency Transparency board board with includes DepEd orders board with includes DepEd orders information on on appropriate MOOE information on on appropriate MOOE MOOE liquidation expenditures MOOE liquidation expenditures Source: PETS-QSDS national survey – school level. PHILIPPINES EDUCATION NOTE 11 Providing Schools with Enough Resources to Deliver Quality Education in the Philippines surprisingly, only about half of the elementary schools and a quarter of the non-IU high schools that have transparency Policies to Strengthen the boards post DepEd’s orders on the appropriate use of MOOE Allocation, Implementation, funds (Figure 10). This lack of information makes it difficult for parents and other local stakeholders to judge whether and Accountability of the funds are being used appropriately. MOOE Funds Decisions on the use of MOOE funds are largely confined to the school principal and other teachers. In 2014, over 80 This note has shown that the bulk of MOOE funds are percent of schools reported that teachers had been consulted transferred to schools and that schools use these funds about how to use the schools’ MOOE funds (Figure 11). PTAs for the purposes for which they were intended. However, have an input into how MOOE funds are used in fewer than in light of the government’s plans to significantly increase 30 percent of schools. This is not surprising since DepEd’s school operational funding, it will be necessary to tackle the current guidelines explicitly prohibit PTAs from “interfering in remaining weaknesses to ensure that these funds are used schools’ administrative management.”23 in the most effective way to improve education outcomes. It is crucial that the system for allocating and managing Only 13 percent of elementary schools receive input from MOOE funds is strengthened to ensure that schools receive school governing councils (SGCs) even though SGCs are their allocations in full and in a timely manner. The current responsible for developing and implementing the school problems that some schools face in spending these improvement plan (SIP), which includes activities financed funds fully and in an effective way also need to be solved. by MOOE funds.24 This number is even lower among non-IU Increasing the transparency and oversight of fund use by high schools, with SGCs, parents, and local school boards involving school governing councils and parents could be participating in MOOE decisions in fewer than 10 percent an effective way of improving school management of MOOE of schools. The study’s interviews with parents revealed a funds. The note also found significant funding inequalities similar picture. Only about one-third of parents reported between schools serving disadvantaged groups and those participating in discussions about the school’s use of serving children from better-off households. Adjusting the financial resources in general and fewer than a quarter MOOE allocation formula to include an equity component reported participating in decisions about how to use the would narrow these funding differences and thus improve school’s MOOE funds. education outcomes. There Is Little Participation by Local Stakeholders in Decisions about How MOOE Funds Are Used Figure 11:  Percentage of schools that received input from stakeholders about MOOE funds, 2014 SY Elementary Schools Non-IU High Schools 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% Teachers PTA School Governing Council Parents Local School Board Teachers PTA School Governing Council Parents Local School Board Source: PETS-QSDS national survey – school level. 12 WWW.WORLDBANK.ORG/PH Improving the Flow of Simplifying the Liquidation Process MOOE Funds to Schools and Supporting the Management of MOOE Funds Ensuring that division offices download all allocated MOOE funds to schools would be an important first step Simplifying the existing requirements for schools to prepare in improving the use of MOOE funds. Tightening and liquidation reports on how they used their MOOE funds enforcing the rules governing division offices procuring would reduce the significant burden that this currently puts material on behalf of schools would reduce the extent on schools. It would also give school principals more time to to which division offices retain MOOE funds rather than focus on providing academic leadership in their schools. One transfer them directly to the schools. Even in cases where approach that has been adopted in other countries would centralized procurement may be more efficient, the be to treat MOOE funds as grants. For example, this is the division offices could still download the funds to schools, case in Indonesia, where these funds now have much less who could then pay the division offices for any goods and onerous reporting requirements than required by the usual services procured on their behalf. This would also ensure government budget and implementation systems.25 Schools that these funds are properly accounted for in school use simplified reporting templates to report on their use liquidation reports and make it easier for all MOOE funds to of the funds and submit these reports to district (division) be monitored. Setting division office targets for the full and offices every quarter. The Indonesian system also encourages timely downloading of school MOOE funds and tying these much more involvement by school committees (school to performance-based bonuses (PBB) would also facilitate governing councils) in overseeing the use of school MOOE the flow of funds. funds, a role that used to be played by the district office, and this has strengthened monitoring. Developing a similar Stepping up monitoring efforts will also be essential to system, adjusted for the specific context of the Philippines, improve the flow of funds to schools. The current reporting could reduce the burden on schools and at the same time requirements hinder the effective monitoring of MOOE strengthen oversight of the use of funds. downloading to schools. While division offices are required to submit monthly reports on the status of downloading Reducing the frequency of transfers from once a month and utilization to the Office of the Secretary, there is no to once a quarter would make procurement processes mechanism to verify whether each school in the division has more efficient and would reduce the time that school received their full allocated amount. Establishing a system to principals would need to spend preparing liquidation provide this information as well as a feedback mechanism for reports. Releasing larger sums on a less frequent basis schools to inform DedEd about the fund transfers that they would make it easier for schools to procure items in bulk for have received would go a long way towards strengthening both immediate and future activities instead of having to monitoring. procure small quantities frequently. It would also reduce the time needed to undertake canvassing and the time spent In order to strengthen accountability, it is vital that schools travelling to make purchases. Less frequent transfers would and other stakeholders know the details of the funding also reduce the number of liquidation reports that schools formula and the correct MOOE allocation for each school. would need to submit, which again would reduce the A first step would be to enforce the existing requirement burden on schools. for division offices to inform schools about their allocation at the beginning of the fiscal year. Moreover, posting the Extending the current deadline for schools to submit criteria used to determine the allocated amount for each liquidation reports on their MOOE expenditures would school (such as the number of teachers and classrooms) further ease their management burden. Giving schools more online as well as on the division office transparency than the current 35 day limit would give them more time board at the beginning of the year would strengthen to spend MOOE funds and to do so efficiently. For example, accountability. they would have more time to identify the best available suppliers in terms of both cost and quality. PHILIPPINES EDUCATION NOTE 13 Providing Schools with Enough Resources to Deliver Quality Education in the Philippines Box 3: The Pupil Premium in England In 2011, the United Kingdom government introduced a “pupil premium.” This initiative provides government-funded schools within England with additional per-student funding to raise the attainment of disadvantaged pupils and to narrow the gap between them and other students. In 2014/15, each school received an additional £1,300 (US$2,031) for primary-aged students and £935 (US$1,461) for secondary-aged students. Rough calculations suggest that an average sized secondary school would receive approximately £200,000 (US$312,500) in additional funding through the pupil premium, which is the equivalent of five full-time teachers. The main criteria used to calculate schools’ eligibility for this extra funding is the number of students in the school that have received free school meals over the last six years. Head teachers and school governing bodies are accountable for the use of these funds in two ways. First, performance tables that outline the performance of disadvantaged students compared to their peers are made available to the public. Second, schools are required to publish details online each year of how they have used the premium and what impact it has had. Schools typically use the additional resources to hire more teachers and teaching assistants in order to introduce special programs for disadvantaged students. In addition, the resources are frequently used to allow eligible students to participate fully in after-school activities. A recent study of the implementation of the pupil premium found that: • Schools are using the funding effectively to improve learning outcomes of disadvantaged students and narrowing learning disparities. • The best schools combine targeted interventions with robust tracking to evaluate their effectiveness. • School governing bodies take strategic responsibility for student targeting and hold school leaders accountable. • Challenges remain in schools with weak leadership, including weak governing bodies. Sources: OFSTED (2014) and www.gov.uk/pupil-premium-information-for-schools-and-alternative-provision-settings. Schools will need more support and training from the DepEd 100,000 in cash at any given time if the division offices were district level offices to build their capacity to manage MOOE to transfer allocations to schools on a quarterly rather than funds. It is not financially feasible to provide a dedicated a monthly basis. Allowing schools to deposit these funds in bookkeeper to each school to manage the administrative bank accounts would overcome this security issue. requirements associated with MOOE funding. Instead, the role played by district offices in assisting and supporting Strengthen Oversight over the schools needs to be expanded. In particular, district offices Use of MOOE Funds by Schools could encourage schools to spend their MOOE funds in accordance with the priorities in their school improvement Strengthening the role played by school governing councils plans and could help them with the administration of MOOE (SGCs) in overseeing MOOE funds has the potential to lead funds. Providing stakeholders such as teachers, parents, and to more effective use of MOOE funds. While SGCs are already members of SGCs and PTAs with training on how to spend expected to play a role in school improvement planning, MOOE funds effectively could also help schools to manage their role could be expanded, for example, by requiring their funds better. them to sign off on liquidation reports and to ensure that the reports are posted on school transparency boards. It will Allowing schools, at least those with bigger allocations, to be vital to disseminate information about the current and deposit their MOOE funds in bank accounts would also help future responsibilities of the SGCs in order to reinvigorate this them to manage their funds safely. Many schools have to important school-level institution and to hold schools more maintain large sums of MOOE funds in cash, which is clearly accountable for their use of MOOE and other funds. a security risk. For example, rough calculations suggest that about 22 percent of non-IU high schools with a thousand Ensuring that MOOE and other funds that schools receive or more students would have to hold onto more than PHP from both DepEd and other sources are added together and 14 WWW.WORLDBANK.ORG/PH treated as a single school budget in the SIP can also increase and provide schools in poorer areas with the additional oversight over use of MOOE funds. Having a single budget in resources that they need to support the learning needs each school can help stakeholders such as teachers and SGCs of marginalized students. Many other countries, like the to identify any potential duplication of expenses and enable United Kingdom, have introduced funding components of effective monitoring of MOOE and other school funds. this kind (Box 3). MOOE allocations should also be adjusted to take into account price differences between regions so Reduce Funding Inequalities by that schools operating in high-cost areas such as remote Including an Equity Component locations where travel and transportation costs are high are in the MOOE Funding Formula able to purchase similar amounts of goods and services as those in lower-cost locations. Introducing an equity component into the MOOE funding formula would be one way to reduce the large school-level Over the last five years, the Philippines government has funding inequalities highlighted in this note. In order to provided schools with ever greater amounts of operational compensate those schools that receive lower funding from funding. While this trend is set to continue, it is imperative non-DepEd sources such as local governments, an equity that the systems used to allocate and manage MOOE funds component could be introduced in the allocation formula. are strengthened. Only then will the full potential of funds of This could go some way to equalizing school funding this kind to improve education outcomes be realized. Table 3: Strengthening Systems to Provide Operational Funding to Schools Findings Policy suggestions Not all schools receive their • Enforce existing regulations on the transfer of funds full MOOE allocation and the • Introduce transfer targets for DepEd division offices tied to performance bonuses transfers are often not made on a predictable schedule • Make MOOE allocations and formula components for each school publicly available The management of MOOE • Treat school MOOE funds as a grant to simplify reporting requirements funds within schools is • Reduce the frequency of downloading and increase the time allowed for schools to difficult and time-consuming produce liquidation reports • Provide additional support to schools on MOOE management from district offices and provide school-level training • Allow schools to deposit MOOE funds in bank accounts School-level institutions like • Review and strengthen the role of SGCs in the planning and monitoring of MOOE funds the school governing council • Disseminate information on the roles and responsibilities of SGCs to parents and the are relatively weak local community • Ensure that MOOE and other school-level funds are incorporated into school improvement plans Funding inequalities at the • Introduce an equity component into the MOOE allocation formula. school level are large PHILIPPINES EDUCATION NOTE 15 Providing Schools with Enough Resources to Deliver Quality Education in the Philippines Endnotes 1 MOOE is different to school grant funding because schools are 13 Occasional congressional insertions (additions to the originally required to use and account for the use of these funds in the approved budget) or additional MOOE funding for Special same way as any other recipient of budget funds would be. Education programs may partly explain why some schools 2 Khattri, N., C. Ling, and S. Jha (2010). “The Effects of School-based received more than their allocated amount. Management in the Philippines: An Initial Assessment Using 14 Interestingly, only a quarter of the divisions admitted to retaining Administrative Data.” Policy Research Working Paper Series. No. funds when asked. 5248, World Bank, Washington, D.C. 15 Schools reported receiving only 77 percent of the funds that the 3 World Bank and AusAID (2013). “School-based Management division offices reported downloading in the first three-quarters in the Philippines: An Empirical Investigation.” World Bank and of 2014. AusAID, Manila. 16 The pattern is similar for high schools. 4 AusAID ERF (2011). “Current Issues in Education: School Grants 17 The available data for 2014 show a similar pattern. and School-based Management.” Canberra. 18 World Bank (2016). “The Development and Implementation 5 The findings reported in this note are discussed in more detail in of a Normative School MOOE Formula in the Department of additional annexes and tables accompanying the main PETS- Education in the Philippines.” Washington D.C. QSDS report. 19 Canvassing relates to the requirement that schools obtain at least 6 Years refer to financial years (January to December) unless three quotes for purchases that they make with MOOE funds. otherwise stated. 20 There were no differences in the proportion of rural and urban 7 Discretionary funding refers to the funds that schools receive in high schools that reported finding it difficult to spend their cash, over which they have discretion to use as they please. MOOE allocations. 8 World Bank (2016). “The Development and Implementation 21 More specifically, schools are required to submit a completed of a Normative School MOOE Formula in the Department of liquidation report to the division offices by the fifth day of the Education in the Philippines.” World Bank, Washington D.C. month after they have received an MOOE advance in order to 9 These averages are based on statistics on the 2013 MOOE receive their next MOOE advance. allocations from DepEd for the elementary schools in the PETS- 22 The household questionnaire included a short module on QSDS sample and from the DBM for high schools. consumption and a set of questions on assets that have been 10 Author’s calculations using eBEIS data on enrollment and on the used by the Department of Social Welfare and Development numbers of teachers, classrooms, and graduating pupils for all (DSWD) to undertake a proxy means testing (PMT) approach public elementary schools. to estimating household consumption per capita. The results 11 The word “allocation” here refers to the cash allocation released by reported here are based on information gathered using the PMT the DBM to DepEd divisions based on authorized allotments and approach, and a full description is included in a separate note. released to cover spending obligations. 23 DepEd Order 54, s. (2009). “Revised Guidelines Governing Parents- 12 The study team determined this amount by scaling up the sum Teachers Associations (PTAs) at the School Level.” Department of of the amounts allocated for public elementary and non-IU high Education, Manila. schools in the PETS-QSDS survey to represent nationwide MOOE 24 DepEd (2009). “A Manual on School Governing Councils.” funding. In addition, they estimated national-level funding for Department of Education, Manila. non-IU high schools as about one-quarter of the total funding 25 Al-Samarrai, Samer; Fasih, Tazeen; Hasan, Amer; Syukriyah, for high schools (PHP 5.06 billion) as suggested by the data from Daim. 2014. “Assessing the Role of the School Operational Grant the DBM on per-school funding for the schools in the PETS-QSDS Program (BOS) in Improving Education Outcomes in Indonesia.” sample. World Bank, Jakarta, Indonesia. 16 WWW.WORLDBANK.ORG/PH