1. for Undersecretary Francisco M. Varela
The Challenges to Financial Reforms: The Department of Education Experience
MS. RHUNNA CATALAN
Chief Accountant
for Undersecretary Francisco M. Varela

2. Presentation Outline
The Department of Education (DepEd): A Large and Complex Bureaucracy
Improving Financial Management
Our Continuing Challenges
Moving Forward

3. I. THE DEPARTMENT OF EDUCATION: A Large and Complex Bureaucracy

4. The DepEd is responsible for management and governance of the Phil basic education system.
Inclusive Growth and Poverty Reduction
Societal Goal
Equitable Access to Adequate Quality Societal Services and Assets
Sector Outcomes
Sub-Sector Outcomes
Knowledge, skills, attitude and values of Filipinos to lead productive lives enhanced
Organizational Outcomes
Access to Basic Education Improved
Quality of Education Improved
Filipino Artistic & Cultural Traditions Preserved & Promoted
Major Final Output (MFOs) 1
Public Kindergarten & Elementary Education Services 2
Public Secondary Education Services 3
Alternative Learning System Services 4
Basic Education Sector Management Services 5
Regulatory and Devt. Services 6
Govt. Assist. to Students & Teachers in Private Educ. Services 7
Informal Education Services
Cultural Outreach Services (PHSA)
Children Television Devt. Services
8**
Book Industry Devt. Services
* Subject for refinement
** This is an MFO of the National Book Development Board (NBDB), an attached agency of the DepEd, and does not contribute directly to the attainment of DepEd’s organizational outcomes. Initial recommendation is for the NBDB to be attached to the Department of Trade and Industry (DTI) since its mandate is to develop and promote the local publishing industry 4

5. Global and national initiatives guide the DepEd in the formulation of its goals, policies and strategies.
Education For All / Millennium Development Goals
Philippine Development Plan
Basic Education Sector Reform Agenda (BESRA): school-based management, improvement in teaching and learning quality, among others
K to 12 Reform Program and the President’s 10-Point Basic Education Agenda
Universal Kindergarten Education (RA No )
Additional 2 years of secondary education to enable graduates to develop competencies that will make them better prepared for higher education, the world of work, entrepreneurship and global opportunities.

6. As mandated by the Phil Constitution, it receives the largest share (12-15%) of the National Budget.

7. It is the largest government bureaucracy with a decentralized management framework.
= 1
Central Office
= ARMM
Regional Offices
= 203**
Schools Division Offices
= 2,611
No. of Districts
Elementary Schools*
= 46,137
= M
83%
Public *
= 38,503
= M
17%
Private
= 7,634
= M
Secondary Schools*
= 12,670
= 6.99M
59%
Public *
= 7,470
= 5.58M
41%
Private
= 5,200
= 1.41M
= 58,807 Schs.
Public: 45,973 (78%)
Private:12,834 (22%)
= M enrollees
Public: 20.49M (87%)
Private: 3.03M (13%)
*No. of schools based on EBEIS School Year
**Including16 newly-created divisions

8. The current processes in financial management in DepEd are rooted in Republic Act No.9155.
Develop a regional basic education plan.
Formulate, in coordination with RDCs, budgets to support the regional education plan.
Plan and manage the effect and efficient use of personnel, physical and fiscal resources of the regional office.
Manage the database and management information system of the region.
Region
Develop and implement division education development plans.
Plan and maange the effective and efficient use of all personnel, physical and fiscal resources of the division.
Monitor the utilization of funds provided by the national and local government to schools and learning centers.
Division
Prepare school improvement and annual improvement plans.
Administer and manage all personnel, physical and fiscal resources of the school.
Accept donations, gifts, bequests and grants for the purpose of upgrading teachers’ competencies, improving and expanding school facilities and providing instructional materials and equipment.
School

9. II. FINANCIAL MANAGEMENT INITIATIVES OF THE DEPED

10. Challenges in Managing DepEd Resources
Weak internal controls
Difficulty of collecting accurate data/reports
Lack of resources at the school level
Issues with absorptive capacity
Delays in payment of teacher salaries
Disjointed planning and budgeting
Difficulty of monitoring fund sources/ releases
Lack of finance personnel

11. 1. Efforts to improve the direct release of funds to schools
Legal Basis:
Section 10 of RA 9155 provides that the appropriations intended for regional and division offices are to be allocated directly and released immediately by DBM to the said offices.
DBM-DepED Joint Circular No on the direct release of funds to the DepEd Regional Offices and Implementing Units
Success of the School Based Management program under TEEP/SEDIP/BESRA.
Prior to 2008, school MOOE were released either in cash or in kind. With the implementation of BESRA policies and reform thursts, full downloading of resources to schools was intensified.

12. 1. Efforts to improve the direct release of funds to non-implementing units (elementary schools)
Note: 2012 data is as of end of September while 2010 and 2011 data are as of end of December.

13. 2. Efforts to improve payroll management
As of June, 2012
REGION
TOTAL # OF
ATM-Paid %
EMPLOYEES *
ATM/TOTAL
I - Ilocos Region
32,046
19,115
59.65%
II - Cagayan Valley
21,042
13,479
64.06%
III - Central Luzon
52,055
50,388
96.80%
IVA - CALABARZON
53,006
28,631
54.01%
IVB - MIMAROPA
17,484
100.00%
V - Bicol Region
38,377
38,002
99.02%
VI - Western Visayas
38,567
VII - Central Visayas
39,048
38,981
99.83%
VIII - Eastern Visayas
30,985
29,393
94.86%
IX - Zamboanga Peninsula
26,637
7,883
29.59%
X - Northern Mindanao
24,630
XI - Davao Region
20,418
XII - SOCSKSARGEN
21,687
Cordillera Administrative Reg
11,856
10,376
87.52%
CARAGA Region
13,214
National Capital Region
50,424
TOTAL
491,476
422,672
86.00%
* Excludes Central Office and ARMM

14. 2. Efforts to improve payroll management
1993: GAA called for the decentralization of the DepEd payroll system to:
(1) shorten payroll processing,
(2) minimize, if not eliminate, payroll processing errors highlighted by COA audit observations, and
(3) make it easier for teachers to follow up issues with regard to their payroll.
1995: DepEd memorandum establishing the Regional Payroll Services Unit; all regions had an RPSU by June 2006
2002: Decentralization of elementary school teachers’ payroll to the regional offices. As of June 2006, roll-out of elementary payroll system from Central Office to regions was completed.
2001: Introduced the use of Automated Payroll Machine System. This was made compulsory with the issuance of DepEd Order No.8, out of 16 regions are fully implementing the ATM payroll system.

15. TOTAL WITH AGENCY CODES TEACHERS DESIGNATED AS FIN'L STAFF
3. Increasing the quantity and quality of financial management personnel
REGION
DIVISIONS WITH AC
SEC. SCHOOLS/Ius
TOTAL WITH AGENCY CODES
BOOKKEEPER
DISB. OFFICER
TEACHERS DESIGNATED AS FIN'L STAFF
TOTAL FINANCIAL STAFF I 14
119
133 88 62
238 II 8 94
102 74 40
188
III 17
232
249
217 30
464
IV A 15
243
258
227 32
486
IV B 7 75 82 66 18
150 V 13
124
137 10
248 VI
394
411
108
572
788
VII
110
125 16
220
VIII 84 58 52
168 IX 9
132 X 60 73 37 46
120 XI 98
107 70 56
196
XII 65 61
130
XIII
117
126 27
180
234
CAR 42 49
NCR
156
171 48
312
187
2079
2266
1486
1186
4158

16. 4. Efforts to improve recording and booking of transactions
2006: The DepEd Central Office, Region VII RO and Region XI RO started using the eNGAS system. Meanwhile, Region IV-A outsourced the development of its financial management system in 2009.
2006: Proper recording and booking of school buildings implemented by DPWH and other donated properties was observed through training of property and finance staff and strict compliance to various DepEd orders. As of 2011, about PhP 4.07 billion worth of school buildings were included in the books of DepEd.

17. 5. Efforts to strengthen internal control and efficiency of operations
2008: The DepEd established its Internal Audit Service Unit as part of the BESRA reform package. Since its creation, it has conducted audit reports for key offices and major programs such as the Baguio Teachers Camp, GASTPE, and SBM.
Early issuance of program guidelines resulted to the early/timely payment of fees (ex. GASTPE grants) and release of funds (ex. Subsidies to Regional Science HS). Starting 2011, various programs and projects adopted the use of multi-year guidelines lending predictability in budgeting and planning.

18. 5. Efforts to strengthen internal control and efficiency of operations
With the deployment and training of finance personnel and more intensive monitoring, the Department was able to improve liquidation of its cash advances.

19. 5. Efforts to strengthen internal control and efficiency of operations
DepEd is also working towards rolling out its various information systems – enhanced BEIS, Asset Management System, and HR Information System.
The DepEd recently completed the development of the strategic design for its Financial Management Information System. It is working closely with the PFM Committee to integrate key features of the DepEd FMIS in the GIFMIS. On the interim, the DepEd is using its in-house developed budget monitoring and disbursement systems to cope with the monthly reporting requirements of oversight agencies.
Planning and budgeting processes are being harmonized at the Central, Regional and Division levels. Triangulation activities are also undertaken to ensure alignment between planning of activities, budget availability and scheduling of procurement.

20. III. OUR CONTINUING CHALLENGES
, DepE

21. Systemic challenges need longer-term and broader solutions.
Structural rigidity: reforms do not immediately transform
Organizational capacity needs to be enhanced (in terms of quantity and quality)
Culture of centralized control still persists. Innovation needs to be encouraged and nurtured.
DepEd systems remain fragmented, paper-based and labor-intensive.
Reforms need external support and cooperation:
Report requirements could be rationalized to ease burden on field personnel.
Need buy-in of government partners in pushing for equity-based financing and the adoption of the DepEd Medium-Term Expenditure Plan. (MTEP)
Need to track funding from sources apart from the GAA such as LGU’s Special Education Fund and private donations.
Implementation of the DepEd FMIS hinges on GIFMIS roll-out.

22. IV. MOVING FORWARD
, DepE

23. Addressing Structural Rigidity
Establishment of Regional Account Management Teams
Deployment of additional finance personnel and clustering of non-IUs
Roll-out of interim systems such as the Budget Monitoring System and Disbursement Monitoring System
Capacity-building to build managerial talent on the ground
Institutionalization of bottom-up budgeting and planning.
Working with Partners to Institutionalize Reforms
On-going dialogue with DBM and COA counterparts to clarify and rationalize report requirements.
Inter-agency TWG was established to refine and finalize DepEd MTEP.
Joint Circular on the use of the Special Education Fund and development of an SEF manual is being pursued.
Need to strengthen monitoring of public-private partnerships
Close coordination with PFM Committee re GIFMIS dev’t

24. THANK YOU