COA: Balasan used under 10% of PHP 122.48M development fund

ILOILO CITY — The Commission on Audit (COA) has flagged planning and execution bottlenecks in the municipal government of Balasan, Iloilo, after finding that the town spent less than 10% of its 20% Development Fund (DF) in 2025.

Based on the Statement of Appropriations, Allotments, and Obligations submitted to COA, Balasan had a total 20% DF appropriation of PHP 122,478,873.81 for 2025.

This comprised PHP 28.77 million in current-year appropriations and PHP 93.71 million in continuing appropriations carried over from prior fiscal years.

However, actual expenditures for the year reached only PHP 11,913,917.45. This left an unspent balance of PHP 110,564,956.36 at year-end and an overall utilization rate of 9.73%.

Under Section 287 of the Local Government Code (LGC) of 1991, local government units must set aside at least 20% of their annual internal revenue allotment, now the national tax allotment, for development projects.

COA also highlighted low spending across both current and continuing funds.

Of the PHP 28.77 million current-year allocation, Balasan disbursed only PHP 3.91 million, a 13.60% utilization rate, leaving PHP 24.86 million unspent.

Utilization was even lower for continuing appropriations. Only PHP 8 million, or 8.54% of the PHP 93.71 million allocation, was spent during the year, leaving PHP 85.71 million unused.

COA warned that prolonged non-utilization defeats the core purpose of the development fund and directly affects community welfare.

“The foregoing deficiencies indicate weaknesses in development planning, project prioritization, procurement readiness, and fund management,” it said.

“The prolonged non-utilization of substantial development funds defeats the purpose for which the 20% DF was established, delays the delivery of basic infrastructure and socio-economic services to the constituents, and increases the risk that development objectives identified in the Local Development Investment Program and Annual Investment Program (AIP) will not be attained within the intended period,” COA added.

Planning deficiencies

State auditors attributed the low utilization to three causes: structural defects in project preparation, a lack of technical documentation, and vague project descriptions in the AIP.

COA said several programs, projects, and activities (PPAs) were listed in broad, generic terms without specific scopes, locations, technical specifications, or target outputs.

The audit report cited generic AIP entries such as “rehabilitation of municipal and barangay roads,” “municipal environment management,” “local economic development,” and “agricultural productivity development.”

Auditors said vague budgeting violates two rules: Section 287 of the LGC, and Joint Memorandum Circular No. 1, series of 2020. The circular was issued jointly by the Department of Budget and Management, the Department of Finance, and the Department of the Interior and Local Government.

Both require projects funded by the 20% DF to meet three conditions. Projects must be implementation-ready, supported by complete engineering designs, and aligned with local development investment plans.

COA also warned that vague appropriations could undermine the legal basis for municipal contracts.

The auditors cited two provisions: Section 22(c) of the LGC, and Section 4(6) of Presidential Decree No. 1445, the Government Auditing Code of the Philippines. Under both, entering into public infrastructure contracts without explicit project-level authorization from the Sangguniang Bayan or a detailed program of works (POW) exposes the local government to legal challenges and audit disallowances.

“Vague and non-specific appropriations may expose the municipality to questions on the legality, validity, and propriety of contracts and obligations entered into by the Local Chief Executive, considering that public funds may only be disbursed and obligated for purposes expressly authorized under the approved appropriations and investment program,” COA said.

COA also noted that projects were routinely included in the budget without approved POWs, detailed engineering designs, and other required supporting documents.

Implementation was further hampered by procurement backlogs. Auditors also cited inadequate coordination among the Municipal Planning and Development Office (MPDO), the Municipal Engineering Office, the Budget Office, and the Bids and Awards Committee.

COA also cited the municipal government’s repeated reprogramming of funds from unimplemented projects to activities it considered urgent. This created a self-defeating cycle of deferred development projects.

8 projects ongoing, 4 up for realignment

COA assessed 17 development projects programmed for 2025. Eight were ongoing and four required budget realignment.

The remaining five major capital outlays had yet to start. Auditors traced the delays to land acquisition hurdles, missing technical documentation, or delayed procurement schedules.

The audit body directed the municipal mayor, the Budget Office, the MPDO, and the Engineering Office to review unimplemented projects. It also told them to identify savings or infeasible activities that could be reprogrammed to implementation-ready priority projects.

It also recommended that the municipality eliminate generic project descriptions. Proposed AIP entries should include detailed descriptions, cost estimates, POWs, and procurement schedules before budget approval.

COA further urged the municipal government to take three steps:

• secure prior Sangguniang Bayan authorization before entering into contracts involving broadly stated PPAs,
• prioritize procurement-ready projects, and
• regularly assess dormant or deferred projects.

The MPDO reported that, for 2026, generic project descriptions had been corrected before deliberations by the Local Development Council. It added that proposed projects were now supported by detailed engineering designs.

The underutilization finding was not the first for Balasan.

In its 2024 annual audit report, COA flagged the municipality for spending only PHP 20.35 million of its PHP 121.35 million development fund appropriation, a utilization rate of 16.77%.