Underutilized, deprived

By: Francis Allan L. Angelo

WE HAVE begun going through the Commission on Audit’s 2018 annual audit report (AAR) on the Iloilo City and provincial governments. And it’s filled with juicy news on how the two local governments are being ran, especially their fiscal management.

One interesting aspect of the report (actually it has been the subject of previous AARs, read: recidivist) is the “underutilization” of the Capitol’s 20 percent development fund (DF) under the administration of former governor Arthur Defensor Sr.

To reiterate, the 20% DF comes from the annual internal revenue allotment (IRA) or the local government’s share from national revenues.

Section 287 of the Local Government Code provides that each local government unit (LGU) “shall appropriate in its annual budget no less than twenty percent (20%) of its annual internal revenue allotment for development projects.”

Also, Joint Memorandum Circular (JMC) No. 2017-1 of the Department of Interior and Local Government and Department of Budget and Management (DILG-DBM) stated that “all development projects to be funded under the 20% DF shall contribute to the attainment of desirable socio-economic development and environmental management outcomes of the LGU, and shall partake the nature of investment or capital expenditures.”

It is the responsibility of every local chief executive to ensure that the 20% DF is optimally utilized to help achieve the aforementioned objectives, the JMC added.

But based on COA’s audit findings (Observation No. 9), the previous Defensor administration again failed to optimally utilize the 20% DF, which is contrary to Section 5.0 of the DILG-DBM JMC No. 2017-1.

The audit agency also observed that the fund “was not reviewed to determine savings from completed program/project/activities and those which were no longer prioritized, and to be re-appropriated for other development projects, inconsistent with Paragraph 2, Section 322 of the Local Government Code, thereby depriving the constituents of vital services and benefits” (emphases mine).

Here are the numbers:

The Iloilo Provincial Government’s Internal Revenue Allotment (IRA) for 2018 was P2,350,072,677, of which P470,014,535.4 was appropriated for the 20% DF. The amount increased to P633,112,314.80 after the passage of Supplemental Budget Nos. 2 and 3

On the other hand, the final adjusted balance for continuing appropriations (previous allocations) of the 20% DF was P379,337,290.87.

A review of the 2018 Statement of Comparison of Budget and Actual Amounts (SCBAA) showed that P411,078,851.80 (or 64.93%) and P134,272,785.26 (or 35.40%) of the current and continuing appropriations of the 20% DF, respectively, were obligated.

Compared to the 2017 current and continuing appropriations’ utilization of 42.18% and 51.08%, respectively, the current appropriation increased by 22.75% while that of the continuing appropriations decreased by 15.68%.

COA also looked into the details of Programs/Projects/Activities (PPAs) funded by the 20% DF and it found out that 4 current PPAs and 10 PPAs with continuing appropriations have zero percent obligated amount, which means the projects never took off and the funds are lying idle and useless.

The audit body had previously called out the Capitol’s attention to the low rate of the 20% DF utilization in an audit observation memorandum (AOM) with the following recommendations:

-review the availability of the technical personnel, equipment and feasibility of implementing the PPAs within realistic timelines; and

-evaluate and re-assess the PPAs in the continuing appropriations if still responsive to the priority needs of the constituents of the Province, otherwise reprogram the fund.

The audit report also showed large amounts of continuing appropriations in previous years (2012-2017), an indication that the Capitol has not maximized government funds for the benefit of its constituents.

To highlight how much “useless” cash the Capitol is keeping in its coffers, to the detriment of its constituents, please refer to the table below:

Table 6: Summary of 20 % DF Utilization-Continuing Appropriations

To quote the annual audit report: “The existence of a large amount of continuing appropriations implied that its PPAs were not among the priorities, for the same remained unimplemented despite the lapse of several years. As presented in Table 06, only P134,272,785.26 or 35.40% of the P379,337,290.87 continuing appropriations were obligated, exhibiting absence of urgency in the implementation, and contradicting the ‘Priority’ nature of the 20% DF PPAs.”

In short, the Capitol is swimming in idle cash that ought to have uplifted the lives of thousands of Ilonggos wallowing in poverty. Had the Capitol reviewed its investment priorities, maybe we could have taken off like Cebu or those in Luzon.

We will continue with more COA findings on this matter and the justifications offered by Capitol officials to the audit agency.