Guidelines on the Appropriation, Release, Planning and Budgeting Process for the SK Funds

January 23, 2019

DBM-DILG-NYC JOINT MEMORANDUM CIRCULAR NO. 1, S. 2019

 

1.0 LEGAL BASIS

In accordance with Section 20 (a) of the SK Reform Act of 2015 (Republic Act [RA] No. 10742), ten percent (10%) of the general fund of the barangay shall be set aside for the SK. The sangguniang barangay shall appropriate the SK funds in lump-sum, which shall be disbursed solely for youth development and empowerment purposes. HTcADC

Furthermore, Section 20 (b) of the same law provides that the SK shall have financial independence in its operations, disbursements, and encashment of their fund, income and expenditures.

2.0 PURPOSE

This JMC is being issued to prescribe the guidelines on the appropriation and release of the SK fund, provide for the planning and budgeting process for the SK, and emphasize the concomitant posting requirements to enhance transparency and accountability.

3.0 GENERAL GUIDELINES

3.1 Appropriation of the SK Fund by the Barangay

3.1.1 The punong barangay shall include the ten percent (10%) of the general fund accruing to the SK in the barangay executive budget to be submitted to the sangguniang barangay for budget authorization purposes. The sangguniang barangay, in turn, shall appropriate the said SK funds in lump-sum in the pertinent appropriation ordinance. TaCEHA

3.1.2 For budget preparation purposes, the barangay treasurer shall inform, in writing, the SK chairperson and the SK treasurer on or before the 15th day of September of the estimated ten percent (10%) of the general fund of the barangay for the ensuing fiscal year, supported by a certification of income of the barangay from the city/municipal treasurer.

3.2 Release of the SK Fund by the Barangay

3.2.1 The SK funds shall be automatically released by the barangay to the SK, and shall not be subject to any lien or holdback that may be imposed by the barangay for whatever purpose. EDCTIa

3.2.2 Consistent with Section 20 (b) of RA No. 10742, the SK shall open a current account in the name of the SK in a bank, preferably government-owned, situated in or nearest to its area of jurisdiction, with the SK chairperson and the SK treasurer as the official signatories. For efficiency and economy purposes, it is strongly encouraged for the SK to open and maintain a depository account in the same bank and branch of its barangay. In the opening of account, the provisions of Department of Finance Department Circular No. 1-2017 dated May 11, 2017 1 shall be strictly observed.

3.2.3 The SK funds shall be deposited by the barangay in the current account of the SK not later than five (5) working days after the crediting of the monthly internal revenue allotment (IRA) share of the barangay consistent with the rules and regulations issued by the Commission on Audit (COA). CAIHTE

For all other income accruing to the general fund of the barangay, the corresponding SK funds shall be deposited not later than five (5) working days after the end of the month.

The barangay may opt to transfer/release the SK funds earlier than herein prescribed on an annual, semestral or quarterly basis, subject to the written agreement between the barangay and the SK.

Failure by the barangay to release any amount of the SK fund shall subject the erring officials to penalties under existing laws.

3.2.4 In case of barangays without elected SK officials, the barangay shall transfer the corresponding ten percent (10%) SK Fund to the trust fund of the barangay, and the same shall be released by the barangay upon the election of the SK officials concerned. acHTIC

3.3 Planning and Budgeting Process for the SK Fund:

3.3.1 Planning Process by the SK:

3.3.1.1 The SK, in consultation with the Katipunan ng Kabataan, shall formulate a 3-year rolling plan, which shall be known as Comprehensive Barangay Youth Development Plan (CBYDP).This plan shall be aligned with the Philippine Youth Development Plan and Local Youth Development Plans in provincial, city or municipal level.

3.3.1.2 The CBYDP shall serve as the basis for the preparation of the Annual Barangay Youth Investment Program (ABYIP).The ABYIP shall contain the specific programs, projects, and activities with corresponding project costs, including the necessary fund flows to approximate the reasonable timing in the release of funds. It is understood that the ABYIP shall reflect the total resource requirement for the budget year. aScITE

3.3.1.3 The ABYIP shall be prepared and approved by the SK through a resolution before the start of the preparation of the SK annual budget.

3.3.1.4 In the preparation of the CBYDP and ABYIP, the SK shall observe the pertinent policies and guidelines issued by the NYC for the purpose.

3.3.2 Budget Preparation by the SK:

3.3.2.1 The SK annual budget, which is the financial plan embodying the estimates of the income and expenditures of the SK for one (1) fiscal year, shall be prepared in accordance with the approved ABYIP.

3.3.2.2 The SK chairperson, with the assistance of the SK treasurer, shall prepare the SK annual budget consisting the following: (i) estimates of income; and (ii) expenditure program. ADCIca

3.3.2.3 In the preparation of the SK annual budget, priority should be given to youth development and empowerment programs, projects and activities in accordance with the Philippine Youth Development Plan and Local Youth Development Plan, as embodied in the approved CBYDP and ABYIP, that will promote the following:

a) Equitable access to quality education;

b) Environmental protection;

c) Climate change adaptation;

d) Disaster risk reduction and resiliency;

e) Youth employment and livelihood;

f) Health and anti-drug abuse;

g) Gender sensitivity;

h) Sports development; and

i) Capability Building, which emphasizes leadership training. 2

 All regular operating expenses pertaining to the activities of the SK, including the SK counterpart on expenses related to the celebration of the Linggo ng Kabataan, and payment of annual dues for the Pederasyon ng mga Sangguniang Kabataan as may be provided in the SK's Internal Rules of Procedures, shall be charged against the SK funds, subject to the applicable budgeting, accounting, and auditing laws, rules and regulations. ScaCEH

 In accordance with Article 423 of the Implementing Rules and Regulations of the Local Government Code of 1991 (RA No. 7160), the SK fund shall not be used for the payment of personal services expenditures.

 Moreover, the conduct of study tours or "lakbay aral" of the SK officials, chargeable against the SK fund, shall be subject to the policies and guidelines prescribed under DILG-DBM JMC No. 02 dated September 23, 2016. 3

3.3.2.4 The budget cycle of the SK shall be synchronized with that of the barangay. As such, the SK chairperson shall submit the proposed SK annual budget to the SK members not later than the 16th day of October of the current year for budget authorization purposes. A sample of the SK annual budget is hereto attached as Annex A.

3.3.3 Budget Authorization by the SK:

3.3.3.1 The SK shall deliberate on the proposed SK annual/supplemental budget. The SK shall pass a resolution approving the SK annual/supplemental budget. For the annual budget, the resolution shall be passed before the beginning of the ensuing year. The resolution passed by the SK shall be signed by the SK chairperson upon approval by the majority of all its members. TIEHDC

3.3.3.2 As a general rule, all budgetary items shall be included and considered in the preparation of the annual budget. However, if funds allow, changes in the annual budget may be done through supplemental budget(s) under the following circumstances:

3.3.3.2.1 When supported by funds actually available as certified by the SK treasurer; and

3.3.3.2.2 If covered by new revenue source(s).

 Provided, that the programs, projects, and activities to be funded under the supplemental budget should be consistent with the ABYIP of the SK. HCSAIa

3.3.3.3 The SK secretary shall cause the posting of the resolution approving the SK annual/supplemental budget in the barangay bulletin board and in at least three (3) conspicuous places within the jurisdiction of the barangay, and if possible including the use of traditional and non-traditional media, not later than five (5) days after the approval thereof.

3.3.3.4 The SK secretary shall submit the SK annual/supplemental budget to the sangguniang panlungsod or sangguniang bayan, through the city/municipal budget officer, within ten (10) days upon the approval thereof.

3.3.4 Budget Review by the Sangguniang Panlungsod or Sangguniang Bayan

3.3.4.1 The sangguniang panlungsod or sangguniang bayan, as the case may be, shall within sixty (60) days upon receipt review the annual/supplemental budget of the SK on their compliance with the priority programs, projects and activities identified under Section 20 (c) of RA No. 10742, and with other existing laws, rules and regulations.

3.3.4.2 Depending on its findings, the sangguniang panlungsod or sangguniang bayan may render the following review actions:

3.3.4.2.1 The SK annual/supplemental budget may be declared operative in its entirety when it fully complies with the priority programs, projects, and activities identified under Section 20 (c) of RA No. 10742, and with other existing laws, rules and regulations. CaSAcH

3.3.4.2.2 The SK annual/supplemental budget may be declared operative in its entirety, subject to conditions, when certain items of appropriation require prior clearance/documentation and/or approval from appropriate authorities.

3.3.4.2.3 The SK annual/supplemental budget may be declared inoperative in its entirety, when: (i) the expenditure program exceeds the estimates of income; (ii) all the programs, projects, and activities are not based on the ABYIP or inconsistent with the priority programs, projects, and activities under Section 20 (c) of RA No. 10742; and (iii) the resolution approving the SK annual/supplemental budget is passed before the approval of the ABYIP.

3.3.4.2.4 The SK annual/supplemental budget may be declared inoperative in part, when: (i) there is/are item(s) of appropriation contrary to budgetary limitations, such as, but not limited to, inclusion of personal services expenditures; (ii) there is/are item(s) of appropriation that has/have no legal basis; (iii) there are programs, projects, and activities not based on the approved ABYIP; (iv) there are other programs, projects, and activities included before providing for all the priority programs, projects, and activities under Section 20 (c) of RA No. 10742; and (v) when the amount provided for a specific program, project, and activity is higher than the amount provided in the ABYIP for the same program, project, and activity. SaIEcA

3.3.4.3 Failure on the part of the sangguniang panlungsod or sangguniang bayan to complete the review within the prescribed period shall render the said annual/supplemental budget deemed approved.

3.3.4.4 The sangguniang panlungsod or sangguniang bayan shall return to the SK chairperson, through the city/municipal budget officer, the SK annual/supplemental budget with the advice of action thereon, if any, for proper adjustments. Upon receipt of such advice, the SK treasurer who has custody of the funds shall not make further disbursements from any item of appropriation declared inoperative, disallowed, or reduced.

3.3.5 Budget Execution by the SK

3.3.5.1 The SK treasurer, whenever necessary, shall certify the availability of funds.

3.3.5.2 All payments out of the SK fund shall be made through Disbursement Vouchers.

3.3.5.3 Disbursements shall be made by issuing checks drawn against the current account in the name of the SK with the SK chairperson and SK treasurer as the official signatories.

3.3.5.4 All claims against the SK funds shall be properly supported with complete documentation. CcSTHI

3.3.5.5 In accordance with Section 101 of Presidential Decree No. 1445 4 and Section 50, Chapter 9, Subtitle B, Book V of Executive Order No. 292,5 the SK chairperson and SK treasurer shall be properly bonded, chargeable against the SK funds, subject to the pertinent guidelines and policies issued by the Bureau of the Treasury.

3.3.5.6 Unexpended balances in the SK budget(s) shall revert to the general fund of the SK at the end of the fiscal year, and shall not thereafter be available for expenditure except by subsequent approval of the SK. However, unexpended balances for capital outlays shall continue and remain valid until fully spent, reverted, or the project is completed. Reversions of such balances shall not be allowed unless obligations therefor have been fully paid or otherwise settled. DEIHAa

 The balances for capital outlays shall be reviewed as part of the annual budget preparation and the SK may approve, upon recommendation of the SK chairman, the reversion of funds no longer needed in connection with the activities funded by said balances.

3.3.6 Budget Accountability by the SK

The SK chairperson, with the assistance of the SK treasurer and SK secretary, shall prepare the budget accountability reports as may be prescribed by the COA.

4.0 TRANSITORY PROVISION

All undisbursed SK funds as of December 31, 2018 under the custody of the barangay shall be transferred to the current account of the SK. The utilization thereof shall be subject to subsequent planning and budgeting by the SK, in accordance with the policies and procedures prescribed under this JMC. SDTIaE

5.0 RESPONSIBILITY AND ACCOUNTABILITY

The responsibility and accountability in the utilization and disbursement of SK funds shall rest upon the SK officials concerned. It is also the responsibility of the said SK officials to ensure that the SK funds are utilized strictly in accordance with applicable budgeting, accounting, and auditing rules and regulations, and the provisions of the Government Procurement Reform Act (RA No. 9184) and other pertinent laws.

6.0 REPEALING CLAUSE

All issuances by the DBM, DILG and NYC that are inconsistent or contrary to the provisions of this JMC are hereby repealed and modified accordingly. Subsequent issuances by any of the agencies in relation to SK planning and budgeting shall be made in accordance with this JMC.

7.0 CASES FOR RESOLUTION

Cases not covered by this JMC shall be referred to the NYC for joint resolution by the DBM, NYC and DILG.

8.0 EFFECTIVITY

This JMC shall take effect fifteen (15) days following its publication in the Official Gazette or in a newspaper of general circulation.

(SGD.) BENJAMIN E. DIOKNOSecretary, DBM

(SGD.) EDUARDO M. AÑOSecretary, DILG

(SGD.) RONALD GIAN CARLO L. CARDEMAChairperson, NYC

ANNEX A

Sample SK Annual Budget

Object of Expenditure	Account Code	Budget Year Expenditures (Proposed)	Expected Results (desired objective)	Performance Indicators (means of measurement)
Part I. Receipts Program   Ten percent (10%) of the general fund of the barangay Receipts from fund raising activities		1,000,000 500,000
TOTAL ESTIMATED FUNDS AVAILABLE FOR APPROPRIATION		1,500,000
Part II. Expenditure Program   GENERAL ADMINISTRATION PROGRAM: CURRENT OPERATING EXPENDITURES
Maintenance and Other Operating Expenses (MOOE) Traveling Expenses Training Expenses Office Supplies Expenses Drugs and Medicines Expenses Fuel, Oil and Lubricant Expenses Other Supplies and Material Expenses Water Expenses Electricity Expenses Postage and Courier Services Telephone Expenses Internet Subscription Expenses Repairs and Maintenance  Buildings and Other Structures  Machinery and Equipment  Transportation Equipment Current Operating Expenditures  Advertising Expenses  Transportation and Delivery Expenses  Rent/Lease Expenses  Membership Dues and Contributions to Organizations  Donations		50,000 60,000 20,000 5,000 15,000 5,000 5,000 20,000 10,000 15,000 10,000   30,000 10,000 15,000   10,000 5,000 60,000 50,000 5,000
TOTAL MOOE		400,000
Capital Outlay (CO)  Land  Buildings		50,000 50,000
TOTAL CO		100,000
TOTAL GENERAL ADMINISTRATION PROGRAM		500,000
SK YOUTH DEVELOPMENT AND EMPOWERMENT PROGRAMS
a. Equitable access to quality education  MOOE  Subsidy  School Supplies Total		150,000 100,000 50,000 150,000	Increased number of youth enrollees in schools/Decreased number of out-of-school youth (OSY)	Percentage increase in number of youth enrollees in schools/Percentage decrease in the number of OSYs
b. Environmental protection  MOOE  Tree seeds  CO Total		25,000 25,000 50,000 75,000	Increased number of youth organizations participating in environmental protection campaigns	Percentage increase in number of youth organizations participating in environmental protection campaigns
c. Climate change adaptation  MOOE  Supplies and Materials  CO Total		50,000 50,000 100,000 150,000	Increased number of youth organizations implementing climate change adaptation activities	Number of climate change adaptation activities conducted
d. Disaster risk reduction and resiliency    MOOE  Supplies and Materials  CO Total		150,000 150,000 100,000 250,000	Increased number of youth organizations participating in the activities of the Local Disaster Risk Reduction and Management Councils (LDRMMCs)	Number of disaster drills/seminars conducted
e. Youth employment and livelihood  MOOE  Supplies and Materials Total		100,000 100,000 100,000	Increased number of employed youth	Percentage increase in number of employed youth
f. Health and anti-drug abuse  MOOE                Supplies and Materials Total		50,000               50,000 50,000	Decreased number of teenage pregnancies, youth with Human Immunodeficiency Virus (HIV)/Acute Immune Deficiency Syndrome (AIDS)     Decreased number of drug dependent youth and youth who ever tried using illegal drugs	Number of interventions conducted, such as seminars on HIV/AIDS awareness, reproductive health, etc.           Number of drug prevention education information campaign conducted
g. Gender sensitivity  MOOE  Supplies and Materials Total		30,000 30,000 30,000	Improved gender equality in youth participation activities	Number of gender-responsive activities conducted
h. Sports development  MOOE  Supplies and Materials  Food supplies  Officiating fees  CO Total		50,000 30,000 10,000 10,000 25,000 75,000	Healthier and more active youth	Number of sports activities conducted
i. Capability Building  MOOE  Supplies and Materials Total		120,000 120,000 120,000	Better capacitated youth	Number of capability building activities conducted such as dialogues, for a, lectures, classes
Total for Youth Development and Empowerment Programs		1,000,000
TOTAL EXPENDITURE PROGRAM		1,500,000
ENDING BALANCE		0

 

Footnotes

1. Amended Guidelines on Authorized Government Depository Banks.

2. The SK shall implement a program to transfer the knowledge learned from the mandatory and continuing and other training programs by the SK officials to the members of the Katipunan ng Kabataan. The transfer of knowledge program may include dialogues, forum, lectures, classes and other means of transferring knowledge. These shall be mandatorily included in the CBYDP and ABYIP (Rule V, Section 30 [h] of the IRR of RA No. 10742).

3. Policies and Guidelines on Study Tours or "Lakbay Aral" Activities of Local Government Units.

4. Government Auditing Code of the Philippines.

5. The Administrative Code of 1987.