Guidelines on the Release of Funds for FY 2007

March 27, 2007

DBM NATIONAL BUDGET CIRCULAR NO. 508-07

 

1.0 PURPOSE

1.1 To provide the pertinent budgetary policies relative to the release of funds for FY 2007 from all sources;

1.2 To prescribe the procedural guidelines on the treatment of releases and obligations made prior to April 8, 2007 i.e., the effectivity date of the FY 2007 General Appropriations Act (FY 2007 GAA), RA No. 9401;

1.3 To issue the necessary rules and regulations for the implementation of specific items under the FY 2007 GAA and,

1.4 To reiterate the required reports prior to the release of funds.

2.0 COVERAGE

The Circular covers all government agencies, including Local Government Units (LGUs) and Government Owned or Controlled Corporations (GOCCs) receiving budgetary support from the national government in FY 2007.

3. GENERAL GUIDELINES TAHcCI

3.1 The effectivity date of the FY 2007 GAA is April 8, 2007. In view hereof, agencies are hereby authorized to continue to incur overdraft in allotment for obligations corresponding to the actual requirement of their regular operations, chargeable against R.A. 9336, as reenacted, pending the effective date of the FY 2007 GAA.

3.2 Allotment releases during the year from all sources shall be consistent with the FY 2007 Allotment Release Program (ARP). The ARP of each agency/department shall be equal to the approved budget level of the agency/department budget under the FY 2007 GAA, inclusive of automatic appropriation under the FY 2007 National Expenditure Program (NEP). The following items shall form part of the agency ARP and not as an "add-on" to their ARP.

3.2.1 Obligations incurred by the agency authorized under Circular Letter Nos. 2007-1, 2007-3 and 2007-4 dated January 2, 2007, February 1, 2007 and February 26, 2007;

3.2.2 Obligations authorized to be incurred by agencies in accordance with item 3.1 of this Circular;

3.2.3 Special Allotment Release Orders (SAROs) issued from January 1, 2007 to April 8, 2007 for specific agency budgets chargeable against the following:

3.2.3.1  FY 2007 Budget (R.A. No. 9336, as reenacted); and,

3.2.3.2  FY 2006 Budget (R.A. No. 9336, as reenacted) considered as continuing appropriations).

3.2.4 Releases from the Unprogrammed Fund (UF).

3.3 Allotment releases from the multi-user Special Purpose Funds (SPFs) such as the Calamity Fund, Contingent Fund, E-Government Fund, International Commitment Fund, Miscellaneous Personnel Benefits Fund (MPBF),National Unification Fund, Priority Development Assistance Fund and Pension and Gratuity Fund (PGF) shall be over and above the agency/department ARP.

3.4 SAROs shall be issued to cover the amounts obligated by the agency pursuant to items 3.2.1 and 3.2.2 of this Circular. Said SAROs, chargeable against the FY 2007 budget (RA No. 9336 as reenacted), shall be based on the Financial Report of Operations or Statement of Allotment, Obligations and Balances of the agency for the period January 1, 2007-April 7, 2007.

3.5 Government agencies are required to submit to the DBM on or before April 15, 2007, their plans, programs and targets for the year using the Budget Execution Documents (BEDs),prescribed under NBC 507 dated January 31, 2007, to wit:

3.5.1 FY 2007 Physicial and Financial Plan (PFP) — reflects the agency's physical and financial (budgetary allocation) performance/targets in FY 2007 broken down by quarter;

3.5.2 Monthly Cash Program (MCP) — reflects the monthly disbursement requirements of the agency;

3.5.3 Estimate of Monthly Income — reflects the estimated monthly income of the agencies for the current year consistent with the Budget of Expenditures and Sources of Financing (BESF) for the given year. ECTIHa

3.6 DBM, in coordination and consultation with agencies, shall prepare and issue the Agency Budget Matrix (ABM) which shall be the basis of the comprehensive release of allotment chargeable against the FY 2007 GAA.

3.6.1 The ABM (format shown in Annex A) shall be prepared by appropriation/financing sources, to wit:

3.6.1.1  Agency appropriations under the FY 2007 GAA; and

3.6.1.2  Automatic Appropriations under the FY 2007 NEP such as Special Account in the General Fund (SAG F),Retirement and Life Insurance Premium (RLIP) and other items classified as such.

3.6.2 The ABM shall contain the following disaggregation:

3.6.2.1  Withheld Portion which corresponds to the amount programmed by agencies for their regular operating requirement pending the effectivity of the FY 2007 GAA i.e., from January 1, 2007 to April 7, 2007.

3.6.2.2  Net Program which pertains to the amount intended for regular operating requirements from the effective date of the FY 2007 GAA to December 31, 2007, segregated into Needing Clearance (NC) and Not Needing Clearance (NNC) portion.

3.6.3 The NC column pertains to the following budgetary allocations in the agency specific budgets, to wit:

3.6.3.1  Confidential and Intelligence Fund as well as procurement of motor vehicles and motorized equipment which are subject to prior approval of the President of the Philippines;

3.6.3.2  Agency built-in lump-sum appropriations corresponding to items or activities which do not have specific details thereby necessitating the submission of certain documentary requirements prior to its release such as:

• Creation or expansion of new agencies and organizational units;

• Creation of new positions;

• Reclassification of positions;

• Newly legislated schools;

• Amount appropriated for the Equivalent Record Form and Master Teacher;

• Nationwide, region-wide and district-wide lump-sum for infrastructure and non-infrastructure projects; aSACED

• Special Purpose Funds of the Regional Governor and Vice Regional Governor as well as the share in internal revenue collections under the budget of the Autonomous Region of Muslim Mindanao; and,

• All other lump-sum amounts under agency specific budgets.

3.6.3.3  Annually appropriated SAGF built-in under the agency budget;

3.6.3.4  Budgetary items/provisions for Conditional Implementation under the President's Veto message, which are subject to specific guidelines to be issued by the appropriate agencies;

3.6.3.5  Budgetary reallocations by the legislature which provided additional allocations for programs or projects or which introduced new items in the budgets of some departments, bureaus, offices and agencies; and

3.6.3.6  Budgetary support of the national government to the GOCCs and LGUs.

3.6.4 The NNC column refers to budgetary items of agency budgets under the FY 2007 GAA not enumerated under Item 3.6.3. It shall also include requirements for RLIP.

3.6.4.1  The NNC column shall be further disaggregated into:

• This Release which represents the initial comprehensively released allotment for Personal Services (PS),for Maintenance and Other Operating Expenses (MOOE) and Capital Outlay (CO) requirements of the agency; and,

• For Later Release which represents the amount to be released after the conduct of the Agency Performance Review (APR),as prescribed under item 4.3 of this Circular.

3.6.5 The following built-in appropriation items under the FY 2007 GAA, although part of the release amount under the NNC column, can only be obligated by the agency, subject to compliance with the required clearance/approval/documentation: CTIEac

3.6.5.1  Computers and other information technology equipment which need clearance/approved Information Systems Strategic Plan from the National Computer Center under the Commission on Information and Communications Technology;

3.6.5.2  Communication equipment which require clearance from the National Telecommunications Commission;

3.6.5.3  Firearms which need the prior approval of the Philippine National Police;

3.6.5.4  Research and development in the natural, agricultural, technological and engineering sciences which has not yet been approved by the Department of Science and Technology and/or the Department of Agriculture;

3.6.5.5  Books to be procured by agencies other than schools and the National Library exceeding the authorized five (5) copies per title, which need prior approval from DBM;

3.6.5.6  On-going Foreign-Assisted Projects (FAPs) which require the attainment of certain conditionalities; and

3.6.5.7  Grants, subsidies and contributions which must be supported by details indicating among others, the purpose, amount intended for each beneficiary and the list of recipients.

3.7 Agencies may request for additional budgetary allocation to cover their mandatory PS requirements chargeable against the following multi-user SPFs subject to the applicable Special Provisions:

3.7.1 The MPBF which shall be used for and under the following conditions;

3.7.1.1  Deficiency in authorized salaries, bonuses, allowances and premiums payments.

3.7.1.2  Deficiency resulting from the filling up of vacant positions. Said filling up should be covered by a specific authority pursuant to the provisions of AO No. 366 and CL 2006-2. cTCADI

3.7.1.3  In the event of the deficiencies noted under items 3.7.1.1 and 3.7.1.2 abovementioned, the available allotment of the agency shall first be used to cover said requirements. Release from the MPBF shall only be made once the APR has been completed and it has been determined that the aforecited requirements can not be accommodated within the agency's savings.

3.7.2 The PGF which shall be the funding source for the following:

3.7.2.1  Pension benefits for military personnel of the Department of National Defense (DND),uniformed personnel of the Department of Interior and Local Government (DILG),Department of Transportation and Communications (DOTC) and National Mapping and Resource Information Authority (NAMRIA),Members of the Judiciary, Chairs and Members of Constitutional Commissions, Energy Regulatory Commission and others not covered by the GSIS retrement law;

3.7.2.2  Benefits for employees affected by the rationalization of the functions of their agencies pursuant to AO No. 366;

3.7.2.3  Terminal Leave (TL) Benefit requirements of compulsory and optional retirees; and

3.7.2.4  Retirement Gratuity (RG) benefits.

Agencies are reminded to urge their retirees who are qualified to retire under RA No. 1616 to avail of the GSIS retirement package under RA No. 8291 or CA No. 660. In the event said retirees opt to avail of the benefits under RA No. 1616, their gratuity benefits shall be charged against available savings.

3.8 The General Fund Adjustment-Unprogrammed Fund may tapped to augment the agency's operating requirements subject to the condition that their actual income collected and deposited with the Bureau of the Treasury during the year exceeds the revenue estimates included under the FY 2007 Budget of Expenditures and Sources of Financing (BESF).

3.9 Agencies authorized to pay honoraria in accordance with the provisions of Section 46 of the General Provisions of RA No. 9401 and subject to the issuance of implementing guidelines by DBM. ACcISa

3.10 The following rules on savings and augmentation are hereby reiterated:

3.10.1  In the use of savings, priority shall be given to the augmentation of amounts set aside for compensation, Year-End Benefits (YEB),RG/TL, old age pension of veterans and other personnel benefits.

3.10.2  Any excess provision or release for RLIP shall not be considered as savings of the agency.

3.10.3  Agencies may augment any item of expenditure with MOOE, except confidential and intelligence fund without prior approval of the DBM.

3.11  Appropriations shall be available for release and obligation one year after the end of the year it was appropriated with the exception of PS, which shall lapse at the end of the year. Thus, requests for realignment of released allotments under the FY 2006 budget shall be requested until June 30, 2007 so as to provide agencies with sufficient time to implement projects/activities covered by said realignment.

3.12 The deadline for the submission of requests for any release requiring issuance of SARO and NCA in FY 2007 shall be on November 15, 2007.

3.13 Agencies are hereby reminded that the "no report, no release" policy, as it applies to the submission of Budget Execution Documents and Budget Accountability Reports prescribed under NBC No. 507 dated January 31, 2007 shall be strictly enforced.

4.0 SPECIFIC GUIDELINES

4.1 On the release of allotment

4.1.1 DBM, in coordination and in consultation with agencies, shall prepare the ABMs broken down by P/A/P and allotment class, i.e.,PS, MOOE, CO, and by Operating Unit or OU. (An operating unit refers to the "agency receiving NCA directly from the DBM").

 The PS level should already include the adjusted employer's share for health and compensation insurance premiums (authorized under PHIC Circular No. 004-2000 and ECC Board Resolution No. 02-04-235, respectively) effective January 2007.

 For FAPs allocation, the ABM should be further broken down into Peso Counterpart (PC)/ Loan Proceeds (LP) and project/category/component per allotment class basis.

4.1.1.1  The NNC portion of the ABM shall include the following: CADHcI

• Agency specific budget under FY 2007 GAA, other than those enumerated under item 3.6.3 of this Circular; and

• RLIP which is computed at twelve percent (12%) of the comprehensively released itemized salaries, except for the following:

(i) Members of the Judiciary, Chair and Members of Constitutional Commissions and the ERC for which three percent (3%) shall be computed corresponding only to the Life Insurance Premiums;

(ii) Military Personnel of the DND, uniformed personnel of the DILG, DOTC and NAMRIA, for which there shall be no provision for RLIP; and,

(iii) Other agencies not covered by the GSIS Retirement Law.

4.1.1.2  The NC portion of the ABM shall reflect items enumerated in item 3.6.3 of this Circular which are to be released to the agency though a SARO upon compliance with certain documentary requirements. AHDTIE

4.1.1.3  The total of the NNC and the NC columns of the ABM shall be equal to the agency's net program appropriation for FY 2007 as defined under item 3.6.2.2 of this Circular.

4.1.2 Allotments to be comprehensively released to the agencies shall be equivalent to at least 50% of PS, MOOE and CO of the NNC portion of the ABM. The computed amount shall be highlighted in bold words on the last page of the ABM.

4.1.3 The ABM shall be signed/approved by the DBM Secretary or his authorized representative. ABMs of SUCs, MMDA, the Pasig River Rehabilitation Commission and the regionalized portion of the DPWH, DepEd, DOH, TESDA and CHED Supervised Institutions shall be signed/approved by the concerned DBM Regional Director.

4.1.4 The original copy of the approved ABM shall be issued by the DBM to the agency. Any revision/adjustment on the amounts classified under the NNC and NC columns after the ABM has been approved will necessitate the issuance of a SARO by the DBM.

4.1.5 Upon effectivity of the FY 2007 GAA i.e., April 8, 2007 and pending approval of the ABM, agencies are authorized to incur obligations under the FY 2007 GAA, R.A. No. 9401 chargeable against the amount released under the NNC portion of the ABM.

4.2 On the release of Disbursement Authorities i.e.,NCA, Non-Cash Availment Authority (NCAA) and Cash Disbursement Ceiling (CDC)

4.2.1 Agencies shall submit to DBM their MCP to reflect their monthly disbursement requirements for the following:

4.2.1.1  Allotment released to the agency under 4.1.2. of this Circular;

4.2.1.2  RLIP computed at 12% of the initial release for itemized salaries, except for agencies under item 4.1.1.1 (i) to (iii);

4.2.1.3  SAROs issued to the agency from January, 2007 prior to the effectivity date of the FY 2007 GAA, which shall require disbursement authorities; and

4.2.1.4  Continuing appropriations (unobligated allotment) as of December 31, 2006. In this instance, copy of the last page of the Registries of Allotments and Obligations showing the Continuing Appropriations (MOOE and CO),prepared by the Budget Officer, should be submitted as supporting document.

4.2.2 The MCP shall indicate the portion to funded out of NCA, NCAA and CDC. The MCP should be broken down by program/project and allotment class i.e. PS, MOOE and CO. Identification/segregation shall also be made as Locally Funded Projects as well as FAPs, (on a program/component and allotment class basis with breakdown by PC and LP component portion).The LP portion should further be broken down into its cash and non-cash components. ISHCcT

4.2.3 Separate MCPs shall be submitted whenever the following items are requested for release:

4.2.3.1  Specific agency appropriation under the FY 2007 GAA specifically the amounts under the NC portion, if any, of the approved ABM;

4.2.3.2  Claims against multi-user SPFs under the FY 2007 GAA;

4.2.3.3  Automatic Appropriations including SAGF; and

4.2.3.4  The "For Later Release" portion of the NCC of the approved ABM.

 The MCPs shall correspondingly be revised if the amount approved/release is less than the amount requested.

4.2.4 Budgetary polices and requirements for the release of disbursement authorities are as follows:

4.2.4.1  On the Release of NCA

• The amount for PS should fully provide for all filled positions inclusive of fixed expenditures; and, must take into consideration the timing of the grant of year-end benefits and other similar items of expenditures, including pensions for uniformed/military personnel and veterans.

• Seasonal periods or peak and slack times in the provision of MOOE (when agencies' activities/work program require adjustment in operating expenses) should always be taken into consideration.

• CO must likewise be programmed in accordance with scheduled work targets e.g.,initial construction activities will only entail fifteen percent (15%) mobilization costs and the balance shall be in accordance with the work program. Likewise, equipment will require cash only on the expected delivery date and not at the bidding and procurement stages.

• For FAPs, the release of the PC and LP components shall be synchronized. Moreover, the cash portion of the LP component shall be released only upon receipt of the BTr certification re: availability of LP from the foreign lending institution.

• The cash requirements of prior year's A/Ps i.e.,due and demandable A/Ps (charged against FY 2006 and prior years budget) which remain unpaid up to the end of December 31, 2006 shall follow the guidelines prescribed under CL No. 2004-3.

 Cash requirement for current year A/Ps i.e.,for goods/services/projects to be delivered/rendered/completed and accepted during the year (charged against FY 2007 and prior year's budget) shall be paid pursuant to the procedures prescribed under CL No. 2004-3 and 2005-2, as follows: ESDcIA

Þ For Internal Creditors

 May be paid out of the available NCA under the Common Fund System (Item 5 of this Circular).If available NCA is not sufficient, request for the purpose shall be submitted supported by the list of internal creditors to be paid.

Þ For External Creditors

 NCA for the purpose shall be requested on a need basis supported by the list of external creditors to be paid.

4.2.4.2  On the release of NCAA

• Departments/agencies availing of foreign loan proceeds through direct payment chargeable against available allotment, shall submit a request for the issuance of NCAA prior to submission of availment application to Foreign Lending Institutions.

• Requests for NCAA shall be supported by the following as prescribed under CL No. 2003-12 dated December 4, 2003:

— Photocopy of Application for Withdrawal or equivalent document covering the amount requested;

— Certified list of obligated allotments issued for the project against which the disbursements shall be applied; and

— Details of disbursement expressed both in peso and equivalent foreign currency as indicated in the application.

 

4.2.4.3  On the release of CDC

• CDC is an authority issued by DBM to DFA and DOLE to utilize their income collected and retained by their foreign service post to cover its operating requirements but not to exceed the released allotment for the purpose.

• Release of CDC shall be supported by the following accountability reports as consolidated by the DFA or DOLE Home Office: AEIDTc

— FSP Monthly Report of Income;

— FSP Status of Working Fund; and

— Projected Annual Report of Income

4.3 On the conduct of the agency performance review

4.3.1 Analysis of agency performance, in terms of physical and financial outputs shall be undertaken by DBM on a regular basis based on the Budget Accountability Reports (BARs) prescribed under NBC No. 507.

4.3.2 The information on the agencies accomplishments contained in their BARs shall be used and evaluated against the targets they presented in their BEDs. To facilitate monitoring of agency performance, the following BARs are correlated to the corresponding BEDs, as follows:

4.3.2.1  The agency's Quarterly Physical Report of Operations and Financial Report of Operations shall be analyzed against the same quarter, as reflected in the FY 2007 Physical and Financial Plan;

4.3.2.2  In addition, to determine the monthly financial status of the agency, the Statement of Allotment, Obligations and Balances shall be used for the purpose;

4.3.2.3  The Monthly Report and Disbursements shall be evaluated with the program for the same month as reflected in the Monthly Cash Program;

4.3.2.4  The FY 2007 Quarterly Report of Income shall be evaluated against the same period cover under the Estimate of Monthly Income;

4.3.3 The result of the agency performance review will be used as one of the basis for deciding the necessity of the following:

4.3.3.1  Release of the balance of the "For Later Release of the NNC portion" of the approved ABM;

4.3.3.2  Additional release from SPFs;

4.3.3.3  Withdrawal of released allotment;

4.3.3.4   Approval of request for realignment;

4.3.3.5  Revision of cash program; or,

4.3.3.6  Recision of targets.

5.0 REITERATION OF EXISTING POLICIES AND ENUNCIATION OF NEW POLICIES

The Common Fund System policy shall continue to be used. Cash allocation released to agencies under the regular MDS sub account may be used to cover payment of obligations charged against their current and prior years' budget, for which goods and services have been delivered during the year after satisfying their regular operating requirements as reflected/considered in their MCP. The policy of having separate MDS sub-accounts for retirement gratuity/terminal leave benefits and prior years' accounts payable, as well as trust liability account under E.O. No. 388, shall be maintained.

6.0 EFFECTIVITY

These guidelines shall take effect immediately.

 

(SGD.) ROLANDO G. ANDAYA, JR.Secretary

 

Agency Budget Matrix