The Finance of Education by Local Governments

Local government units (LGUs) from Metro Manila were the least dependent on external sources, while those from Muslim Mindanao were the most dependent on their IRA share. The Autonomous Region in Muslim Mindanao (ARMM) LGUs only generated 3% of their revenues internally. The real property tax contributed 23% to the LGUs' local sources of revenues, with the basic real property tax raising Php1.73 billion and the Special Education Fund (SEF) tax raising Php1.43 billion in 2013. The SEF accounted for 19.2% of the total local taxes, with a range of 10.7% for LGUs from Central and Southern Luzon to 23.4% for LGUs from Visayas. The SEF revenues, which come from the imposition of one percent tax on the assessed values of real properties, are earmarked for education and are budgeted and disbursed by local school boards. Among the LGUs in the EdGE alliance, Valenzuela City generated the highest SEF collection at P308.8 million in 2013, but its SEF budget on a per student per day basis is only P13.48. Caloocan City ranks second to Valenzuela City in terms of total SEF collection, but its per capita SEF allocation is only P5.94. Iloilo City has the highest per capita SEF allocation at P15.09, while Malabon City, Malolos City, and Bacolod City can only allocate less than P6.00 per student from SEF. Navotas City has the lowest per capita SEF allocation at P3.44. The LGUs in the EdGE alliance spent an average of 7% of their total budget for education in 2013, with an average of P16.64 million a year. The highest spenders are LGUs from Central Luzon and Southern Luzon that allocated 9% of their budget for education, or an average of P63.41 million. The lowest spenders are LGUs from ARMM that spent less than 1.0% of their budgets for education or an average of P240,000. Those from Northern Luzon spent only 3.0 percent of their budget on education. On the average, 34% of the LGU budget for education in 2013 went to personal services and 66% went to Maintenance and Other Operating Expenses (MOOE). Thirty-six of the 76 LGUs reported devoting 100% of their education budget for MOOE. Forty LGUs used 32% of their SEF on personal services. Normal expenditure items such as utilities, communication, travel expenses, office supplies, travel expenses, and other MOOE expenses eat up most of the expenses of most LGUs. A few LGUs spent on trainings, textbooks, and repair and maintenance of school buildings. The Personnel Expenses were expended for salaries of teachers who were hired by the LSBs and the compensation of other personnel like janitors and security guards.