Core
Business World, 9 October 2013
How huge was the controversial Disbursement Acceleration Program of 2011 (DAP 2011) and how was it put together? It was originally announced via a press statement posted on the Department of Budget and Management (DBM) website on Oct. 12, 2011. Three months later, on Jan. 9, 2012, a press release posted on www.gov.ph said that the President approved the addition of P13.4 billion to the original P72.1-billion DAP 2011 — DAP 2011 would be worth P85.5 billion, not P72.1 billion.
The budget rules on savings and augmentation follow from the Constitution and the General Appropriations Act (GAA). The rules are sound but apparently largely ignored. The 1987 Constitution states:
“Sec.25 (5) No law shall be passed authorizing any transfer of appropriations; however, the President, the President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and the heads of Constitution Commissions may, by law, be authorized to augment any item in the general appropriations law for their respective offices from savings in other items of their respective appropriations.”
Executive Order 292 otherwise known as the Revised Administrative Code of 1987, issued on July 25, 1987 (five months after the 1987 Constitution was ratified) is consistent with the above provision.
The general rule is that no law shall be passed authorizing any transfer of appropriations. The term “realignment” is not even mentioned in the Constitution.
The GAA of 2011 (and prior and subsequent years) defines savings and augmentation as follows:
“Section 60. Meaning of Savings and Augmentation. Savings refer to portions of balances of any programmed appropriation in this Act, free from any obligation or encumbrances or encumbrance which are: (i) still available from the completion or final discontinuance or abandonment of the work, activity or purpose for which the appropriation is authorized; (ii) from appropriations balances arising from unpaid compensation and related costs pertaining to vacant positions and leaves of absence without pay; and (iii) from appropriations balances realized from the implementation of measures resulting in improved systems and efficiencies and thus enabled agencies to meet and deliver the required or planned targets, programs and services approved in this Act at a lower cost.”
“Augmentation implies the existence in this Act of a program, activity, or project with an appropriation, which upon implementation, or subsequent evaluation of needed resources, is determined to be deficient. In no case shall a non-existent program, activity, or project, be funded by augmentation from savings or by the use of appropriations otherwise authorized in this Act.”
Under (i) savings are generated after completion of a project. For example, if a P10-million project is completed at a cost of P8 million, it generates savings worth P2 million. The project has to be completed, not simply awarded, because there is a possibility of change order down the road. Question: how can the Aquino administration generate so much savings when it has failed to move its projects? No progress, no savings.
For projects that are abandoned or discontinued, the decision to do so has to be final, that is, the discontinued project will not reappear in future budgets. Postponing the implementation of a slow-moving project does not create savings. The decision to postpone has monetary implications in the next fiscal years. Note that the agency concerned has two years to implement capital projects; some projects may even be implemented over several years.
Of course, savings due to efficiency gains is allowed. That’s the spirit of item (iii) above. Adoption of new or improved technology, which allows an agency to deliver what was promised for less is real savings.
Given the above, I’m amazed at the ability of Budget Secretary Abad to put together P85.5 billion worth of savings for 2011. Note, too, that the DAP 2011 was put together even when the fiscal year was still in progress, meaning agencies of government have a full quarter left before the end of the fiscal year.
NECESSARY CONDITIONS FOR AUGMENTATION
Augmentation of appropriations within the respective offices from savings is allowed. But for this to happen, the following necessary conditions must be present and observed:
First, the savings must come from items included in the General Appropriations Act (GAA); second, the item(s) to be augmented exist or included in the GAA; third, the item(s)/sources of savings and item(s) to be augmented must be within the appropriations of the authorized official; and fourth, “in no case shall a non-existent program, activity or project, be funded by augmentation, from savings or by the use of appropriations otherwise authorized in this Act” (meaning the GAA).
When Secretary Abad declared as “savings,” in the middle of the fiscal year, part of the appropriation of an agency because it is slow moving, that effectively denies the head of the agency the ability to catch up and deliver what he promised Congress. That’s unfair and illegal.
And when Mr. Abad caused the realignment of “savings” for some new projects, without getting congressional approval, he effectively changed the budget as approved by Congress, altered the desired budget priorities, and changed the targeted beneficiaries. That, too, is illegal.
Moreover, Mr. Abad has to contend with Section 66 of the 2011 GAA, which prohibits against impoundment of appropriations. To impound means to seize or take legal custody of something (in this case, appropriations).
Section 66 says: “No appropriations authorized under this Act shall be impounded through retention or deduction, unless in accordance with the rules and regulations issued by the DBM: PROVIDED, That all funds appropriated for the purposes, programs, projects and activities authorized under this Act, shall be released pursuant to Section 33 (3), Chapter 5, Book VI of E.O. No. 292.”
DAP 2011, which generated P85.5 billion “savings,” and its subsequent allocation to new items not in the GAA has raised a lot of legal issues. Unavoidably, the Supreme Court has to exercise its constitutional duty as the ultimate arbiter of the law. It has to decide in a manner that will strengthen political institutions and the system of checks and balances.
