Findings No.1 COA Annual Audit Report 2004

July 28, 2008

1. Management failed to provide adequate budget in the General Fund for the City’s Ad Interim Schools Division operating expenses prompting them to utilize significant amount of the Special Education’s budget for the purpose in violation of Section 272 of R.A. 7160.

Section 272 of Republic Act 7160 otherwise known as the Local Government Code of 1991 provides that “ The proceeds from the additional one percent (1%) tax on real property accruing to the Special Education Fund (SEF) shall be automatically released to the local school boards. . . . Provided, however, that the proceeds shall be allocated for the operation and maintenance of public schools, construction and repair pf school buildings, facilities and equipment, educational research ,purchase of books and periodicals and sports development as determined and approved by the Local School Board.”

Article 184 (f) of the Rules and Regulations Implementing the Local Government Code of 1991 provides that in the preparation of the budget, the School Board shall give priority to the following:

Construction, repair and maintenance of school buildings and other facilities of public elementary and secondary schools;

Establishment and maintenance of extension classes when necessary; and

Holding of sports activities at the division, district, municipal, and barangay levels.

In 2002, the City Government of Tangub entered into a memorandum of agreement with the Department of Education (DepEd), Region X to establish a separate City Schools Division. In that agreement, the LGU of Tangub City bound itself to provide an annual financial assistance to the City Ad Interim Division in the amount of P2.6 million for its maintenance and other operating expenses. Such financial support shall continue until the operations of the interim Division shall be fully funded by the National Government. In June 2003, the Ad Interim City Division started operations.

To provide for the annual budget requirement in operating the Ad Interim Schools Division of P2.6 million, the City inadvertently approved the inclusion in the Special Education Fund budget P561,198.00 for its Personal Services and P1,070,491.09 for Maintenance and Other Operating Expenses. (Annex 1) P700,000.00 was provided for in the General Fund. P500,000.00 came from 20% Development Fund while P200,000.00 was sourced from the Supplemental Budget.

However, total expenses incurred in operating the ad interim office amounted to P1,523,151.49 for the year, P700,000.00 was charged against General Fund and P823,151.49 against Special Education Fund.

Disbursements charged to SEF that totaled P957,482.52 for the year revealed that expenses totaling P823,151.49 were for wages and maintenance of the Ad Interim City Division and only P134,331.03 for the repair of school buildings. (Annex 2)

The Local School Board had prepared the 2004 SEF budget in violation of the provisions of Sections 272 of RA 7160 and Articles 184 (f) of its Implementing Rules and Regulations.

In the exit conference, the City Officials had acceded to provide appropriations in the general fund for the maintenance and operating expenses of the Ad Interim City Division.

Recommendation

Require the Local Sanggunian to include in the 2005 General Fund budget the cost to operate the Ad Interim Division. The Local School Board should also comply with the criteria set in allocating the additional 1% real property tax in preparing the SEF budget. Use 20% Development Fund for other priority development programs/projects.

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Written by admin · Filed Under Commission on Audit, Tangub City