COA: Cebu City exceeded limit

CEBU, Philippines - The Cebu City Government has exceeded by at least P62 million the 45 percent limit on the appropriation for personnel services last year.

This was found out by the Commission on Audit in its recent audit observation.

The figure however is far lower than the findings of the Department of Budget and Management which earlier observed that the city has exceeded its PS appropriation by over P500 million.

But despite the COA and DBM findings, the city government insisted that it is still within the 45 percent limit citing various reasons.

Cebu City Budget Officer Nelfa Briones said that the computation on the city’s PS was based on the Local Budget Operations Manual.

Briones said that the Local Budget Circular No. 98 from which the COA has based its observation and computation was not applied in the city’s questioned appropriations – the 2011 Annual Budget and the three supplemental budgets after that – because LBC No. 98 was issued on October 2011 yet.

The city believes that LBC No. 98 is applicable only to future appropriations after the circular was issued.

The 2011 Annual Budget was prepared and approved early 2011 while Supplemental Budget Nos. 1 and 2 were passed and approved before October.

LBC No. 98 provides for the list or waved items of appropriations that may not be included in the computation of the 45 percent limit.

Waved items, according to this circular, includes absorption of the cost of hospital services transferred from provinces to newly created cities, creation of mandatory positions, payment of the minimum year-end bonus or P1,000 for the Punong Barangay and P600 for other mandatory barangay officials and their cash gifts and payment of retirement gratuity and Terminal Leave Benefits of employees.

Apparently, the city included in the waved items the monetization of leave credits, subsistence allowance, laundry allowance and hazard pay, which are not specified in LBC No. 98.

Basing from LBC No. 98 alone, the city government has exceeded about P19.11 million in the PS computation in SB 1, P3.07 million in the SB 2 and over P40 million in SB 3, according to COA.

Specifically, the questioned items, among others were the P46.5 million appropriation for the year-end bonus of 4,600 city hall employees budgeted under SB 3 and the P28 million cash incentives of barangay officials where the captain received P60,000 for 12 months each while the councilors received P36,000 for 12 months each.

But COA said that the P62 million excess of the city might still go up if they have to include the P6.8 million honorarium of City Environment Sanitation and Enforcement Team.

COA said that DBM found the city exceeding over P500 million in its PS appropriation because the DBM failed to include the retirement gratuities and terminal leave benefits as waved items.

Briones said that the appropriation for PS in the SB 3 must not be considered as additional because the source of the fund is a realignment from the current appropriation for PS. The city government also believes that the excess of P3 million in PS appropriation in SB 2 may be covered by the unexpended appropriation as of December 31, 2011 amounting to P69.079 million.

Rama said that it was only a matter of interpretation. He believes that the budget office can justify the findings of the DBM and COA . - THE FREEMAN