Metro Manila cities leave millions in education funds unused, COA finds
MANILA, Philippines — Millions of pesos intended to improve public education have either not been used fully or improperly spent by several local governments in Metro Manila, according to the 2023 Commission on Audit (COA) report.
Philstar.com analyzed the audit reports of 16 Metro Manila cities and found eight had notable irregularities in their use of the Special Education Fund (SEF).
The most common problem was the underutilization of funds, despite pressing needs for new classrooms, school repairs, and adequate resources for teachers and students.
Other irregularities included charging unallowable expenses to the SEF, such as electricity and water, and salaries or allowances for teaching personnel in schools without staffing shortages.
These problems have persisted for years, with COA repeatedly flagging some cities for similar issues.
So, what is the SEF and where can it be used? The SEF serves to supplement a local government’s annual budget for education, particularly for the operation and maintenance of public schools and priority programs.
It is sourced from 1% of the assessed value of real property on top of the basic real property taxes collected yearly.
The Local Government Code of 1991 limits the use of SEF to the construction and repair of school buildings, improvement of school facilities, equipment, educational research and teacher training, textbooks, and sports development.
The Department of Education (DepEd), Department of Budget and Management (DBM) and Department of Interior and Local Government (DILG) have issued joint circulars to detail the allowable expenses charged against the SEF.
Although COA has repeatedly urged local governments to improve SEF spending, they cite challenges, some beyond their control, in achieving this.
School construction and repairs on hold
Pasig City
Pasig struggled to implement 22 planned programs, projects and activities (PPAs) in 2023, leaving P131.452 million in funds unutilized.
Many of the stalled projects aimed to enhance public school teachers’ skills in areas such as information and communication technology (ICT), science and math, and basic life support.
Among these unimplemented initiatives was also the purchase of “Math Kits” for Grade 3 students, for which P44 million or a third of the unutilized funds had been earmarked.
Of Pasig City's P1.691 billion SEF appropriation, COA noted that only P573.557 million (33.93%) was utilized, leaving roughly two-thirds unspent.
The city's School Division Office (SDO) superintendent told COA that procurement issues, including difficulties in consolidating necessary materials and supplies, hindered program and project implementation.
State auditors recommended, and Pasig City agreed, that the city explore other allowable expenditures to maximize the millions of pesos available for constructing conducive classrooms, updating instructional materials, and other necessary improvements.
Pasay City
Pasay was also flagged for the low utilization of SEF in 2023.
COA found P410 million (27.99%) of the P1.465 billion budget for school building construction, renovation, rehabilitation, and IT/office equipment unutilized.
While some planned construction projects were slated for 2024 after bidding concluded at the end of 2023, other projects did not undergo bidding at all, state auditors found.
One project, the second phase of the 12-room Don Carlos Village Elementary School, was put on hold due to ongoing negotiations with the National Housing Authority (NHA) and DepEd regarding construction rights on NHA-owned land.
A significantly larger amount of the city’s SEF — P1.016 billion (85.31%) of P1.191 billion in continuing appropriations from previous years — was also unutilized by the end of the year.
The remaining P174.895 million funds were spent on eight school construction and restoration projects, in addition to another project for a school sewerage plant facility.
“Although the budget may be reallocated in future years, the local school board (LSB) failed to recognize that time is a crucial factor for the benefit of the students, as the ultimate beneficiaries of the projects. Hence, it is important that the implementation of the planned PPAs be time-bound,” COA said.
Parañaque City
Parañaque, meanwhile, was unable to fully complete 24 programs and projects amounting to P266.221 million, where 87.99% of the fund was unutilized and the remaining was partially utilized.
The identified obstacles included a lack of procurement activity, program preparation by the City Engineering Office, and negotiation delays for land lots where school buildings will be built.
Despite a smaller appropriation, Muntinlupa City underutilized P129.945 million (27.48%) of its P472.954 million SEF budget, with P83.925 million partially used and P46.020 million completely unutilized, due to plan changes and document delays.
Las Piñas City
Recognized by COA as one city with a high utilization rate, state auditors still noted how Las Piñas City failed to use P75.912 million of its P388.199 million SEF in 2023.
Five of the 19 priority development projects to construct and repair schools and their facilities were not implemented, amounting to P54.261 million in unutilized funds.
Malabon
Malabon City, on the other hand, faced procurement challenges that delayed four programs and projects totaling P20.350 million in SEF. These included initiatives for literacy and numeracy, ICT equipment, furniture and fixtures, and a smart classroom.
COA also flagged the city for not allocating P15.962 million in available SEF for the National Feeding Program (NFP), which the city deemed unnecessary due to a low undernourishment rate of 2.53% in 2022.
“Equal attention should be given to these programs to ensure a comprehensive approach in improving the quality of education,” COA said, emphasizing that other priority programs should not be overlooked.
Improper SEF use
Some cities not only struggled to fully utilize the SEF but also improperly charged expenses to it.
Marikina City
Marikina has long struggled with this as COA reports in previous years have also indicated the ineligible expenses made by the local government, which eventually have to be reimbursed.
In 2023, COA found that P3.712 million in SEF funds was spent on ineligible expenses, particularly electricity, telephone, and interest, which are not authorized by the Local Government Code or DepEd-DBM-DILG joint circulars.
“Utilizing the SEF other than what the law allows defeated the purpose in ordaining that the proceeds of the 1% SEF can be appropriated and used solely for the benefit of the elementary and secondary school system, whether in the form of school buildings or instructional materials which are perennial problems in public schools,” state auditors said.
COA noted that using the fund for ineligible expenses depletes resources intended to improve educational facilities, rehabilitate them and enhance safety.
This also prevents the city from hiring more security personnel, installing air-conditioning units in classrooms, constructing additional comfort rooms with sufficient water supply and equipping laboratories with complete supplies, state auditors added.
COA said Marikina City students and teachers could have “state-of-the-art” facilities, equipment and improved basic education programs, including K to 12 support if the local school board — in charge of planning and disbursing the funds — properly utilizes the SEF.
Valenzuela City
Flagged for the same problem, Valenzuela City had spent even more than Marikina for ineligible expenses.
COA uncovered P93.72 million in ineligible SEF spending, including P83.87 million for financial assistance to teaching personnel, who received P2,000 every two months plus P3,000 in December 2023. This amounted to P70.963 million.
Meanwhile, the local government spent P12.907 million on non-teaching staff for anniversary bonuses, incentives and special welfare assistance.
According to the joint circulars, these expenses should not be charged against the SEF.
Other ineligible expenses included a feeding program-related team-building seminar and P4,000 monthly payments to “Bantay Estudyante” workers, mostly senior citizens.
“Such amounts will somehow alleviate the basic financial needs of every teaching and non-teaching personnel; however, such benefits were not included in the enumeration under the SEF,” COA said.
Accountability sought
The Second Congressional Commission on Education (EDCOM 2) has also noted these issues, finding P15 billion in underutilized SEF from 2018 to 2022. It was also discovered that underutilization mostly occurred in cities.
This was a finding in EDCOM 2’s 2024 report entitled “Miseducation: The Failed System of the Philippine Education.”
“Despite this, and the presence of two policies on reporting of SEF expenditures, who is accountable in reporting these figures, and in working with LGUs to ensure that they are spent?” EDCOM 2 Executive Director Karol Mark Yee said in March.
Yee emphasized reviewing existing laws and measures to ensure the SEF is properly and effectively utilized.
He also suggested developing a better framework to address SEF funding inequalities faced by LGUs with significantly smaller incomes than larger cities and provinces.
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