Filamer Christian University

GRADUATE SCHOOL
Roxas Avenue, Roxas City

Ed.D. 707 – Financial Management in Education

ADONIS P. BESA DR. LORNA L. LORENZO

Student, Ed.D.-EL Professor

Budgeting, Budget Process, Implementation

and Performance Evaluation and Control
Introduction and the Merits of Budgeting
 Budgeting is an important tool in management. For a budget to be meaningful, it has to be
prepared with the institutional plan as its basis; for, after all, the budget is a reflection of the
institutional plan.
 Included as a component of the institutional plan is the definition and articulation of objectives
that are convergent with the institutional vision/mission that should be fully appreciated by all
the components of the academic community.
 To operationalize the objectives contained in the institutional plan are specific programs and
projects the implementation of which, by virtue of the funding provided in the budget, will
redound to the greater enhancement of excellence in the educational operation of the
institution.
 In the financial and resource constraints, priorities will have to be determined and the
implementation of the budget entails compliance with the priorities as contained in the budget
document.
 Periodic monitoring and coordination during budget implementation is also desirable. When
required, control mechanisms may be instituted to direct financial operations toward a
desirable path consistent with the defined objectives and priorities.
 As a result of the attainment of institutional objectives, performance indicators will demonstrate
the department or officer responsible for project execution and the instrumental in achieving
high levels of institutional productivity.
 With the institution cognizant of high productivity, then a culture of excellence will prevail, which
can be the basis for a system of meritocracy in the institution.

Planning Function of Budgeting

 A starting point in the preparation of the budget is the knowledge of the present state of the
institution as contained in the institutional plan. The institutional strengths and weaknesses as well
as threats and opportunities, have to be highlighted for the provision of a budget.
 Having analyzed the existing situation, one has to be certain that the objectives are doable,
and that their implementation is within the time frame of the budget while cognizant, all the
time, of resource and financial constraints. Thus, an important document is a budget statement
detailing the challenges faced by the educational institution, and its concerns and desired
future for the educational institution.
 Having completed the budget statement, the financial projections can be prepared with the
identification of sources of revenues, and the definition of all expenditure items.

Budget for Effective Coordination, Monitoring and Control

 During the preparation of the budget, consultation with the relevant and involved offices is
necessary in order for them to assist in the process, most especially in the articulation of urgent
concerns and challenges.

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Budget as an instrument for Effective Realization of Goals and Objectives Within Financial and Resource
Constraints
 During the budget preparation, key performance indicators are defined. For each budget item,
there is a corresponding indicator that the defined activity has been achieved.
 There should also be a demonstration of the linkage of the performance to the institutional
mission, goals, and objectives.
 Finally, the fact that these were all achieved within the resource constraints of the institution
should be of prime importance. Such, is the test of good implementation of the budget: that
targets are achieved within the limits of the institutional resources. Achievements should be
supported with concrete indicators of performance.

Budget as a Basis in the Formulation of Performance Indicators and the Institution of an Effective
Evaluation and Merit System.
 The budget document should contain performance indicators corresponding to the key
budgetary items.
 In education, the performance indicators for instruction are the number of student served, or
the number of graduates who did well in the world of work. Another indicator would be a high
percentage of graduates who pas their board examinations. In some institutions and for the
members of the faculty, the performance indicators are the student contact hours, participation
as thesis adviser or attendance in thesis-dissertation committees, and additional duties and
responsibilities as committee member or head of the department.

The Budgeting Process in the Private and Public Education Sector

 The budget process in the government is different from that of the private sector.
 In the private sector, the Board of Trustees or Board of Directors has the final approval of the
budget.
 In the government, it is the House of Representatives and the Senate of the Philippines that have
the final say on the budget. Once approved by both houses of the Congress of the Philippines,
the document is submitted to the Office of the President for the budget to take effect as a law
and consequently for appropriate implementation by the line agencies of the Executive
Department of the government, the Constitutional bodies such as the Commission on Audits,
the Commission on Elections, and the Judiciary and the Legislative Department.

1. Private Education Sector

1.a. Budget Framework and Process
The head of the institution, most likely with the approval of the Board, promulgates
the terms of reference contain the parameters of the budget preparation. Such terms of
reference contain parameters of the budget preparation, the Budget Committee and
its members, the urgent concerns that the institution has to address in the forthcoming
budget period, some assumptions with respect to enrolment level, faculty hiring, salary
increases, merit and promotion, acquisition of capital equipment and physical plant
expansion, procurement limitations and the allocation of 70% of tuition fee increases for
salaries and wages and employee benefits, 20% for maintenance an operating expenses
and 10% return on capital. The schedule of budget preparation is also included in the
terms of reference, together with the schedule of presentation to the Board of trustees or
directors.

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1.b. Budget Preparation and Programming
With the assistance form the finance office of the institution, the colleges and
offices will prepare the budget, which should contain the following:
a. Situational Analysis
Review of the past year’s performance, analysis of strengths and weaknesses and
threats and opportunities. Based on the review, identification of concerns and the
budget theme for the forthcoming year. From the situation analysis, one will be able to
lay down the basis for the budget which will provide resolutions to the challenges
identified, a continuity of excellent programs that have been on stream, and the
introduction of new programs consistent with the articulated needs of the clientele.
b. Budget Working Papers
o Budget Projection
The basis of budgetary projection is the actual results of financial operations
in the previous three academic years, the current year’s budget and the
projection for the next three years. The projection is across all offices, colleges and
departments. This is shown as Form B.
Before the consolidation of the budget as shown in Form B, a subsidiary
document is necessary, which is the Enrollment Projection as shown as Form B-1
showing the past three years actual enrolment, the current year’s enrolment and
the enrolment projection over the next three years. Present actual revenues for
the last three years and estimate of the current year’s revenues in the space
provided in Form B. Then, with the enrolment projection in Form B-1 as basis,
estimate the revenues for the next three years and place it in Form B. In addition
to Form B-1, there is also a need to fill in Form B-2, the Individual Time Allocation
Schedule, and B-4, which is the Consolidated Time Allocation Schedule. Form B-2
and B-3 are necessary to be able to fill in form salaries and wages in Form B-3.
When Form B-3 is completed, then Form B-4 can be prepared.
With the completion of Form B, the Pro Forma Statement of Income and
Expenses can be finalized, as shown in Form B-5. Consequently, the pro-forma
Balance Sheet, as shown in Form B-6, can be prepared.

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 o Budget Implementation
Upon the approval of the budget by the Board of Trustees/Directors, the
head or the president of the institution will issue a memorandum to all concerned
that the respective college or office budget is duly approved for implementation.
The corresponding performance indicators should be identified consisting of the
following:
- Indicators of Quality Teaching
- Indicators of Quality Research
- Indicators of Quality Extension Services
o Budgeting Monitoring and Control
Inflow of revenues and disbursements should be closely monitored by the
appropriate officer, and each department should be properly informed of the
results of the financial operations of each college or department. There should not
be any deviation from the approved budget, except for deviations that are within
the authority granted to the dean, or head of the office, or to the President of the
institution. If there is any deviation, there should be an appropriate explanation as
to the reason or causes of such deviation. If the deviation merits sanction, the
head of the institution may institute the corresponding action.
2. Public Education Sector
2.a. Budget Framework and Process in the DepEd, CHED & TESDA
As early as November of each year, the Department of Management issues the Budget
Circular for the year immediately after the succeeding.
At the end of each calendar year, i.e. December 31, DepEd, TESDA, CHED, and state
colleges and universities are provided with their budget balance. All these offices will have to
obligate said balance for any activities or projects that have been contracted and, therefore,
the balance should already be obligated before December 31. If the funds have not been
obligated, the balance will revert to the central fund. If the budget balance has been obligated
and duly supported with a daily signed contract, said document has to be submitted to the
DBM. Once the obligated items are approved by the DBM, the agency concerned is only given
three months to disburse the obligated balance. If a government unit is not able to disburse its
budget for the calendar year, it is taken as an indication of not being program of activities or
implement a project. This may be taken against the office concerned and thus minimize the
chances for this office to get an increase in budget.
The basis of the budget is the National Plan as prepared by the National Economic
Development Authority (NEDA). All programs and projects must be consistent with the
education section of the national plan that contains the objectives and the strategies for the
education sector.
2.b. Budget Preparation
The Budget Officer and the Planning Officer of DBM, usually with the Rank of Director or
Assistant Secretary, coordinates with the Budget Account Officer of DepEd or TESDA or CHED
for any documentation, data, or information necessary for the preparation of the budget, while
all units of the DepEd, TESDA, and CHED are given the necessary instructions with respect to the

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budget documents to be prepared, data to be generated, performance indicators, and
justifications for any new project.
With respect to personnel services, the heads of the offices are not so involved in the
qualification. These are readily available in the accounting office. What will be subject matter
for discussion with the Secretary, Undersecretaries, Chairman and Commissioners of CHED, or
Director-General and Deputy Director-General of TESDA are the following:
 Creation of Additional Teacher Items, Principals, and Superintendent
The creation of teacher items is supported with enrolment data. However, in areas
where there is declining enrolment because of the peace and order situation or for
economic reasons, the teacher assigned in a district cannot be transferred to the district
where there is a shortage of teachers because of the provision of the Magna Carta for
Teachers that prohibit the transfer of teachers.
The number of slots for higher positions from teacher I to II, then to III and eventually
master teacher is also of great concern to the higher officials of DepEd, because this is a
way to enhance meritocracy in the service by providing enough slots for outstanding
teachers to be promoted to a higher level of teacher position. In addition, the number
of teacher-in-charge in various elementary and secondary schools has to be analyzed
for the office to recommend and justify the creation of principal items.
Beyond the principal position is that of the supervisor and eventually, upon passing
the superintendent’s examination, the position of superintendent.
 Developmental Intervention in the Continuing Education of Teachers
The budget for some development intervention is contained in the MOOE. In view
of the practice of submitting some components of the budget of MOOE as source
savings, once mandatory saving is required, in the light of the shortfall of revenues of the
government, the budget for MOOE is never sufficient to meet the needs of the education
sector.
 Foreign-Assisted Projects
In view of the financial limitations of the government in financing education, the
country has been securing assistance from abroad in the forms of loans or grants. Loans
were primarily from the World Bank and the Asian Development Bank.
 Capital Expenditures
The classroom shortage is a perennial problem. It is high time that DepEd should
this problem by having a massive construction program. If the present budget of DepEd
is not sufficient, DepEd may borrow the whole amount required from the GSIS. After all,
DepEd is the largest contributor to the GSIS. The monthly amortization can be
accommodated in the annual budgetary allocation of DepEd.
This recommendation for the total solution to the shortage of the classrooms is also
applicable to TESDA and CHED in order that all technical institutions and state colleges
and universities are provided with beautiful infrastructures that can be the source of pride
for the faculty and students of state colleges and universities, as well as the TESDA
technical institutions.

2.c. Consultation Within the Respective Offices

Once all the offices have finalized their respective budgets, the Secretary, together with
all the undersecretaries, assistant secretaries, assistant secretaries, and directors will discuss the
budget. Questions may be raised to evaluate whether the estimates are quite realistic with
respect to the three components: (1) Personal Services, (2) Maintenance and Other Operating
Expenses, and (3) Capital Expenditures. Usually, the focus of the discussion is one various
programs and projects of the various bureaus and offices.
After some revisions as agreed upon during the Department deliberations, the budget is
presented to the DBM. There may be some suggestions on various aspects of the budget. If
found to be in order, adjustments are accepted. In the meantime, the DBM, together with the
Treasury, evaluates the feasible limit of the total budget of the government. Once the absolute
figure is already arrived at, the DBM will issue a circular to all concerned on the budget limit of
each department. The Department will have to present a revised budget to comply with the
limits imposed by the DBM.
2.d. Consultation with DBM
Having complied with the budgetary limits set by the DBM, the final department budget
is presented to the DBM. After that, the DBM and the Presidential Management Staff will conduct
a meeting with the representatives of all the departments.
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 2.e. Consultation with the Regional Development Council (RDC)
The regional component of the budget of each line agency is discussed in the Regional
Development Council in all the 16 regions of the country. The members of the RDC are the city
mayors, governors, all regional directors of various national offices, representatives of the
business sector, the Presidential Assistant on Regional Concerns, and others.
2.f. Cabinet Discussion on the Budget
The consolidated Department budget is presented to the President who is the
Chairperson of the National Economic and Development Authority in the presence of all
cabinet secretaries. The deliberations usually involve aligning various department budgets to
national concerns in order to create greater synergistic impact as a result of the implementation
of the budget.
2.g. Presentation of the Budget to Congress and Budget Hearings
Immediately after the State-of-the-Nation Address (SONA) of the President, the National
Budget is presented to the Speaker of the House of Representatives and the Chairman of the
Committee on Appropriation. With the budget duly submitted, the Chairman of the Committee
on Appropriation schedules a hearing of the budget of various departments. During the hearing,
the members of the Appropriation Committee ask all kinds of questions. These are mostly
focused on the thrust of the budget and how the national and local concerns of the
congressmen are reflected in the budget.
2.h. Budget Presentation in Plenary Session
After the Committee hearing in the Appropriation Committee of the Congress of the
Philippines and the Senate Education and Finance Committee, the budget is presented in a
plenary session of both houses. Only the Chairman of the Committee on Appropriation or, in the
case of the Senate, the Chairman of the Finance Committee of the Senate, will answer all the
questions of any of the Senators or Congressmen. However, officers of the DepEd , TESDA and
CHED, and state colleges and universities should be present in their assigned places to provide
some answers to questions raised, and the officer of the office concerned will give the answer
to the Chair for the Chair to convey said answer to the body in plenary session.
Once the budget is approved on second reading, the document is presented to the
Bicameral Committee consisting of 24 members with an equal number from the Senate and
Congress of the Philippines.
2.i. Deliberation in the Bicameral Committee
The Bicameral Committee is a very powerful committee. While they are deliberating, one
should be around for any possible data or answers to questions raised, or else some items in the
budget may be deleted.
The deliberation in the Bicameral Committee can sometimes time-consuming most
especially if there are some intramurals between the majority and minority. However, once there
is a vote in the Bicameral Committee for submission of the budget for third reading, the action
by the Congress of the Philippines and the Senate of the Philippines is final.
2.j. Presentation for Final Approval
Both houses of Congress in plenary session take the final action of the budget and upon
passage of the budget on its third reading by both houses of congress, it is submitted to the
President of the Philippines. The President may veto some items of the budget and send the
reply to both houses of the items vetoed.
2.k. Budget Programming and Implementation
After the approval of the budget by the President of the Philippines, who signs the Budget
into appropriation Act, the DBM will identify the programmed items in the budget that will surely
be funded in view of the revenue target of the Government. The unprogrammed items are
subject to availability of funds, which may only be released once there is a significant
improvement in the revenue collection of the government. If the anticipated collection is not
attained, the DBM may even issue 10% reserved for savings.
2.l. Budget Monitoring, Evaluation, and Control.
With the approved budget, DepEd, TESDA, and CHED monitor the implementation of the
budgets of all offices under their jurisdiction. The preparation of a cash flow statement is used
as an instrument of monitoring.

Performance Budgeting System, Zero-Based Budgeting, PPBS and Strategic Budgeting

Performance-oriented budgeting is a way to focus more on the expected outcome for the
financial resources being provided. Thus, the analysis is not so much of various items of the budget, but
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on how a certain budget being allocated will generate the expected outcome or performance
expressed in terms of key budget indicators.

Zero-based budgeting is a system where the focus of the presentation is the full justification of
the funding being provided. In many instances, it is only the incremental budget being proposed that
is provided with justification. In zero-based budgeting, there has to be rationale for the whole project
as a basis for its budgetary provision, and not only the incremental amount being proposed.

Planning, Programming, Budgeting System (PPBS) is a technique wherein all budgets must be
based on a carefully prepared plan. The plan should contain situation analysis or prevailing
environment. With a fully articulated plan analysis of the situation, programs, projects, and activities
are identified with their rationale, objectives, processes and activities, schedules of implementation,
priorities and the expected outcome of the project of the office. The carefully prepared plan is the
basis for the budget being proposed. With a budget based on a carefully prepared plan,
programming is formulated in order to maximize the use of resources that will redound to the
production of expected institutional outcomes.
Strategic budgeting is an amalgamation of good features of performance budgeting, zero-
based budgeting, and PPBS. Strategic budgeting, just like PPBS, requires in-depth analysis of the
environment and the operation of the institution in such an environment. In a way, strategic budgeting
is like a zero-based budgeting because the whole project being proposed has to have an all-
encompassing orientation in its rationale, so that the project being proposed for funding will redound
to the achievement of performance that will satisfy the clientele being served.

CONCLUSIONS:
 The budget is also a means of instituting effective coordination, monitoring, and control in the
financial operations of the institution.
 The budget is also used as a basis for formulating performance indicators that can be used in
instituting an effective evaluation and merit system. Performance indicators may be in terms
of the extent the institution has performed its teaching function, the quality of research, and
community and extension services.
 Budget processes in both public and private sectors are different from each other.
 For effective budget monitoring and control, a cash flow statement should be followed.
 A full understanding of the effective use of budgeting as a planning instrument for effective
monitoring and performance evaluation leads to the attainment of the mission/vision and
objectives for which the education sector has been established.

References:
Arcelo, Adriano, et. al. (1972). Accounting Manual for Private Educational Institutions (Manila: Fund for
Assistance to Private Education.)
Fairweather, James s. (2002). “The Methodologies of Faculty Productivity”. The Journal OF Higher
Education, Vol. 73, No. 1 (January-February, 2002)
Hoyt, Maurice (2001). “Performance Pay for Teachers”. The Kappan, Vol. 183, No. 4 (December, 2001):
312-216.

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