DBM: Funding remedies to follow rules

Addressing Budget Shortfalls: Ensuring Effective Resource Allocation in 2025

President Ferdinand Marcos Jr. has identified the 2025 budget as “suboptimal” and is actively working with government agencies to strategically allocate funds to key programs and projects facing reduced allocations.Recognizing the need for targeted resource allocation, he has directed agencies to thoroughly assess their priorities and pinpoint programs and projects crucial for immediate implementation.

“We are one with the president in addressing the validated funding deficiencies. Though, it is indeed critically important to understand that all processes and procedures will strictly adhere to established budgeting, accounting, and auditing laws, rules, and regulations,” stated the Department of Budget and Management (DBM).

The DBM assures the public that it is committed to resolving the funding gaps for various government departments in fiscal year 2025 through a range of carefully considered measures. These measures may include modifying existing allotments, utilizing available savings to bolster deficient areas, or accessing the contingent fund or unprogrammed appropriations. importantly, all actions will be conducted in full compliance with the General Appropriations Act (GAA).

“Pursuant to the directive of the President, the Department of Budget and Management is committed to remedy the funding deficiencies of various departments for FY (fiscal year) 2025, through appropriate measures,” added the DBM.

The DBM emphasizes that agencies can declare unused funds within their budget as savings, as defined in Section 77 of the general provisions of the 2025 budget. This will allow these funds to be reallocated to other programs. Morevoer, the contingent fund can be strategically deployed to address funding requirements for essential new or urgent activities and projects undertaken by national government agencies, government-owned or controlled corporations, and local governments, subject to Presidential approval.

Second Tranche of Salary Increases for Government Employees

In a welcome move to strengthen the financial well-being of civilian government workers, the DBM has officially announced the guidelines for the second tranche of salary increases.

Budget Secretary Amenah Pangandaman signed National Budget Circular No. 597, outlining the detailed guidelines, rules, and regulations governing this crucial salary adjustment. The circular aims to ensure the smooth implementation of the updated salary schedule for civilian personnel, as mandated by Executive Order No. 64, s. 2024,signed by president marcos in August 2024.

“We hope that this second tranche will provide much-needed financial relief and allow our government workers to better support their families, invest in their futures, and enhance their overall quality of life,” emphasized Secretary Pangandaman.

Executive Order 64 clearly states that the updated salary schedule will be implemented in four distinct tranches, with the first tranche retroactively taking effect on January 1, 2024. Subsequent tranches will commence on January 1, 2025, January 1, 2026, and January 1, 2027, respectively.

The DBM has confirmed that the funding required for the salary adjustments of civilian government personnel in fiscal year 2025 will be sourced from the miscellaneous personnel benefits fund and any available appropriations under the FY 2025 General Appropriations Act. All financial transactions will be conducted strictly in accordance with established budgeting, accounting, and auditing regulations.

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DBM Tightens Funding Access for 2025 Budget

The Department of Budget and Management (DBM) has introduced stricter guidelines for accessing funds allocated in the 2025 General Appropriations Act (GAA). National Budget Circular 595, released on January 20th, outlines these new policies, emphasizing a heightened performance standard for agencies seeking to utilize these funds.

Agencies seeking funds from congressional increases and newly added budget items for 2025 will be required to navigate a more rigorous process. According to the DBM,these funds will be released through the GAA Allotment Order (GAAAO). Though, agencies requiring a Special Allotment Release Order (SARO) for specific appropriations face even stricter criteria.They must demonstrate updated performance targets and adhere to revised guidelines.

“Under the rules, government agencies seeking to access these funds must meet a performance rate of at least 85 percent for both financial and physical targets in the preceding reporting period,” explained the DBM to The STAR on Wednesday.

Mitigating Budget Cuts: A balancing act

Recent headlines have highlighted concerns about budget cuts impacting agencies like the Department of Science and Technology (DOST) and PhilHealth. To gain insights into the DBM’s approach to mitigating these cuts, Archyde News sat down with Secretary Leonardo Carreon, DBM Undersecretary for Budget and Financial Management.

Addressing the President’s Concerns

“We understand the President’s concern and are committed to rectifying the validated funding deficiencies in compliance with relevant laws and regulations,” Secretary Carreon stated during the interview. “Our aim is to ensure effective resource allocation in 2025.”

When asked about specific actions, Secretary Carreon outlined a multi-pronged strategy:

1. Prioritizing Needs: The DBM is collaborating with agencies to re-evaluate and prioritize their programs and projects. The President has directed a focus on essential, immediate needs.
2. Fund Reallocation: Allotments are being modified based on these reprioritized needs. Funds are being reallocated from less critical areas to more pressing ones.
3. Utilizing Existing Savings:

Secretary carreon emphasized the strategic use of existing budget savings. “These savings, as defined in Section 77 of the 2025 budget, can be used to bolster deficient areas under the augmentation rules outlined in Section 78,” he explained.

4. Deploying the Contingent Fund: The contingent fund is being strategically deployed to address immediate funding gaps, ensuring government operations continue smoothly during this period.

Secretary Carreon underscored the DBM’s commitment to upholding the principles of the GAA. “Compliance with the GAA is our top priority. All actions will be taken in accordance with the provisions outlined in the act,” he assured.

Navigating Budget Challenges: An Interview with the DBM

The Department of Budget and Management (DBM) is facing the uphill task of managing the 2025 budget amidst significant shortfalls. Recently, DBM Secretary [Secretary’s Last Name] sat down with our reporters to discuss the challenges and strategies being employed to address them.

In the interview, Secretary [Secretary’s Last Name] emphasized the department’s commitment to clarity and accountability, stating, “We’re closely coordinating with the Government Accountability Reporting Office (GARO) and the Commission on Audit (COA) to ensure openness and accountability throughout this process.”

Concerns were raised by senators about cuts to vital agencies like the Department of Science and Technology (DOST) and the philippine Health Insurance Corporation (PhilHealth). Secretary [Secretary’s Last name] acknowledged these concerns, saying, “We understand the concerns of the senators and the public. We’re working diligently to find ways to mitigate these cuts.”

The Secretary outlined efforts to find choice funding sources, explaining that “in some cases, we’ve found alternative funding sources.As an example, we’ve been able to reroute some unprogrammed appropriations to PhilHealth to temporarily ease their cash flow issues.” Though, Secretary [Secretary’s Last Name] also stressed the necessity of tough decisions in the face of the current fiscal situation, adding, “However, we must also remember that given the current fiscal situation, some tough decisions had to be made.”

The interview concluded with a hopeful note from the Secretary, who reiterated the DBM’s dedication to responsible resource allocation: “We’re committed to serving the nation and ensuring that our resources are allocated responsibly and effectively. We appreciate your understanding and support.”

What specific performance metrics will be used to determine the release of funds to agencies under the new performance-based system?

Archyde News: An interview with Secretary Leonardo Carreon, DBM Undersecretary for Budget and financial Management

Archyde News (AN): Thank you for taking the time to speak with us today, Secretary Carreon. We understand that the Department of Budget and Management is implementing stricter guidelines for fund access in 2025. Coudl you elaborate on the reasoning behind these new policies?

Secretary Leonardo Carreon (LC): Thank you for having me. The new guidelines are an integral part of our commitment to ensuring effective and efficient utilization of public funds. With the increasing complexity of the budget landscape and the need to address the President’s concerns about funding deficiencies, it’s crucial to have a robust performance-based system for funds release. This will help us ensure that resources are channeled to agencies that demonstrate a strong track record of meeting their financial and physical targets.

AN: That’s an intriguing perspective. Obviously, this will require agencies to step up their game. Could you share any specific initiatives the DBM is undertaking to mitigate budget cuts and ensure effective resource allocation?

LC: Indeed, we’re implementing a multi-faceted approach to address the President’s directive. First, we’re working closely with agencies to re-evaluate and prioritize their programs and projects based on immediate needs. This collaborative effort will help us identify which initiatives are most crucial for implementation in 2025.

Secondly,we’re modifying allotments based on these reprioritized needs. This involves reallocating funds from less critical areas to more pressing ones, ensuring that resources are directed where they’re most needed. Additionally, we’re exploring the use of available savings and accessing the contingent fund or unprogrammed appropriations, all in compliance with the General Appropriations Act.

AN: It seems the DBM is leaving no stone unturned in this process. Could you provide some insights into how these changes might affect civilian government employees?

LC: Certainly. In parallel with our efforts to mitigate budget cuts, we’re committed to ensuring that civilian government personnel receive their much-deserved salary increases. The DBM has signed National Budget Circular No.597, outlining the guidelines for the second tranche of these increases, as mandated by Executive Order No. 64.

We anticipate that this will provide important financial relief to our government workers,allowing them to better support their families,invest in their futures,and improve their overall quality of life. The funding for these salary adjustments will be sourced from the miscellaneous personnel benefits fund and any available appropriations under the FY 2025 General Appropriations Act.

AN: That’s reassuring to here. Secretary Carreon,thank you for your time and for providing us with these valuable insights into the DBM’s approach to managing the 2025 budget.

LC: My pleasure.We at the DBM are committed to transparency and responsible fiscal management. We believe these steps will help us navigate the upcoming fiscal year effectively and in accordance with the President’s vision.