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Response to Kule Inquiry re Normative Financing and the Gradual Decrease of Government Funding in State Universities

In Interviews on July 4, 2010 at 8:09 am

IBON Research Head Sonny Africa replies to interview questions emailed by Philippine Collegian News Editor Marjohara Tucay and Philippine Graphic News Staffer John Morales regarding the state of State Colleges and Universities for the past two decades:

Kule/ Graphic: According to the Budget of Expenditures and Sources of Financing document of the Department of Budget and Management, since 1987, the annual government subsidy has increased by only an average 10 percent, while internal income of SUCs has increased by a faster phase, with an average increase of 17 percent (see attached document). What can you infer from this data? Also, the percentage share of SUCs’ internal income in the total budget of these public tertiary schools has increased from 9 percent (and 91 percent coming from the GAA) in 1987 to over 15 percent in 2010. Does this data tell anything about government spending in tertiary education?

Sonny Africa: Actually mas malala ang deterioration sa state subsidy for higher education if we also factor in rising prices. Nilagay ko ang consumer price index sa Column H sa worksheet “SUC budget 1989-2010” para ma-compute natin ang real value of the states subsidy taking inflation into account (base year ay 2000; 1987-2009 data ay from BSP, 2010 ay IBON estimate). The real value of the state subsidy of P12.59 billion in 2010 is down by over 20% from the budget peak in 1998 and even less than in 1989 or 2 decades ago. The situation would even look much worse if aside from inflation we also consider the rising student and tertiary-level age population. In which case the 12 years of the generally declining state subsidy, in real terms, is particularly problematic.

SUCs have apparently tried to compensate for this – in line with official government policy – by efforts to increase their internal income through various revenue-generating schemes. Especially in the context of widespread and even increasing poverty in the country, this can only mean that higher education is becoming even more inaccessible to the country’s poor and heading towards being a luxury that only students from the country’s better-off families can afford.

Kule/ Graphic: In 2005, CHEd and DBM has implemented the “normative financing scheme” in computing for the maintenance and other operating expenses (MOOE) component that will be provided for each SUC. Under the said scheme, allocation will be based on “performance”–passing rates, number of publications and researches, number of centers of excellence in the university etc. UP was not included in this scheme as the said university already enjoys a “lion’s share” in the budget allocation. Since its implementation, yearly, several schools get budget cuts for their MOOE due to their low cumulative rating in the normative financing scheme. Thus, SUCs with low budget and poor performance gets less from the pie. What can you say about this allocation scheme? How will this affect the future performance of the said schools?

Sonny Africa: The Arroyo administration planned to implement the normative financing scheme in its Medium-Term Philippine Development Plan 2004-2010. While ostensibly a way to more ‘rationally’ allocate finite government resources among SUCs, based on their supposed ‘’performance’, they have instead given the national government an excuse to cut SUC budgets. It is true that SUCs must continuously improve the quality of their instruction and research but the way to do this is to increase the resources they have and to design constructive ways of using these more effectively, not by using a socially insensitive, irresponsible and destructive free market-inspired scheme of incentives and penalties. The normative financing scheme and the budget cuts they result in will also likely increase the pressure to raise revenues though various income-generating schemes in SUCs, making higher education even more inaccessible.

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