Polytechnic University of the Philippines
GRADUATE SCHOOL
Manila
A Summary of the Report on the Different Topics on the Subject
DEM 740 (FISCAL MANAGEMENT IN EDUCATION)
Presented to
Dr. Gloria T. Baysa
Course Specialist
Presented by
Arlene E. Gazzingan, DEM Student
BANGKO SENTRAL NG PILIPINAS (CENTRAL BANK OF THE PHILIPPINES)
By JOSEPHINE M. DELA ISLA
The Bangko Sentral ng Pilipinas (English: Central Bank of the Philippines; sometimes, Spanish: Banco
Central de Filipinas), and commonly abbreviated as BSP on documents written in Filipino or English, is
the central bank of the Philippines. It was established on July 3, 1993, pursuant to the provision of
Republic Act 7653 or the New Central Bank Act of 1993.
Seal of Bangko Sentral ng Pilipinas (1993-2010).
The BSP Vision and Mission
Vision
The BSP aims to be a world-class monetary authority and a catalyst for a globally competitive
economy and financial system that delivers a high quality of life for all Filipinos.
Mission
BSP is committed to promote and maintain price stability and provide proactive leadership in
bringing about a strong financial system conducive to a balanced and sustainable growth of the
economy. Towards this end, it shall conduct sound monetary policy and effective supervision over
financial institutions under its jurisdiction.
Functions and Operations
Objectives
The BSP’s primary objective is to maintain price stability conducive to a balanced and sustainable
economic growth. The BSP also aims to promote and preserve monetary stability and the
convertibility of the national currency.
Responsibilities
The BSP provides policy directions in the areas of money, banking and credit. It supervises operations
of banks and exercises regulatory powers over non-bank financial institutions with quasi-banking
functions.
Under the New Central Bank Act, the BSP performs the following functions, all of which relate to its
status as the Republic’s central monetary authority.
•
Liquidity Management. The BSP formulates and implements monetary policy aimed at
influencing money supply consistent with its primary objective to maintain price stability.
•
Currency issue. The BSP has the exclusive power to issue the national currency. All notes and
coins issued by the BSP are fully guaranteed by the Government and are considered legal
tender for all private and public debts.
•
Lender of last resort. The BSP extends discounts, loans and advances to banking institutions
for liquidity purposes.
•
Financial Supervision. The BSP supervises banks and exercises regulatory powers over nonbank institutions performing quasi-banking functions.
•
Management of foreign currency reserves. The BSP seeks to maintain sufficient international
reserves to meet any foreseeable net demands for foreign currencies in order to preserve the
international stability and convertibility of the Philippine peso.
•
Determination of exchange rate policy. The BSP determines the exchange rate policy of the
Philippines. Currently, the BSP adheres to a market-oriented foreign exchange rate policy such
that the role of Bangko Sentral is principally to ensure orderly conditions in the market.
•
Other activities. The BSP functions as the banker, financial advisor and official depository of
the Government, its political subdivisions and instrumentalities and government-owned and controlled corporations.
Organization of the Bangko Sentral
The basic structure of the Bangko Sentral includes:
•
The Monetary Board, which exercises the powers and functions of the BSP, such as the
conduct of monetary policy and supervision of the financial system;
•
The Monetary Stability Sector, which takes charge of the formulation and implementation of
the BSP's monetary policy, including serving the banking needs of all banks through accepting
deposits, servicing withdrawals and extending credit through the rediscounting facility;
•
The Supervision and Examination Sector, which enforces and monitors compliance to banking
laws to promote a sound and healthy banking system; and
•
The Resource Management Sector, which serves the human, financial and physical resource
needs of the BSP
The Executive Management Services
The BSP Monetary Board
Chairman
Amando M. Tetangco, Jr.
Members
Cesar V. Purisima
Alfredo C. Antonio
Ignacio R. Bunye
Peter B. Favila
Felipe M. Medalla
Armando L. Suratos
Position Classification and Compensation Scheme for Teaching Positions in
Elementary and Secondary Schools by Nimfa del Rosario
The Teachers’ Preparation Pay Schedule (TPPS)
The TPPS is the position classification and compensation scheme for teaching positions in elementary
and secondary schools. It similarly applies to guidance counselors/coordinators, school librarians who
are given teaching loads.
Classification and Compensation Scheme for Teaching Positions in Elementary and Secondary
Schools
Factors for Classification of Positions
 Academic or educational preparation;
 Teaching experience including those in private schools; and
 Extra-curricular activities for professional growth.
Academic Preparation Prerequisites
 Level I, e.g., Teacher I, School Librarian I - Bachelor of Science in Education degree or
equivalent;
 Level II, e.g., Teacher II, Guidance Counselor II - Bachelor of Science in Education degree or
equivalent, plus 20 graduate units; and
 Level III, e.g., Teacher III, School Librarian III, Guidance Counselor III Master’s degree or
equivalent.
Special Considerations for Teachers
 Hardship/Special Hardship Allowance
 Hardship Allowance, as provided under Section 19 of RA No. 4670, is given to all
teachers who are assigned to hardship posts whether resident or transient, on
regular or temporary status of employment.
 Special hardship allowance is granted to teachers assigned to handle multigrade classes.
 The hardship/special hardship allowance shall not exceed 25% of the basic pay
of the teacher, and is in lieu of hazard duty pay.
 One Salary Grade Increase for Retiring Public School Teachers
 The one salary grade increase shall take effect on the last day of the service of
the retiring public school teacher. The salary of the retiring teacher shall be
adjusted upward by one salary grade at the same step of his/her previously
assigned salary grade.
ISSUES IN EDUCATION FINANCE by Vida M. Orajay
Public Finance
 field of economics concerned with how governments raise money, how that money is spent,
and the effects of these activities on the economy or society;
 studies how governments at all levels provide the public with desired services and how they
secure financial resources to pay for these services.
Why Public Finance is needed?
 Governments provide public goods—government-financed items and services such as roads,
military forces, lighthouses, and street lights.
 Private citizens would not voluntarily pay for these services, and therefore businesses have no
incentive to produce them.
 Governments redistribute income by collecting taxes from their wealthier citizens to provide
resources for their needy ones.
 The taxes fund programs that help support people with low incomes.
Scope of Public Finance




Government Revenue
Government Expenditures
Public Debt
Public Debt Management
Public Revenue
 An important source of tax revenue in most industrialized countries is the income or payroll
tax, also known as the personal income tax.
 Income taxes are imposed on labor or activities that generate income, such as wages or
salaries.
 Governments generate some revenue by charging fees for the services they provide, such as
entrance fees at national parks or tolls for using a highway.
 Capital tax includes items or facilities that generate profits, such as factories, business
machinery, and real estate.
 A property tax is a capital tax used by state and local governments. Property taxes are levied
on items such as houses or boats.
 An excise tax is levied on a specific product, such as alcohol, cigarettes, or gasoline.
Public Debt Management
 Is the process of establishing and executing a strategy for managing the government debt in
order to:
 Raise the required amount of funding
 Achieve its risks and cost objectives
 Meet any other sovereign debt management goals the government may have set.
Government Spending
 Exhaustive spending refers to purchases made by a government for the production of public
goods.
For example, to construct a new harbor the government buys and uses resources from the
economy, such as labor and raw materials.
 Transfer spending when government transfers income to people to help them support
themselves.
Transfers can be one of two kinds: cash or in-kind.
 Cash transfers are cash payments, such as social security checks and welfare payments.
 In-kind transfers involve no cash payments but instead transfer goods or services to
recipients. Examples of in-kind transfers include food stamp coupons and Medicare.
Education Expenditure
 refers to the current operating expenditures in education, including wages and salaries and
excluding capital investments in buildings and equipment
Government Assistance to Students
 DepEd
 GASTPE (Government Assistance to Students and Teachers in Private Education
– DepEd Order No. 11, 2. 2003
 CHED
 StuFAPs (Student Financial Assistance Programs) – CMO No. 56, s. 2012
Financial Statement Analysis contains the information you need to help make the decisions needed in
your business. It involves Items in a single year’s financial statement, Comparative Financial
Statements in a period of time, Statements with those of other businesses.
Methods of Financial Statement Analysis
1. Vertical financial Statement Analysis - each item is expressed as a percentage of significant total.
2. Horizontal Statement Analysis - calculate peso or percentage changes in a financial statement item
from one period to the next.
3. Common-Size Statements - shows only percentages and no absolute dollar amounts.
4. Trend Percentages - show changes over time in given financial statement items
(can help evaluate financial information of several years)
5. Ratio Analysis – the expression of logical relationships between items in a financial statement of a single
period
(e.g., percentage relationship between revenue and net income)
ARTICLE XI-ACCOUNTABILITY OF PUBLIC OFFICERRS (Philippine Constitution)
 Sec. 1 – Public office is a public trust. Public officers and employees must at all times be
accountable to the people, serve them with utmost responsibility, integrity,
loyalty, and
efficiency, act with patriotism and justice, and lead
modest lives.
FINANCIAL FORECASTING
Forecasting
- is projection, assumption and analysis.
 Forecasting is based on historical data and educated guesses. If the market changes
significantly, historical data and "accumulated wisdom" will be of little use in predicting future
events.
 Forecasting is based on assumptions; always develop a variety of forecasts based on different
assumption scenarios, and create contingency plans for each scenario.
 The longer-term the forecast the more inaccurate it will usually be. Nothing is certain but
change − especially over the long term.
 Qualitative- judgemental, consensus, expert
 Quantitative – trend analysis, multiple regression
The Forecasting Process
Marketing (sales estimate), Top Management (policy, strategy), Production (capacity, schedules),
Accounting(financial statements, depreciation, taxes) will all lead to the Finance Department which
will forecast sales.
FORECASTING THE EDUCATIONAL COST
• Estimating expenditures on the basis of information derived from the source of finance
• Estimating expenditures from the accounts of educational institution
• Estimating expenditures based on the units for costing (cost/student, cost/ graduates et.)
Considering the Costs
Recurring Cost and Capital Cost
Other Considerations
 Personnel
 Equipment
 Maintenance and other operating expenses
 Buildings
 Site
 Special projects
Salary Compensation and Fringe Benefits of PUP Faculty by Nimfa Del Rosario
Manual on Position Classification and Compensation Scheme for Faculty Positions in State
Universities and Colleges
Prior to the issuance of PD No. 985, State Universities and Colleges (SUCs)which were
exempted from the coverage of the National Position Classification and Compensation Plans adopted
individual staff credentials and qualifications, position classification and pay plans.
As early as 1982, the Philippine Association of State Universities and Colleges (PASUC),
together with the DBM, started deliberating on a scheme of upgrading/promoting qualified and
deserving faculty members through a process of objective evaluation. This paved the way to the
development and adoption of a Common Criteria for Evaluation (CCE) across programs and disciplines
which aimed to rationalize academic ranks and salaries.
NCC No. 68, NCC No. 69 and the latest, National Budget Circular (NBC) No. 461. NBC No. 461 is
a revision and an update of NCC No. 69 which was exclusively for the faculty positions in SUCs. Under
NBC No. 461, Commission on Higher Education (CHED)-supervised higher education institutions (HEIs),
Technical Education and Skills Development Authority (TESDA)-supervised Technical Education
Institutions (TEIs) and SUCs are covered.
The Point System
The CCE point system in determining faculty rank and sub-rank is as follows:
Major Factors and Maximum Points
Point Allocation Under NBC No. 461
Qualitative Contribution Evaluation
 QCE is the process of determining the eligibility of a faculty candidate for the particular rank
and sub-rank indicated by the QCE.

Qualitative Contribution (QC) is the continuous improve towards excellence by a faculty
member in all four (4) functional areas of the institution, namely: instruction, research,
extension and production.
Point Allocation Under NBC No.461 with QCE
Faculty Rank
Instructor
Assistant Professor
Associate Professor
Professor
College Professor
University Professor
Sub-Rank
I
II
III
I
II
III
IV
I
II
III
IV
V
I
II
III
IV
V
VI
SG
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
Point Rank
65-below
66-76
77-87
88-96
97-105
106-114
115-123
124-130
131-137
138-144
145-151
151-158
159-164
165-170
171-176
177-182
183-188
189-194
195-200
201-205
QCE POINTS
80-83
84-85
86-87
88-89
90
91-95
61-65
66-70
71-75
76-80
81-85
86-90
91-95
96-100
Determination of Appropriate Faculty Rank and Salary
A faculty member who is assigned on the basis of the CCE and QCE to a sub-rank higher Than his/her
present rank, or subsequently promoted through presidential discretion, shall be rank and salary
corresponding to that higher rank.
A faculty member who merited a higher rank based on the CCE but assigned a lower rank and salary
corresponding to that lower rank.
In the initial implementation of NBC No. 451, a faculty member who is assigned on the basis of the
CCE and QCE to sub-rank lower than his/her present rank shall retain his/her present rank and salary.
Role of Agencies in the Implementation of NBC No. 461
 Role of SUCs, HEIs and TEIs The heads of SUCs, HEIs and TEIs shall submit the Personal
Services Itemization and Plantilla of Personnel (PSIPOP) reflecting the modifications in
rank/sub-rank and the corresponding salary adjustments of faculty members concerned
together with the CCE Computer Print-Out and pertinent evaluation documents.
 Role of DBM The DBM Regional Offices ®s) shall verify and post-audit the PSIPOP. The DBM
ROS shall then prepare the Notice of Organization, Staffing and Compensation Action (NOSCA)
reflecting the changes in the rank/sub-rank and salaries of faculty members concerned in the
respective institution.
Night Pay of Faculty/Non –Faculty of the Polytechnic University of the Philippines (PUP)
 The night service is considered as separate and distinct program from the regular 8-hour
service. The night pay does not partake of the nature of overtime pay which is not part of
basic salary, as a matter of right for recompense of services rendered in the night program of
the University.
Step Increment of Faculty Members
 In cases of promotion or movements from one sub-rank to another, the step increment Earned
by a faculty member in his/her previous faculty rank cannot be carried over to his/her salary in
the higher level faculty rank. His/her next step increment shall be reckoned from the date of
his/her appointment to the higher level faculty rank.
 In case of conversion of a teaching position to a faculty rank, the step increment earned by a
teacher in his/her previous position cannot also be carried over to the converted faculty rank.
His/her step increment shall be reckoned from the date of his/her appointment to the newly
converted faculty rank.
PUP Salary And Fringe Benefits
SALARY
 Day Income (Basic Monthly Salary)
 Part-Time Pay (Teaching)
 School (Night Monthly Pay) Non-Teaching
 Overtime/ Temporary Substitution/Graduate School/Open University
 Pera
FRINGE BENEFITS
• Rice Alleviation
• Clothing Allowance
• PIB – Performance Incentive Bonus
• PBB – Performance Base Bonus
• Anniversary Bonus
• Vacation Leave
• Sick Leave
• Proportional Pay
• 13th Month Pay
• Merit System Incentive- Distinctive Award with monetary award
• Retirement pay – computation is based on the 3 years basic salary and
• part-time pay for faculty and for the administrative employee
• basic salary and night pay
Retirement
ELIGIBILITY REQUIREMENTS
1. Member shall be entitled to the retirement benefit, provided he/she is separated
from the service at the time of application, and on condition that:
2. Request for conversion from one mode of retirement to another shall not be allowed.
3. The retirement proceeds shall at all times be subject to deduction for any outstanding indebtedness
the member may have incurred with the GSIS, subject to existing policies.
Money and Economy by Marjerie Quero
1. Monetary Theory
• The study of the effect of money in the economy.
• Supply of money.
• Demand for money.
2. Different Types of Investments
 Investing in Stocks
 Stock Market
 Investing in Bonds
Quantity Theory of Money
• Supply of money determines the level of prices and changes in the money supply result in
proportional changes in prices;
• is insensitive to interest-rate movement
• Nominal income is determined solely by movements in the quantity of money.
Keynes’s Liquidity Preference Theory
Motives behind the demand for money:
1. Transactions Motive
• Determined by the level of people’s transactions.
• These transactions were proportional to income.
2. Precautionary Motive
• Cushion against an unexpected need.
• The demand for precautionary money balances is proportional to income.
3. Speculative Motive
• People hold money as a store of wealth.
• Wealth is tied closely to income.
Assets to Store Wealth:
1. Money
2. Bonds
* Components of the Expected Return:
a. Interest Payment
b. Expected Rate of Capital Gains
Different Types of Investments
 Investing in Stocks

Stock Market

Investing in Bonds
Overview of the Conceptual Framework of the Course by Sheila Marie L. Jesalva
Job Description of Financial Manager
• responsible for financial advice
• to support the clients and colleagues
•
responsible for the financial health of an organization
Roles of Financial Manager
 providing and interpreting financial information;
 monitoring and interpreting cash flows
 predicting future trends;
 analyzing change and advising accordingly
 formulating strategic and long-term business
 researching and reporting on factors influencing business performance;
 analyzing competitors and market trends;
 developing financial management mechanisms that minimize financial risk;
 managing company's financial accounting, monitoring and reporting systems;
 liaising with auditors to ensure annual monitoring is carried out;
 developing external relationships with appropriate contacts
 producing accurate financial reports to specific deadlines
 managing budgets;
 arranging new sources of finance for a company's debt facilities;
 supervising staff;
 keeping abreast of changes in financial regulations and legislation.
Effectiveness is about doing the right task, completing activities and achieving goals
Efficiency is about doing things in an optimal way, for example doing it the fastest or in the least
expensive way. It could be the wrong thing, but it was done optimally.
Effective and efficient finance manager must:
 Generate high income in a low expenses
 Maximize the wealth of the shareholders in a least waste of time and effort
Main Factors Affecting Financial Stability and Stability of School
-the ability to handle your financial obligations in a way that contributes positively to other areas of
your life.
Attitude is Essential
Goal Setting
Resources
Leadership
Primary Goals of Business
1. Cash flow
 A growing business needs positive cash flow:
- looking at how to get your working capital
- combines two tangible facets of business
( what matters & that it flows)
2. Opportunities
generate opportunity chains: vision, values and mission
> the more right opportunity chains, the faster and more smoothly your business will grow
3. Visibility
“ Being seen by somebody is better than nobody is seeing you at all.”
> Being recognized as an authority, an expert and a leader
To effectively and efficiently manage financial obligations, the finance manager must:
 plan sound
 realistic
 determine the start up cost
 determine the operating costs
 running
 thriving
FINANCIAL INTERPRETATION OF RATES AND RATIO by Arlene E. Gazzingan
Growth Enrolment Ratio
a statistical measure used in the education sector and by the UN in its Education Index to determine
the number of students enrolled in school at several different grade levels (like elementary, middle
school and high school), and examine it to analyze the ratio of the number of students who live in that
country to those who qualify for the particular grade level.
 For example, if a nation has 900,000 people enrolled in school in the academic year 2005/06,
this number is divided by the total number of school-age individuals. Suppose this number is
1,000,000. This means 90 percent of the people are enrolled; or that 90 percent is the Gross
Enrollment Ratio of that nation.
GER = number of actual students enrolled / number of potential students enrolled
Pupil/Student-Teacher Ratio
the number of students who attend a school or university divided by the number of teachers in the
institution.
For example, a student–teacher ratio of 10:1 indicates that there are 10 students for every one
teacher.
Facilities-Pupil/Student Ratio
the number of school facilities (classrooms, textbooks, toilets, laboratory rooms etc.) divided by the
total number of enrollees in a particular school or bureau.
Recurring Unit Cost
Regular cost incurred repeatedly, or for each item produced or each service performed.
Thus, We can calculate alternative forms of unit costs of education. These are:
(i) Cost per learner (unit cost of education) = Total expenditure
Total enrolment
(ii) Cost per learner actually attending the school =
Total expenditure
No. of student attending classes
(ii) Cost per successful learner (effective unit costs of learner) =
Total expenditure
Number of pass-out learners
(iii) Cost of education per capita = Total expenditure
Total population
Ratio of Total Education Expenditures to Total School Budget
Public expenditure on education as % of total government expenditure is the total public education
expenditure (current and capital) expressed as a percentage of total government expenditure for all
sectors in a given financial year. Public education expenditure includes government spending on
educational institutions (both public and private), education administration, and subsidies for private
entities (students/households and other private entities).
Promotion Rate
the percentage of pupils/students promoted to the next grade/year level in the following school year.
(Reference: UNESCO)
Promotion Rate= Promotees × 100
Enrolment
Dropout Rate
the percentage of pupils who leave school during the year for any reason as well as those who
complete the previous grade/year level but fail to enroll in the next grade/year level the following
school year.
How to Compute:
DR= Gr.(X-1) enrolment- (Gr.X enrol.-Gr.Xrepeater)
SYN-1
SYN_______ × 100
Gr. (X-1)enrolment
DR Gr.III= Gr.2enrolment-Gr. Enrolment-Gr.repeaters)
SY 2005-06
SY 2006-07_________× 100
Gr.2 enrolment
= 295- (289-7) × 100
295
= 295-282 × 100
295
=0.0440678 × 100=4.40678
DR Gr III= 4.41%
Class Size Indicator
a measure of the average number of students in any given course in a school or education system,
and it is often expressed as a ratio of students to teachers—e.g., 25 to 1, or 25 students for every one
teacher. The term class size may also refer to the total number of students in a particular grade level,
or “class,” in a school.
Cohort Survival Rate
the percentage of enrollees at the beginning grade or year in a given school year who reached the
final grade or year of the elementary/secondary level.
How to compute:
CSR= Number of Grade VI pupils
Number of Grade I pupils (6 years ago)
Cost-Benefit Analysis by Minda DC Eduarte
Cost –Benefit Analysis
• is a set of practical procedures for guiding public expenditure decisions.
• is the implicit or explicit assessment of the benefits and costs (i.e., pros and cons, advantages
and disadvantages) associated with a particular choice.
• is a technique for assessing the monetary social costs and benefits of a capital investment
project over a given time period.
Principles of Cost-Benefit Analysis
• Appraisal of a project: It is an economic technique for project appraisal, widely used in
business as well as government spending projects (for example should a business invest in a
new information system)
• Incorporates externalities into the equation: It can, if required, include wider
social/environmental impacts as well as ‘private’ economic costs and benefits so that
externalities are incorporated into the decision process. In this way, CBA can be used to
estimate the social welfare effects of an investment
Stages in the application process
• Identify all costs and benefits
• Measure them
• Discount them back to common time period
• Assess whether benefits>costs
• Assess who bears the benefits and costs
• Perform sensitivity analysis
• Assess whether proposal is worth it
Present Value
• Project evaluation usually requires comparing costs and benefits from different time periods
• Dollars across time periods are not immediately comparable, because of inflation and returns
in the market.
Valuing Public Benefits and Costs
• Recall that the discount rate, benefits, and costs are needed to compute the present value of a
project
• For private company:
– Benefits = revenues received
– Costs = firm’s payments for inputs
• For public sector, market prices may not reflect social benefits and costs.
– Externalities, for example
• Several ways of measuring benefits and costs
– Market prices
– Adjusted market prices
– Consumer surplus
– Inferences from economic behavior
– Valuing intangibles
–
•
•
Market prices
– In a properly functioning competitive economy, the price of a good simultaneously
reflects its marginal social cost of production and its marginal value to consumers.
– Ignores market imperfections
– Easy to gather
Consumer surplus
– Public sector projects can be large, and change market prices
Keep in mind
•
•
•
•
•
The choice is the alternative selected.
The opportunity cost is the alternative not selected, the opportunity given up.
Every choice has a cost; there is no such choice as a free choice.
Disadvantages are not costs.
With every decision, there is only one choice and one cost.