SC’s DAP decision and PH’s budget process

The Philippine Human Development Report 2008-2009, “Institutions, Politics and Human Development” (disclosure:  I am a member of the executive committee), in its theme chapter (another disclosure: my daughter Toby Monsod coauthored the chapter with Emmanuel de Dios) had an excellent analysis and discussion on the national government budget: how it is used as an instrument for development; how it can be a tool for efficient management and accountability; and how it also is used as an instrument for partisan politics. All within the Philippine context.

I mention this because the shortcomings of the Philippine national budget and the budget process, as of that period, are examined in detail: the balance of powers (between the executive and the legislative) over the purse, the major budget issues due to the executive, the major budget issues due to Congress; the pork barrel, savings, lump sums, confidential and intelligence funds.

One of the findings was that, although the 1987 Constitution sees Congress holding the power of the purse, the Revised Administrative Code of 1987 (RAC), in defining the powers and limitations of both the executive and the legislative in the preparation, authorization and implementation of the annual General Appropriations Act (GAA), borrowed heavily from Presidential Decree No. 1177, which as heavily favored the executive.

Another of its findings: “All things considered, one would have to say the budget is constraining of human development and good government. For one, the budget is inflexible as regard both allocation and procedural rules, a situation which does not allow greater investment or innovation in the delivery of public services, human development or otherwise…”

The Department of Budget and Management (DBM), based on the papers written by Budget Secretary Butch Abad and others, must have read this report closely, and may have used it as a basis for the changes and reforms it pursued since 2010. For example, if you compare expenditures on health, education and other social expenditures pre-2010 and post-2010, the increases in the latter period are large and statistically significant, even on a per capita basis.  And changes in the process for greater efficiency in management and accountability have been put in place, starting from the zero-based budgeting.

Changes to make the budget less vulnerable to partisan politics, however, were not pursued as actively as budget-for-development and budget-for-efficiency-and-accountability. This administration is not a saint. The most one can say about this administration in this regard is that pork barrel funds, for the most part, were impartially divided (unlike in all the other previous administrations, as can be seen from the 2007-2009 PDAF allocations). But of course, there is no more pork barrel, thanks to the Supreme Court.

The question is:  How do we locate the recent Supreme Court decision regarding the Disbursement Acceleration Program (DAP) within this framework? Answer: The decision in effect strives to balance the scales between executive and legislative powers through restrictions on the executive. Thus, it tries to address the first finding mentioned above, but in so doing, it has also exacerbated the problem described in the second finding by making the budget even more inflexible. In other words, the decision is a double-edged sword.

The DAP was an attempt to make the budget process more flexible, allowing for innovation in the delivery of public services. How? By taking away (temporarily) the unobligated appropriations of the government executive agencies, and putting them to use in faster moving programs and projects of other government agencies. Why temporarily? Because if the slow-moving agencies performed better, they would presumably get it back one way or another.

I think this was an excellent way of making sure that the people’s money was not allowed to lie idle, and slow down the development objectives of the country. But, the Court did not allow this. Or, to be more specific, it said that this flexibility was not allowed by the GAA provisions themselves. The DBM’s position is that this flexibility is allowed under the RAC.

In trying to tie the hands of a too-powerful executive (not only President Aquino), the high court may have overreached itself when it pronounced that all items in the DAP had no appropriations cover (that absolute). This, after the DBM had submitted the list of projects undertaken by DAP and pointed out where they fell under the GAA. In other words, the Court  thought it knew better than the practitioners in the budgeting field, and in effect said the DBM was lying. Since when did Supreme Court justices become budget experts?

In effect, the Court said that the executive was not only spending money that it should not have spent (the definition of savings), but spending it on projects that were not allowed (no appropriations cover). Do you wonder why P-Noy was upset.

Are the Supreme Court and the Office of the President (OP) headed for an inevitable cowboy type “High Noon?” No. Actually, all I think the OP has to do is to redefine “savings” and enact this into law. And that the Supreme Court use “presumption of regularity” rather than presume guilt on the part of the executive, until its officials can prove themselves innocent. Tsk.

One final word on the DAP. The reason it is in bad odor in some quarters is that the people have been led to believe that this fund is the President’s pork barrel. If you will recall, when the Priority Development Assistance Fund (PDAF) was under attack, the defense of the legislators was that the DAP was an even larger pork barrel. And the perception seems to have stuck. Unfortunately for the country.