The Financing of Education

Many of the problems of education today are linked to the under-investment in education. The increase in the education budget from 1986 to 1989 was not sustained in the succeeding three-year period. After reaching a peak of 13.2% of the national budget in 1989, the share of education declined to 11.7% in 1991. Real per capita expenditures declined starting in 1990. The growth in the nominal size of the education budget was attributed to the growth of salary inputs which account for about 70% of total education expenditures. The level of spending is very much below those of other ASEAN countries. Actual expenditure per student increased from 783 pesos (P) in 1986 to P1,380 in 1994 at the elementary level. During the same period, a slight decline was observed at the secondary level from P1,271 to P1,257 per student.

However, education has been given the highest budgetary priority in the national government budget in recent years. Realignments within the DepEd budget have been made to augment the financial resources for elementary education. In addition, two-thirds of the President’s Social Fund have been committed primarily to establish new schools in barangays without an elementary school. The share of education in the national budget increased to 14% in 1995. The education budget (DepEd and state universities and colleges) increased from P13.13 billion in 1986 to P53.7 billion in 1995. The average teachers’ salary increased from P1,553 per month in 1986 to P5,902 which is probably the highest rate of increase among the various professional groups in the national government. To implement the Master Plan for Basic Education (1996-2005), it is estimated that P50 billion will be allocated for the modernization of basic education in the next ten years.

The national government is authorized by the Constitution to contribute to the financial support of educational programmes. The DepEd is likewise asked to formulate measures to broaden access to education through financial assistance and other incentives to schools, teachers, and students. Public elementary schools, national secondary schools, vocational and technical schools, other special schools, and chartered and non-chartered tertiary educational institutions are funded primarily from national funds. Local governments are encouraged to assume the operation of non-national public schools, while the national government provides funds and adequate sources of revenue. Government educational institutions are allowed to receive grants, legacies, and donations for purposes specified by existing laws. The management and use of such income is subject to government accounting and auditing rules and regulations.

Private schools throughout the country are funded from capital investments, equity contributions, tuition fees and other school charges, grants, loans, subsidies and other income sources in accordance with current legislation. The national, regional, provincial, city and municipal governments may also aid school programmes with loans, grants and scholarships to recognize the complementary role of the government and of private schools in the educational system.

A number of programmes have been funded through international finance assistance. For instance, the Secondary and Elementary Education Project (1990-94) was financed through a support loan from the World Bank with co-financing by the Overseas Economic Co-operation Fund of Japan. The Philippine-Australia Technical and Vocational Education Project aimed at improving the sub-sector was supported by the Australian bilateral assistance. The Science Teaching Improvement Project was jointly financed by the German government and the Philippine government. The Science Equipment Project (1989-1992) was implemented with the financial assistance of the German government.