I.

Introduction Several factors are to be considered in the allocation of budget for staterun university personnel services, maintenance and other operating expenses and capital outlay. These factors will serve as a guide to make a budget plan for a period of time or for a whole fiscal year. On the other hand, forecasting of budget might help for predicting future budget allocation for different institutions. Forecasting, according to Investopedia, is the use of historic data to determine the direction of future trends. It is the result of study and analysis of available pertinent data. Forecasting is used by companies, institutions or organizations to determine how to allocate their budgets for an upcoming period of time. Forecasting methods include different models such as simple-moving average, weighted-moving average, simple exponential smoothing and the use of linear regression line. This study used linear regression to forecast the possible amount to be allocated for the Polytechnic University of the Philippines for the fiscal year 2015 by using data gathered from different sources from fiscal year 2000 until 2014. This paper seeks to provide and illustrate the importance of forecasting in a real-case situation. Background of the Study Issues are rising regarding raising the funds given to all state universities, these include the Polytechnic University of the Philippines or PUP. Every year when the Congress of the Philippines makes the General Appropriations Act, protesters are active in demanding for higher budget for education or to prevent the cut off in the yearly budget. For this reason,

researchers had the interest to forecast the budget of their university. Budget awareness is important especially to the members or part of an organization or an institution. This can help them to petition for higher budget or to watch over for cut offs in the budget. This can also help the institution, especially the government in this case, to allocate a reasonable budget. Linear regression model is used because it is the best model to describe the relationship between the three factors which a budget for a state university make up. II. Review of Related Concepts The review of related concepts for this case study focuses on different forecasting methods - stating which among these best fits as an instrument to forecast an education budget. The chapter begins by discussing the general background of the Polytechnic University of the Philippines, the education budget in the Philippines. Followed by the definition of forecasting, its different methods and applications. General Background of the Polytechnic University of the Philippines The Polytechnic University of the Philippines (PUP) is

a coeducational, research state university located in Manila, Philippines. It was founded on October 19, 1904, as the Manila Business School, then the city's business school. The university operates on three campuses located throughout Manila. PUP is the largest university in the Philippines by enrolment with more than 60,000 students. PUP's mission is to be an avenue for the development of the citizenry and for the enhancement of nation building through meaningful growth and transformation. PUP also puts an emphasis on the alleviation of the plight of the poor. In accordance with its mission, PUP is also notable for charging the lowest tuition among

all universities in the Philippines at 12 pesos (US$0.29) per academic unit, a rate that has unchanged since 1979 ("Polytechnic University of the Philippines." Wikipedia). Furthermore, the university is composed of 15 colleges. It has largest student body in the Philippines with a population of 61,253 students. Aside from its degree-granting units, PUP also has a distance education unit, a graduate school, and a laboratory high school. In 2009, PUP was ranked fifteenth by the Commission on Higher Education (CHED) and the Professional Regulation Commission (PRC), placing in as one of the top 20 higher learning institutions in the Philippines. The Webometrics Ranking of World Universities, which rank universities according to web presence, visibility, and access placed the university at 10,610 (worldwide) and 48 (national), respectively. According to the QS Asian University Rankings, PUP ranked at 401 out of 424 Asian institutions ("Polytechnic University of the Philippine." Wikipedia). PUP currently admits all students, including internationals, on a need-blind basis. Admission in PUP mainly requires passing the PUPCET, the university's entrance test. Other criteria for admission are: a general weighted average in high school which is 82% and above, and the enrolee's good moral character. A graduate of PUP Laboratory High School is exempted to take the entrance test, unless they opt to take it for scholarship purposes. Also exempted from taking the test are entrance scholars such as valedictorian, salutatorian, journalist, athlete, etc. ("Incoming Freshman." pup.edu.ph). Of an estimated 50,000 annual

entrance test examinees, only 8,000 will be accepted due to the university's limited budget (Pata, 2014). Education Budget in the Philippines Advancing quality education in the country continues to be a priority under the Aquino administrations 2014 budget, with the education sector claiming a significant part of the total P841.8-billion allocation for social services in the FY 2014 General Appropriations Act (GAA)("Education Remains Top Priority." 2014). The Department of Budget and Management (DBM) reported that the Department of Education (DepEd) has been given biggest budget among all national government agencies this year, with a 2014 allocation amounting to P309.43 billion. Comprising this is a P44.6-billion appropriation for the construction, repair and rehabilitation of at least 43,000 kindergarten, elementary and secondary school buildings nationwide. The Administrations education initiatives are also complemented by our efforts to ensure that children are able to enroll and, even more important, remain in school until they graduate. These are some very necessary investments in the countrys human capital that the 2014 budget wholly supports, Abad said. Abad noted, for example, that through the expanded Conditional Cash Transfer program (CCT) of the Department of Social Welfare and Development (DSWD), a total of 4.3 million student beneficiaries will be sufficiently covered to allow them to graduate from high school. Among other education targets for the year include the procurement of additional

textbooks and workbooks to attain the ideal 1:1 student per textbook ratio. In support of the K-12 Program, an appropriation of P1.7 billion has likewise been set aside for the procurement of over 42 million learning modules and teaching guides. Abad also announced that various programs and projects designed to enhance students skills and capabilities will be implemented this year. This includes the school-based management installation support (P1 billion), the Alternative Delivery Mode Project (e-IMPACT) in the DepEds regular budget, the Abot-Alam Program (P1.97 billion), and the Basic Education Madrasah Program (P535 million), among several others. Financial assistance to in-need students will also be continued this year through various scholarship programs. These include the Government Assistance to Students and Teachers in Private Education (GASTPE) program, which will be implemented this year with a budget of P7.45 billion. Other scholarship programs will also be under the wing of other agencies, including the Commission on Higher Education, Department of Labor and Employment (DOLE) and the Technical Education and Skills Development Authority (TESDA), the Department of Science and Technology (DOST), National Commission on Indigenous Peoples (NCIP), Department of Agriculture (DA), Department of Agrarian Reform (DAR) and various State Universities and Colleges (SUCs) nationwide. Furthermore, the budget chief also mentioned the creation of around 34,700 new teaching and non-teaching positions with an allocated budget of P8.56 billion, which will help bring the teacher-to-pupil ratio to an ideal 1:45. A stand-by appropriation of P655 million for Quick Response Funds has likewise been allotted specifically for the repair, rehabilitation,

renovation and/or replacement of school buildings and essential teaching aids and materials that may be destroyed by natural calamities. We remain mindful of the potential challenges that may hamper our progress this year, especially with respect to providing quality education to Filipino students. The 2014 National Budget considers these possible setbackssuch as typhoons and calamitiesso that emergencies dont endanger our broader goal of establishing a robust public education system, Abad added ("Education Remains Top Priority." 2014). However, Despite the nominal increase in the education budget over recent years, state spending on education has actually declined when compared to the Gross Domestic Product, representing just a third of the United Nations recommended national investment on education. Education Secretary Armin Luistro himself noted this trend in a recent presentation on the state of the cou ntrys education system before Philippine Business for Education, an organization of businesses supporting education reforms (Quismundo, 2012). According to Luistro, state spending in 1997 and 1998 hit a high of 3.2 percent of the countrys GDP, higher than the current level of 2.1 percent. The current education budget is P238.8 billion, higher than last years P207 billion but lower if taken as a ratio of GDP. Last years budget was 2.3 percent of GDP, a benchmark used globally to gauge how much governments spend on education. The UN recommends that governments spend at least six percent of their GDP on education. If we work hard for a bigger share in the budget, if we were back to 3.2 percent rather than 2.1 percent, wed have a budget of at least P327

billion, Luistro said in his presentation before business leaders in Makati City. Luistro also noted that per capita spending for each of the more than 20 million public school students every school year has increased to P10,700, from P9,400 in 2011 and P8,000 in 2010. But despite the nominal increases, the amount is actually going down compared to inflation. Asked later if DepEd has asked the President to raise education spending levels, Luistro said the department was aware of competing state needs and was pursuing alternative sources of funding to address critical shortages in education resources.We talk about that in Cabinet meetings and we talk about competing needs. For example, we have to invest in energy. So we talk about that and were balancing it, said Luistro. He also noted that DepEd, the countrys largest bureaucracy, continues to receive the largest allocation in the annual state budget and has seen the largest increase in spending among government departments in the last two years. Whats important is that we are looking at other sources of funding. Example, there is the SEF (Special Education Fund) of local government units, said Luistro. DepEd is also pursuing partnerships with the private sector to address unresolved shortages in classrooms, textbooks, teachers, school desks and sanitation facilities. The current classroom shortage is at 50,921 while DepEd lacks around 74,000 teachers (Quismundo, 2012).

Forecasting Forecasting is the process of making statements about events whose actual outcomes (typically) have not yet been observed. A commonplace example might be estimation of some variable of interest at some specified future date. Prediction is a similar, but more general term. Both might refer to formal statistical methods employing time series, cross-sectional or longitudinal data, or alternatively to less formal judgemental methods. Usage can differ between areas of application: for example, in hydrology, the terms "forecast" and "forecasting" are sometimes reserved for estimates of values at certain specific future times, while the term "prediction" is used for more general estimates, such as the number of times floods will occur over a long period. Risk and uncertainty are central to forecasting and prediction; it is generally considered good practice to indicate the degree of uncertainty attaching to forecasts. In any case, the data must be up to date in order for the forecast to be as accurate as possible ("Forecasting." Wikipedia). Forecasting is a prediction of what will occur in the future. It is an uncertain process that is vital to survival in todays international business environment. Rapid technological advances have given consumers greater product diversity as well as more information on which they make their product choices. Managers try to forecast with as much accuracy as possible, but that is becoming increasingly difficult in todays fast -paced business world (Hermus et al., 2014). The use of historic data to determine the direction of future trends. Forecasting is used by companies to determine how to allocate their budgets

for an upcoming period of time. This is typically based on demand for the goods and services it offers, compared to the cost of producing them. Investors utilize forecasting to determine if events affecting a company, such as sales expectations, will increase or decrease the price of shares in that company. Forecasting also provides an important benchmark for firms which have a long-term perspective of operations ("Forecasting." Investopedia). Principles of Forecasting Reid & Sanders stated that many types of forecasting models that differ in complexity and amount of data & way they generate forecasts: -Forecasts are rarely perfect. -Forecasts are more accurate for grouped data than for individual items. -Forecast are more accurate for shorter than longer time periods (2010). Categories of Forecasting Methods Yeung enumerated the differences between Qualitative Forecasting Methods and Quantitative Forecasting Methods (2012). Qualitative Forecasting Methods -These methods are used when historical data are scarce or not available at all. -They generally use expert opinion to predict future events subjectively

Advantage - useful when historical data either are not available or are scarce. For example, sales of new product, environment and technology over the long term. Disadvantage Subjective Quantitative Forecasting Methods -These methods are used when historical data are available. -They generally construct a forecasting model from available data or theory to do forecasts. --Advantage Objective. Once the underlying model or technique has been chosen, the corresponding forecasts are determined automatically. They are fully reproducible by any forecaster. --Disadvantage Need data Reid & Sanders summarized the different forecasting methods from both Qualitative and Quantitative Methods (2010). Quantitative Methods --Time Series Models: -Assumes information needed to generate a forecast is contained in a time series of data -Assumes the future will follow same patterns as the past

--Causal Models or Associative Models -Explores cause-and-effect relationships -Uses leading indicators to predict the future -Housing starts and appliance sales

CAUSAL FORECASTING METHODS Causal forecasting methods are based on a known or perceived relationship between the factor to be forecast and other external or internal factors 1. regression: mathematical equation relates a dependent variable to one or more independent variables that are believed to influence the dependent variable 2. econometric models: system of interdependent regression equations that describe some sector of economic activity 3. input-output models: describes the flows from one sector of the economy to another, and so predicts the inputs required to produce outputs in another sector 4. simulation modelling

III.

Statement of the problem/study Scope This studys goal is to portray the past and the current situa tion of

the account of the university, to sort the problems why the university had this insufficient budget in every year and maybe to find an alternative solution on how to budget the spending of the university. Limitation This study took place in Polytechnic University of the Philippines, and continue the data that we have gathered from the university through home, the internet, people that studying in the university that we have surveyed and brainstorming solutions on every flaws of the calculation of the budget from the data that we have collected. Significance of the study This study can support the university on how to save and budget the funds of the school, to provide understanding for the students that are complaining on having an inadequate budget for the facilities of the university. Importance of the study This can help improve the schools standing on the overall ranking of the universities if the budget is computed accordingly so that the remaining funds can be provided to the facilities, the professors, and the employees and also for the teaching materials. Or if there will be an

increase on the budget of our school, we can double up or do an excellent progress on the current situation of the university. IV. Presentation of Data, Computations, Results and Analysis III. Presentation of Data, Computations, Results and Analysis The Congress of the Philippines, which includes the Senate (Upper House) and the House of Representatives (Lower House), has the power to appropriate. The Congress approves the national budget of our country as calculated and presented by the executive branch of the government. Below is the data gathered from the Department of Budget and Management and from the Polytechnic University of the Philippines portal: Table 1.0 Polytechnic University of the Philippines Budget for Fiscal Years 2000-2013 as stated in yearly General Appropriations Act* (in Thousand Pesos). General Appropriations Act Released Allotment Personnel Maintenance and Other Capital Services Operating Expenses Outlay 379, 238 107, 476 11, 000 379, 982 81, 139 2, 500 440, 640 87, 989 2, 000 437, 450 75, 514 0 437, 118 77, 956 0 436, 860 74, 853 486 437, 548 74, 853 400 458, 118 81, 284 2, 012 459, 670 80, 843 13, 047 521, 983 99, 396 3, 012 526, 333 95, 614 0 581, 968 95, 614 0 628, 603 106, 180 0

Fiscal Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

TOTAL 497, 714 463, 621 530, 629 512, 964 515, 074 512, 199 512, 801 541, 414 553, 560 624, 391 621, 947 677, 582 734, 783

2013 2014

735, 313 173, 816 7, 700 916, 829 725, 211 193, 795 4, 342 923, 348 In this study, simple linear regression model is used to forecast the

PUP budget for the fiscal year 2015. In simple linear regression model, we predict scores on one variable from the scores on a second variable. The variable we are predicting is called the criterion variable and is referred to as Y. The variable we are basing our predictions on is called the predictor variable and is referred to as X. When there is only one predictor variable, the prediction method is called simple regression. In simple linear regression, the topic of this section, the predictions of Y when plotted as a function of X form a straight line. The formula for simple linear regression is = 0 + 1 where 0 is the intercept and 1 is the slope. Y will represent the PUP budget and will be the Fiscal Years. Table 2.0 PUP Budget for Fiscal Years 2000-2014 Fiscal Year (x) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

TOTAL (Y) 497, 714 463, 621 530, 629 512, 964 515, 074 512, 199 512, 801 541, 414 553, 560 624, 391

2010 2011 2012 2013 2014

621, 947 677, 582 734, 783 916, 829 923, 348

Plotting the points in the table to rectangular coordinate system gives scatter plot diagram below: Figure 1.0 PUP Budget for Fiscal Years 2000-2014

1000000 900000 800000 700000 600000

500000
400000 300000 200000 100000 0 1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

The formula to compute for 1 is

=1 (=1 )(=1 ) 1 = 2 2 =1 (=1 )

This needs additional columns in the table for 2 , product of and .

Fiscal Year (x) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 30105

TOTAL (Y) 497714 463621 530629 512964 515074 512199 512801 541414 553560 624391 621947 677582 734783 916829 923348 9138856

995428000 927705621 1062319258 1027466892 1032208296 1026958995 1028678806 1086617898 1111548480 1254401519 1250113470 1362617402 1478383396 1845576777 1859622872 18349647682

2 4000000 4004001 4008004 4012009 4016016 4020025 4024036 4028049 4032064 4036081 4040100 4044121 4048144 4052169 4056196 60421015

= 18349647682
=1

= 30105
=1

= 9138856
=1

2 = 60421015
=1

1 =

(1518349647682) (30105)(9138856) (1560421015) 301052

1 =

275244715230 275125259880 906315225 906311025

1 =

119455350 4200

1 = .

0 = 0 =

=1 1 =1

15

9138856 (28441.75)(30105)
0 = 56473335.18

The equation of linear regression is = 56473335.18 + 28441.75 The forecast needs is the budget for 2015. Thus, = 56473335.18 + (28441.75)(2015) = . The forecast of PUP budget for fiscal year 2015 is P837691.07

1000000 900000 800000 700000 600000 500000 400000 300000 200000 100000 0 1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

V. Conclusions, Recommendations and References Therefore, for the fiscal year 2015, the Polytechnic University of the Philippines can at least received budget allotment of P837691.07 as the computation for future value suggests. The decrease in budget allotment is a result of frequent budget cut in the previous years. This doesnt mean that PUP will only received that amount, but the amount obtained represents the least value for the next fiscal year. Researchers suggest to use the other types of forecasting model and the use of softwares like eViews, IBM SPSS and others for more reliable, accurate and presentable results.

References:
"Budget and Finances." PUP :. N.p., n.d. Web. 21 Mar. 2014.

<http://www.pup.edu.ph/Finance/>.

"Education gets lions share of 2014 Budget." Official Gazette 1 (2014): n. pag. www.gov.ph. Web. 19 Mar. 2014.
"Forecasting." Investopedia 1 (2000): n. pag. http://www.investopedia.com. Web. 18 Mar. 2014. Lane, David. "Introduction to Linear Regression." Introduction to Linear Regression. N.p., n.d. Web. 21 Mar. 2014. <http://onlinestatbook.com/2/regression/intro.html>.

"Philippine education spending still below UN standard." Philippines Daily Inquirer 1 (2012): n. pag. http://globalnation.inquirer.net. Web. 15 Mar. 2014.