Securing Financing for MDGs Amidst Economic Challenges

EQUAL STANDARDS FOR EQUAL OPPORTUNITIES 1

FRAMEWORK FOR A QUALITY, ACCESSIBLE, AND RELEVANT PUBLIC HIGHER EDUCATION SYSTEM2

What is Higher Education to Us

The Youth Against Debt (YAD) defines education as a process each individual must embrace to be
able to realize her/his actual or innate potential towards full human development. It is a fundamental
function or a route for people to become productive members of a particular society. It is often
associated with formal education or what many call as university education. However, the concept of
education is primarily more than that.

In reality, education is a combination of diverging experiences gained from different fields of learning
and interactions. It is the learning and unlearning of knowledge, skills and morals/ethics provided by
formal school education and the construction of understanding facilitated by everyday experience
which is often called as informal learning.

For us, the traditional role of higher education is to segment an existing homogenous labor pool,
already capacitated by an effective basic and secondary education system, into specialized labor pools
performing distinct highly technical tasks oriented towards national development needs, both in
economic and social terms. The education system should thus be seen as a continuum – from basic
(primary and secondary) education which already equips the populace the basic skills for production,
to higher (tertiary) education which elevates social technical competency as investment for further
development of the instruments of production.

The responsibility of investing in higher education, therefore, is delegated to social entities directly
accountable to national development, which is both a function of an overall government
industrialization strategy and existing labor market demand. Thus, both the government and private
sector alike have a stake in investing for a quality and relevant higher education system.

Philippine Education

However, Philippine education is far from this. Our current educational system is characterized as:

• Lacking a clear national development policy. A national development policy is very crucial in
determining the role and position of the education sector in the whole schema of social
production. This is especially true for higher education, given that we (wrongly) assign to it the
function of training our labor sector.

1
Prepared by the Youth Against Debt (YAD), a coalition of student and youth organizations.
2
With long excerpts from YAD and Freedom from Debt Coalition’s (FDC) the “Neglected Generation:
Education Spending in the Philippines”, June 2008

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• Governed by the policy of trifocalization3. The current education paradigm treats vocational-
technical education for basic production as extrinsically separate and independent of basic and
higher education. This trichotomy may have been caused by the difference of the three levels in
terms of cost. For example, basic education is supposedly universally free, and there is an option
later whether to pursue vocational-technical education or a much more expensive higher
education.

Maybe as a social reaction to the emerging problems of this education framework, there is a trend
towards tying vocational-technical education with higher education. College courses being
offered gradually begin to reflect the technical needs of the booming industries, such as
healthcare and ICT (Information Communication Technology). There had also been proposals to
create college programs that are modularized to include technical education, so one receives a
technical education diploma sometime along the middle of the college program.

• Basic (primary and secondary) education is unable to capacitate the labor pool to a level of
competence apt for specialized training due to lack of government and private investment for a
quality education system.

Due to this incapacity, the populace had been conditioned to view primary and secondary
schooling only as preparations for college, thus resulting in the relegation of much of the tertiary
education to skills training.

In this case, we have higher education system only serving to bridge the gap between the
technical skills of the existing workforce (produced by secondary education) and the demands of
the labor market.

• Because of the service-oriented nature of labor demand, and the current framework of higher
education only as a bridge between the basic education institutions and the labor market, private
sector investment in higher education only serves to offer training for service industries.

• Labor demand remains to be services-oriented, particularly because private sector investment in

higher education is focused solely on existing labor market demand (characterized by the growth
of the services industry) and not on a specific industrialization strategy.

The government is currently supporting a labor-exportation policy, primarily compelled by low

internal employment rate and the
macroeconomic value of foreign Figure 8. Average Net Increases of Students per HEI
currency remittances of Overseas
Filipino Workers (OFW). Thus, local
skills-training is almost always
influenced by current global labor
demand.

Trends in the higher education system

There is a continuing increase in the cost

of private higher education, causing a

3
Quoting Commission on Higher Education’s (CHED) policy.

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mass departure of college students from private college universities to state universities and colleges
(SUCs) due to the inability of many students to afford unregulated private higher education. This
would not be a problem if SUCs can absorb the said students.

However, the meager budget provided by the government cannot simply capacitate our SUCs to
absorb the college entrants. SUCs are thus forced to pass on the cost to the students. For example, the
UP System hiked tuition by as high as 300% in 2007.

Proof of this fact, during the formal opening of classes last June of this year, Divina Pasumbal, public
information chief of Polytechnic University of the Philippines’ (PUP) public said more and more
students from private schools were transferring to PUP because of its low tuition. However, PUP
could only accommodate 8,000 students per year.

Figure 9. SUC Budget per College Entrant

SUC Budget per College Entrant

30000
25000
20000
15000
10000
5000
0
6

8
99

99

99

99

00

00

00

00

00

00

00

00

00
-1

-1

-1

-1

-2

-2

-2

-2

-2

-2

-2

-2

-2
95

96

97

98

99

00

01

02

03

04

05

06

07
19

19

19

19

19

20

20

20

20

20

20

20

20
Students thus, not being able to afford any school at all, have nowhere to go. This slows down net
growth of college students resulting to less and less people enrolling in college. If continued, this
trend will result in decreasing supply of skilled labor, which will inevitably take its toll on our
economy.

Clearly, there is a lack of effective government investment on higher education both in terms of
budgetary allocation and governance support, as manifested by the sheer volume of students that
cannot afford tertiary education and the quality of students produced by our HEIs.

However, this was aggravated by the incongruent increase in the number of SUCs in the last decade,
contrary to government policy of a moratorium on the creation of SUCs as proposed by the
Presidential Commission on Education Reforms. The practice of building more negligible SUCs
rather than strengthening existing ones opened higher public education to the dictates of patronage
politics. These SUCs are not created to provide for the quantitative or qualitative needs of the
education sector but primarily to increase the rapport and political esteem of local government
officials to their constituents.

The direct result is a decreasing per-unit budget allocation to public higher education, compromising
the absorptive capacity of the public HEIs. Thus, there is commonly a trade-off between absorption of
students and the quality of education offered.

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This prompts the existing SUCs to conduct cost-recovery (e.g. user fees, community financing, cost
sharing) as a survival strategy. It is compelled to devolve to the students an increasing part of its
financial and operational burdens such as increased tuition and other miscellaneous fees.

The immediate corollary consequence of this is a staggering decline in the enrollment growth rate of
SUCs. Since students are not able to afford private higher education, the overall annual percentage
growth in enrollment is drastically slowing down. Due to lack of enrollees and resources, we ended
up with SUCs that are very small by international standards.

Figure 10. Historical Enrolment Levels

12.00%
10.00%
enrollment in percent

8.00%
6.00%
4.00%
2.00%
0.00%
1995-

1996-

1998-

1999-

2000-

2001-

2002-

2003-
1998*
1997-
1996

1997

1999

2000

2001

2002

2003

2004
-2.00%
-4.00%
year

Source: CHED Data

As a consequence, we have a public higher education system suffering not only from a lack of
resource input but also from a defective governance framework.

Vision for a Strong Higher Education System

The Youth Against Debt (YAD) believes in quality, relevant, accessible education on all levels, with
each level designed not only to be preparatory for the next, but also, by itself, already contributive to
larger social development goals.

Following our three-level education system, the best design would be a primary or elementary level
devoted to the learning of basic skills, knowledge and values, with the secondary level already
preparing graduates for productive work so that those who wish to engage in the production process
would already be equipped with the necessary skills.

Like in developed countries, the tertiary level in the Philippines should thus be geared to those who
would wish to either devote themselves to the production of new ideas and knowledge or train those
who would handle more sophisticated technical jobs. In order to accomplish that, we need a strong
public higher education system which:

• Provides and maintains equal quality standards for all students. There must be a certain level of
variance between schools in terms of specific curriculum which should be determined by
educators in consultation with the communities that the school services. The school must be
intimately linked to the environment it operates in.

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• Reflects and contributes to a national development plan. In the context of labor market
globalization, this necessitates the reorientation of the labor supply produced by the new higher
education system by establishing a strong return-of-service program. HEIs should be geared
towards national agro-industrial development and local community empowerment.

• Can absorb the entire demand for higher education on the absence of private higher education
institutions (this restores the public sector role as the main provider of higher education, with
private sector effort acting only as an ancillary and support system). Thus, our SUCs must be
made able to compete with private ones in terms of quality and relevance.

Policy Reforms

Such vision of a strong, relevant and sustainable public higher tertiary education can only be realized
if the government, in the immediate will implement the following policies:

1. There must be moratorium on tuition and other fee increase in SUCs. So as not to compromise the
fiscal standing of SUCs about to increase its tuition and other fees, economic relief equal to the
projected increase should be provided by the State upon justification of immediate and substantial
need.

2. The following policy changes must made:

a. Republic Act 7722 or the Higher Education Act of 1994 must be amended so as to increase
the power of CHED in regulating and stabilizing tuition and other school fees. The
amendment must include the power to impose fee increase cap and the power to prosecute in
incidents of violation.

b. Section 42 of Batas Pambansa 232 or the Education Act of 1982, which allows private
schools to determine the rate of its school fees without regulation, must be amended
following the Supreme Court ruling in 153 SCRA 622 (Philippine Consumer’s Foundation
vs. Secretary of Education, Culture, and Sports) which states that the power to regulate school
fees devolves to the education departments

3. The institution of Multi-sectoral School Fee Boards must be mandated in all private and public
HEIs. These boards, which are to be composed of an equal number of representatives from the
administration, academic and non-academic personnel, parents/guardians, students and alumni
association, shall study, conduct consultation and thereafter recommend on tuition and other
school fee adjustments.

4. Concurrent with the strengthening of pre-basic (e.g. Early Childhood Care and Development or
ECCD) and basic education (primary and secondary) using the Education for All (EFA)
framework, technical training should gradually be infused to secondary education through
establishing greater coordination with TESDA and DepEd, instead of relegating the task of
technical training to higher education.

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To guide the transition towards a strong developmental higher education system, the following
proposals are suggested:

1. SUCs must be subjected to a periodic review, which will ascertain:

a. Effectively performing SUCs, based on a certain benchmark pegged on international

standards;
b. For non-performing SUCs, how much performance was a function of resource input (to
determine potentially performing SUCs); and
c. Best academic and management practices, which will be documented and used as a resource
by all SUCs.

2. SUCs which are performing or will potentially perform when given more resources must be
capacitated to a degree which will enable it to absorb the demand for the relatively non-
performing SUCs in specific territories. Local and national development demands shall be
considered when expanding.

a. In this modified outcome-based financing, both the potential and actual outcomes are
assessed.
b. These performing SUCs are in essence competing with these SUCs for students, which
gradually weeds out non-performing SUCs without compromising the capacity to accept
entrants and to offer those entrants quality education.

3. Regionalized return-of-service programs must be strengthened so as to gradually increase higher

education’s social return.

Financing Higher Education

There is no question that public higher education system needs to undergo radical reforms both in
terms of framework and governance. However, this should go hand-in-hand with higher levels of
government support, in terms of budgetary allocation, policy support, and governance assistance.

Sad to say, education spending in the Philippines is negligible and are nowhere near widely-accepted
international standards concerning education expenditures. One such standard is the standard
formulated by the United Nations Educational, Scientific and Cultural Organization (UNESCO).

In 1996, the International Commission of Education in the Twenty First Century4, headed by former
European Commission President Jacques Delors, submitted a report entitled “Learning: the Treasure
from Within” to the UNESCO. The report among others resulted in the adoption of the United
Nations of the Delors Benchmark for education where notably over a hundred countries including the
Philippines willfully assented.

The report recommended 6% of the Gross National Product to education. This percentage range is
now referred to as the UNESCO Delors benchmark for education.

However, that standard is not being followed in the Philippines. From the time the Delors standard
was widely accepted as an international point of reference, education spending in our country as
percentage of the GNP hovered no more than 3.8%.

4
The commission was itself an offshoot of the general conference held in November 1991 tasked ‘to convene
an international commission to reflect on education and learning for the twenty-first century'.

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This wouldn’t be much of a dilemma if the trend of our government’s spending on education was
geared towards the fulfillment of the standard like that of other developing countries.

Table 26. Education Spending vis-à-vis GNP, 1996-2007

6% of Education Delors Education Spending

Year GNP
GNP Spending Gap as % of GNP
1996 2,261,339 135,680 74,682 60,998 3.30%
1997 2,522,884 151,373 94,954 56,419 3.76%
1998 2,815,259 168,916 106,850 62,066 3.80%
1999 3,136,170 188,170 110,614 77,556 3.53%
2000 3,496,863 209,812 116,827 92,985 3.34%
2001 3,876,603 232,596 121,498 111,08 3.13%
2002 4,223,326 253,400 125,395 128,005 2.97%
2003 4,631,479 277,889 128,995 148,894 2.79%
2004 5,248,064 314,884 128,789 186,095 2.45%
2005 5,885,050 353,103 131,217 221,886 2.23%
2006 6,570,310 394,219 144,226 249,992 2.20%
2007 7,274,660 436,480 164,103 272,377 2.26%
*As computed by the Freedom from Debt Coalition

Yet the trend is nowhere positive. In reality, there is a decreasing and sustained drift towards state
indifference concerning the education of our people. From 3.8% in 1998 during the time of Estrada,
education expenditure as proportion of the total national income dipped to 2.26% in 2007 under
President Arroyo.

In fact, for 2009, the Philippine government proposes an education budget representing 2.14% of
GNP – a far cry from the 6 percent international benchmark. This is much lower than this year (2008)
which is 2.19% only of the total national income.

Even some countries that were not able to achieve education spending 6% of their GNP were better
education financiers than us. Namibia, Oman, Iran, all posted education expenditures at 4% of their
total national income in 2002 compared to our 2.97% showing during the same year.

Proposed 2009 Alternative Budget for SUCs

For FY 2009, ABI proposes an increase in the budget of SUCs, particularly 29 centers of excellence
identified by the CHED. The proposed increase will be in the form of augmenting the budget for
capital outlay (CO) and provision of additional subsidy for students.

The proposed increase in CO is computed taking into consideration each SUC’s student population.
The per capita CO budget as for FY 2009 is computed and compared with the average per capita CO
for all SUCs. For those SUCs which have less per capita CO budget than the national average, it is
proposed that their CO budgets be increased in the amount of the shortfall between their NEP budget
and the average to equalize the CO spending for these centers of excellence. Table 27 details the
relevant variables and the computation of the proposed increases for each of the identified SUCs.

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Table 27. Details of Proposed Increase in Capital Outlay of SUCs for 2009

Student NEP 2009 Proposed

Proposed
Population CO CO / CO per
Region Institution Additional
(2006-2007) Expense capita capita
CO ('000)
Adjusted ('000) increase
Mariano Marcos State
I
University 9,232 3,012 326.26 52.25 482.36
Pangasinan State
I
University 10,622 3,012 283.56 94.94 1,008.49
II Cagayan State University
13,150 3,012 229.05 149.46 1,965.35
Isabela State University –
II
Cabagan 17,293 3,012 174.17 204.33 3,533.50
III Bulacan State University
17,501 3,012 172.10 206.40 3,612.23
Central Luzon State
III
University 8,114 3,012 371.21 7.30 59.19
III Tarlac State University
11,100 3,012 271.35 107.15 1,189.41
IVA Cavite State University
12,163 3,012 247.64 130.87 1,591.76
IVB Palawan State University
15,870 3,012 189.79 188.71 2,994.88
Western Philippines
IVB
University 4,681 3,012 643.45 - -
V Bicol University
11,946 3,012 252.13 126.37 1,509.63
VI Capiz State University
9,100 3,012 330.99 47.52 432.40
West Visayas State
VI
University 14,486 3,012 207.92 170.58 2,471.03
Eastern Visayas State
VIII
University 7,653 4,512 589.57 - -
VIII Leyte Normal University
6,001 3,012 501.92 - -
VIII Samar State University
3,402 3,012 885.36 - -
Southern Leyte State
VIII
University 4,177 3,413 817.09 - -
Western Mindanao State
IX
University 8,940 3,012 336.91 41.59 371.84
Zamboanga State College
IX of Marine Science and 1,190.5
Tech. 2,530 3,012 1 - -
Central Mindanao
X
University 5,384 3,012 559.44 - -
Mindanao Polytechnic
X
State College 6,369 3,012 472.92 - -
Mindanao State
X University - Iligan
Institute of Tech. 10,471 3,012 287.65 90.85 951.33
University of
XI
Southeastern Philippines 10,281 3,012 292.97 85.54 879.42

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Student NEP 2009 Proposed

Proposed
Population CO CO / CO per
Region Institution Additional
(2006-2007) Expense capita capita
CO ('000)
Adjusted ('000) increase
Mindanao State
XII
University 29,715 11,065 372.37 6.13 182.29
University of Southern
XII
Mindanao 12,325 3,012 244.38 134.12 1,653.08
Philippine Normal
NCR
University 13,273 3,012 226.93 151.58 2,011.94
Polytechnic University of
NCR
the Philippines 50,016 3,012 60.22 318.28 15,919.33
Technological University
NCR
of the Philippines 18,090 3,012 166.50 212.00 3,835.17
CAR Benguet State University
11,062 3,012 272.28 106.22 1,175.03
TOTAL
47,829.67

In addition to the proposed increase in CO budget, ABI proposes the provision of subsidy to cover
relief for SUC students in light of the increasing prices which include education-related expenses
such as daily transportation expenses going to and from the campus, spending for meals while in
school, costs of textbooks and other school supplies. In computing the proposed increase, internally-
generated income by these SUCs has been used as a basis. Table 28 provides the amounts of
internally-generated income by SUCs from tuition fees and other income collected from students.
Using this combined income as base, it is proposed that an amount equivalent to 20 percent be
provided for under their respective budgets for next year to be used as subsidy to students. This
should defray the cost of education to shield the students from any pressures from the SUCs to
increase their collections from the students arising from inflation and the limited budgetary support
they have been receiving from the national government.

Table 28. Details of Proposed Increase for Student Subsidy

Internally - Generated Income –

Proposed
('000)
increased Subsidy
Institution Other Income
Tuition to Cover Relief
Collected from ('000)
Fees
Students
Mariano Marcos State
University 45,192 26,010 14,240.40
Pangasinan State University
21,000 27,208 9,641.60
Cagayan State University
79,000 - 15,800.00
Isabela State University –
Cabagan 72,789 4,896 15,537.00
Bulacan State University
185,000 - 37,000.00
Central Luzon State
University 65,000 - 13,000.00
Tarlac State University 60,154 57,946 23,620.00

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Internally - Generated Income –

Proposed
('000)
increased Subsidy
Institution Other Income
Tuition to Cover Relief
Collected from ('000)
Fees
Students
Cavite State University
68,989 70,690 27,935.80
Palawan State University
52,777 60,149 22,585.20
Western Philippines
University 23,520 7,596 6,223.20
Bicol University
103,100 6,415 21,903.00
Capiz State University
39,542 43,088 16,526.00
West Visayas State University
81,858 27,257 21,823.00
Eastern Visayas State
University 34,500 17,959 10,491.80
Leyte Normal University
11,139 10,494 4,326.60
Samar State University
10,000 22,075 6,415.00
Southern Leyte State
University 27,130 12,912 8,008.40
Western Mindanao State
University 35,966 131,385 33,470.20
Zamboanga State College of
Marine Science and Tech. 4,750 500 1,050.00
Central Mindanao University
13,997 26,416 8,082.60
Mindanao Polytechnic State
College 93,573 31,612 25,037.00
Mindanao State University -
Iligan Institute of Tech. 36,219 19,430 11,129.80
University of Southeastern
Philippines 46,631 30,180 15,362.20
Mindanao State University
31,297 15,270 9,313.40
University of Southern
Mindanao 180,000 - 36,000.00
Philippine Normal University
49,202 5,383 10,917.00
Polytechnic University of the
Philippines 52,166 42,110 18,855.20
Technological University of
the Philippines 62,665 88,292 30,191.40
Benguet State University
54,606 17,458 14,412.80
TOTAL
488,898.60

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Table 29 shows the combined proposed increases in CO and student subsidy for SUCs. The total
proposed increase for the identified SUCs is P536.728 million.

Table 29. Consolidated Alternative Budget for SUCs

Proposed Proposed Total

Region Institution NEP 2009 CO Student Proposed
Increase Subsidy Increase

(In '000 pesos)

Mariano Marcos State
I
University 400,507 482 14,240 14,723
I Pangasinan State University
220,079 1,008 9,642 10,650
II Cagayan State University
285,236 1,965 15,800 17,765
Isabela State University -
II
Cabagan 360,057 3,533 15,537 19,070
III Bulacan State University
175,101 3,612 37,000 40,612
III Central Luzon State University
257,171 59 13,000 13,059
III Tarlac State University
121,444 1,189 23,620 24,809
IVA Cavite State University
187,824 1,592 27,936 29,528
IVB Palawan State University
145,494 2,995 22,585 25,580
IVB Western Philippines University
96,587 - 6,223 6,223
V Bicol University
369,044 1,510 21,903 23,413
VI Capiz State University
210,145 432 16,526 16,958
VI West Visayas State University
330,604 2,471 21,823 24,294
Eastern Visayas State
VIII
University 173,345 - 10,492 10,492
VIII Leyte Normal University
92,119 - 4,327 4,327
VIII Samar State University
100,186 - 6,415 6,415
Southern Leyte State
VIII
University 117,647 - 8,008 8,008
Western Mindanao State
IX
University 253,227 372 33,470 33,842
Zamboanga State College of
IX
Marine Science and Tech. 74,072 - 1,050 1,050
X Central Mindanao University -

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Proposed Proposed Total

NEP 2009 CO Student Proposed
Increase Subsidy Increase

236,471 8,083 8,083

Mindanao Polytechnic State
X
College 99,587 - 25,037 25,037
Mindanao State University -
X
Iligan Institute of Tech. 379,713 951 11,130 12,081
University of Southeastern
XI
Philippines 168,579 879 15,362 16,242
XII Mindanao State University
1,282,234 182 9,313 9,496
University of Southern
XII
Mindanao 237,638 1,653 36,000 37,653
NCR Philippine Normal University
282,318 2,012 10,917 12,929
Polytechnic University of the
NCR
Philippines 663,637 15,919 18,855 34,775
Technological University of
NCR
the Philippines 393,214 3,835 30,191 34,027
CAR Benguet State University
237,383 1,175 14,413 15,588
TOTAL 536,728

Box 1. Delors Standard and Debt Service

The Delors Standard: A Short Review

Since its international recognition in 1996, the Delors standard built the necessary impetus to invest
more on education by giving education spending a clear political weight among governments. It also
sets the demarcating contour by clearly establishing the minimum level below which state subsidy on
education cannot dip or be neglected without causing serious ill effects in terms of its quality,
accessibility and sustainability.

Because of this, governments, especially those based in developing countries, tried to comply with the
standard by raising their level of public spending on education as proof of their concrete commitment
to education.

The graph below from a 2006 Education For All (EFA) study5 shows some of the countries (with data
available) which have invested 6 percent or more of their gross national income (as measured by t
gross national product or GNP)to education.

5
Education for All (EFA) 2006 Global Monitoring Report: Literacy for Life

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Figure 11. Public Expenditure on Education as % of GNP, various countries, 2002

While it also showed countries that were not able to act in accordance with the widely accepted
benchmark, it was reported that significant strides were made to fulfill the goal. According to the
same study, an increase in education spending from 1998 to 2002 was reported in about two-thirds of
the countries (with available data). Some of the glaring examples are Malaysia, Madagascar,
Grenadines, Cameroon and Cape Verde.

While in another study6, it was reported that countries like Bangladesh, Brazil and Egypt invested
close to 6 percent of their GNP to education. It can be argued that appropriate level of government
spending varies especially if taking into consideration the peculiarities of their economic and political
backgrounds. But looking at countries with similar income per capita as the Philippines, even war-
torn Lebanon is fractionally higher than the Philippines. All others are spending above five percent of
their GNI (gross national income) to education.
Table 30. GNP per Capita and Education Spending, 2004

UNESCO 2004 GDP per Capita, Education spending

Data PPP in US$ as % of GNP
Cape Verde 5,449 6.23
Lebanon 5,422 2.51
Philippines 4,834 2.36
Swaziland 4,646 6.24
Guyana 4,482 5.35

Thus, more than everything, education spending is mostly a matter of national policy.

Least Spender on Education

While previous governments are equally accountable and guilty for our dismal state of education, the
Arroyo government’s treatment of education expenditure is alarming if not outrightly exasperating.

6
UNESCO Institute for Statistics 2000 Facts and Figures

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Of the total P1.66 trillion losses, the Arroyo Administration contributed P1.3 trillion in deficit making
her the least spender on education.

Figure 12. Delors Gap per Administration

Delors Gap per Administration

1,400,000

1,200,000

1,000,000

800,000

Series1

600,000

400,000

200,000

-
Aquino Ramos Estrada Combined Arroyo 01-07

While some will argue that total national incomes vary through the years, even the said amount is
deflated to real value (1985 prices), Mrs. Arroyo will still emerge as the least spender compared to the
total losses earned by Ramos and Estrada.

Of course, the Arroyo government could also argue that its deficit was the product of a lengthy rule
which is currently on its 8th year. However, we include the losses of the Aquino government7 together
with Ramos and Estrada’s amounting to P733 billion, Mrs. Arroyo will still emerge as the most
tightfisted of all post-Marcos governments concerning education spending.8

Where is the Money?

So where did the money go? While there are many answers to this question, one way of knowing is
by looking deeply into our debt problem.

As of end-December 2006, the Consolidated Public Sector Debt (CPSD) stood at P 4.944 trillion or
US$ 98.99 billion.9 A large chunk of our public sector debts are composed of debts by the National
Government (NG). As of end of 2007, the NG Outstanding debt is pegged at P 3.782 trillion or US$
81.6 billion.

7
The Delors Benchmark does not cover the Aquino government as it was only widely recognized in 1996.
However, for the sake of argument, we included her administration.
8
Deflating the amount loss to real value, the combined deficit of Aquino, Ramos and Estrada (10 years) is P
345.6 billion as compared to the P 303.9 billion of Mrs. Arroyo gained in only seven years.
9
Department of Finance data as cited in “Sustaining the Momentum of Indebtedness: Debt and the Proposed
2008 National Government Budget”, Freedom from Debt Coalition, September 2007

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Securing Financing for MDGs Amidst Economic Challenges

Due to the government's standard policy of prioritizing debt payments as institutionalized by the
automatic debt servicing provision enshrined in the Revised Administrative Code of 1987,
succeeding administrations have been investing much less in social services in terms of percentage.

This decrease in allocation for social services is evidently seen in the per capita and per student
spending of the administration for health and education respectively. According to FDC, from the
Estrada Government's P201.00 per capita on health, it radically dropped to P184.00 under Mrs.
Arroyo. Furthermore, per pupil spending dropped from Estrada's P5,830 to P5,467 during Arroyo’s
term.

Consistently, the Arroyo administration’s top priority like her previous predecessors remains to be
debt servicing. Education, which is supposed to get the highest budgetary allocation this year, is
merely a third of what they will be spending on debt payment also this year (P181.86 billion
compared to P624.09 billion).

Debt Constricted Education Financing

Finding light to the question where did the losses go can be seen by comparing total Interest payments
from the time (1996) UNESCO adopted the Delors Benchmark for education up to 2007 and Delors
gap earned by the Ramos, Estrada and Arroyo governments.

As of 2007, total interest payments amounted to P 2.2 trillion compared to the total gap or losses our
education suffered through the years which totaled to P 1.66 trillion.

Clearly, increased social spending is being siphoned away by debt servicing. And the trend through
the years is, the larger the payment of debt interests is, the larger the Delors gap becomes.

Figure 13. Delors Gap vs. Interest Payments

Delors Gap vs. Interest payments

1,782,867
1,800,000

1,600,000

1,400,000 1,318,346

1,200,000

1,000,000
Total, Delors Gap
Interest Payments
800,000

600,000

346,976
400,000
232,607
154,493
200,000 117,417

-
Ramos 96-97 Estrada Arroyo 01-07

Of Democracy and Resources

The real culprit in this dismal spending on education is not only our government's predilection in the
acquisition of debt, but also more importantly, the institutional mechanisms that dictate and aggravate
our reliance to more borrowings to pay our debts. Section 26 (B) Book 6 of the Revised
Administrative Code of 1987 is the kernel stone of all these debt-creating laws.

Because of the automatic debt servicing provision, payments for both principal and interest on public
debt are automatically appropriated undermining social services like education and health. This is

70 2009 Alternative Budget Initiative

 Securing Financing for MDGs Amidst Economic Challenges

done without the pleasure of the public’s review or scrutiny, which inevitably resulted in paying
dubious if not illegitimate debts.

The assertion that we are increasingly having a scarcity of resources is a fat lie. Correctly, what we
have is a scarcity of democracy in the management and disbursement of our collective resources
brought about by archaic institutional mechanisms. It not only compelled our government to reject
widely accepted international standards on social spending such as the Delors standard, it also
subjected our people to a life of forced indebtedness.

Automatic Appropriations on Education

Thus, the government must make an effort to reach the 6 percent of GNP to education. This can be
done in a gradual manner, with a 1 percent of GNP increase yearly for education spending until 2010.

However, this must be complemented by a strong legislative effort to institutionalize the standard by
passing a law giving automatic appropriations on education. It will force our legislators to finally
repeal Sec. 31 (B) of Presidential Decree 1177 in Sec. 26 (B), Book 6 of the Revised Administrative
Code of 1987, which ensures the automatic appropriation of payments for principal and interest on
public debt. There must be no middle ground in this issue. Our national leaders must choose between
the education of our people and the interest of foreign creditors.

Equal Standards for Equal Opportunities

Now more than ever, education must be transformed from a tool of social and economic inequity into
a process and apparatus which will equalize opportunities for the realization of premium human
development and the deepening of social consciousness geared towards creating responsible, critical
and dynamic persons. Lastly, education must become a vehicle for progressive social and economic
mobility between citizens and the government geared towards promoting the individual's and society's
future development.

However, unless the appropriate political will and commitment from our government are exercised to
transform our education into such a powerful force of change, we will have to content ourselves with
the current educational system which will only give our people equal prospects towards collective
poverty and obtuseness.

2009 Alternative Budget Initiative 71