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COA scores lack of transparency in billion-peso high school fund 


(First of two parts) GMA News Research examines one of the biggest programs under the DepEd’s budget a year before the government rolls out Senior High School (SHS) – and, consequentially, more funds – for the implementation of the K-to-12 curriculum.

However you do the math, there is simply no way to accommodate the graduates from the country’s 38,000 public elementary schools in fewer than 8,000 public high schools.
 
To ease classroom congestion, the Department of Education (DepEd) subsidizes the private school education of students who otherwise would have added to the overcrowding of public high schools. 
 
This scheme falls under DepEd’s Government Assistance to Students and Teachers in Private Education (GASTPE) program, which now has more than 800,000 grantees at the cost of P8.3 billion.

Yet the program, despite being allotted billions of pesos in a sector where fund scarcity is perennial, has been a cause for concern for lack of transparency and accountability mechanisms.

The Commission on Audit does not audit GASTPE, and the agency has questioned the department’s long-standing arrangement with the private agency that runs the program.

Next year, the appropriation for GASTPE is expected to increase to around P20 billion, making it one of the biggest programs under the DepEd’s budget for the implementation of the K-to-12 curriculum.
 
GASTPE’s funding has ballooned tremendously since its pilot run in the 1980s. The program started out with just P40 million; now, that amount wouldn’t even cover the program’s administrative fees.
 
The government ramped up the GASTPE budget most notably during the term of President Benigno Aquino III. In fact, there were more funds for GASTPE in the first five years of the Aquino administration (P34 billion from 2011 to 2015) than in the nine years under President Gloria Macapagal-Arroyo (P20 billion).
The funding for GASTPE is equivalent to 2.4 percent of the DepEd’s 2015 budget.
 
GASTPE’s budget is actually bigger than some of the items earmarked under the DepEd Office of the Secretary’s budget, like the P2.9 billion appropriation for the repair of public school buildings and water and sanitation facilities. It is also bigger than the P1.2 billion DepEd OSEC appropriation for the acquisition of school desks, furniture and fixtures.
 
The appropriation for the acquisition, improvement, survey, and titling of school sites is P410.8 million; both this item and GASTPE share a common rationale, which is to address congestion in existing public schools.

But the Commission on Audit (COA) has questioned the department’s longstanding arrangement with the private agency that runs the program and is not audited by COA.  

Public program run by a private entity
 
The DepEd pays the Private Education Assistance Committee (PEAC), a private organization, P60 million each year to run the GASTPE program.
 
Last school year, there were 852,928  GASTPE-funded students in private schools nationwide.
 
DepEd’s payments to PEAC were disbursed as “subsidy to non-government organization,” recorded in DepEd’s books as an outright expense. As such, no detailed accounting report of the actual utilization of funds is required from PEAC.
 
COA expresses concern over this set up, saying that DepEd is engaging the services of PEAC through a "somewhat continuous or perpetually negotiated contract."
 
"Apparently, the procurement process under RA 9184 and its Revised Implementing Rules and Regulations (IRR) was disregarded," COA says in its 2013 annual audit report on DepEd, adding that the service being contracted by DepEd to PEAC is not among the activities exempt from public bidding.
 
DepEd counters that PEAC has a clear mandate to manage programs like the GASTPE. 
In its reply to COA’s findings, DepEd lists three presidential executive orders that provide the legal basis for DepEd to deal with PEAC without undergoing public bidding.
 
Two executive orders date back to 1968, when PEAC was created as the trustee of the Fund for Assistance to Private Education [FAPE] from the US government.
 
A third executive order, issued in 1994, stated that contributions, donations, grants, and other government funds for programs of assistance to private education may be managed and administered by PEAC.
 
“We never looked at this as a procurement issue,” says DepEd undersecretary for finance and administration Francisco Varela in an interview with GMA News.
 
Blind audit
 
COA said it couldn't assess the reasonableness, validity and legitimacy of the multi-million contract costs of PEAC due to the absence of necessary information, documents, and records.
 
For instance, the payment of the P60 million administrative fees to PEAC was only supported with a FAPE [PEAC] billing statement stating the number of grantees per program and the total amount of cost.
 
"It should have been appropriate if the names of grantees were indicated, the year level and the name of the private school, and the school address/location where the grantees are enrolled, were provided so that confirmation can be readily sent," COA said.
 
When asked for these details, PEAC merely referred COA to the FAPE website.
 
To address the problem of access to financial information, COA recommended to DepEd the opening of PEAC's books of accounts for audit.
 
But the education department, in its reply to COA, said “DepEd is not the competent authority to decide on the issue.”
 
“The COA may wish to bring up the matter to the Office of the President or some other competent legal authority such as the Department of Justice for the proper adjudication of this issue,” it added.
 
ACT Teachers party-list Rep. Antonio Tinio, a critic of the GASTPE program, agreed that COA should have access to the books. Tinio warned that the funds were susceptible to misuse under the current setup.
 
“Essentially, bulag ang gobyerno dahil walang malinaw na accounting. Hindi required ang mag-account sa paggamit ng umaabot ng mahigit P8 billion, at pagdating ng 2016 ay lalo pang lalaki ito. So importante na ngayon pa lang ay malinaw na ang mga usaping nire-raise sa COA report,” Tinio told GMA News.
 
 (“Essentially, the government is blind as to how the funds are accounted. There is no requirement to account for government funds worth more than P8 billion. This amount will increase further in 2016. This is why it is important this early on to sort out the issues raised in the COA report.”)

Poor monitoring

COA’s 2013 audit report questions DepEd’s ability to keep an eye on PEAC’s activities.
 
COA notes that the contract between DepEd and PEAC did not specify criteria against which PEAC’s performance or accomplishment can be assessed or evaluated.
 
“The contract involves payment/transfer of huge amount of government funds, but the provisions in the contract simply enumerate the responsibilities of the contracting parties and the amount of consideration,” the COA said.
 
“It appears therefore that the DepEd had already placed its full trust and confidence to FAPE [PEAC] the implementation of one of its major and biggest funded programs," it added in its audit report.
 
DepEd USec. Varela said DepEd closely coordinated with the committee. PEAC submits reports to DepEd, and both partners hold quarterly meetings to check what PEAC has been doing.
 
“These reports on how many new schools are accredited, how many grantees are given to these schools, how many grants are utilized by each of the schools… these are reported by PEAC to DepEd on a regular basis. So we do monitor,” Varela said.
 
The DepEd secretary attends these meetings and goes through these reports wearing two hats—as head of the department and as the chairman of the PEAC.
 
This fact has led to questions on possible conflict of interest.

A 2011 World Bank study on education service contracting (ESC) in the Philippines has asked how DepEd will properly monitor FAPE's [PEAC's] performance when, in his role as DepEd secretary, the chair of PEAC can ask his subordinates in DepEd to do his bidding.
 
Varela said having the DepEd secretary chair PEAC actually helped keep the management of the GASTPE program in check.
 
“It's a positive thing that works well for the implementation of the program itself and at the same time making sure that the interests and objectives of Deped are taken into account,” Varela said. -NB/JJ, GMA News

Part II: 
COA scores lack of transparency in billion-peso high school fund

Tags: gastpe, coa