MANY state universities and colleges (SUCs) are not only in bad shape when it comes to quality as shown by lackluster board exam results – they are also being questioned for their poor handling of public funds.
Practically all are dependent on state subsidies, hamstrung by restrictions on raising funds internally such as hiking tuition, while those that have commercial ventures such as leasing barely make profits because of inefficiencies.
In 2007, the government allocated a total of P18.5 billion for SUCs, and this was increased to P19.4 billion this year.
The University of the Philippines (UP) system, Mindanao State University (MSU), Polytechnic University of the Philippines (PUP), Don Mariano Marcos Memorial State University, and Technological University of the Philippines (TUP) have the largest subsidies from the national budget (see table).
UP, with its whopping P6-billion subsidy, remains the top-performing state university in board exams, with passing rates of more than 90 percent. Meanwhile, funds continue to flow into under-performing SUCs, even with repeated recommendations to streamline the massive publicly funded higher education system.
In contrast, many private educational institutions produce more licensed professionals yearly at a fraction of the cost.
Based on the 2005 board exam results, the latest data publicly available, the University of Santo Tomas – which has an annual budget of around P2 billion and some 40,000 students – produced 2,409 licensed professionals, or an overall passing rate of 80 percent.
That same year, heavily subsidized UP produced only 2,300 board passers, from eight campuses all over the country.
SUCs with less funding produce even fewer licensed professionals. PUP, which has more than 50,000 students in 10 campuses, produced only a little over 1,200 licensed professionals in 2005, with passing rates below 50 percent.
The need to finance SUCs with multiple branches across the country appear to be contributing to a number of financial irregularities reported this year by the Commission on Audit (COA).
Cases include failure to recover student loans and collect money from commercial leases, lack of control over research funds, unliquidated advances, and inadequate financial reporting.
Guards at end
State auditors have questioned many SUCs for administering student loans that eventually turn out to be giveaways.
Donelo Sescon, assistant director at the COA, told the Varsitarian that Student Financial Assistance Programs (Stufap) involve non-interest loans granted to the students that must be paid after they leave school.
In the last fiscal year, TUP failed to collect P616,000 in loans because of TUP-Manila’s failure to issue bills to student-borrowers and lack of records to track their whereabouts.
“Granting of the Stufap was somehow lax because our student affairs office cannot properly monitor the scholarship grants due to the absence of a definite system that should be followed for this process,” TUP financial director Marites Bolaños said in an interview.
PUP also has the same problem. Only P36,000 was collected out of the P2 million worth of loans in 2004.
The COA report pointed out that failure to collect such loans meant depriving more deserving students of access to education.
PUP officials declined to comment.
Joselito Foliosco, chief specialist at the Department of Budget and Management (DBM), said SUCs really find a hard time managing scholarships, because funds really come from the tuition that the students pay.
“The SUCs are not allowed to increase tuition immediately, and that is why the budget for student scholarship is also less,” he added.
Also rampant among SUCs is the failure to make money from commercial leases.
For PUP, receivables accumulated from 1999 to December 2007 have amounted to almost P10 million.
Sescon said this goes straight to bad debts.
“It goes to bad debts, because it can’t be collected anymore. It’s recorded as a receivable but you can’t collect it, so the best solution is to write it off,” he said. “Landlord problems are normal for other schools.”
The UP System has not been spared of questions on its finances.
The 2007 COA findings said UP had an “ineffective monitoring and supervision of research work,” failing to submit output for 166 research projects amounting to P41.3 million, or 62 percent of the total 268 projects worth P94.48 million.
In an interview, UP registrar Pamela Constantino said that although there are budget problems, the emphasis on research in addition to classroom work is a priority.
“The university (UP) … will always use (its) their budget for the development of student welfare, especially when it comes to research,” Constantino said.
UP was also hit for the lack of policy when it comes to numerous foundations doing fund-raising for the state university. COA said there were no reports and contracts covering nearly P60 million in funds raised.
Losing canteen
Like the rest of the government bureaucracy, many SUCs don’t bother to make a full accounting of cash advances.
The MSU, for instance, had unliquidated cash advances totaling P26.83 million last year, meaning its assets have been overstated while expenses have been underreported.
It was also found that the biggest university in Mindanao lost P3.2 million on its canteen alone, with auditors discovering “excess personnel.” COA told university officials to consider hiring a private concessionaire.
The Varsitarian contacted the MSU to get a comment, but school officials declined.
Sescon said unliquidated cash advances could mean suspension or even a criminal case.
“They (SUCs) are required to liquidate because we wouldn’t know what happened to the cash. If they don’t liquidate, then there would be a case of suspension,” Sescon said.
When the case becomes extreme, it can go to the courts.
“When they’re stubborn and they’re P50,000 over their balance, then we report them to the Ombudsman,” Sescon said.
Absolute freedom?
Aside from funds given to them by the government, SUCs also obtain cash from other sources such as donations and contributions and the tuition paid by students, though the latter is usually regulated.
“The lack of budget is also agitated by the fact that SUCs cannot generate income by means of increasing their tuition” Foliosco said.
Data showed that in 2006, SUCs had additional income amounting to a total of P6.6 billion, which slightly increased to P6.8 billion in 2007.
Budget officials noted that SUCs generally have more independence in controlling their finances, because unlike government agencies and departments, they are not required to deposit any amount to the Bureau of Treasury, which is tasked to save excess budget for future use. This means they can raise and use money in whatever way they want.
But because the tendency is for many SUCs to take in as many students as they can and introduce more and more programs to justify expansion, funds eventually become short.
“The budget is not enough for operating expenses. If they have income, it supplements their operational expenses,” COA’s Sescon said.
The DBM’s Foliosco said: “Actually, there are many factors to consider like the number of students in a specific area and the turnout of enrollees. So the best solution that we can do is to distribute the budget properly.”
Budget distributed
The DBM has devised a scheme to check fund allocations for each school through a system called “normative clemency.”
This is based on the three major types of government expenditures: capital outlays which deal with financing building construction; personal services, which cover faculty salaries; and maintenance and other operating expenditures, which cover electricity, water, telephone, and janitorial services.
Normative clemency ensures that no SUC will have an excess or lack of funds for all three types of expenses, because they are mandated to submit proposed expenses to both the Commission on Higher Education (Ched) and the DBM.
“We require SUCs to submit data about their incoming expenditures,” explained Foliosco. “The SUCs will then compute how much money they will be needing based on a standard model set by Ched in collaboration with DBM, and we give them the budget based on the results.”
But normative clemency had not been imposed strictly, as SUCs needed more time to adjust to the new budget system. When it was first implemented in 2006, only 25 percent of the budget of certain SUCs was subject to the new scheme, officials said.
This year saw the full implementation of the system as all SUCs were required to present the full budgets to the Ched and DBM.
The House of Representatives has recently approved the 2009 budget of SUCs. The UP System was allocated with P6.4 billion, TUP with P369 million and PUP with P635 million.
For the COA, state universities should maximize whatever funds they have.
“SUCs are okay. They do not lack any cash. What they need is to manage their cash well because if not, they’ll suffer,” Sescon said. Andrewly A. Agaton, Alphonsus Luigi E. Alfonso and R. B. Tiu
