The Budgeting Process: Gilbert R. Hufana

THE BUDGETING PROCESS
SUBTITLE
GILBERT R. HUFANA
Professor
GOVERNMENT BUDGETING
• Government budgeting is the critical exercise of

allocating revenues and borrowed funds to attain the
economic and social goals of the country.
• It also entails the management of government
expenditures in such a way that will create the most
economic impact from the production and delivery of
goods and services while supporting a healthy fiscal
position.
GOVERNMENT BUDGETING
IMPORTANCE
• Government budgeting is important because it

enables the government to plan and manage its
financial resources to support the implementation of
various programs and projects that best promote the
development of the country.
• Through the budget, the government can prioritize
and put into action its plants, programs and policies
within the constraints of its financial capability as
dictated by economic conditions.
THE BUDGET PROCESS
• Budgeting for the national government involves four

(4) distinct processes or phases : budget preparation,
budget authorization, budget execution and budget
accountability.
• While distinctly separate, these processes overlap in
the implementation during a budget year.
• Budget preparation for the next budget year proceeds
while government agencies are executing the budget
for the current year and at the same time engaged in
budget accountability and review of the past year's
budget.
BUDGET PREPARATION
• The determination of budget priorities and activities

guided by the overall national development plan with
the ceilings and constraints imposed by available
revenues and borrowing limits.
• The preparation of the annual budget involves a
series of steps that begins with the determination of
the overall economic targets, expenditure levels,
revenue projection and the financing plan by the
Development Budget Coordinating Committee
(DBCC).
DEVELOPMENT BUDGET COORDINATING
COMMITTEE (DBCC)
• The DBCC is an inter-agency body composed of the

DBM Secretary as Chairman and the Bangko Sentral
Governor, the Secretary of the Department of Finance,
the Director General of the National Economic and
Development Authority and a representative of the
Office of the President as members.
• To meet the Constitutional requirement for the
submission of the President’s budget with 30 days from
the opening of each regular session of Congress, the
budget preparation phase is guided by a budget
calendar.
ACTIVITIES
1. Determination of overall economic targets,

expenditure levels and budget framework by the
DBCC;
2. Issuance by the DBM of the Budget Call
• The call defines the budget framework; sets economic and fiscal
targets; prescribe the priority thrusts and budget levels; and
spells out the guidelines and procedures, technical instructions
and the timetable for budget preparation;
3. Preparation by various government agencies of their
detailed budget estimates ranking programs, projects
and activities using the capital budgeting approach
and submission of the same to DBM;
ACTIVITIES
• Conduct a budget hearings were agencies are called to

justify their proposed budgets before DBM technical panels.
• Submission of the proposed expenditure program of
department/agencies/special for confirmation by
department/agency heads.
• Presentation of the proposed budget levels of
department/agencies/special purpose funds to the DBCC for
approval.
• Review and approval of the proposed budget by the
President and the Cabinet;
• Submission by the President of proposed budget to
Congress.
BUDGET AUTHORIZATION
• The President submits the overall budget to Congress

in the form of detailed Expenditure Program
accompanied by the Budget of Expenditures and
Sources of Financing; the Budget Message of the
President and the Regional Allocation of the
Expenditure Program.
• Section 22, Article VII of the 1987 Constitution
provides for this.
HOW DOES THE BUDGET
BECOME A LAW?
• President submits proposed annual budget in the form of Budget of

1 Expenditure and Sources of Financing (BESF)
• The proposed budget goes first to the House of Representatives (HOR), which assigns
2 the task of initial budget review to its Appropriation Committee.
• The Appropriation Committee together with the other House Sub-Committee conduct
hearings on the budgets of departments/agencies and scrutinize their respective
3 programs/projects.
• While budget hearings are on-going in the HOR, the Senate Finance Committee conduct its
own review and scrutiny of the proposed budget and proposes amendments to the House
4 Budget Bill to the Senate body for approval.
• To thresh out differences and arrive at a common version of the General Appropriations Bill,
the House and the Senate creates a Bicameral Conference Committee that finalizes the
5 General Appropriations Bill.
• President signs the bill then it becomes the General Appropriations

6 Act (GAA) .
THE GENERAL APPROPRIATIONS ACT
• The General Appropriations Act (GAA) is the

legislative authorization that contains the new
appropriations in terms of specific amounts fo:
• salaries, wages and other personnel benefits;
• maintenance and other operating expenses; and
• capital outlays authorized to be spent for the
implementation of various programs/projects and
• activities of all departments, bureaus and offices of
the government for a given year.
BUDGET EXECUTION
• Budget implementation starts with the release of

funds to the agencies.
• To accelerate the implementation of government
programs and projects and ensure the judicious use of
budgeted government funds, the government
adopted the Simplified Fund Release System (SFRS)
beginning 1995.
SIMPLIFIED FUND RELEASE SYSTEM
(SFRS)
A POLICY-DRIVEN SYSTEM WHICH STANDARDIZED THE RELEASE OF

FUNDS ACROSS AGENCIES WHICH ARE SIMILARLY SITUATED IN LINE
WITH SPECIFIC POLICY INITIATIVES OF THE GOVERNMENT.
• The agency budget matrix (ABM) is prepared by the DBM in consultation
1 with the agencies and the Allotment Release Program (ARP)
• Issuance of either a General Allotment Release Order (GARO) or a

2 Special Allotment Release Order (SARO)
• DBM releases the Notice of Cash Allocation (NCA) on a monthly or

3 quarterly basis.
• Agencies utilize the released NCAs following the "Common Fund"

4 concept.
AGENCY BUDGET MATRIX
• The agency budget matrix (ABM) is prepared by the

DBM in consultation with the agencies at the beginning
of each budget year, upon approval of the annual
General Appropriations Act.
• The ABM serves as a blueprint which provides the basis
for determining the timing, composition and
magnitude of the release of the budget.
ALLOTMENT RELEASE PROGRAM
• The Allotment Release Program (ARP) which

prescribes the guidelines in the prioritization of fund
releases is prepared based on updated resources and
economic development thrusts and consistent with
the cash budget program.
• The ARP serves as basis for the issuance of either a
General Allotment Release Order (GARO) or a Special
Allotment Release Order (SARO), as the case maybe,
to authorize agencies to incur obligations.
NOTICE OF CASH ALLOCATION
• The NCA specifies the maximum amount of

withdrawal that an agency can make from a
government bank for the period indicated.
• The Bureau of the Treasury (BTr), replenishes daily the
government servicing banks with funds equivalent to
the amount of negotiated checks presented to the
government servicing banks by implementing
agencies.
BUDGET ACCOUNTABILITY
• Cognizant of the fact that no propitious results can be

obtained, even with maximum funding, if agency
efficiency is low and funds are wastefully spent,
systems and procedures are set in place to monitor
and evaluate the performance and cost effectiveness
of agencies.
• At the agency level, budget accountability takes the
form of management's review of actual performance
or work accomplishment in relation to the work
targets of the agency vis-à-vis the financial resources
made available.
BUDGET ACCOUNTABILITY
• Also, detailed examinations of each agency's book of

accounts are undertaken by a resident representative
of the Commission on Audit (COA) to ensure that all
expenses have been disbursed in accordance with
accounting regulations and the purpose(s) for which
the funds have been authorized.

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THE BUDGETING PROCESS

• Government budgeting is the critical exercise of

• Government budgeting is important because it

• Budgeting for the national government involves four

• The determination of budget priorities and activities

• The DBCC is an inter-agency body composed of the

1. Determination of overall economic targets,

• Conduct a budget hearings were agencies are called to

• The President submits the overall budget to Congress

• President submits proposed annual budget in the form of Budget of

• President signs the bill then it becomes the General Appropriations

• The General Appropriations Act (GAA) is the

• Budget implementation starts with the release of

A POLICY-DRIVEN SYSTEM WHICH STANDARDIZED THE RELEASE OF

• Issuance of either a General Allotment Release Order (GARO) or a

• DBM releases the Notice of Cash Allocation (NCA) on a monthly or

• Agencies utilize the released NCAs following the "Common Fund"

• The agency budget matrix (ABM) is prepared by the

• The Allotment Release Program (ARP) which

• The NCA specifies the maximum amount of

• Cognizant of the fact that no propitious results can be

• Also, detailed examinations of each agency's book of

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