DBM, DILG tell LGUs where to get funds to pay the FY 2023 PBB of LGU personnel
The Department of Budget and Management (DBM) and Department of the Interior and Local Government (DILG) have jointly issued guidelines on the grant of the FY 2023 Performance-Based Bonus (PBB) to local government units (LGUs).
The said guidelines provides that LGUs must passed all the eligibility requirements for the FY 2023 PBB before they can grant PBB to their employees.
However, aside from being able to pass the eligibility requirements, the LGUs must also have available funds to pay the performance-based bonus of their employees.
Where can LGUs get funds to pay the FY 2023 PBB of their employees?
In DBM-DILG Joint Memorandum Circular No. 2025-001, the DBM and DILG provide that LGUs may charge the FY 2023 PBB against their FY 2023 local funds subject to Personnel Services (PS) limitation pursuant to Sections 325(a) and 331(b) of the Local Government Code of 1991 (R.A No. 7160) and the 2016 Budget Operations Manual for LGUs.
However, in case the LGU did not allocate funds from its FY 2023 local budget, it can charge the FY 2023 PBB against its FY 2024 budget. A supplemental budget should be enacted in FY 2024 for this purpose, subject as well to the PS limitation rules.
Seemingly, many LGUs have not provided funds to pay the FY 2023 PBB of their employees either in FY 2023 or FY 2024 local budgets. For this reason, the DBM and DILG issued amendments to the funding source provision of DBM-DILG Joint Memorandum Circular No. 2025-001 to ensure that LGUs have funds to pay the FY 2023 PBB of their personnel in case they become eligible.
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Hence, the DBM and DILG issued DBM-DILG Joint Memorandum Circular No. 2025-2 to provide the funding source for the payment of FY 2023 PBB of LGU employees.
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The joint circular provides, as follows:
The FY 2023 PBB shall be charged against the FY 2025 LGU funds, subject to the passage of a supplemental budget for the purpose and the PS limitation in LGU budgets, pursuant to Section 325(a) of the Local Government Code of 1991 (R.A. No. 7160).
The LGU shall exercise prudence in the use of local funds. In determining the amount of the PBB, the Sanggunian concerned shall ensure that the same is reasonable and that the expenditure will not in any way, adversely affect the delivery of services to the public.
Summary
The DBM and DILG provided guidelines for the LGUs where they can source the funds to pay the FY 2023 PBB of their employees should they be declared eligible to the said performance-based bonus. In the amendments issued by the agencies, they said that LGUs may get the funds from their FY 2025 local funds, subject to the passage and approval, as well as review, of a supplemental budget, and further subject to the PS limitation rules under the Local Government Code of 1991.