G/Budgeting: What expenditure items can be charged against the 20% Development Fund?

Query:

Hello po ask ko lng po ung barangay aide honorarium puydi po ilagay sa 20% nga ira?

Response:

To answer the query, it is important to understand the guidelines on the use of the 20% development fund, what is allowed and what is not allowed to be charged against the fund.

The Local Government Code (LGC) of 1991 provides that:

SECTION 287. Local Development Projects. – Each local government unit shall appropriate in its annual budget no less than twenty percent (20%) of its annual internal revenue allotment for development projects. Copies of the development plans of local government units shall be furnished the Department of Interior and Local Government.

The Department of Budget and Management (DBM) and the Department of the Interior and Local Government (DILG), as mandated by the LGC, issues guidelines to implement the aforesaid provision, the latest of which, as of this writing, is Joint Memorandum Circular No. 2017-1 dated February 22, 2017.

What are the allowable development projects that can be charged against the 20% DF?

The 20% DF may be used to fund the social, economic, and environmental development programs and projects of the local government units (LGUs), which include all the provinces, cities, municipalities, and barangays.

Social Development includes the following:

1. Construction or rehabilitation of health centers, rural health units or hospitals, including purchase of lot for the purpose;
2. Purchase of ambulance and medical equipment;
3. Construction or rehabilitation of local government-owned potable water supply system;
4. Establishment or rehabilitation of Manpower Development Centers;
5. Construction or rehabilitation of evacuation centers, including purchase of lot for the purpose;
6. Construction of Special Drug Education Centers, and Drug Treatment/Rehabilitation Centers, including purchase of lot for the purpose;
7. Rehabilitation of historical sites classified as such by the National Historical Commission of the Philippines;
8. Purchase and development of land for the relocation of informal settlers and relocation of victims of calamities;
9. Construction or rehabilitation of multi-purpose halls, including purchase of tot for the purpose; and
10. Installation of street lighting system.

On the other hand, Economic Development programs and projects may include the following:

1. Construction or rehabilitation of communal irrigation or water impounding system;
2. Purchase or lease of post-harvest facilities, such as farm or hand tractor with trailer, thresher and mechanical driers;
3. Construction or rehabilitation of local roads or bridges, including purchase of appropriate engineering equipment, such as dump trucks, graders and pay loaders;
4. Capital expenditures related to the implementation of livelihood or entrepreneurship/local economic development projects;
5. Development of alternative power or energy sources, such as, but not limited to, renewable energy power plants; and
6. Amortization of loans used to finance development projects cited in this JMC, subject to the 20% debt service cap prescribed under Section 324 (b) of RA No. 7160.

The 20% DF may also be used to fund the environmental management programs and projects of the LGU, which may include:

1. Reforestation and urban greening;
2. Construction or rehabilitation of sanitary landfills and materials recovery facilities;
3. Purchase of garbage trucks and other equipment for environmental management and protection purposes;
4. Implementation of flood and erosion control projects, such as rehabilitation and construction of drainage systems, de-silting of rivers, and de-clogging of canals; and
5. Other environmental management projects that promote air and water quality, as well as productivity of the coastal or freshwater habitat, agricultural land and forest land, such as, but not limited to, treatment of wastewater for conservation/re-use purposes, and installation of air pollution control devices.

What expenditure items are not allowed to be charged against the 20% DF?

The following expenditure items shall not be allowed to be charged against the 20% DF or included in the appropriations for allowable development projects:

1. Personal Services expenditures, such as salaries, wages, overtime pay and other personnel benefits;
2. Administrative expenses, such as supplies, meetings, communication, water and electricity, petroleum products, other general services, and the like;
3. Traveling expenses, whether domestic or foreign;
4. Registration or participation fees in training, seminars, conferences or conventions;
5. Purchase of administrative office’ furniture, fixtures, equipment or appliances, and
6. Purchase, maintenance or repair of motor vehicles or motor cycles, other than those specifed in item 3.0 hereof.

Thus, the honorarium for barangay aide cannot be charged against the 20% DF as the same fall under the items of expenditures which cannot be charged against the fund. Nonetheless, the honorarium may be charged against the general fund of the Barangay, which may be sourced from its Internal Revenue Allotment (IRA).

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