EXPLAINER: WHAT DOES “Frontloading of Available Appropriations” (REALLY)MEAN?

‘Frontloading of available appropriations’ is a budgeting policy imposed by the Department of Budget and Management (DBM) to national government agencies (NGAs), including state-universities and colleges (SUCs), certain government-owned and controlled corporations (GOCCs) and offices under the Constitutional Fiscal Autonomy Group (CFAG), to optimize the use/utilization of the Annual National Budget, specifically the budget under Personnel Services.

This policy must not be confused with the policy on realignment of funds which is a different budgeting policy applicable to other allotment class such as Maintenance and Other Operating Expenses (MOOE) and Capital Outlay (CO). This will be discussed in another article.

The policy to ‘frontload available appropriations’ means to use or utilize available appropriations to fund the obligations incurred by the Agency so as not to be reverted or wasted. It is noted that once the Congress appropriated funds for the programs, projects, and/or activities of the goverment, which in this case the budget for the salaries, allowances, and other benefits of government employees, it does not only use the taxes collected from the Filipino people but also the funds the government borrowed from either domestic or foreign lenders.

Please take note that these borrowings/loans come with an interest. This interest, whether we like it or not, should be paid by the government. And where does the government get the money to pay the interest? From the Filipino people — through their taxes. Hence, when Agencies do not use their annual budgets well, it is not only the government that is at loss but significantly the Filipino people.

Why do Agencies resort to frontloading?

It is essential to point out that the Annual Budget is prepared a year before it is implemented. For instance, the annual budget for this year was prepared last year. During the implementation or when the budget is used, there will be instances when an expense, which has no budget this year, will emerge. For example, the budget for the increase in the salary of an employee who was promoted during the year was not of course considered when the budget was prepared last year. Or, the budget for the salaries of new employees hired this year was also not considered when the budget was prepared last year.

Customarily, the budget for these expenses, among other similar expenditures, must be requested by the Agency concerned from the DBM. The DBM will then get the fund for these expenses through a Fund called the Miscellaneous Personnel Benefits Fund (MPBF) or other appropriate fund source.

However, the DBM observed that in previous years, Agencies were needlessly maintaining unutilized appropriations in their books/registries which most often resulted to reversion of funds (i., wastage of funds). Thus, the DBM adopted and imposed the policy of frontloading available unobligated allotment to government agencies to cover their emerging obligations under the Personnel Services. The policy is like a “first in-first out method” wherein the Agency must first use all of its available allotment. Once the allotment is depleted, that’s the time the Agency can request additional funds from the DBM through the MPBF or other appropriate fund source.

How frontloading is done?

In NBC 573 — the guidelines for the release of funds for FY 2018 — Section 4.7.3 provides the following:

“In instances where an insufficiency in PS occurs and frontloading shall be resorted to, the use of unobligated PS allotment which have been comprehensively released may be utilized subject to the approval of Agency Head, based on the following:

Item 4.7.3.1 Reallocation Advice for Use of PS Appropriations (RAPSA) duly accomplished and signed by the Agency Head or his designated representative. In the case of SUCs, the approving authority Shall be the President of SUC as Agency Head, unless approval of the Board is necessary as required in the respective charter of SUCs.”

The adjustments (i.e., fronloading of appropriation from Salaries to Mid-Year Bonus, etc.) must be reflected in the Agency’s Registry of Allotments and Obligations for PS (RAOPS) which shall be the basis in the preparation of Budget and Financial Accountability Reports (BFARs) which is required to be submitted to the DBM.

Under the rules, the reallocation of any object of expenditures under Personnel Services shall not be understood as realignment of funds as the latter is a completely different policy. Again, this topic will be discussed separately.

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