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  • 1. SCHOOL FINANCE: FuNdS INtHE GOvErNmENtBasic Concept

2. FINANCE is the lifeblood of any educationsystem, making it possible to build schools, hireand train teachers, and equip classrooms withlearning materials and technology. SCHOOL FINANCE - term used ingovernment accounting to apply to all fundsexcept for the profit and loss funds (e.g.,enterprise fund, internal service fund, and trustand agency fund). Examples of government fundsare the general fund, special assessment fund,and capital projects fund. Governmental fundsuse the modified accrual accounting method. 3. GOvErNmENt FuNdING is financialassistance the government gives to eligiblepeople and businesses with no paybackrequirements. This is a common procedure inmost governments and is done for manydifferent reasons. 4. BATAS PAMBANSA BILANG 232AN ACT PROVIDING FOR THE ESTABLISHMENTAND MAINTENANCE OF AN INTEGRATED SYSTEMOF EDUCATION.CHAPTER 5School Finance andAssistance 5. Sec. 33. Declaration of Policy. It ishereby declared to be the policy of theState that the national government shallcontribute to the financial support ofeducational programs pursuant to goalsof education as declared in theConstitution. Towards this end, thegovernment shall: 6. 1. Adopt measures to broaden access toeducation through financial assistanceand other forms of incentives to schools,teachers, pupils and students; and 2. Encourage and stimulate privatesupport to education through, inter alia,fiscal and other assistance measures. 7. A. FUNDING OF REPUBLIC SCHOOLS Sec. 34. National Funds. Publicschool shall continue to be funded fromnational funds: Provided, That localgovernments shall be encouraged toassume operation of local public schoolson the basis of national fundparticipation and adequate revenuesources which may be assigned by thenational government for the purpose 8. Sec. 35. Financial Aid Assistance toPublic Secondary Schools. Thenational government shall extendfinancial aid and assistance to publicsecondary schools established andmaintained by local governments,including barangay high schools. 9. Sec.36.ShareofLocalGovernment.Provinces, cities and municipalities andbarangays shall appropriate funds intheir annual budgets for the operationand maintenance of public secondaryschools on the basis of national fundparticipation. 10. Sec. 37.Special Education Fund. Theproceeds of the Special Education Fundaccruing to local governments shall be usedexclusively for the purposes enumerated inSection 1 of Republic Act No. 5447, and inaccordance with rules and regulations issuedby the Ministry of Education, Culture andSports and the Ministry of the Budget. Saidproceeds shall be considered a local fund andshall be subject to Presidential Decrees No.477, Presidential Decree No. 1375 and otherapplicable local budget laws and regulations. 11. Sec.38.TuitionandotherSchoolFees. Secondary and post-secondaryschools may charge tuition and otherschool fees, in order to improve facilitiesor to accommodate more students. 12. Sec. 39.Income from other Sources. Government-supported educational institutionmay receive grants, legacies, donations and giftsfor purposes allowed by existing laws. Furthermore, income generated from productionactivities and from auxiliary enterprises may beretained and used for schools concerned inaccordance with rules and regulations jointlyissued consistently with pertinent appropriationand budgetary laws by the Ministry of theBudget, the Ministry of Education, Culture andSports and the Commission on Audit. 13. B.FUNDINGOFPRIVATESCHOOLS Sec. 40.Funding of Private Schools. Private schools may be funded from theircapital investment or equity contributions,tuition fees and other school charges, grants,loans, subsidies, passive investment incomeand income from other sources. 14. Sec. 41.Government Assistance. Thegovernment, in recognition of theircomplementary role in the educationalsystem, may provide aid to the programs ofprivate schools in the form of grants orscholarships, or loans from governmentfinancial institutions: Provided, That suchprograms meet certain defined educationalrequirements and standards and contribute tothe attainment of national developmentgoals. 15. Sec. 42.Tuition and Other Fees. Eachprivate school shall determine its rate oftuition and other school fees or charges. Therates and charges adopted by schoolspursuant to this provision shall be collectible,and their application or use authorized,subject to rules and regulations promulgatedby the Ministry of Education, Culture andSports. 16. Sec. 43.Income from Other Sources. Anyprivate school duly recognized by thegovernment, may receive any grant and legacy,donation, gift, bequest or devise from anyindividual, institution, corporation, foundation,trust of philanthropic organization, or researchinstitution or organization as may be authorizedby law. Furthermore, private schools are authorized toengage in any auxiliary enterprise to generateincome primarily to finance their educationaloperations and/or to reduce the need to increasestudents fees 17. Sec. 44.Institutional Funds. Theproceeds from tuition fees and otherschool charges, as well as other incomeof schools, shall be treated asinstitutional funds. Schools may pooltheir institutional funds, in whole or inpart, under joint management for thepurpose of generating additionalfinancial resources. 18. C.INCENTIVESTOEDUCATION Sec. 45.Declaration of Policy. It is thepolicy of the State in the pursuit of itsnational education development goals toprovide an incentive program toencourage the participation of thecommunity in the development of theeducational sector. 19. Sec.46.RelatingtoSchoolProperty. Real property, suchas lands, buildings and other improvements thereon usedactually, directly and exclusively for educational purposesshall be subject to the real property tax based on anassessment of fifteen per cent of the market value of suchproperty: Provided, That all the proceeds from the paymentthereof shall accrue to a special private education fundwhich shall be managed and disbursed by a local privateschool board which shall be constituted in each municipalityor chartered city with private educational institutions withthe mayor or his representative as chairman and not morethan two representatives of the institutional taxpayers, and,likewise, not more than two residents of the municipality orchartered city who are alumni of any of the institutionaltaxpayers as members: Provided, further, 20. That fifty percent of the additional one percent tax onreal estate property provided for under Republic Act5447, shall accrue to the special private educationfund: Provided, finally, That in municipalities orchartered cities wherein the number of privateinstitutions with individual enrollment of pupils andstudents over five thousand exceeds fifteen, themembers of the private school board shall be increasedto not more than fourteen members determinedproportionately by the Minister of Education, Cultureand Sports. The private school board shall adopt itsown rules which shall enable it to finance the annualprograms and projects of each institutional taxpayerfor the following purposes; student-pupil scholarships;improvement of instructional, including laboratory,facilities and/or equipment; library books andperiodicals acquisition; and extension service in thecommunity, in that order of priority. 21. Sec.47.RelatingtoGiftsorDonationstoSchools. All gifts or donation in favor of anyschool, college or university recognized by theGovernment shall not be subject to tax; Provided,That such gifts or donations shall be forimprovement of classrooms and laboratory oflibrary facilities, and shall not inure to the benefitof any officer, director, official, or owner orowners of the school, or paid out as salary,adjustments or allowance of any form or naturewhatsoever, except in support of faculty and/orprofessorial chairs. 22. Sec. 48.Relating to Earnings from EstablishedScholarship Funds. All earnings from theinvestment of any duly established scholarshipfund of any school recognized by thegovernment, constituted from gifts to the school,and/or from contributions or other resourcesassigned to said fund by the school, if saidearnings are actually used to fund additionalscholarship grants to financially deservingstudents shall be exempt from tax until thescholarship fund is fully liquidated, when theoutstanding balance thereof shall be subject totax. 23. Sec. 49.School Dispersal Program. All gainsrealized from the sale, disposition or transfer ofproperty, real or personal, of any duly establishedprivate school, college or university, in pursuanceof a school dispersal program of the government orof the educational institution as approved by thegovernment, shall be considered exempt from tax ifthe total proceeds of the sale are reinvested in anew or existing duly established school, college, oruniversity located in the dispersal site, within one(1) year from the date of such sale, transfer ordisposition; otherwise, all taxes due on the gainsrealized from the transaction shall immediatelybecome due and payable. 24. Sec. 50.Conversion to Educational Foundations. An educational institution may convert itself into anon-stock, non-profit educational foundation, inaccordance with the implementing rules to be issuedjointly by the Ministry of Education, Culture and Sportsand the Ministry of Finance. In the case of stock corporations, if for any reason itscorporate existence as an educational institutionceases and is not renewed, all its net assets afterliquidation of the liabilities and other obligations maybe conveyed and transferred to any non-profiteducational institution or successor non-profiteducational institution or to be used in such manner asin the judgment of said court will best accomplish thegeneral purposes for which the dissolved organizationwas organized, or to the State. 25. GOVERNMENTALFUNDS 26. 01 General Fund 20-9-30110 - 44 Special Revenue FundsBudgeted Special Revenue Funds10 Transportation 20-10-14311 Bus Depreciation 20-10-14713 Tuition 20-5-323/32414 Retirement 20-9-50117 Adult Education 20-7-70519 Non-Operating Fund 20-9-50528 Technology Fund 20-9-53329 Flexibility Fund 20-9-543 27. Non-Budgeted Special Revenue Funds12 School Food Services 20-10-20115 Miscellaneous Programs Fund 20-9-50718 Traffic Education 7/20-9-51020 Lease-Rental Agreement 20-9-50921 Compensated Absences Liability Fund 20-9-51224 Metal Mines Tax Reserve 20-9-23125 State Mining Impact 90-6-30726 Impact Aid Fund (P.L. 81-874) 20-9-51427 Litigation Reserve Fund 20-9-515 28. 45 - 49 Permanent Funds45 Permanent Endowment Fund 20-9-604/OPIApproved (Earnings, not principal, must be spent ondistrict operations)50 - 59 Debt Service Funds50Debt Service 20-9-43860 - 69 Capital Projects Funds60 Building 20-9-50861 Building Reserve 20-9-502 29. PROPRIETARY FUNDS70 - 72 Enterprise Funds70 Day Care OPI Approved71 Industrial Arts OPI Approved72 Enterprise - Miscellaneous OPI Approved 30. 73 - 79 Internal Service Funds73 Processing OPI Approved74 Purchasing OPI Approved75 Central Transportation OPI Approved76 Instructional Materials Center OPIApproved77 Miscellaneous Internal Service OPIApproved78 Self Insurance Fund - Health 20-3-33179 Self Insurance Fund Liability 20-3-331 31. FIDUCIARY FUNDS80 - 85 Trust Funds81 Private Purpose Trust Fund (Non-expendable)20-9-60482 Interlocal Agreement 20-7-457/20-9-511/(This fund should be preceded with the digit 3 whenused by Special Education Cooperatives.)20-7-801/20-9-70183 Investment Trust Fund 20-9-213(4)84 Student Extracurricular Activities 20-9-50485 Misc. Private Purpose Trust Fund (Expendable)OPI Approved 32. 86 - 95 Agency Funds86 Payroll Clearing Fund 20-9-22087 Claims Clearing Fund 20-9-22088 Investment Earnings Clearing OPI Approved89 Retirement/COBRA Insurance 2-18-70490 Agency -- A OPI Approved91 Agency B OPI Approved92 Reserved93 Reserved94 Reserved95 Cafeteria/Flex Plan OPI Approved 33. ACCOUNTABILITY SCHEDULES Fixed Assets (SCFA)Required for reporting Long-Term Liability (SCLTL)Required for reporting