Reforming the Special Education Fund under the Local Government Code to Support New Normal Education

By: John Kristoffer P. Pereda

I. Introduction

      In the pursuit of promoting universal respect for and observance of human rights and fundamental freedoms, the Universal Declaration of Human Rights (UDHR) recognized the right to education of every individual[1]. Although the UDHR does not have the force of law, it is seen as having moral force, binding in the sphere of conscience.[2] Taking cue from this declaration, the 1987 Philippine Constitution,  recognized this right to education providing a policy towards its furtherance. Under Article XIV, Section 1 of the Constitution, “the State shall protect and promote the right of all citizens to quality education at all levels, and shall take appropriate steps to make such education accessible to all.”

      As worded, Article XIV, Section 1 merely provides a guiding principle for the government in laying down laws, rules, and regulations concerning education – that the State shall endeavor to protect and promote the people’s right to quality and accessible education. As such, in Tolentino v. Secretary of Finance[3], it is considered as one of the provisions “that are put in the Constitution as moral incentives to legislation, not as judicially enforceable rights.” Guided by this policy, Congress, on different occasions, has enacted various laws in pursuit of the mandate of Article XIV, Section 1.

      It has been noted that in some developing countries, there is trend towards the decentralization of the management of public education to improve educational quality by bringing decision-making closer to schools, which, in effect, makes educational policymaking more responsive to local needs.[4] Notwithstanding this trend, public education policymaking in the Philippines remains mainly a business of the national government[5], primarily through the Department of Education.

      At any rate, the enactment of the Local Government Code of 1991 (LGC) marked an important milestone in the recalibration of responsibilities in the management of public education. The LGC sought to include local government units (LGUs) as partners in managing their respective local public education sectors, thereby slightly reducing the control of the national government over public education which the latter had monopolized for decades. The LGC granted special bodies called the local school boards (LSBs) the power to devote a special fund called the Special Education Fund (SEF) to certain projects and programs in schools in their respective localities.

      With the outbreak of the Covid-19 pandemic, the world has witnessed a public health crisis that drastically changed how societies conduct their affairs. Certainly, the education sector is not left undisturbed. In fact, it is among the most affected sectors. For the first time in decades, the pandemic caused an extensive cancellation of formal classes which, in turn, prompted resort to alternative modes of learning. Unsurprisingly, the novelty of the “new normal” instructional methods has drawn countless issues on inclusivity and accessibility. At the frontline of addressing these issues is the national government, having retained its function of managing public education.

      At this point, it is worthy to recall that that by virtue of the LGC, LGUs, through LSBs, have become stakeholders on the management of public education. They participate, albeit in a limited fashion, in financing the public education sector by means of SEFs. Thus, being partners of the national government, LGUs are likewise responsible in cushioning the effects of the pandemic in the education sector of their respective localities.

      This occasion presents an opportunity to examine the role of SEFs in making quality education inclusive and accessible, especially at this time of a public health crisis. This is so because the issues brought about by the shift to the “new normal” education mostly revolve around financing and managing resources. Guided by the policy laid down in Article XIV, Section 1 of the Constitution, such opportunity is taken here.

II. Discussion

      Evidently, the enactment of the LGC ushered in a new era in Philippine public administration. Under the LGC, responsibilities on several policy areas are delegated to LGUs, both with respect to decision-making and fiscal administration. With the goal of involving local stakeholders in the management of the local public education sector, the LGC granted LSBs certain powers and functions for such purpose, to wit:

      Section 99. Functions of Local School Boards. – The provincial, city or municipal school board shall:

(a) Determine, in accordance with the criteria set by the Department of Education, Culture and Sports, the annual supplementary budgetary needs for the operation and maintenance of public schools within the province, city, or municipality, as the case may be, and the supplementary local cost of meeting such as needs, which shall be reflected in the form of an annual school board budget corresponding to its share of the proceeds of the special levy on real property constituting the Special Education Fund and such other sources of revenue as this Code and other laws or ordinances may provide;

(b) Authorize the provincial, city or municipal treasurer, as the case may be, to disburse funds from the Special Education Fund pursuant to the budget prepared and in accordance with existing rules and regulations;

(c) Serve as an advisory committee to the sanggunian concerned on educational matters such as, but not limited to, the necessity for and the uses of local appropriations for educational purposes; and

(d) Recommend changes in the names of public schools within the territorial jurisdiction of the local government unit for enactment by the sanggunian concerned.

      The Department of Education, Culture and Sports shall consult the local school board on the appointment of division superintendents, district supervisors, school principals, and other school officials.

      Arguably, the most critical and consequential function of LSBs is that described in Sec. 99(a) and (b). Both paragraphs, taken together, provide that LGUs, through the LSBs, are mandated to determine and provide supplementary budget needs, in accordance with existing rules and regulations, for the operation and maintenance of public schools within their respective locality. Accordingly, said budget is to be sourced from the Special Education Fund (SEF), the generation of which is governed by Section 235 of the LGC, to wit:

Section 235. Additional Levy on Real Property for the Special Education Fund. – A province or city, or a municipality within the Metropolitan Manila Area, may levy and collect an annual tax of one percent (1%) on the assessed value of real property which shall be in addition to the basic real property tax. The proceeds thereof shall exclusively accrue to the Special Education Fund (SEF).

      Conversely, Sec. 272 provides for the manner and the formula of allocation of the SEF, to wit:

Section 272. Application of Proceeds of the Additional One Percent SEF Tax. – The proceeds from the additional one percent (1%) tax on real property accruing to the Special Education Fund (SEF) shall be automatically released to the local school boards: Provided, That, in case of provinces, the proceeds shall be divided equally between the provincial and municipal school boards x x x

      In sum, the SEF is a locally-generated fund intended to augment the budgetary requirements of local basic education sector. The authority to determine the school-related expenses that may be charged against the SEF are vested to LSBs.

      At any rate, the utilization of the SEFs as provided for in the LGC was envisioned to take place in a normal environment, i.e., in a society that is in the regular conduct of its affairs. While certain weak points in the existing SEF structure have already been noticed since the implementation of the LGC,[6] the outbreak of the Covid-19 pandemic has highlighted the same. The SEF appears to be counterproductive, or at the least, inconvenient, against the backdrop of the Covid-19 pandemic.

      Under the existing framework, the SEF is sourced from the proceeds of the additional one percent (1%) tax on real property levied and collected by LGUs. In case of real property tax collection by cities, the proceeds accruing to the SEF is automatically given to the city school boards, while in case of provinces, the proceeds are equally divided between the provincial school board and the municipal school boards.

      Ideally, this framework is a sound arrangement that has the effect of incentivizing well-performing LGUs. An LGU that develops an economic environment conducive for real property investments within the locality increases its collectible real property taxes. If it is diligent in collecting the same, such LGU generates a greater amount of SEF. In other words, SEFs tend to reward hard work.

      In reality however, the existing SEF framework seems to perpetuate inequity among LGUs and among the divisions of our public education sector across the country. There are two main factors that lead to this inference: the poverty incidence in a certain LGU and its real property tax collection.

The following statistics gives a glimpse of the current situation.

      First, on poverty incidence. Data from the Philippine Statistics Authority show that in 2018, the National Capital Region (NCR), Region III and Region IV-A record that lowest rate of poverty incidence among families in the country, with 1.4%, 5.2%, and 5.1%, respectively, of their total population living below the poverty line. Conversely, among the regions with the highest poverty incidence rate are Region V with 20%, Region VIII with 23.9%, and Region IX with 25.4%.

      Second, concerning the real property collection of LGUs. It is a well-known fact that real property investments are concentrated in metropolitan areas and other major cities. The LGUs therein collect the highest amount of real property taxes which means that they collect the highest amount of funds accruing to the SEF. According to the 2018 data from Bureau of Local Government of Finance, LGUs in the NCR was able to collect approximately 25.3 billion pesos in real property tax; those in Region III, 7.4 billion; and those in Region IV-A, 13 billion pesos. Conversely, those in Region V, 956 million; those in Region VIII, 678 million; and those in Region IX, 572 million.

      Admittedly, the presentation of the this data is not intended for scientific treatment nor does it seek to arrive at a scientifically precise analysis. Nonetheless, a reasonable inspection of the same suggests that the disadvantaged students in regions with relatively low poverty incidence rate stand to be benefited from a bigger SEF mainly due to the presence of massive real property investments therein, as reflected by the sheer amount of real property tax collected by their LGUs. On the other hand, disadvantaged students in regions with a relatively high poverty incidence rate enjoy a meager share of the SEF, owing to minimal real property investments in their regions.

      The social ramifications of this inequality are evident. With a bigger fund to address the effects of the pandemic in the education sector, i.e. greater SEF collection (which may be further augmented by supplemental appropriations), LGUs in richer regions are more capable of providing education stakeholders with resources, equipment, and materials to support the students therein in adapting to the “new normal” mode of learning. LGUs in poorer regions can only do so much. Only major cities are able to procure laptops, mobile phones, and other electronic devices to be used in alternative distance learning.

      In other words, LGUs in regions with low poverty incidence rate have more SEF at their disposal. Conversely, those in regions with high poverty incidence have less. This predicament falls squarely into the very essence of inequitable access to education. The incongruence of the concept of SEF with the declared policy in Article XIV, Section 1, i.e. that the State shall protect and promote the right to quality and accessible education, has become unmistakably apparent. Hence, a reorientation of the concept of SEF is in order.

III. Proposed Solution

      In this time of an ongoing global pandemic, the inequities in educational opportunities in different divisions of our public education sector has become ostensible. Thus, the need to revisit the SEF mechanism has become more pressing. Indeed, the existing SEF system is a missed opportunity to make public education more equitable and accessible, and as such, the best time to rectify that is now.

      In designing a system of intergovernmental relations, which is mostly given weight in federal and decentralized arrangements, the concept of intergovernmental fiscal transfers, also known as “equalization” transfers, is usually employed. As the term suggests, it is designed to minimize the economic disparities of local governments. In its basic concept, lower level government units contribute funds to a common pool wherein the amount of the contribution is proportionate to each unit’s respective resources and capabilities. In turn, the funds in the common pool is distributed to the recipient units according to their respective needs. Such arrangement, also known as horizontal transfers, deal specifically with rectifying fiscal imbalances between governmental units at the same level.[7] Here, a “parochial” perspective is diminished, and every unit becomes a stakeholder in the development of another.

      Given its character, the provisions in the LGC governing SEFs, especially Sec, 99 (a) and (b), must be amended to redesign the SEF into an equalization fund. Instead of being directly applied to the needs of the generating LGU, the SEF must be pooled into an equalization program to support localities with greater needs in public education management, which has become imperative in this time of Covid-19.

IV. Conclusion

      Without a doubt, certain LGUs will be apprehensive, if not dismissive, of the proposal put forward herein. To be sure, they cannot be faulted – it is understandable because there lies in intergovernmental relations an inherent, or perhaps eternal, tension in competing for resources.

Nonetheless, in this time of a national crisis, the spirit of bayanihan becomes more crucial. The essence of bayanihan, roughly translated as solidarity or civic unity, requires a little sacrifice on the part of the more capable in order to aid a fellow in need. One has to set aside personal parochial interests to support the needs of another.

      State legislations, as well as other government actions, must be guided by the Constitution. The policies and principles laid therein are not merely hollow words, but are express declarations of the collective goal of the people. In this regard, government actions and decisions that affects education must be in pursuit of the goal enunciated in Article XIV, Section 1. As shown here, the provisions governing SEF is anomalous as they tend to perpetuate inequity in the education sector – an obvious affront to the letter and spirit of Article XIV, Section 1. That being the case, SEF must be reformed to become an instrument of providing equal access to quality education.  This proposal does not find justification on equity alone, but also on the shared moral responsibility of every Filipino to the succeeding generation.


[2] Jacob Dolinger, The Failure of the Universal Declaration of Human Rights, 47 UNIVERSITY OF MIAMI INTER-AMERICAN L. R. 164, 184 (2016)

[3]235 SCRA 630 (1994)

[4] World Bank Group. Assessing the Role Played by Local Government in Supporting Basic Education in the Philippines. WORLD BANK (2016),

[5] Id.

[6] Rosario G. Manasan, Janet S. Cuenca & Alicia B. Celestino. Mobilizing LGU Support for Basic Education: Focus on the Special Education Fund, PHILIPPINE INSTITUTE FOR DEVELOPMENT STUDIES, (May 2011),

[7]Adam Yeeles, Intergovernmental Fiscal Transfers and Geographical Disparities in Local Government Income in the Philippines, 32 JOURNAL OF SOUTHEAST ASIAN ECONOMIES 390, 391 (2015)

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