BUREAU OF LOCAL GOVERNMENT FINANCE

2014 ANNUAL REPORT

OUR VALUES

Integrity Teamwork Service

Excellence Accountability Commitment

PLEDGE OF COMMITMENT

We, the Officials and Employees of the

Bureau of Local Government Finance, commit to:

Build and institutionalize a culture of Excellence, Competence, Professionalism and Dedication to public service. A continuing challenge for us is to ensure that our institution has the skills, the right values and perspective in the way of doing business;

Lead by example the observance of the ethical standards for public servants with indubitable integrity and spirituality that we may increase confidence of the general public in the government system;

Generate and promote good relationship with the transacting public through prompt action, transparency and utmost courtesy as enshrined in our Citizens Charter;

Focus on our clients and practice greater sensitivity to their priorities and services required.

BLGF VISION /MISSION

__________________________________

BLGF of the Department of Finance is the focal

agency and an authority in local finance that

aims to be at the forefront of local economic

growth leading the way towards national

development

The Bureau of Local Government Finance (BLGF) continuously

endeavored to pursue efforts for the attainment of its mandated goals

and objectives with the BLGF Vision, Mission and Values as guiding

principles. With lean manpower due to the implementation of the

Rationalization Plan, it was able to deliver its services effectively and

was able to sustain its excellent performance.

As a main strategic priority BLGF continued to undertake vital tasks that

aim to sustain local government revenue generation efforts and ensure

that the fiscal provisions of the Local Government Code (LGC) are

properly observed through policy measures, capacity building programs

and actual LGU field audits. New Manuals, Tools, Systems were

formulated, developed and implemented, and other reforms from the

administration/implementation of Special Projects such as the

European Union Project were mainstreamed to the LGUs to support

them in enhancing their capacities, for better treasury operations.

The approach in achieving our goals was more on leveraging our limited

funds and lean manpower, and strived to foster better collaboration

and coordination with partner agencies and stakeholders Most of the

plans and programs for the year were aimed at attaining good

governance, transparency and accountability by taking the necessary

steps towards simplified and better delivery of services, and efficient

monitoring of operations and performance across regions.

OUR GOALS FOR 2014

GOAL 1 Creating Conditions Conducive to Economic Growth and Competitiveness Self-sufficient Local Government Units that generate sufficient revenues to support delivery of services and local development

GOAL 2 Good Governance and Transformational Leadership Accountable, resilient and competent pool of practitioners equipped with the right values and possessing leadership, management and the appropriate technical competencies GOAL 3 Enhanced Systems and Tools Functional and operational systems and tools to enhance operations monitoring and compliance reporting of LGUs for policy development

GOAL 4 Implementation of Special Projects to Support LGUs

Capacitated local treasurers and assessors, and improved business processes in the LGUs

GOAL 5 Strengthening of Organizational Structure, Capacity Building and Enhancement of BLGF Business Processes

Strengthened organizational structure, enhanced business processes and capacitated workforce

RealProperty

Tax

Business Tax Fees andCharges

EconomicEnterprise

57.85 58.3

16.66 16.95

44.86

59.22

17.36 18.05

Revenue Generation Program CY 2014 (In Billion Pesos)

Annual Target Actual Collection

GOAL 1 - Creating Conditions Conducive to Economic Growth and Competitiveness Self-sufficient Local Government Units that generate sufficient revenues to support delivery of services and local development

INCREASE THE LOCAL TAX BASE

Institutionalization of valuation reform initiatives to increase real property tax bases of LGUs:

The BLGF continues to institutionalize valuation reform initiatives by monitoring the compliance of LGUs with DOF-DILG Joint Memorandum Circular No. 10-001 (October 2010) which enjoin all concerned LGUs to revise their Schedule of Market Values (SMV) and effect the general revision of property assessments using the Philippine Valuation Standards and the Mass Appraisal Guidebook:

A total of 75 LGUs have revised their SMVs

BLGF likewise monitors compliance of LGUs with DOF-DILG Joint Memorandum Circular No. 10-002 (October 2010) to encourage LGUs to impose idle land tax.

Consolidation & Monitoring of Idle Land Tax Reports - 34 LGUs

INCREASE LOCALLY SOURCED REVENUES

REVENUE GENERATION PROGRAM

The Revenue Generation Program is one of the priority programs of the BLGF. Through this program, the BLGF provides technical assistance to LGUs in implementing tax collection enforcement programs and strategies aimed at improving their performances in generating locally sourced income.

As of 4th quarter, LGUs registered an average of 93.14% collection efficiency (based on partial data of actual vs. targeted collections) on all local income sources.

Annual Actual Collection

Target Collections Efficiency

Real Property Tax P 57.85 B P44.86 B 76.54%

Business Tax 58.30 B 59.22 B 101.58%

Fees and Charges 16.66 B 17.36 B 104.20%

Economic Enterprise 16.95 B 18.05 B 106.49%

Total P149.76 B P139.49 B 93.14%

433.28

340.68

92.595

LGU Financial Performance Monitoring CY 2014

(In Billion Pesos) Income Expenditures Surplus

GOAL 1 - Creating Conditions Conducive to Economic Growth and Competitiveness Self-sufficient Local Government Units that generate sufficient revenues to support delivery of services and local

development

INCREASE LOCALLY SOURCED REVENUES

TECHNICAL ASSISTANCE

A total of 739 technical assistance, consultative

services and capability building for LGUs were

rendered covering:

The updating of Local Revenue Codes

Credit financing schemes

Bond-flotation, Build-Operate-Transfer

(BOT) and other non-traditional sources

of financing

Core technical competencies

LGU DEBT MONITORING AND CREDITWORTHINESS

RATING YSTEM

The LGU Debt Monitoring System and the Creditworthiness Rating System is used in conjunction with the LGU Debt Service Certification System which determines the maximum amount an LGU can allocate for debt service. For Year 2014, a total of 375 LGUs were issued certifications for their borrowing and debt service capacities as a requirement for sub-loan projects under the GFIs, ALRF and for bond flotation.

LGU FINANCIAL PERFORMANCE MONITORING

The Statement of Receipts and Expenditure Reporting

System is currently the reporting system for the

revenues and expenditures of the local government

units (LGUs). The system involves monitoring financial

performance using financial indicators that reflect how

well the LGU funds have been utilized. The electronic

Statement of Receipts and Expenditure System (eSRE),

supports the system and serves as a tool to gather

baseline data for simulation of basic and vital

information on the fiscal performance of the LGUs

Preliminary figures on the income and expenditures of LGUs as of December 2014, indicated a total income of P433.28 B as against expenditures of P340.68 B. The surplus in the amount of P92.595 B is a result of the intensive implementation of collection strategies and close monitoring of LGU financial performance and fund management. The 4th quarter SRE reports of the LGUs are submitted during the 1st quarter of the succeeding year.

GOAL 2 - Good Governance and Transformational Leadership Accountable, resilient and competent pool of practitioners equipped with the right values and possessing leadership, management and the appropriate technical competencies

Institutionalization of Continuing Professionalization Education (CPE) and Capacity

Building for local assessors and treasurers

BLGF as a Continuing Professional Development (CPD) Institutional Service Provider facilitated the formulation and accreditation of three (3) courses on Valuation namely: Philippine Valuation Standards (PVS), Basic Course on Mass Appraisal (BCMA) course No. 2 and Skills Development in SMV Updating and Conduct of General Revision. The PVS was offered in year 2010 with a total of 10 schools conducted. The BCMA # 2 and Skills Development in SMV Updating and Conduct of General Revision were offered in Year 2014, a total of 9 schools were successfully conducted. BLGF likewise was able to facilitate the accreditation of its pool of resource speakers and established its pool of facilitators. A total of fifteen (15) resource speakers are accredited by the PRC, all of these are licensed appraisers and experts in the field of valuation and assessment. The continuing conduct of CPD is aimed at improving valuation and assessment operations in the LGUs and to support the local assessors and appraisers in the renewal of their Real Estate Service Act (RESA) licenses.

Continuous reinvention of the local treasury and assessment offices through innovative capacity building and development/implementation of

standards

Performance Standards and Rating System The Performance Standards and Rating System was finalized in 2014 with the necessary Department Order - DO 006.2015 signed by the Secretary of Finance for its implementation consisting of Operational Performances Goals (OPG) – to measure the technical knowledge and skills of treasurers and Competency Performance Goals (CPG) – to measure their Basic Universal Skills as indicators beginning midyear of 2015. The Performance Standards and Rating System shall set the criteria and benchmarks for the regular performance appraisal of local treasurers and assistant treasurers. The system is consistent with the policies and guidelines of the Civil Service Commission that a regular, output-oriented and performance- based appraisal system for local treasurers and assistant treasurers is necessary for the effective supervision of local treasury operations of the local government units. Local Treasury Examination The Local Treasury Examination is a two-track approach to further professionalize the local treasury service. The first track is the conduct of one-time diagnostic examination to gauge competencies, knowledge and operational skills of local treasurers. The second track is a special examination intended as an additional criteria in the selection screening process for the appointment of treasurers. Terms of Reference for the engagement of Non Key Experts to develop the examination has been drafted.

ANTI CORRUPTION PROGRAMS

Revenue and Assessment Performance Evaluation The BLGF continuously implement revenue and assessment performance evaluation programs in the local treasury and assessment offices to abate occurrence of irregularities. A total of 1,212 LGUs nationwide were evaluated in Year 2014. Continuous investigation of complaints/cases filed against erring local treasurers was likewise undertaken, Record shows the following were acted upon in 2014:

50 Complaints

17 resolutions

143 general administration

53 Ombudsman Order/Decisions/CSC Decisions implemented

Appointments and Designations Established standards are followed in the selection of treasurers to be appointed and designated. For Year 2014, there were 91 appointments issued by the Secretary of Finance and attested by the Civil Service Commission and 1,019 designation orders issued.

GOAL 2 - Good Governance and Transformational Leadership Accountable, resilient and competent pool of practitioners equipped with the right values and possessing leadership, management and the appropriate technical competencies

LGU Fiscal Sustainability Scorecard The Department of Finance implemented beginning 3rd quarter of 2013 the LGU Fiscal Sustainability Scorecard. The Fiscal Sustainability Scorecard rates the fiscal performance of provinces, cities and municipalities based on set fiscal indicators using the Statement of Receipts and Expenditures (SRE) and other official reports regularly submitted by local treasurers and assessors. The full assessment for the 80 provinces, 144 cities and 1,454 municipalities was completed and published through newspaper and the Iskor Ng Bayan website in December 2014. Support to LGU Finance Operations

BLGF issued 344 rulings and opinions in Year 2014, covering local treasury operations, local taxation, and real property appraisal and assessment.

GOAL 3 - Enhanced Systems and Tools Functional and operational systems and tools to enhance operations, monitoring and compliance reporting of LGUs for policy development

Integrated Information Management Systems (i2MS) Improvement of systems and processes in the BLGF is one of the major thrusts of BLGF. The implementation and adoption of the Integrated Information Management Systems (i2MS) covering LGU Debt Information System ( LGU debt monitoring), Local Real Property Information System, Document Management and Archiving System and BLGF Operations Management System, was initiated in Year 2014 by phases. For the efficient implementation of the system, orientation/simulation and coaching were conducted. In addition, implementing policies/guidelines were provided to all BLGF offices including Memorandum Circulars for adoption or use by all concerned offices.

Enhanced Electronic Statement of Receipts and Expenditures (eSRE) version 2.1

The eSRE is the official reporting system for LGU Financial Performance. The system was enhanced from version 1 to version 2.1 . The enhanced system provides the facility to forecast revenues and expenditures based on a macroeconomic model and framework; Determine financial stability of LGUs through 19 financial indicators and the LGU Credit Rating System which is a regular credit worthiness tool – a criterion which shall be used other than net debt service ceiling and borrowing capacity.

A total of 1,486 trainings on the enhanced system

for municipalities nationwide were conducted to

familiarize the LGUs on the use of the system. The

enhanced system will be implemented in the first

quarter of 2015.

GOAL 4 - Implementation of Special Projects

Capacitated local treasurers and assessors, and improved business processes in the LGUs

EUROPEAN UNION (EU) Under the European Union (EU), the LGU – Public Financial Management Project 2 (PFM2) was implemented. The project aims to enhance the capacity of local governments to generate revenue and to allocate and spend public funds more effectively and efficiently. Expected Outputs:

Improved Revenue Generation and Management at LGU Level through :

o Expansion and enhancement of analytical and diagnostic tool and use of the eSRE

o Expansion and enhancement of existing key manuals and modules on Resource Mobilization

o Conduct of Trainers' Training workshops on key manuals and modules

o Implementation of eSRE-Based Treasurers' Performance Rating System and Set-up of Competency Certification System

o Establishment of a Monitoring System on Impositions of LGUs provided in their Local Revenue Codes

Conducted consultation workshops with stakeholders and initial updating of the following Public Financial Management Manuals

Technical editing on the Manual on Local Government Financial Performance Monitoring System (LGFPMS) and SRE Analysis completed

Finalization of Assessment Evaluation/Examination and Monitoring Manual completed, accordingly exposure workshops to regional offices and selected LGUs were conducted.

Finalization of the Performance Standards for Treasurer was completed and conducted three cluster Exposure Workshops to local treasurers nationwide.

Development of the Manual on the Evaluation of Local Treasury Operations (MELTO) was completed. Exposure workshop and simulation with regional offices was conducted.

Update on the Local Treasury Operations Manual (LTOM) has been reviewed by BLGF-Technical Working Group. Integration of recommendations is on-going.

Draft Bill on the enhanced LGU Reclassification System was presented to DOF and filed in Congress.

GOAL 5 - Strengthening of Organizational Structure, Capacitating BLGF Employees Strengthened organizational structure, enhanced business processes and capacitated employees

Implementation of the Approved Rationalization Plan The approved Rationalization Plan is underway for implementation, with the release of the Notice of Organization Staffing and Compensation Allocation NOSCA from the Department of Budget and Management. The BLGF prepared the timetable for implementation and formulated an enhanced process of recruitment and promotion to effectively carry out the filling of vacant positions.

Trainings for BLGF Employees

The BLGF recognizes the importance of trainings as an opportunity to strengthen the knowledge and skills of the employees. It also recognizes the need for the employees to be well informed and to keep their interpersonal relationship and commitment alive to be able to achieve shared goals.

For Year 2014, the BLGF conducted Basic Course on Mass Appraisal Course # 2 for Local Assessment Operations Officers, Seminar Workshop on Administrative Discipline for Special Investigators, and Human Resources Management Officers, Gender Analysis and GAD Planning for selected BLGF employees and Teambuilding for all employees .

It is important to provide a dynamic environment for all employees, thus the need to facilitate organizational re-structuring. Our goal is to develop

our work force and maintain a stimulating office environment for employees. The approved Rationalization Plan of BLGF and continuous

performance improvement through capacity building are expected to bring about our goal for more strengthened organizational environment

that will impact on our operating culture.