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Local Governance and Fiscal Management Project (formerly Strengthening LGU Management and Administration) :  Philippines :Go to Project Summary

Local Governance and Fiscal Management Project (formerly Strengthening LGU Management and Administration) :  Philippines

Timetable  |  Financing Plan and TA Utilization


TA Name Local Governance and Fiscal Management Project (formerly Strengthening LGU Management and Administration)
Country Philippines
TA Number 4778
Project Number 38275- 02
Source of Funding/Amount[Approved]
Technical Assistance Special Fund US$1.80  million
Description The TA will improve fiscal mangement and service delivery in selected provinces, as well as in cities and municipalities within those provinces. There will be three components, namely: (i) support for clearer and more effective legal framework for decentralization and intergovernmental fiscal transfer system; (ii) support for LGU efforts to establish more effective and transparent budget processes and public expenditure management; and (iii) strengthening LGU financial capacity to mobilize revenues.

Linkage to Country/Regional Strategy The Philippine CSP for 2005-2007 lays down the thrust of ADB's sector policy reform areas in the three areas of power, financial markets and governance (including local governance and judiicial systems). The local governance and finance development program focuses on improved resource mobilization and budget operations at the LGU level. The TA contributes in realization of the above objectives of the local governance program.
Outcome Progress Toward Outcome
1. Participating LGUs gain enhanced access to own resources from traditional sources such as taxes, fees and LGU GOCC income.
2. In participating LGUs, LGU access to nontraditional resources, including bank loans, bonds, and build-operate-transfer arrangements, is enhanced.
3. Improved LGU expenditure and financial management.
4. The legal framework for decentralization is clarified and improved.
TA implementation is ongoing.
Outputs and Timeframe Status of Implementation Progress (Outputs, Activities and Issues)
Component A
(i) An in-depth study of the current status of decentralization, with recommendations for the revision of the Local Government Code (LGC) including: (a) review of the first 15 years of decentralization and its impact on service delivery, issues encountered and recommendations; (b) study of completed and to be completed mandated devolution under the LGC, other special laws and jurisprudence; (c) study on the direction of decentralization under possible changes in the system of government; (d) prepare the second phase of EO 444; (e) develop a devolution framework including the medium and long-term vision for decentralization and a corresponding change management plan and timetable.

(ii) Develop proposals for the reform of intergovernmental fiscal relations among different LGU levels including: (a) assess current practices in pilot provinces by which participating provinces share revenues with their municipalities and develop proposals for their improvement; (b) support the development and implementation of revisions in inter-provincial revenue sharing as permitted by law; (c) assess the impact of the IRA formula and procedures on revenue adequacy, predictability and collection incentives in participating LGUs and develop proposals for reforming IRA.

(iii) Support for capacity development activities for DILG, NGA, LGUs and the LGU Leagues including: (a) prepare and implement plans to strengthen policy advocacy role of LGU Leagues; (b) study to strengthen the monitoring of ODA for LGUs by DILG staff; (c) prepare a study on the operation and conceptual framework on capacity development for the local government; (d) advocacy for decentralization directed towards the National Government; (e) support in LGPMS utilization and institutionalization, including advisory assistance to LGUs in use of LGPMS, preparation of action plans in pilot areas on the implementation of the LGPMS and the e-NGAS, assistance to DILG regional offices on the use of LGPMS, advocacy among Leagues on LGPMS, analysis and validation of LGPMS data by academe, and studies and report writing on LGPMS; and (f) conduct a study on the legal, financial and policy issues of economic enterprises and undertake building program in project and enterprise development.

Component B

(i) Development of an improved personnel services expenditure policy for LGUs (in consultation with Civil Service Commission);
(ii) Development of forward estimates;
(iii)Development of a framework for LGU expenditure management;
(iv)Training in use of medium-term frameworks and output based budgeting;
(v) Action plan to implement e-LGAS and Local Government Performance Measurement System (in consultation with COA);
(vi) Action plan for creating an effective internal audit function in LGUs where one is lacking;
(vii) More efficient procurement process and improved quality of procurement outputs through a local procurement manual;
(viii) Review/updating of guidelines regarding Special Education Fund (in consultation with Department of Education); and
(ix) Review of release procedures for Special Shares of LGUs (National Wealth, Ecozone, VAT, and Tobacco Excise, in consultation with Department of Energy and Department of Environment and Natural Resources

Component C
(i) Preparation of action plans for pilot LGUs on revenue mobilization;
(ii) Design and implement training program in revenue estimation;
(iii) Study/framework on local asset management.
Component A:
Update as of Steering Committee Meeting on 20 Jan 2009
1. Completed the draft on study of decentralization with recommendations for the revision of the LGC.
2. Delivered the report on capacity building on synchronized planning and budgeting.
3. Report on the design architecture of LGPMS accepted by DILG.
4. Ongoing work on software development
5. Report on BGPMS accepted by DILG
6. Ongoing work on improving systems for maximizing the benefits of ODA for LGUs in coordination with NEDA
7. Finalized the mechanisms and programs on maximizing LGU corporate powers to promote local economic growth
8. Ongoing work on the development of the DILG Strategic Plan for LGS
9. Policy training courses for DILG executives and technical staff to be conducted in Feb-March 2009
10. Ongoing work on the development of the DILG Sector Information systems Strategic Plan for CY 2009-2013

Completed the following:
1. On in-depth study of the current status of decentralization 1.1 Draft of in-depth decentralization study with recommendations for the revision of LGC.
1.2 Several consultation workshops with project local key stakeholders all over the country.
1.3 Consultation workshops with National Government Agencies attended by representatives of DA, DENR, DOH, DSWD, DBM, DILG, DPWH and NEDA.
1.4 Consultation workshops in Cebu City participated in by local governments and DILG officials in the Visayas, Union of Local Authorities of the Philippines that presented the proposed amendments to the Local Government Code.
1.5 Consultation workshops in Davao City participated in by local governments in Mindanao.
1.6 Consultation workshops in Baguio City participated in by local governments in Northern Luzon.
1.7 Survey of issuances of the various national government agencies that have implications on decentralization

2. On analysis of proposed amendments to Book ll at LGC
2.1 Submission of a written report to BLGD-DILG analyzing the implications (including revenue impact) of the various amendments to Book II of the LGC as proposed by:
o ADB TA 4556
o different LGU Leagues.

3. On support for capacity development activities
3.1 Memorandum of Understanding constituting an Inter-agency Committee to oversee the Implementation of JMC No. 001 series of 2007
3.2 Integrative Framework for the Implementation of JMC No. 001
3.3 Orientation Modules for Four (4) Categories of Participants
3.4 A Primer on the Rationalized Local Planning System
3.5 Conduct of Cluster Orientation Course
3.6 Enhancement of the CDP and ELA Manual
3.7 Technical Training Program on the Application/ Utilization of Tools, Approaches, Procedures for Comprehensive Development Planning for Local Government Units
3.8 LGPMS Topical Outline
3.9 LGPMS Operational Framework and Data Capture Form
3.10 LGPMS Functional Requirements  This contains the requirements of BLGS in the enhancement of the LGPMS software, i.e., Data Capture Module, Online Report Module, Administration Module, Homepage, etc.
3.11 Completion Report: Content Simplification of LGPMS (Deliverable 1 of LGPMS under this TA )  This report presents the improvements made from the old LGPMS to the revised LGPMS, i.e., framework, indicator system, reporting system, etc.

4. On Barangay Govt Performance Management System
4.1 Four (4) Regional Workshops Conducted
4.2 Briefings on BGPMS to pilot Barangays
4.3 Finalized Data Capture Form
4.4 Conduct of Pre-Test
4.5 Retrieval of Data Capture Form
4.6 Consolidation of Data
4.7 Regional Reports Submitted
4.8 Study on Barangay Classification and Identifying
4.9 Performance Indicators were submitted to DILG and Team Leader

5. On improving systems for maximizing the benefits of ODA for LGUs in coordination with NEDA conducted several interviews with LGU stakeholders and ODA (NEDA, League of Cities. Land Bank and Development Bank of the Philippines). Also, conducted a one day workshop with key stakeholders on the ODA with the support of NEDA. Sent follow up questionnaire to the participants.

6. On mechanisms and programs on maximizing LGU corporate powers to promote local economic growth
6.1 Inception report, a draft study and a final report for the study, program design or strategy as a next step to the study.
6.2 establishing a working relationship with the officials and concerned staff of the BLGD-DILG.
6.3 subsequent discussions and consultation meetings to firm up the outline and content of the Study on LGU Corporate Powers.
6.4 an Inception Report on LGUs Exercise of Corporate Powers
6.5 researches and data gathering on various LGU experiences in the exercise of corporate powers on (i) LGUs experience in the operation of economic enterprises; (ii) LGUs experience in public-private partnership; (iii) LGUs experience in operating public utility; (iv) LGUs experience in inter-local cooperation (LGU initiative); (v) LGUs experience in inter-local cooperation (Congressional initiative); (vi) LGUs experience in corporatization of public utility through LGU initiative; (vii) LGUs experience in corporatization of basic services through Congressional initiative; (viii) LGUs experience in loans and bond flotation
6.6 drafting of Program Design on LGUs Exercise of Corporate Powers in close consultation with DILG.
6.7 series of consultation meetings with BLGD, BLGS, OPDS and BOC re: LGUs Exercise of Corporate Powers.
6.8 drafting of Case Studies on selected models of LGUs Exercise of Corporate Powers.
6.9 revission of Program Design on LGUs Exercise of Corporate Powers.
6.10 program Design on LGUs Exercise of Corporate Powers

7. On the development of the DILG LG Sector Information Systems Strategic Plan for CY 2009-2013
7.1 submission of first draft of the IT Governance and Planning Framework.
7.2 adoption of the Control Objectives for Information related technologies (CobiT). CobiT is an IT governance control framework that is utilized to align IT strategies with organizational goals, manage risk, and assess IT processes.
7.3 consultation meetings with the DILG EDPS Chief to tailor the CobiT framework to one which was more in line with managements instruction to treat the EDPS as if it were a new organization and, thus, more reflective of the institutions focus in planning and organizing its new IT service.

Component B:
Update as of Steering Committee Meeting on 20 Jan 2009:
1. Report being drafted for the development of an improved personal services expenditure policy for LGUs in consultation with CSC.
2. Report being drafted for the review and updating of guidelines on Special Education Fund in consultation with DepED and DILG
3. DMB accepted the report on review of existing release procedures and guidelines to include documentation for Special shares of LGUs on National wealth, Ecozone, VAT and Tobacco Excise in consultation with DOF, DOE and DENR.
4. GPPB-TSO accepted the report on the development of simplified local procurement manual for barangays
5. Report being drafted for the financial management operations of Local Economic Enterprise
6. Report being drafted for the development of an advisory on dealing with surplus and impending deficit in a local govt budget
Completed the following:
1. On development of an improved personal serices expenditure policy for LGUs
1.1 formulation of a survey instrument on personal services expenditures with DBM (ROCS and OPCCB) officials and staff for presention to DBM regional officials prior to its roll-out to LGUs by the DBM regional offices.
1.2 development of a template intended to analyze the responses to the PS questionnaire.
1.3 visit of selected LGUs for key informant interviews.
 Marikina City
 San Jose del Monte City
 Tagaytay City
 Quezon City
 Tacloban City, Leyte Province, Palo, Leyte and Basey, Samar
 Surigao City, Butuan City, Bayugan City, Agusan del Sur Province, and Municipality of Trento, Agusan del Norte Province and Municipality of Tubay,
 San Fernando City (La Union), La Union Province, and municipalities of Bauang and Caba, La Union
 Iloilo City, Iloilo Province, Guimaras Province, and Sta. Barbara, Iloilo
 Tagum City, Davao del Norte and municipalities of Asuncion and Sto. Tomas, Davao del Norte

2. On review and updating of guidelines on Special Education Fund (in consultation with Department of Education and DILG)
2.1 formulation of a survey instrument on size of the SEF and its utilization with DBM officials and staff. (Presented the survey instrument to DBM regional officials prior to its roll-out to LGUs by the DBM regional offices.
2.2 visit of selected LGUs for key informant interviews regarding current practice on utilization of the SEF. LGUs visited:
 Marikina City
 San Jose del Monte City
 Tagaytay City
 Quezon City
 Tacloban City, Leyte Province, Palo, Leyte and Basey, Samar
 Surigao City, Butuan City, Bayugan City, Agusan del Sur Province, and Municipality of Trento, Agusan del Norte Province and Municipality of Tubay
 San Fernando City (in La Union), La Union Province, and municipalities of Bauang and Caba, La Union
 Iloilo City, Iloilo Province, Guimaras Province, and Sta. Barbara, Iloilo
 Tagum City, Davao del Norte and municipalities of Asuncion and Sto. Tomas, Davao del Norte

3. On review of existing release procedures and guidelines to include documentation requirements for Special Shares of LGUs on National Wealth, Ecozone, VAT, and Tobacco Excise in consultation with DOF, DOE and DENR
3.1 providing technical inputs and advisory assistance to the Regional Operations and Coordination Service on remittance procedures and other related matters on the special shares
3.2 Interview of key informants from BIR, MGB, DOE, NTA, and DBM ROs and some local budget officers
3.3 two workshops: one with national government agencies and regional directors/staff of the DBM, and another with LGUs and the different Leagues (Provinces, Cities, and Municipalities)
3.4 report writing

4. On the development of Simplified Local Procurement Manual for Barangays in consultation with concerned LGU
4.1 Review of Literature (October to December 2007
4.2 Research through Consultations (October 2007).
4.3 Consultative Workshop on the Development of a Simplified Local Procurement Manual (SLPM) for Barangays conducted on 28 November 2007 at the Hotel Rembrandt
4.4 Participation in WB Consultative Workshops in Iloilo City and in Manila on Building Capacities of Communities, LGUs, and Civil Society Organizations (CSOs) in Procurement Reforms, including review of the Community-Based Procurement Manual being utilized under the WB-funded Kapitbisig Laban sa Kahirapan  Comprehensive and Integrated Delivery of Social Services (Kalahi-CIDSS) Project of the DSWD (December 2007 to January 2008)
4.5 Field visits to select barangays in Cebu (Visayas), South Cotabato (Mindanao) and Pampanga (Luzon)
4.6 General Assessment Report on Barangay Procurement submitted to GPPB-TSO on 19 June 2008.
4.7 Report on Project Status presented during the ADB TA 4778 Progress Report to Government at the Linden Suites on 17 July 2008
4.8 Presentation to GPPB-TSO of the draft SLPM for Barangays on 01 September 2008.
4.9 Focus Group Discussion/Validation Workshop on the draft SLPM for Barangays in Cebu City on 05 September 2008
4.10 Submission of revised draft SLPM to GPPB-TSO on 17 September 2008
4.11 Presentation of the revised draft SLPM to GPPB-TWG on 19 September 2008

5. On the development Guide to the Financial Management Operations of Local Economic Enterprise (LEE) in consultation with COA and concerned LGUs
5.1 formulation of a survey instrument on local economic enterprises with DBM (ROCS and OPCCB) officials and staff. Presentaion of the survey instrument prior to its roll-out to LGUs by the DBM regional offices
5.2 Visit of selected selected LGUs for key informant interviews on current practice on LEE financial management.
 Marikina City
 San Jose del Monte City
 Tagaytay City (with G. Wright, international consultant)
 Quezon City
 Tacloban City, Leyte Province, Palo, Leyte and Basey, Samar
 Surigao City, Butuan City, Bayugan City, Agusan del Sur Province, and Municipality of Trento, Agusan del Norte Province, and Municipality of Tubay
 San Fernando City (in La Union), La Union Province, and municipalities of Bauang and Caba, La Union (with G. Wright, international consultant)
 Iloilo City, Iloilo Province, Guimaras Province, and Sta. Barbara, Iloilo
 Tagum City, Davao del Norte and municipalities of Asuncion and Sto. Tomas, Davao del Norte

6.On the development of an Advisory on Dealing with Surplus and Impending Deficit in a Local Government Budget
6.1 Visit of selected LGUs for key informant interviews regarding current practice on fiscal surplus/ deficit.
 Marikina City
 San Jose del Monte City
 Tagaytay City (with G. Wright, international consultant)
 Quezon City
 Tacloban City, Leyte Province, Palo, Leyte and Basey, Samar
 Surigao City, Butuan City, Bayugan City, Agusan del Sur Province, and Municipality of Trento,, Agusan del Norte Province, and Municipality of Tubay
 San Fernando City (in La Union), La Union Province, and municipalities of Bauang and Caba, La Union (with G. Wright, international consultant)
 Iloilo City, Iloilo Province, Guimaras Province, and Sta. Barbara, Iloilo
 Tagum City, Davao del Norte and municipalities of Asuncion and Sto. Tomas, Davao del Norte

Component C:
Update as of Project Steering Commitee meeting on 20 Jan 2009:
1. Completed the training program and action plans on revenue mobilization
2. Completed the training study/framework on local asset management
3. SRE web-based application will be enhanced to link the the DILG's LGPMS and BLGF's LGFPMS.
4. Ongoing work on study on local service delivery

Completed the following:
1. On Training Program and Action Plans on Revenue Mobilization
1.1 Discussions on the re-scoped Terms of Reference to ensure a strong link between the TA # 4556 and TA # 4778. Discussions with BLGF on the contents and training modules to be incorporated in the updated Revenue Generation and Resource Mobilization Handbook.
1.2 Obtaining relevant documents, interviews/discussions with concerned officials and staff as the updating of the Revenue Generation and Resource Mobilization Handbook
1.3 finalization of modules of the Revenue Generation and Resource Mobilization Handbook
o Module I  Revenue Generation and Resource Mobilization Framework
o Module II  The Basics of Taxation
o Module III  Real Property and other Land-Based Taxes
o Module IV  Business Taxes and other Related Taxes
o Module V  Regulatory Fees, Service and User Charges
o Module VI  Charges/Receipts from Economic Enterprises
o Module VII  Financial Analysis
o Module VIII  Loans and other Financing Options: Public-Private Partnership
o Module IX  Debt Management
o Module X  Identifying the Appropriate Financing Options
o Module XI  Developing a Revenue Generation and Resource Mobilization Plan

1.4 Finalization of Training Design for the Revenue Generation and Resource, Mobilization Handbook, Trainors Training Manual,
1.5 conduct of Trainors Training for BLGF Central and Regional Offices
1.6 conduct of Seminar-Workshops on Revenue Generation and Resource Mobilization for 9 pilot LGUs in Luzon, Visayas and Mindanao

2. On Training Study/Framework on Local Asset Management
2.1 research on
 Local government financial statements for 2003, 2004 and 2005 from COA records; BLGF Income Classification Scheme and other rules and regulations;
 Local Government Code provisions pertaining to asset management;
 COA rules and regulations governing property management;
 Existing literatures and international practices on local asset management;

2.2 Conduct of seminar/workshop/survey of selected 32 LGUs in the Luzon, Visayas and Mindanao areas, done the tabulation and analysis of the survey results;
2.3 conduct power point presentation briefing before DILG and BLGF officials; and
2.4 submission of power point presentation, and draft Executive Summary to ADB TA 4778 Project officials, DILG and BLGF officials for comments.

3. On Develop proposals for the reform of intragovernmental fiscal relations among different LGU levels
3.1 work plan and survey instrument for beneficiaries (survey instrument for service providers is still being developed)
3.2 Discussions with NSO for the conduct of the study
Geographical Location nationwide
Responsible ADB Officer Reza Anglingkusumo
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Public Management, Financial Sector, & Trade Division, SERD
Timetable
Concept Clearance 17 Jun 2005
Fact-finding 01 Jul 2005 to 04 Nov 2005
Approval 03 Apr 2006
Financing Plan / TA Utilization Top TA Amount
ADB Others Gov Total Approved Amount Revised Amount
$1,800,000.00 $0.00 $775,000.00 $2,575,000.00 $1,800,000.00 $1,719,559.14
 Total Commitment Uncommited Balance Total Disbursement Undisbursed Balance
$1,719,559.14 $80,440.86 $1,719,559.14 $80,440.86
2008 Asian Development Bank

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