May 25, 2024

■  Rimaliza A. Opiña 

The Commission on Audit has advised the city government of Baguio to terminate the time deposit accounts containing accumulated unexpended funds from the Special Education Fund (SEF).

As of Dec. 31, 2023, a total of P187,744,336.47 of SEF are deposited in three high yield accounts, contrary to its purpose that the same should have been used for the operation and maintenance of public schools, construction and repair of school buildings, facilities and equipment, purchase of books and periodicals, and sports development. 

In its audit observation memorandum (AOM) addressed to Mayor Benjamin Magalong, City Treasurer Alex Cabarrubias, Acting City Accountant Freda Jimenez, the city council committee on ways and means, and the Baguio City Schools Division superintendent, the COA has advised the city government to terminate these deposits and inform the Local School Board about the existence of the amount.

The COA reiterated in its AOM that only idle funds may be deposited in high yield savings accounts. For the SEF, the COA said deposits reached over P187M because appropriations in the previous years have not been fully utilized, leaving substantial unexpended balances at the end of each fiscal year.

Also, unexpended balances were not reappropriated in the succeeding years, therefore increasing the SEF but defeating the purpose of why local governments collect an additional one percent from real property taxes for the SEF.

“It appears then that the city government has been appropriating additional one percent tax, the proceeds of which was partially released to the Local School Board for budgeting and a substantial portion invested in time deposit accounts therefore defeating the purpose and objectives of the SEF as specified in Section 272 of the Local Government Code,” the AOM states.

The COA has issued several AOMs advising the LGU to terminate high yield savings accounts using amounts that have already been appropriated.

The COA said depositing unexpended amounts to high yield savings accounts may appear a sound fiscal management system, but this also shows that use of appropriated funds is not fully maximized.