Fund Utilization Analysis on the Mandated Requirements of R.A.

7160:
The Case of Bayawan City, Negros Oriental, Philippines

Dr. Guilbert Nicanor A. Atillo

Abstract

The barangay has a significant role in planning and implementing

government policies, plans, programs, projects, and activities in the grassroots
as such they are given considerable autonomy to manage their affairs and their
financial resources and utilize them at their own discretion, as long as this will
result to the improvement of the welfare of their constituents. In order to fulfill
their mandates and functions as contained in the R.A. 7160 - Local Government
Code, barangays must be equipped with the necessary administrative
capabilities and financial mobilization competencies. Based on this, the study
attempts to analyze important issues on financing of devolved function at the
barangay level with particular focus on fund utilization and program allocation on
mandated requirements as prescribed by R.A. 7160 using the data mining
technique for collecting, searching and analyzing the annual barangay financial
data and reports for FY 2012 – 2014 filed by the 28 barangays in the Bayawan
City Accounting Office as the primary source of information. The study found that
on the average, all of the barangays had a significant 10% to 20% increased on
their annual expenditures for FY 2012 to FY 2014. The increase in their spending
does not always relate to their performance in the delivery of basic services to
their community; further results reveals that most barangay are falling short of
expectations, mainly because of financial constraints. Notable recommendations
include that barangays could perhaps develop a new local taxes collection
scheme in order to have a continual increase of its annual income and not to rely
merely on the Internal Revenue Allotment as the major source of income from
the City government.

Keywords: barangay fund utilization, mandatory requirements R.A. 7160,

Bayawan City, barangay expenditures, barangay

Introduction

The Barangay as a political unit plays an important role in planning and

implementing government policies, plans, programs, projects, and activities in the
community. To be competitive and profitable, the barangays are given
considerable autonomy to manage their affairs, explore any possibilities of
raising their financial resources and utilize them at their own discretion, as long
as this will result to the improvement of the welfare of their constituents. In order
to fulfill their mandates and functions as contained in the Local Government
Code, Barangays must be equipped with the necessary competencies, not only
in terms of administrative capabilities but also on financial resources which are
necessary for the provision of basic technical and physical facilities. However,

1
there has not been much research conducted to establish the relationship
between barangay financial management practices and success measures of its
performance.

Cuaresma, (2003) stated that the key concern is weak public financial
management that hampers the implementation programs at the local level.
Likewise in the study conducted by the Department of Interior and Local
Government revealed that the development opportunities in practicing fiscal
governance and good financial management are missing in the barangays level.
This is because they are not spending their funds for programs, activities, and
projects properly towards economic growth. Also, there is a need to improve
external audit and oversight as the lack of scrutiny of audit reports compromises
effectiveness of the audit function. The lack of transparency makes it difficult for
civil society to hold government accountable. These calls for the key reforms for
the government to address financial risks to eliminate inefficient, and irrelevant
programs and projects, and re-channel funds to priority social programs (Nigbur,
2010).

In order to fulfill their mandates and functions as contained in the Local

Government Code, Barangays must be equipped with the necessary
competencies, not only in terms of administrative capabilities but also on financial
resources which are necessary for the provision of basic technical and physical
facilities. However, there has not been much research conducted on the effective
monitoring on the efficiency of the Barangay fund utilization as well as to assess
its performance in attaining prescribed goals and objectives. Hence, this study
aims to gain insight with respect of the need to address scarcity of evidenced-
based activities on barangay financial management practices. It will analyze and
evaluate important issues on financing of devolved function at the barangay level
with particular focus on fund utilization and program allocation on mandated
requirements as prescribed by R.A. 7160. Finally, this study gives a heads-up
overview on how the barangay finances should be given a proper allocation that
will result to a better and faster development of the smallest unit of society
towards a greater perspective.

Research Design and Methodology

Data mining technique was used for collecting, searching and analyzing
annual financial data and reports for FY 2012 – 2014. Information from the
Accounting and Budget Office of Bayawan City, Negros Oriental filed by the 28
barangays were used as first-hand information on the analysis of the fund
utilization on the mandated requirements as prescribed by RA 7160 with
permission from the city government authorities. Moreover, the study does not
prescribe how barangays should conduct their policy and planning processes,
but it will show the relationships of the barangay financial profile to their budgeted
expenditures on the mandatory requirements as prescribe in R.A. 7160 leading
to effective basic delivery services.

2
 Finally, the study is based on the concept public budgeting as a tool in an
effective fund resources allocation that will have a great impact on the
accomplishment of programs and projects and delivery of basic services to
barangay constituency.

Result

A. Financial Profile of the Barangays

Total Barangay Income for FY 2012 - 2014

7,000,000.00
6,000,000.00
5,000,000.00
4,000,000.00
3,000,000.00
2,000,000.00
1,000,000.00
0.00
BANAY-BANAY

UBOS
BANGA
BOYCO
BUGAY

DAWIS

MINABA

NARRA

POBLACION

VILLAREAL
CANSUMALIG

MALABUGAS

NANGKA

SAN MIGUEL

VILLASOL
KALUMBOYAN

MANDU-AO

TAYAWAN
SAN ISIDRO
SAN JOSE

SUBA
TABUAN
SAN ROQUE

TINAGO
ALI-IS

MANINIJON
KALAMTUKAN

PAGATBAN

2012 2013 2014

Figure 1. Total Barangay Income FY 2012 - 2014

Barangay income is derived from the internal revenue allotment, local

taxes, other sources of income and subsidy from the local government unit. Out
of the 28 barangays, 8 barangays namely Banaybanay, Dawis, Nangka, San
Jose, San Roque, Tayawan, Tinago, and Villareal declared a decreased of -1 to -
30 % in their total actual income due to poor collection of real property tax that
resulted to drop in revenues. Meanwhile, the continuous annual income growth of
the majority of the barangays in Bayawan City were attributed to the effective tax
collection system employed that resulted to the upsurge on the collection of real
property taxes and business taxes, taxes fishing industry, growing demand of
both agricultural and aquamarine products and the subsidy amounting to P
500,000.00 given by the city government. Finally, one of the primary factors that
contribute to the increasing and decreasing of the barangay annual income is the
effective tax administration and tax collection system employed by the barangays
which greatly influences the overall profit numbers.

3
B. Budgeted Expenditures on the Mandatory Requirements as Prescribe in
R.A. 7160
This part of the presents the estimated expenditures on Economic
Development Fund, Sangguniang Kabataan (SK) Fund, Barangay Disaster Risk
Reduction and Mitigation Fund, Juvenile Justice and Welfare Fund, Gender and
Development, Senior Citizens and Persons with Disabilities, Establishment of
Plant Nursery, Daycare Services, Health and Nutrition Services, Peace and
Order Program, Personal Services, MOOE and Capital Outlay.

Expenditures on Economic Development Fund

1,400,000.00
1,200,000.00
1,000,000.00
800,000.00
600,000.00
400,000.00
200,000.00
0.00
BUGAY
BOYCO

MINABA

NARRA

UBOS
BANAY-BANAY
BANGA

CANSUMALIG

NANGKA

POBLACION

VILLAREAL
TAYAWAN
MALABUGAS
MANDU-AO
DAWIS

SAN MIGUEL

VILLASOL
KALUMBOYAN

SAN ISIDRO

SAN ROQUE
SUBA
SAN JOSE

TABUAN

TINAGO
ALI-IS

KALAMTUKAN

MANINIJON

PAGATBAN

2012 2013 2014

Figure 2. Expenditures on Economic Development

It is interesting to note that majority of the barangays both having an

increasing and decreasing expenditures for their economic development
activities for FY 2012 – 2014, there were 10 out 28 of barangays have decreased
their economic development expenditures namely: Banga (-3.74%), Boyco (-
2.08%), Dawis (-7.13%), Kalamtukan (-16.80%), Kalumbuyan (-25.87%),
Pagatban (-24.96%), Poblacion (-60.45%), San Miguel (-34.47%), Tinago(-
1.66%), and Villasol (-7.83%). For FY 2014, eight (8) barangays specifically
Barangays Banaybanay (-3.14%), Bugay (-38.23%), Cansumalig (-10.36%),
Malabugas (-37.62%), Mandu-ao (-41.93%), Minaba (-41.80%), Nangka (-
0.80%), Narra (-33.92%), and Tabuan (-44.16) decreased their economic
development expenditures. The decreased was the result of poor project
planning and PAPs prioritization made by some barangays. Furthermore, this
would mean that these barangays does not consider economic development and
becomes even more problematic when these economic development allocations
are disaggregated into PAPs, which raises questions on whether or not

4
barangays really understand what economic development means and what
development outcomes it should achieve (Layug and Pantig, 2009).
Meanwhile, other barangays like a significant increase for economic
development spending for barangays Boyco (214.28%), Kalamtukan (129.29%),
Pagatban (126.44%), and Ubos (99.93%) revealed that increased in their
economic development spending were mainly for barangay beautification project,
road gravelling maintenance and repair, electrical, installation of basketball court,
barangay administration office improvement, provincial gravelling, installation of
billboards and barangay street signs, construction of new barangay hall, concrete
fencing of barangay site perimeter, Barangay Pangkabuhayan Project, rent a
tent, assistance to entrepreneur, trainings, orientation and other activities to
livelihood, improvement of ecotourism project, improvement of barangay office
partition, purchase of lot (barangay site), building construction and other capital
outlay projects.

Expenditures on Sangguniang Kabataan (SK) Fund

1800000 2012 2013 2014

1600000
1400000
1200000
1000000
800000
600000
400000
200000
MANIN…

0
KALU…
KALA…

MAND…

TAYA…
POBLA…
SAN…
SAN…
SAN…
SAN…
BANA…

MALA…

VILLA…
VILLA…
CANS…

PAGA…
BOYCO
BANGA

BUGAY

MINABA

NARRA

UBOS
Barangay

NANGKA
DAWIS

SUBA
TABUAN

TINAGO
ALI-IS

Figure 3. Expenditures on SK Fund

Barangays Banaybanay, Kalamtukan, Pagatban, and Tayawan increased

their SK expenditures from 100 to 200 percents. While other barangays such as
there were four (4) barangays namely: Poblacion (-33.75), San Roque (-16.00),
Tabuan (-12.91) and Tinago (-10.82) and the majority of the barangays
decreased its annual Sangguniang Kabataan (SK) expenditures to almost 90
percent from their expenditures due to the pending bill passed by Congress of
the Philippines for the abolition of SKa that seeks to prevent members of the SK
youth council from holding positions of government that left all SK positions
vacant and prevented a re-election until a further date. The same reasons
moaned by the Barangay Officials of Bayawan City.

5
 Expenditures on BDRRM
300,000.00
250,000.00
200,000.00
150,000.00
100,000.00
50,000.00
0.00

MINABA
BANGA

BUGAY

NARRA

UBOS
BANAY-BANAY

BOYCO

NANGKA

POBLACION

VILLAREAL
CANSUMALIG

MANDU-AO

TAYAWAN

VILLASOL
MALABUGAS

SAN JOSE
SAN MIGUEL
DAWIS

KALUMBOYAN

SAN ISIDRO

SAN ROQUE
SUBA
TABUAN

TINAGO
ALI-IS

KALAMTUKAN

MANINIJON

PAGATBAN
2012 2013 2014

Figure 4. Expenditures on Barangay Disaster Risk Reduction Mitigation

Most Barangay Disaster Risk Reduction and Management expenditures were

very low even if there was a 30% increase compared to the previous spending. In
FY 2013 – 2014, majority of the barangays reduce again their BDDRM
expenditures to almost 10% compared since most of the barangays do not have
barangay disaster risk reduction management plan that limits their budgeting.

Expenditures on Juvenile Justice and Welfare

60,000.00
50,000.00
40,000.00
30,000.00
20,000.00
10,000.00
0.00
MINABA

NARRA
BANAY-BANAY
BANGA
BOYCO
BUGAY

NANGKA

UBOS
POBLACION

VILLAREAL
CANSUMALIG

TAYAWAN
MALABUGAS
MANDU-AO

SAN JOSE
SAN MIGUEL

VILLASOL
DAWIS

KALUMBOYAN

SAN ISIDRO

SAN ROQUE
SUBA
TABUAN

TINAGO
ALI-IS

KALAMTUKAN

MANINIJON

PAGATBAN

2012 2013 2014

Figure 5. Expenditures on Juvenile Justice and Welfare

6
 In general, majority of the barangays declared an increased in their annual
expenditures on juvenile justice and welfare in order to promote youth and
children’s right. They also device programs, activities and projects for the
children and youth of their barangays that focused on juvenile delinquency
prevention, juvenile welfare and protection and due to the growing reports and
cases of juvenile delinquency in their communities.

Expenditures on GAD
300,000.00

250,000.00

200,000.00

150,000.00

100,000.00

50,000.00

0.00
BANAY-BANAY
BANGA

BUGAY

MINABA

NARRA
BOYCO

SAN MIGUEL

UBOS
VILLAREAL
CANSUMALIG
DAWIS

NANGKA

POBLACION

VILLASOL
TAYAWAN
MALABUGAS
MANDU-AO

SAN JOSE
KALUMBOYAN

SAN ISIDRO

SAN ROQUE
SUBA
TABUAN

TINAGO
ALI-IS

KALAMTUKAN

MANINIJON

PAGATBAN

2012 2013 2014

Figure 6. Expenditures on Gender and Development

Barangays Nangka (87.00%); San Miguel (1840%); Ubos (563.60%); and

Villasol (137.81%) have increased its spending on GAD related projects and
programs specifically on gender sensitivity training project and community-based
monitoring system (CBMS) in FY 2014. The largest expenses went to the
construction of a waiting shed, procurement of sound system and trainings for
economic empowerment of community women on basic needs, livelihood and
skills development, and training sessions on gender sensitivity, anti-VAWC
awareness campaign. While majority of the barangays with low GAD
expenditures can be attributed to these constraints and issues: 1) no GAD focal
person that can craft the GAD plan and budget, and 2) the deliberation and
decision-making is done by the barangay captain and the barangay council
because there are no solid women’s organizations in the barangay so there is no
participation by women’s groups in the GAD planning and budgeting process.

7
 Expenditures on Senior Citizen and PWD
60,000.00

50,000.00

40,000.00

30,000.00

20,000.00

10,000.00

0.00
BANAY-BANAY
BANGA

BUGAY

MINABA

NARRA

POBLACION
BOYCO

UBOS
KALUMBOYAN
CANSUMALIG

NANGKA

SAN MIGUEL

VILLAREAL
VILLASOL
DAWIS

MANDU-AO
MALABUGAS

SAN ISIDRO

SUBA

TAYAWAN
SAN JOSE

SAN ROQUE

TABUAN

TINAGO
ALI-IS

KALAMTUKAN

MANINIJON

PAGATBAN
2012 2013 2014

Figure 7. Expenditures on Senior Citizen and PWDs

Barangays Boyco and Pagatban has the least expenditures on programs and
projects for Senior Citizens and PWD due to the fact that these barangays do not
have concrete plan and programs. On the other hand, Barangays Banga,
Poblacion, San Miguel, San Isidro, Villasol, and Kalamtukan increased its budget
to 200 to 300 percent by providing medical assistance, mutuary assistance and
other benefits as well as projects geared for the care of the elderly.

8
 Expenditures on the Establishment of Plant Nursey
200000

100000

0
2013 2014
ALI-IS - BANAY-BANAY - BANGA - BOYCO -
BUGAY - CANSUMALIG - DAWIS - KALAMTUKAN -
KALUMBOYAN - MALABUGAS 20,000.00 MANDU-AO - MANINIJON -
MINABA - NANGKA - NARRA - PAGATBAN -
POBLACION - SAN ISIDRO - SAN JOSE - SAN MIGUEL -
SAN ROQUE - SUBA - TABUAN - TAYAWAN -
TINAGO - UBOS - VILLAREAL - VILLASOL -

Figure 8. Expenditures on Establishments of Plant Nursery

Only five (5) barangays namely: Cansumalig, Malabugas, Nangka, Narra,

and San Isidro allocated budget for the establishment of plant nursery. While
most of the barangays have no expenditures on the establishment of a plant
nursery because it was not their priority and the City Government have been
constructing and maintaining nurseries to all rural barangays using the City’s
budget.
Ironically in FY 2014, Barangay Nangka has the largest expenditures
amounting to P 130,000.00 that established a barangay nursery in their
jurisdiction. This moved was triggered by the indiscriminate cutting of trees in
their barangay due to road widening. The barangay also adopted the Barangay
Forest Program as a strategy to support the National Greening Program (NGP)
of the government through a Memorandum of (MOA) Agreement with the City
Environment and Natural Resources Office (CENRO) to successfully implement
the project in the barangay and the city.

9
 Day Care Services Expenditures

90000
80000
70000
60000
50000
40000
30000
20000
10000
0
BANAY-BANAY
BANGA

BUGAY

MINABA

NARRA

POBLACION
BOYCO

UBOS
VILLAREAL
KALUMBOYAN
CANSUMALIG

MALABUGAS

NANGKA

SAN ISIDRO

SAN MIGUEL

TAYAWAN

VILLASOL
DAWIS

MANDU-AO

SAN JOSE

SUBA
TABUAN
SAN ROQUE

TINAGO
ALI-IS

KALAMTUKAN

MANINIJON

PAGATBAN
2012 2013 2014

Figure 9. Expenditures on Day Care Services

Barangay Villasol, Suba, San Roque, San Miguel, Nangka, and

Banaybanay has zero (0) and/or none day care services expenditures for FY
2012 – 2014, this due to the following reasons: 1) that “day-care workers were
appointed by the barangay captains were co-terminus with the barangay captains
and that they were fired if the barangay captain who appointed them loses in the
election”; 2) there was no budget allocated for the conditions of the centers in
terms of facilities that need attention for the maintenance of the physical facilities
like classrooms, space for outdoor activities, comfort rooms and related matters;
and 3) salaries of the daycare workers and maintenance of the daycare centers
were shouldered by the City Government, thus, the aforementioned barangays
need not spend for such services. However, barangays Tayawan, Dawis,
Tabuan, Banga, Maninijon, Mandu-ao, and Kalumbuyan had expenditures for the
honorarium of the day care teachers and supplies and materials needed by
daycare centers situated in other sitios.

10
 Expenditures on Health and Nutrition Services
140,000.00
120,000.00
100,000.00
80,000.00
60,000.00
40,000.00
20,000.00
0.00

BANAY-BANAY
BANGA

BUGAY

MINABA

NARRA
BOYCO

NANGKA

UBOS
POBLACION

SAN MIGUEL

VILLAREAL
CANSUMALIG
DAWIS

MANDU-AO

TAYAWAN

VILLASOL
MALABUGAS

SAN JOSE
KALUMBOYAN

SAN ISIDRO

SAN ROQUE

TINAGO
ALI-IS

SUBA
TABUAN
KALAMTUKAN

MANINIJON

PAGATBAN
2012 2013 2014

Figure 10. Expenditures on Health and Nutrition Services

Both Barangays Tinago and San Jose, have no health and nutrition
expenditures. Barangay Cansumalig has a significant dropped from P80,000.00
to P 1,800.00 on their health expenditures from FY 2012 to FY 2014. The
respondents affirmed that their expenditures depend on the extent of the health
problems in their barangays. While Barangay Banga and Maninihon increased
their health and nutrition services expenditures because they had implemented
the feeding program for their daycare.

250,000.00
Expenditures on Peace and Order Program
200,000.00

150,000.00

100,000.00

50,000.00

0.00
BUGAY
BANGA
BANAY-BANAY

BOYCO

MINABA

NARRA

POBLACION
NANGKA

UBOS
CANSUMALIG
DAWIS

SAN MIGUEL

VILLAREAL
KALUMBOYAN

TAYAWAN

VILLASOL
MALABUGAS
MANDU-AO

SAN ISIDRO

SUBA
SAN JOSE

TABUAN
SAN ROQUE

TINAGO
ALI-IS

KALAMTUKAN

MANINIJON

PAGATBAN

2012 2013 2014

Figure 11. Expenditures on Peace and Order Program

11
 Barangays Ali-is, Bugay, San Miguel, Suba, Tinago, Narra, Kansumaling,
San Roque and Ubos has very low to zero expeditures on related programs from
CY 2012 to 2014 due to the lack of knowledge and awareness of the existence
of the Barangay Peace and Order Council was considered a serious
administrative problems; lack of knowledge regarding the operation of the
Barangay Peace and Order Council (BPOC); no coordination among BPOC
members; and the absence of incentives. Meanwhile, Barangays Banga,
Kalamtukan, Mandu-ao, Maninijon, Nangka, Tayawan and Villareal had a
considerable increased on their Peace and Order Programs expenditures by
investing in radio communication devices which is an important asset in
monitoring and responding to urgent conditions and in maintaining peace and
order situation of their barangays.

Expenditures on Personal Services

3,000,000.00
2,500,000.00
2,000,000.00
1,500,000.00
1,000,000.00
500,000.00
0.00
BANGA

BUGAY

MINABA

NARRA
BOYCO

UBOS
BANAY-BANAY

CANSUMALIG

NANGKA

POBLACION

VILLAREAL
MALABUGAS
MANDU-AO

TAYAWAN
SAN JOSE

VILLASOL
DAWIS

KALUMBOYAN

SAN ISIDRO

SAN MIGUEL
SAN ROQUE
SUBA
TABUAN
ALI-IS

MANINIJON

TINAGO
KALAMTUKAN

PAGATBAN

2012 2013 2014

Figure 11. Expenditures on Personal Services

The barangay can appropriate not more than 55% of the total annual
income for personal services – which include the honorarium/salary provided for
elected officials and corresponding staff such as the barangay treasurer and
secretary. Almost all barangays had 10% to 50% increased in their personal
expenditures for the increase in honoraria and hiring additional barangay
personnel.

12
 2,500,000.00
2012 2013 2014
2,000,000.00

1,500,000.00

1,000,000.00

500,000.00

0.00
BANAY-BANAY

BUGAY
BANGA

MINABA

NARRA

POBLACION
BOYCO

UBOS

VILLASOL
CANSUMALIG

MALABUGAS

NANGKA

SAN MIGUEL

VILLAREAL
DAWIS

KALUMBOYAN

MANDU-AO

SAN ISIDRO

SUBA
TABUAN
TAYAWAN
SAN JOSE

SAN ROQUE

TINAGO
ALI-IS

KALAMTUKAN

MANINIJON

PAGATBAN
Figure 12. Expenditures on MOOE

There is a significant decreased on MOOE expenditures for the five

barangays specifically Cansumalig (-6.36%), Dawis (-16.49), Kalamtukan (-
53.78%), Kalumbuyan (-24.88%), Malabugas (-30.79%) and San Isidro (-5.18%)
from their previous MOOE expenses. Similarly, in FY 2013 – 2014, Barangays
Al-is (-37.92), Bugay (-2.19), Dawis (-22.98), Mandu-ao (-9.93) Minaba (-61.92),
Narra (-28.64), Poblacion (-25.44), San Jose (-45.38), San Roque (-36.06), Suba
(-21.58), Tinago (-3.00) and Villasol (-16.21) decrease their MOOE expenditures.
One of the main reason identified by the respondents, firing of some barangay
employees and cross-cutting measures employed by the barangays.

1400000
1200000
1000000
800000
600000
400000
200000
0
Barangay
ALI-IS

BOYCO

MANINIJON

NANGKA

SAN JOSE
SAN MIGUEL
DAWIS

MALABUGAS
MANDU-AO

NARRA

SAN ISIDRO

SAN ROQUE
SUBA
BUGAY

KALAMTUKAN

PAGATBAN

VILLASOL
MINABA

POBLACION
BANGA

TABUAN
CANSUMALIG

KALUMBOYAN

TINAGO
UBOS
VILLAREAL
BANAY-BANAY

TAYAWAN

2012 2013 2014

Figure 13. Expenditures on Capital Outlay

13
 Out of the 28 barangays there were four (4) barangays whose capital
outlay expenditures surge to 80% to 300% namely: Banaybanay (83.94%),
Minaba (107.40%), San Isidro (333.65%), Suba (85.46%), Al-is (111.68%), Narra
(179.92%), San Jose (228.09%) and Villasol (201.40%). The reason for the
increasing expenditures includes construction of new roads, canals, and covered
courts all of which were included in their annual Annual Procurement Plan.
On the other hand, there were nine (9) barangays in FY 2012 – 2013
namely Al-is (-67.56%), Boyco (-2.08%), Cansumalig (-12.50%), Dawis (19.38%),
Kalumbuyan (-21.42%), Malabugas (-33.54%), Narra (-62.08%), Tinago ( -
4.76%), and Villasol (-47.55%) and similarly for FY 2013 – 2014, five (5)
barangays specifically Nangka (-6.66%), Pagatban (-14.03%), Suba (-13. 88%),
Ubos (-17.09%) and Villareal (-15.49%) decreased their capital outlay expenses
due to poor infrastructure planning.

Discussion

On the average, all of the barangays had a significant 10% to 20%

increased on their annual expenditures for FY 2012 to FY 2014. The increase in
their spending does not always relate to their performance in the delivery of basic
services to their community. According to the study conducted by Layug, [Link]
(2010), barangays mostly in the rural areas are still stuck into quagmire of
incompetence and inefficiency, unable to deliver better basic services, if at all,
and being complacent on the status quo because of policy, institutional, financial
binding constraints undergirded by political, social, economic and cultural factors.
Unless and until barangays perform better in the provision of basic services,
decentralization defeats its very purpose – that is, devolving powers to
barangays inorder to empower them, and in turn, deliver goods and services and
empower the people. Most are falling short of expectations, mainly because of
financial constraints. Likewise, the same sentiments were noted that policy
intervention is essential to enhance the main purpose of decentralization.
In summary, the barangay spending patterns whether increasing or
decreasing has both either positive or negative socio - economic impact. An
increase in barangay expenditures on social and economic infrastructure can be
growth enhancing and beneficial to the community. According to Olukayode,
(2009) government expenditure no doubt is an important instrument for a
government to control the economy of a nation. Economists have been well
aware of the effects in promoting economic growth. Anyway, the general view is
that barangay expenditure notably on social and economic infrastructure can be
growth enhancing although the financing of such expenditure to provide essential
infrastructural facilities including transport, electricity, telecommunication, water
and sanitation, waste disposal, education and health can be growth retarding.
On the other hand, the relationship between barangay spending and
economic development, thus, has been a controversial issue as it has led to the
establishment of two positions. One position says that more barangay spending
spurs economic development while the other states that a negative relationship
exists between barangay spending and economic development. Various studies,

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have supported these two positions. According to the Keynesian model,
increase in government expenditure leads to higher growth while the neo-
classical came forth with an opposing view that fiscal policy does not have any
effect on the growth of national output. However, recent literature has argued that
government fiscal policy mitigate against failure arising from market inefficiencies
(Abu, et al, 2010). ). Barro (1990) investigated and found that government
expenditure impacts economic growth and that government activity determine the
direction of economic growth (Barro & Sala-i-Martin, 1990).
Though, many economists would agree that there are instances when
lower levels of government spending would enhance economic growth, in some
situations higher levels of government spending would be desirable. But, the
question as to what the optimal size of government should be for the economy to
derive the maximum benefit still remains unanswered.

Conclusion

The barangay spending patterns whether increasing or decreasing has

both/either positive or negative socio - economic impact. An increase in barangay
expenditures on social and economic infrastructure can be growth enhancing and
beneficial to the community. And when barangay spending is zero or below,
there will be very little social and economic development because of the difficulty
enforcing contracts, protecting property and developing an infrastructure.

References

Abu, O.M.G., Sanni, L.O. Erondu, E.S and Akinrotimi, O.A. (2010). Economic
Viability of Replacing Maize with Whole Cassava Root Meal in the Diet of
Hybrid Cat-Fish. Agricultural Journal, 5: 1-5.

Barro, R. J. (1990). Government spending in a simple model of endogeneous

growth. Journal of political economy, 98(5, Part 2), S103-S125.

Barro, R. J., & Sala-i-Martin, X. (1990). Economic growth and convergence

across the United States (No. w3419). National Bureau of Economic
Research.

Cuaresma, J. (2003). Transforming local finance. In Introduction to public

administration in the Philippines.

Layug, A.S., Pantig, IM. T., Bolong, L.E. and Lavado. R.F.(2009). Do Barangays
Really Matter in Local Services Delivery?: Some Issues and Policy
Options, Philippine Journal of Development Number 67, Second
Semester 2009 Volume XXXVI, No. 2
Nigbur, Tobias. (2010). Francis X. Diebold, Neil A. Doherty, and Richard J.
Herring: The known, the unknown, and the unknowable in financial risk
management. Financial Markets and Portfolio Management.

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Olukayode, M. E. (2009): Does Government Spending Spur Economic Growth in
Nigeria? MPRA paper No. 17941.

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