PERFORMANCE CHALLENGE FUND: OVERVIEW AND UPDATE

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1 PERFORMANCE CHALLENGE FUND: OVERVIEW AND UPDATE AUSTERE A. PANADERO Undersecretary for Local Government Department of the Interior and Local Government

2 FLOW OF PRESENTATION 1. Performance-Based Incentive Policies Performance-Based Incentive Policy Presidential Instruction Creating an Incentive System for LGUs to Support National Thrust and Priorities GAA 2011-P500M for PCF 2. Overview on Performance Challenge Fund 3. Implementation Update and Status 4. Our Vision and Challenges

3 PERFORMANCE-BASED INCENTIVE POLICIES FOR THE PHILIPPINES

4 PERFORMANCE-BASED INCENTIVE POLICY FOR THE PHILIPPINES (APPROVED BY THE DEVELOPMENT BUDGET COORDINATING COMMITTEE (DBCC) ON FEB 20, 2009) PBIP is an incentive framework to rationalize national government inter-governmental fiscal transfers to LGUs towards improving overall LGU performance in governance and delivery of basic services PBIP seeks improvement on LGU performance by linking incentives to the achievement of a set of performance targets

5 PRESIDENTIAL DIRECTIVE CREATING AN SYSTEM FOR LGUS ADHERENCE TO NATIONAL THRUST AND PRIORITIES (18 JANUARY 2011 ) NEDA, DILG, DA, and DTI were directed to create a system of incentives (e.g. grants, concessional loans) and disincentives to ensure that LGUs local projects are aligned with national priorities

6 GAA 2011 SPECIAL PROVISION P500M appropriated for Performance-Based Challenge Fund under Local Government Performance Management Program to cover financial subsidy to qualified LGUs The Fund shall be used for the implementation of the priority projects of the national government in order to achieve the MDG, maintain core road network to boost tourism and local economic development and comply with Philippine Disaster Risk Reduction and Management Act of 2010 and Solid Waste Management Act of DILG shall submit to DBM, House Committee on Appropriations and Senate Committee on Finance report on financial and physical accomplishments or post on DILG website, on a quarterly basis.

7 OVERVIEW ON PERFORMANCE CHALLENGE FUND AND SEAL OF GOOD HOUSEKEEPING

8 PERFORMANCE CHALLENGE FUND: AN INCENTIVE FOR TRANSPARENCY AND ACCOUNTABILITY Financial subsidy facility to stimulate local governments to put premium on performance particularly on the areas of transparency and accountability in order to avail themselves of financial support to jumpstart and sustain local economic development initiatives in their localities. Tapat na Palakad, Bayang Maunlad Transpare nt Accountabl e LGUs Attainment of MDGs Local Economic Development Disaster/Climate Change resiliency

9 PERFORMANCE CHALLENGE FUND An incentive fund to LGUs which comes in the form of counterpart funding for Local Development Projects in the Annual Investment Program (AIP) and funded out of the 20% Local Development Fund (LDF) consistent with national goals and priorities

10 SEAL OF GOOD HOUSEKEEPING: PCF ELIGIBILITY CRITERIA Open to all provinces, cities and municipalities that passed Seal of Good Housekeeping focused on: Sound Fiscal Management highlighting the absence of adverse COA Opinion on LGU financial statements Transparent and Accountable Governance putting value on the Full Disclosure Policy

11 TARGET COVERAGE FOR 2011 Target LGUs Total Number of LGUs Target Number of Recipients (20%) Amount of PCF Subsidy Municipalities 1, P1M Cities P3M Provinces P 7M Total 344 LGUs

12 NG-LGU COUNTERPARTING SCHEME LGU Level Maximum PCF Subsidy Minimum LGU Counterpart Minimum Total Project Cost Province P 7 Million P 7 Million P 14 Million City P 3 Million P 3 Million P 6 Million Municipality P 1 Million P 1 Million P 2 Million counterpart sharing scheme - PCF shall match the investment of the eligible LGU up to a maximum amount based on the LGU level

13 ELIGIBLE PROJECTS Project aligned to the achievement of the following national government thrust and priorities: Attainment of MDGs (e.g. school buildings, rural health units and health centers, birthing facilities, water and sanitation system, farm-tomarket roads, housing and settlements) Local Economic Development (e.g. local roads and bridges, tourism facilities, irrigation systems, post harvest facilities, cold storage facilities, ports and wharves and other economic infrastructures and growth enhancing projects such as market, slaughterhouses, and water supply system) Adaptation to Climate Change and Preparedness for Disasters (e.g. flood control, reforestation, solid waste management facilities, storm drainage, dikes and related flood protection measures, slope protection, evacuation centers, rain water collector, early warning and devices and rescue equipment).

14 Procedures for Accessing Fund Assessment on Seal of Good Housekeeping Application and Review of Project Proposals Approval and Release of PCF to LGUs All Targe t LGUs Criteria for Assessment 1. Compliance to Full Disclosure Policy 2. Adherence to COA Rules and Regulation s No adverse COA findings LGUs with Seal of Good House keeping Review Criteria: 1. Convergen ce with national developme nt goals and priorities 2. Complianc e to PCF Requirements LGUs which qualify for grant Provinces P7M Cities P3M Municipalities P1M April-June 2011 June-July 2011 July-Sept 2011

15 IMPLEMENTATION UPDATES In 2010, 30 LGUs which passed the SGH were able to avail of PCF LGU recipients were scattered nationwide, leaving Regions III, IV-B and XII w/o recipients. 7 LGUs converged with NAPC focus areas PCF-funded projects support/provide the supply side of Conditional Cash Transfer (CCT) PCF generated substantial amount of LGU funds to be aligned with national priorities Currently, done with 2011 Assessment on SGH for 1 st batch of LGUs (4 th -6 th class cities and 4 th - 5 th class municipalities) with around 69 nominees

16 st 15 PCF-Recipients Region I *Santol, La Union Construction of Santol Development Center Region V *Sto. Domingo, Albay RHU Birthing Facility Expansion Project *Mobo, Masbate Construction of 2-Classroom School Building Region IV-A *Pitogo, Quezon Concreting/Rehabilitation of Brgy. Road Region VI *Balete, Aklan Farm-to-Market Road Rehabilitation *Anilao, Iloilo Livelihood Program Region VII *Catigbian, Bohol Development of Abatan River *Balilihan, Bohol Provision of Potable Water Supply CARAGA *San Agustin, Surigao del Sur Water System Region X *Naawan, Misamis Oriental Urban Road Dev t Construction of 1Km Municipal Street *Damulog, Bukidnon Rehabilitation of existing water system *Clarin, Misamis Occidental Construction of Municipal Beach ARMM *Datu Paglas, Maguindanao Public Terminal Region IX *Leon B. Postigo, ZDN Rehabilitation of Municipal Health Center *Tampilisan, ZDN LGU Training Center

17 nd 15 PCF-Recipients Region I *Alilem, Ilocos Sur Improvement of Abatar-Daddaay Proper to Market Road CAR *Banaue, Ifugao Construction of Solid Waste Management System *Lagawe, Ifugao Ecological Waste Management Program Region IV-A *Mataasnakahoy, Batangas Improvement and Expansion of Municipal Health Center Region VII *Maribojoc, Bohol Integrated Resource and Mgmt. Program *Amlan, Negros Occidental Establishment of Agri-Vocational Technical High School Center Region X *Calamba, Misamis Occ. Improvement and Rehab of Rosario Neri Street Municipal Road and Rehab of Brgy. Road Region II *Quezon, Isabela Sanitary Landfill (Phase I) *Saguday, Quirino Construction of 100 sq.m. Open-Air Market Bldg. Region V *Camaligan, Camarines Sur Livelihood Project Region VII *Kawayan, Biliran Break Water Sea Port REGION XI *Dujali, Davao del Norte Development of Municipal Public Market CARAGA *San Jose, Dinagat Island Construction of Permanent Structure Seaport Facility Phase I *Cagwait, Surigao Del Sur Concreting and Re-blocking of Narra Road *Carrascal, Surigao Del Sur Water System

18 PCF funded-projects of the 30 LGU-Recipient ranges from Attainment of MDGs Birthing Facilities Education Facilities (Classrooms) Improvement of Municipal Health Centers Potable Water Supply Systems Expansion of Agri-Vocational Technical High School Local Economic Development Preparing for Disaster and Climate Change Farm to Market Roads Construction of Public Markets Rehabilitation of Barangay Roads Solid Waste Management & Eco-Tourism Park Shrimp Paste Processing Plant Public Transport Terminal LGU Training Center Construction of Seal Wall and Flood Control System Sanitary Landfill Ecological Solid Waste Management Facilities

19 INITIAL RESULTS OF ASSESSMENT (2011) FIRST ROUND (4 TH -5 TH CLASS CITIES & 4 TH 6 TH CLASS MUNICIPALITIES) SGH Criteria No COA adverse opinion Full disclosure of local budget and finances, bids and public offerings in all modes or in Web + conspicuous place within public buildings or print media 1 st Batch of Nominees for 2011 Region No. of Cities No. of Municipalities I 3 22 II 0 9 III 2 6 IV-A 0 3 IV-B 0 1 V 0 0 CAR 1 1 VI 0 4 VII 0 2 VIII 0 1 IX 0 2 X 0 0 XI 1 0 XII 1 0 CARAGA 0 10 ARMM 0 0 TOTAL 8 61

20 ASSESSMENT ON SGH FOR 2011 Fairly good performance No difficulty in disclosing local budget and finances, bids and public offerings Difficulty in Passing In full disclosure, LGUs have difficulty in posting in all three modes Web + conspicuous place within public buildings or print media

21 OUR VISION Scale-up performance incentive system Bundle programs and projects to capacitate LGUs to achieve development agenda and put together a mechanism and systems of incentives to encourage LGUs improve performance and converge with national goals and priorities SGH/PCF as platform for convergence platform for convergence of other incentive systems to LGUs through the adoption of the Seal of Good Housekeeping as a basic criteria for other incentives to LGUs focus of convergence of NGAs, LGUs, CSOs, and development partners in improving local governance and performance

22 OUR CHALLENGE NGAs work together to bundle programs and projects that will capacitate LGUs to achieve their development agenda put together a mechanism and system of incentives that will encourage LGUs to improve performance CSOs/POs partner with LGUs in upgrading LGU capacity that will improve service delivery encourage LGUs to be transparent and accountable to their constituents Development partners enhance capacity of CSOs and support development of systems on performance management

23 For more information: Austere A. Panadero Undersecretary for Local Government