Building New Classrooms in 2012 and 2013

Print

 

 

Building 200,000 New Classrooms in 2012 and 2013

 

 

      MAP submitted to President Benigno Simeon C. Aquino III on 14 June 2011 the MAP Position Paper on the perennial issue of classroom shortages in the public schools.

 

      MAP believes that as a result of the unabated population growth, coupled with the government's inability in the past decades to cope with the accumulating huge resources demand for new classrooms and repair of dilapidated classrooms and destroyed school buildings, the country faces what could become a serious shortage crisis.  This could be averted if new and doable approaches in funding and partnerships are adopted urgently.

 

            As in the past, the present practice limits classrooms construction to traditional National Budget capital outlay allotments at the rate of only 8,000 to 10,000 units per year.  However, MAP estimates the annual demand to be more like 100,000 new classrooms per year in order to significantly address the backlogs and current needs.

 

            MAP believes that by adopting “out-of-the-box” measures which effectively tap and pool existing and available public and private funds, the Aquino Administration can achieve what has never been achieved before – 200,000 new classrooms within two years, 2012-2013.  This level is the equivalent of 20 years production at the normal historical levels of only 10,000 units per year.

 

            The following were among MAP’s key recommendations:

 

1.      Introduce the “Rent-to-Own” (BLT) and Public-Private-Partnership (PPP) under MOOE (Maintenance and Other Operating Expenses) in the DepEd budget.  For the same amount of annual expenditure, this will translate to five times (5x) more number of classrooms than the usual pure capital outlay budget line.  Other countries are using this model to tap into private investible funds.

 

         The high liquidity in the system is evidenced by the Php1.9 Trillion Special Time Deposits of banks with the Bangko Sentral ng Pilipinas (BSP). Given acceptable Return on Investments (ROI) and government's guarantee of payment stream, the private sector welcomes this opportunity and contribution to education.

 

2.      Utilize the Special Education Fund (SEF) from real estate taxes of LGUs that already breached P15 B per year. The SEF is under-utilized. Using half of this SEF (Php7.5 B) as an annual loan amortization amount, the LGUs can front-load the construction of some 50,000 new classrooms from a Php40 B loan total which can be secured from the banks.  This is similar to the present LGUs financing using the IRA as collateral and debt service.

 

3.     Urge legislators to allot 30% of their “pork barrelor PDAF amounting to some Php7.4 B per year for the construction of some 9,300 new classrooms.  This initiative alone already approximates DepEd's entire annual historical capacity.

 

            The MAP Position Paper illustrated DETAILED CLASSROOM DEMAND vs. DOABLE SUPPLY projections.  MAP strongly believes it is worth pursuing and hope the President supports this so that the concerned agencies can flesh out details and mechanics of implementation.

 

            MAP hopes that President Aquino will find this Private-Public Sector initiative practical, realistic and implementable.  MAP’s Task Force on Education, chaired by former DepEd Secretary Jesli Lapus, is willing to partner with DepEd and all the other concerned departments.

 

MAP appointed on 11 August 2011 MAP Task Force on Education Member ROBERTO JOSE CASTILLO to be the MAP representative in the Department of Education’s (DepEd)Technical Committee for the Classroom Design Standards.

 

 

MAP Position Paper

on

“Building 200,000 New Classrooms in 2012 and 2013”

 

A Project of the MAP Task Force for Education chaired by Sec. Jesli A. Lapus

14 June 2011

 

Introduction

 

It is the obligation of the state to provide access to education for all. The good news is that the 2011 budget of the Department of Education (DepEd) increased to a record high of Php 192 billion which is 57% more than the Php 122 billon budget of five years ago (2006).  However, the bad news remains - only Php 8 billion is allotted for 10,000 new classrooms, which is a mere token in the face of the huge demand for classrooms. In fact, the growth in the number of enrollees in both primary and secondary levels has been consistently outpacing the growth in the number of classrooms for decades.  This pattern has to be reversed. 

 

Given the perennial levels of inadequate budget appropriations for school building and the construction rate of about 10,000 classrooms per year, the Philippines is not poised to attain classroom sufficiency.   Even the increased DepEd projected targets of 20,000 to 25,000 classrooms per year in the next five years appear grossly understated when matched with the country’s needs.

 

Millions of Filipino school-age youth cannot afford to wait long years for enough classrooms to be built.   The task is nothing short of herculean, but there is a way.  It is high time for us to act together and employ  alternative approaches.

 

This paper presents out-of-the–box measures aimed at improving school infrastructure delivery and addressing backlogs.  With better utilization and pooling of  the available government and private sector resources, this perennial problem can be significantly addressed in the next two years, i.e. 2012-2013.

 

The Stark Truth: Classroom Shortage Crisis Looming

 

Classroom shortages are exacerbated by a number of factors:

  1. 1.     The annual population growth increasing by 2.04% or estimated at 1.9 million people in 2010;
  2. 2.     The implementation of K+12 program which adds three more year levels to the present basic education cycle of 10 years (i.e. 30% increase in resources);
  3. 3.     The government’s campaign for higher participation and lower drop-out rates;
  4. 4.     Thousands of badly dilapidated and unserviceable classrooms; and
  5. 5.     The constant destruction of classrooms by typhoons, floods, landslides and natural calamities.

 

The total demand for new classrooms is clearly nothing short of alarming. Consider the following:

1.  At a 2.04% growth in population and 45 students per class, there is a need to build 25,000 more classrooms per annum (net of graduates).

2.  With a 5% annual improvement in participation rate (estimated at an average of 75%), there is a need to provide 37,000 classrooms per year for this.

3.  Assuming a replacement rate of 5% of the total classrooms per year which are dilapidated and unserviceable, 22,000 classrooms need to be rebuilt.

4.  Assuming 3% of the total classrooms are affected/destroyed by natural disasters and calamities, some 10,000 classrooms per year must be 

     reconstructed.

5.  With the implementation of K+12 program, 33,000 classrooms need to be constructed in 2011 for the kindergartens.  Another 60,000 classrooms have to

     be built within 2015-2016 in preparation for the inclusion of 11th and 12th year levels in basic education in 2016-2017.

 

TABLE 1.    PROJECTED CLASSROOM DEMAND (2011-2016)

 

FACTORS CONSIDERED

2011

2012

2013

2014

2015

2016

Population Growth (net of graduates)

25,000

25,000

25,000

25,000

25,000

25,000

Increased participation rate

37,000

37,000

37,000

37,000

37,000

37,000

Replacement of dilapidated classrooms

22,000

22,000

22,000

22,000

22,000

22,000

Losses from Typhoon, Calamities, and resettlements 

10,000

10,000

10,000

10,000

10,000

10,000

 

K+12

 

33,000 (kindergarten)

 

0

 

0

 

0

 

30,000 (grade 11)

30,000

(grade 12)

TOTAL

127,000

94,000

94,000

94,000

124,000

124,000

 

Based on the above table, the annual classroom (CLS) shortage for the next five years ranges between 94,000 to 124,000 units which requires more than Php 72 billion to Php 99 billion a year at the average cost of Php 800,000 per classroom.  Certainly, this requirement dwarfts the peak budget allocation of Php 8 billion in 2011.

 

It’s Doable:      200,000 New Classrooms in Two Years (2012-2013)

 

It is imperative to urgently address the huge demand to put an end to permanent and accumulating backlogs. By employing innovative and multi-sectoral approaches, it is possible to frontload the construction of more than 200,000 new classrooms in the two years 2012-2013.   These approaches include the following:

  1. 1.    Adopting a more flexible government education budget (GAA)
  2. 2.     Harnessing private sector resources and expertise through Public-Private Partnerships (PPP)
  3. 3.     Using part of the Priority Development Assistance Fund  (PDAF)
  4. 4.     Using the Special Education Fund (SEF) of the Local Government Units (LGUs) as collateral and for debt servicing
  5. 5.     Accessing funds from our international development partners like the World Bank and the Asian Development Bank
  6. 6.     Promoting donations from the private sector, civil society organizations, and non-governmental organizations

 

The following table summarizes these new financing alternatives which will allow Philippine basic education to dramatically catch up with the burgeoning demand for new classrooms.

 

Table  2.  Possible Supply of New Classrooms Using Various Approaches/Sources

 

SOURCE

2011 (Actual)

2012

2013

 

Cost to Government

(in billions)

Classrooms

Cost to Government

(in billions)

Classrooms

Cost to Government

(in billions)

Classrooms

1.  GAA

 

 

 

 

 

 

     Capital outlay 

8

10,000

6*

7,500

9*

11,250

     MOOE (Rent to Own)**

--

--

6**

37,500

9**

56,250

     Additional Php 25 billion for the PPP Program          (Php 5 billion a year from 2012-2016)***

--

--

5

15,625

5

15,625

     GAA TOTAL

8

10,000

17

60,625

23

83,125

2.  PDAF

 

 

 

 

 

 

     30% of congressmen budget (285 members)

--

--

6

7,500

6

7,500

     30% of senators budget (24 members)

--

--

1.4

1,800

1.4

1,800

     PDAF TOTAL

 

 

7.4

9,300

7.4

9,300

3.  LGU Special Education Fund (SEF) loan      

     servicing ****

--

--

7.5

25,000

7.5

25,000

4.  WB-ADB Assistance Fund

--

--

6

7,500

6

7,500

5.  Donation (donors, foundations, and others)

--

--

0

5,000

0

5,000

TOTAL

8,000

10,000

37.9

107,425

43.9

129,925

 

 

 

 

 

 

 

 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*        This assumes a 50% increase from the previous year in the total budget for classrooms and that 50% of the current budget will be allotted under capital outlay of the GAA.

**      This assumes that there is a 50% increase in the total budget for classroom and that 50% of the current year’s budget for classrooms will be allotted under MOOE, and that the rental rate is is Php 160,000 per annum per classroom for the next six years. 

***     This accounts the DepEd’s plan to allocate Php 25 billion for its PPP program on school building for the next 5 years (i.e. Php 5 billion will be allocated per year).  Under this program, 31,250 new classrooms can be built in years 2012-2013 (or 15,625 units per year).

****    This assumes a Php 40 billion loan for drawdown in two years (Php 20 billion per annum) with an annual debt service of Php 7.5 billion (which is 50% of the Php 15 billion SEF collected a year).

 

With these approaches and possible fund sources, the government can mobilize about Php 80 billion pesos to finance the building of 238,000 classrooms worth Php 190 billion during 2012 and 2013, thereby substantially addressing the projected classroom requirements for the same period.

 

1.     General Appropriations Act (GAA)

 

Under the 2011 DepEd Budget, a total of Php 12 billion was allocated for School Facilities, of which Php 8.3 billion is appropriated to finance new classrooms. Using the traditional approach of pure capital outlay, the government can only build 10,000 classrooms (or 20,000 classrooms in two years).  Therefore, the classroom backlog expected to be accumulated in the next years is way beyond the absorptive capacity of DepEd and/or DPWH.

 

By introducing the “rent-to-own” MOOE option in the GAA, the same budget amount can allow five times (5x) more classrooms than if this amount were spent to build (capital outlay).  Thus, a 6 billion GAA projection in 2012 translates to 37,500 CLS instead of just 7,500 CLS.

 

Public-Private Partnership (PPP) for Classrooms

 

The PPP framework is another approach in addressing the classroom backlog.  This approach is in line with the PPP initiative of the Aquino Administration which offers the following key advantages:

1.  Classroom development is “front-loaded” (i.e., can be delivered within 2 years instead of 10 years – cumulative through the usual procurement system)

2.  The public sector provides the market with business opportunity based on an “economic lot” (scale) that would allow the private sector to do value

     engineering that would ultimately redound to lower cost and potential savings to the government  

3.  It minimizes risks of government systems breakdown and possible corruption by simplyfying and standardizing processes, specifications, and lease rates

4.  It utilizes excess liquidity (i.e. Php 1.9 trillion available funds in the Special Deposit Account of the banking sector with the Bangko Sentral ng Pilipinas) in

     the credit institutions properly.

 

a.     a.   Build-Lease-Transfer (or Rent-to-Own) Scheme

 

A PPP option can also be introduced nationwide by allowing for a line item under the Maintenance and Other Operating Expenses (MOOE) of the GAA.  This can be done through a rent-to-own scheme (i.e. Build-Lease-Transfer scheme under the BOT Law).  Large and small construction firms in all urban and far-flung areas can participate and earn acceptable returns on investment. The school buildings will be constructed on school or government-owned lands.

 

 Assuming that 50% of the budget is allotted for rent-to-own for the period 2012-2013, a total of 93,750 classrooms can be available in two years time.

           

 

Number of Classrooms

2012

 

Capital Outlay:  Php 6 billion

@ Php 800,000 per classroom

7,500

MOOE (Rent-to-Own):  Php 6 billion

Php 20 billion worth (payable in 6 years @ Php 160,000 per year per classroom)

37,500

 

 

2013

 

Capital Outlay:  Php 9 billion

@ Php 800,000 per classroom

11,250

MOOE (Rent-to-Own):  Php 9 billion

Php 20 billion worth (payable in 6 years @ Php 160,000 per year per classroom)

56,250

 

 

GRAND TOTAL UNDER RENT-TO-OWN

112,500

 

b.    b.  Php 5 Billion for Design-Build (Turn-Key) Scheme

 

The DepEd has a proposed budget for an additional Php 5 billion a year for the next five years (or Php 25 billion in total) to be solely used for the PPP program using the Design-Build-Transfer (or turnkey) Scheme.  Through this approach, the provision of new classrooms is also being front-loaded. The Php 25 billion can be advanced by the private sector in the period 2012-2013, which can finance more than 30,000 classrooms.

 

2.     Priority Development Assistance Fund (PDAF)

 

Another source of fund is the Priority Development Assistance Fund (PDAF) or “Pork Barrel” of legislators.  Each congressman is allocated Php 70M per year, while each senator is allocated Php 200M.

 

Assuming that 30% of this total PDAF is allocated by the legislators for classrooms in the next two years, 19,000 classrooms can be delivered to the education system.  This is equivalent to the entire annual limited capability of DepEd in the past.

 

 

Congressmen:

Php 70 million x 30%                                     =      Php 21 million

Php 21 million x 285 representatives         =      Php 5.98 billion

 

Senators:

Php 200 million x 30%                                   =      Php 60 million

Php 60 million x 24 representatives           =      Php 1.44 billion

 

 TOTAL FOR ONE YEAR

 

 

 

7,500 classrooms

 

+

 

1,800 classrooms

 

9,300 classrooms

 

3.     Special Education Fund (SEF)

 

The local school boards in the country receive annually, through automatic appropriation, 1% of the total real estate tax collections of the LGUs.   Called the Special Education Fund (SEF), it is allocated pursuant to the Local Government Code for the (a) operation and maintenance of public schools, (b) construction and repair of school buildings, facilities and equipment and other education spending.   In 2008, the total SEF stood at P15 billion. The SEF is expected to increase yearly as real estate values appreciate. 

 

Table  3.  Special Education Fund (SEF) Income and Expenditures, 2001-2008 (in million pesos)

 

 

2001

2002

2003

2004

2005

2006

2007

2008

SEF Income

8,451

9,537

11,002

10,693

12,381

13,909

13,540

14,956

SEF Expenditures

7,774

7,395

8,826

8,854

10,265

11,451

11,679

11,492

Unspent Amount

677

2,142

2,176

1,839

2,116

2,458

1,861

3,464

Source:  Bureau of Local Government Financing, Statement of Income and Expenditures

 

Like the IRA, the SEF can and should be used as loan collateral with financial institutions in order to frontload the financing of school buildings.   A portion of the SEF (say, 50% or Php 7.5 Billion) can be earmarked as annual debt service for a 7-year loan at 10% interest per annum. 

 

 

Php 40 Billion loan for drawdown of 2 years

(Php 20 Billion loan per annum)

50,000 classrooms

(or 25,000 classrooms/year)

 

4.     WB-ADB Assistance

 

The national government has, in the past, tapped loans from World Bank (WB) or Asian Development Bank (ADB) as budget support for the school building projects. International development assistance agencies (IDAAs) have also shown keen interest in supporting projects that help improve quality of both educational facilities and services.  In fact, school building construction serves to be one of the focal points of foreign support.

 

WB and ADB have expressed interest in restoring loans for purposes of school building at past levels of Php 3 billion to Php 6 billion.

 

WB-ADB loan facility with DepEd (Php 6 billion)

7,500 classrooms

 

 

5.  Other Sources: Donations and Aid

 

Through donations in kind from the private sector and civil society organizations, the DepEd has successfully been generating a good number of new classrooms every year.   In fact, a number of institutions (e.g. Philippine Business for Social Progress, Fil-Chinese Chamber of Commerce) have expressed intentions to continue helping the government address the classroom backlog in the country.   Several successful DepEd programs (e.g. Brigada Eskwela, Adopt-a-School Program) will also continue to register contributions to this effort.

 

Similarly, classrooms had been donated by USAID, AUSAID, Spain, UNICEF and other foreign donors.

 

NOW IS THE “RIGHT” TIME

 

Perhaps, this is the right time to wage the decisive battle against the nagging classrooms shortage problem. There is a government  that enjoys the unprecedented popularity to  wield the necessary political will. And there is a financial system that enjoys unprecedented excess liquidity eager to invest in the future of the country.

 

Many of the recommended solutions are not new ideas. Some have been presented to Congress, to Cabinet, to the League of Provincial Governors and discussed in PPP workshops on various occasions in the past.  Though generally favourably received, the needed concerted and determined implementation in its entirety has not been done.

 

These non-exclusive approaches utilize existing and available resources under doable schemes. GAA and SEF financial leveraging coupled with motivated private sector  investments are the main lynchpins. 

 

With a strong political will of the government and commitment of the private sector, these solutions can be adopted and executed well within the term of President Benigno Simeon C. Aquino III.

 

Indeed, we need not be told what we already know – the reality that there is a huge backlog in classrooms that begs for urgent and innovative action.  This paper is an attempt to assert that it is also a reality that it can be done. 

 

 

 

 

 

 

List of Events

Tue Oct 28 @ 2:30PM - 05:00PM
ASEAN Service Sector

Calendar of Events

October 2014
S M T W T F S
28 29 30 1 2 3 4
5 6 7 8 9 10 11
12 13 14 15 16 17 18
19 20 21 22 23 24 25
26 27 28 29 30 31 1

Connect with Us!

Facebook Image