Law Summary
Reversion and Incentive Mechanism for Savings
- Uncommitted funds at year-end revert to the National Treasury as per existing law.
- Agencies that actually revert savings in maintenance and operating expenses may retain an amount equal to 110% of such savings in subsequent years as an incentive.
- Conditions for retaining savings include:
- No jeopardy to the original intended activities of the agency.
- Savings are not due to failure in achieving agency work targets.
Permissible Uses of Accumulated Savings
- Retained savings can augment budgets for equipment, construction, and other non-recurring expenses.
- Staff compensation, including allowances and bonuses, cannot be augmented from these savings.
Exclusions from Eligible Savings
- Exclusions from savings eligible for future use include:
- Transfers from personal services, equipment, capital outlays, or other than regular maintenance and operating expenses.
- Lump sum appropriations for grants, contributions, aid, research, or similar purposes.
- Expenditures funded by borrowings or donations.
- Blind certifications to accounts payable.
- Savings from non-implementation of approved activities or failure to meet work targets.
- Other items excluded by presidential directive.
Chargeability and Utilization of Accumulated Savings
- Amounts retained shall be charged to the Special Activities Fund or other funds appropriated in the General Appropriations Law.
- Fund releases are made available in the year such funds are needed.
Review and Evaluation by Cost Reduction Committees
- Reverted funds under this policy are subject to review and evaluation by the Departmental and National Cost Reduction Committees as created under LOI No. 506.
- Such reviews serve as the basis for matching fund releases by the Budget Commission.
Implementation and Regulatory Authority
- The Commissioner of the Budget is tasked with promulgating rules and regulations for effective implementation of these instructions.