Legal basis and purpose statement
- Republic Act No. 5447 establishes a Special Education Fund to support education priorities through an additional tax on real property and other sources.
- Republic Act No. 5447 creates Local School Boards to administer the local government share of the Special Education Fund.
- The Special Education Fund Act specifically refers to implementation of the Magna Carta for Public School Teachers (Republic Act No. 4670).
- The Letter’s purpose is to enhance the effectiveness of the Special Education Fund by ensuring consistent compliance with the statutory priority system and financial arrangements.
Covered fund and administering bodies
- The rules apply to the Special Education Fund administered by Local School Boards under Republic Act No. 5447.
- Local School Boards must use and allocate Special Education Fund proceeds exclusively for the activities enumerated in the Letter.
- The Letter also binds the fiscal and oversight actors tasked with processing, passing on, auditing, and disallowing expenditures connected to Local School Board budgets.
- The Letter specifically instructs compliance in relation to funds administered by Local School Boards, including their use for personal services, infrastructure, teaching materials, and teacher benefits.
Exclusive purposes for Special Education Fund
- The Special Education Fund shall be used exclusively for public school system activities limited to the following:
- The organization and operation of extension classes needed to accommodate all children of school age desiring entry to Grade I, including creation of positions of classroom teachers, head teachers and principals for extension classes, which shall not exceed standard requirements of the Bureau of Elementary Education.
- The programming of construction and repair of elementary school buildings, acquisition of sites, and construction and repair of workshops and similar buildings with accessories to house laboratory technical and similar equipment and apparatus needed by public schools offering practical arts, home economics and vocational courses, with priority to elementary schools.
- The payment and adjustment of benefits in favor of public school teachers provided under Republic Act No. 4670.
- The preparation, printing and/or purchase of textbooks, teachers’ guides, forms and pamphlets, approved in accordance with existing laws to be used in all public schools.
- The purchase and/or improvement, repair and refurbishing of machinery, laboratory, technical and similar equipment and apparatus, including spare parts needed by secondary schools offering vocational courses.
- The purchase of teaching materials such as workbooks, atlases, flip charts, science and mathematics teaching aids, and simple laboratory devices for elementary and secondary classes.
- The implementation of the existing program for citizenship development in barrio high schools, folk schools and adult education classes.
- The promotion of physical education, such as athletic meets.
- Local School Boards must allocate funds according to an order of priority that governs how provinces and cities/municipalities receive portions of the Special Education Fund.
Allocation priority and exclusive-priority system
- For allocation of funds from the portion of the Special Education Fund accruing to provinces, cities and municipalities, Local School Boards must observe the following order of priority:
- For provinces: activities item (d), (c) and (e).
- For cities and municipalities: activities item (a), (c) and (d).
- The remaining items are considered of secondary priority.
- Local School Boards must apply a system of exclusive priority: the needs of a prior activity must be met first before appropriating funds for the next succeeding priority.
- This exclusive-priority rule must be followed strictly for the top priority activities identified in the priority order.
- Local School Boards must ensure their budgeting process and subsequent allocations reflect the priority structure mandated by the Letter.
Prohibited expenditures without lawful authorization
- Local School Boards must not appropriate, local officials must not authorize, and treasurers must not pay for activities outside those allowed under Republic Act No. 5447, unless authorized by law.
- The Letter identifies specific examples of prohibited categories, including:
- Basic salary for persons other than elementary school teachers, head teachers and elementary school principals.
- Construction and/or repair of buildings other than school buildings.
- Motor vehicles.
- Payment of maintenance and operating expenditures of agencies and offices other than the Local School Board itself.
- Purchase of forms other than those used in the school system.
- Sponsorship of fairs, contests, exhibits, and other related activities.
- Local School Boards must implement the prohibition by structuring appropriations so that disallowed categories cannot be funded from the Special Education Fund.
Personal services rules and budget limits
- Extension and other positions created by the Local School Board must be supported by the Local School Board until these can be absorbed by the national government budget.
- The Ministers of the Budget and of Education, Culture and Sports must jointly develop standards and a mechanism under which Local School Board–created positions may be absorbed by the national budget.
- New items and extension positions provided in the national budget must be used first to absorb extension positions created by Local School Boards, following criteria set by the Ministers of the Budget and Education, Culture and Sports.
- Teacher allowances funded from the Special Education Fund must not exceed:
- 100% of basic salary for first class local government units.
- 75% (spelled as “seventy five (7%))” in the Letter) of basic salary for second and third class local government units.
- 50% of basic salary for fourth and lower classes of local government units.
- Existing rates may continue for the class of local government units that presently exceed the percentage benchmarks.
- In determining eligibility to allowances and privileges funded by Local School Boards, “teachers” must follow the definition in the Magna Carta for Public School Teachers, excluding those on detail performing work of a non-teacher.
- Not more than 60% of the total Local School Board budget may be used for personal services payments, except when authorized by the Office of Budget and Management upon recommendation of the Ministry of Education, Culture and Sports.
Textbooks and instructional materials procurement
- Priority in purchasing books and teaching material must be given to textbooks approved by the Textbook Board Secretariat.
- All textbooks, teaching aids, school forms, workbooks and other teaching material purchased using the Special Education Fund must be purchased directly from the Instructional Materials Corporation.
- The Instructional Materials Corporation must be immediately operationalized by the Minister of Education, Culture and Sports by using the existing organization and assets, personnel and facilities of the Textbook Board Secretariat.
- Staff members of the Textbook Board Secretariat must be absorbed by the Instructional Materials Corporation at no diminution in compensation.
Financing arrangements and temporary fund gaps
- The General Fund and Trust Funds of a local government unit may be used to cover temporary deficiencies in the funds of its Local School Board as a loan.
- Loans must be covered under terms and conditions imposed by the local government unit.
Budget process and oversight responsibilities
- The Division Superintendent of Schools or the District Supervision member of the Board, as the case may be, must initiate the budget process.
- The budget process requires preparation and submission of a proposed budget that must observe the priority structure mandated by the Letter and serves as the basis for Local School Board consideration.
- The Commission on Audit and the Office of Budget and Management must assist in ensuring compliance with the Letter within their respective jurisdictions.
- The Minister of the Budget must observe the guidelines when passing upon Local School Board budgets as provided in pertinent law.
- The Commission on Audit must disallow, in audit, all expenditures found to be in violation of the Letter.
Signature and issuance date
- The Letter was signed by FERDINAND E. MARCOS, President of the Philippines.
- It was done in the City of Manila on the thirty-first day of May nineteen hundred and eighty five (May 31, 1985).