Case 10-4 University of the Philippines

This recommends that the Vice President of Finance should allocate the available funds to the autonomous campuses based on the objective criteria to be discussed in the succeeding sections since it is most reflective of the priority needs of each unit with regard to their MOOE expenditures. The VP of Finance could further test the new allocation for reasonableness by reviewing the actual expenditures reported by each constituent unit during the past year.
Background
Due to the 33% decrease in the MOOE budget of the University of the Philippines System, the Vice President of Finance is now tasked to formulate a new budget that will objectively allocate MOOE among the different campuses. From the P250 million left for distribution to the 6 campuses, 10% will be set aside for an Academic Program Improvement leaving only
P225 million available funds for distribution.
On a recent discussion with the UP Chancellors the following concerns have been brought up whic h will be taken to account when the funds are distributed.
 An across the board, pro-rata budget cut on all campuses will carry over any unfair budget allocation of last year to the upcoming year.
 Allocation based on number of students does not take into ac count activities of other campuses such us having extra revolving fund which could help cover some of the MOOE expenses of the respective campus. Moreover, some campuses have does not have many students but has a number of extension and research units.
 Newly established units should have fund set aside for development that does not prejudice the existing units.
 Congressmen have biases on regions which support their candidacy.
Analysis
Since there have been multiple factors to consider in granting a budget for a certain unit, there cannot be just one allocation base. To be fair to all units, an objective approach as to how the funds will be used should yield to the new budget allocation for the CY 2000.
The following assumptions were used to come up with t he new budget allocation.
1. UP Baguio will become an autonomous campus.
2. The criteria will be used in allocating the available budget will be as follows.
a. Number of Students with Laboratory Subjects (30%). This criter ion is given highest priority since this was also the focus of last year’s allocation.
b. Number of Buildings (24%). Large part of maintenance expenses would be attributed to work done on buildings which makes it second in priority.
c. Number of Campuses (18%). More campuses means that an autonomous unit requires more overhead.
d. Students (12%). Students are the main users of the facilities in the campuses and operation are usually more concerned on them.
e. Faculty, REPS and Admin Personnel (6%). These people are confined in office buildings which leaves th em next in priority to the students.
f. Provision for Development (10%). This criteria gives a chance to for the newly established units to be appropriated enough funds for their startup operations while still allocating to the existing units. The weight of provision for each autonomous unit is based on the time it was established. The newer, the campus the greater part of provision is allocated.
The weights were computed by ranking by ranking the criteria, adding up the ranks to arrive at the total and taking the percentages by dividing each rank by the total. The provision for development is fixed at 10%.
3. Administrative personnel are given a 50% weight than that of a faculty in computing for the share of Faculty, REPS and Admin per constituent unit.

Group 6 | Garcia | Rodriguez | Serrano

There is, however, lack of information with regard to the following.
 There is no data regarding the extension and research centers brought up by one of the chancellors.
 Bias of the congress has not been taken into account since regions that support their candida cy cannot be clearly identified.  There are no actual records of expenditures to tell whether the previous budget was appropriate of should consider revision.
From the information acquired, we come up with the objective formula for calculating MOOE.
Criteria

Constituent Unit

Students
(12%)

Laboratory
Subjects (30%)

Faculty, REPS and Admin (6%)

Building
(24%)

Campuses
(18%)

Provision for
Development
(10%)

Diliman

52%

43%

41%

29%

14%

8%

Los Banos

18%

28%

31%

48%

7%

12%

Manila

10%

18%

13%

4%

14%

4%

Visayas

12%

6%

10%

12%

29%

16%

Mindanao

1%

1%

1%

1%

14%

20%

Open University

3%

1%

3%

4%

14%

20%

Baguio

4%

3%

2%

2%

7%

20%

Allocation the available fund 0f P25 million, the corresponding amounts are as follows.
Laboratory
Subjects

Students
Weights

Faculty, REPS and admin

Building

Provision for
Development

Campuses

Total

%

12%

30%

6%

24%

18%

10%

Available Budget

27,000,000.00

67,500,000.00

13,500,000.00

54,000,000.00

40,500,000.00

22,500,000.00

225,000,000.00

Diliman

14,075,461.41

29,258,509.45

5,535,798.25

15,785,942.49

5,785,714.29

1,800,000.00

72,241,425.89

32%

Los Banos

4,725,482.09

18,818,909.90

4,150,886.94

25,706,070.29

2,892,857.14

2,700,000.00

58,994,206.36

26%

Manila

2,762,113.30

12,343,715.24

1,717,674.72

2,156,549.52

5,785,714.29

900,000.00

25,665,767.06

11%

Visayas

3,348,738.86

3,814,238.04

1,365,676.43

6,297,124.60

11,571,428.57

3,600,000.00

29,997,206.50

13%

Mindanao

277,581.48

660,734.15

96,174.40

517,571.88

5,785,714.29

4,500,000.00

11,837,776.19

5%

Open University

735,311.81

873,971.08

340,457.36

2,415,335.46

5,785,714.29

4,500,000.00

14,650,790.00

7%

Baguio

1,075,311.06

1,729,922.14

293,331.91

1,121,405.75

2,892,857.14

4,500,000.00

11,612,827.99

5%

Total

100%

225,000,000.00

This objective allocation would result in an uneven budget cut across the different units. UP Open University’s budget would decrease the highest by 62% while UP Baguio’s budget would increase 9.7 times.
MOOE/Student
1999

MOOE/Student
2000

11%

2930

2605

58994206

20%

7458

5949

25665767

46%

8681

4715

41921000

29997207

28%

5574

3988

Mindanao

30063000

11837776

61%

54960

21641

Open University

38252000

14650790

62%

26399

10111

Baguio

1086000

11612828

-969%

513

5480

1999 Budget

2000 Budget

Diliman

81271000

72241426

Los Banos

73956000

Manila

47252000

Visayas

Group 6 | Garcia | Rodriguez | Serrano

% Difference

It would bring about an uproar from the autonomous units to know that their budget was effectively cut down greater than the 33% budget cut. However, the objective allocation shows that the previous allocation may have been prejudicial for the other units. The new MOOE per student reveals a lower variance among autonomous units than the previous budget.
The chancellors must understand that the total budget cut entails adjustment from all units and that some units are more able to absorb the cut than the rest. Further contentions on the proposed budget may be brought up with supporting documentation of the actual MOOE expenditures of the units for the previous year and the expected expenditure for the upcoming year.
Conclusion
The allocation based on an objective formula would be sound course of action for the VP of Finance. However, since the constituent units would be unlikely to agree to more than 33% cut in their budget, this poses a severe problem in terms of implementation. The chancellors should be weary to set the priority of the whole system before their own. The MOOE budget should be used according the most pressing need for the budget in light of the current budget cut.

Group 6 | Garcia | Rodriguez | Serrano