PERFORMANCE CHALLENGE FUND FOR LGUs

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PERFORMANCE CHALLENGE FUND FOR LGUs
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The Performance Challenge Fund for Local
Government Units (PC Fund)

• an incentive fund to LGUs in the form of
  counterpart funding to high-impact capital
  investment projects in the Annual Investment
  Program and funded the 20 Development Fund
  consistent with national priorities
• seek to rationalize national government
  intergovernmental transfers to LGUs, and
  encourage alignment of local development
  initiatives with national government development
  thrust and priorities.

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OBJECTIVES

• Recognize good governance performance
  particularly in the adoption of good
  housekeeping governance areas of planning,
  budgeting, revenue mobilization, financial
  management and budget execution, procurement, and
  resource mobilization
• Seek improvements in LGU performance by linking
  incentives/financial grants with performing LGUs
  based on an established set of requirements and
  condition
• Encourage alignment local development programs
  with national development goals and priorities
• Stimulate LGU and private sector investments in
  sectors prioritized by the national government

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TARGET BENEFICIARIES

• LGUs may be targeted based on
• Option1 Income class (3rd class below)
• Option 2 Alternative indicators of fiscal need
  (e.g., income/IRA per capita, or
  poverty incidence)
• Option 3 Level of LGUs (provinces, or cities or
  municipalities)
• Option 4 Open to all LGUs which pass the
  eligibility criteria Seal of
  Good Housekeeping
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• Number of target LGUs may be limited by the
  volume of grants that are sizeable enough to be
  attractive to targeted LGUs
• P5M grant/each for 100 municipalities, or
• P10M grant/each for 50 provinces, or
• P10M grant/each for 50 cities, or

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GRANT CONDITIONS AND ELIGIBILITY CRITERIA

•  Eligibility criteria (qualification)
• comply with the following criteria as seal of
  good housekeeping in key governance areas of
  planning, budgeting, revenue mobilization,
  financial management and budget execution,
  procurement, and resource mobilization in order
  to qualify for the grant
• Grant Condition (competition)
• qualified LGUs will be selected on the basis of
  their equity funding from the LGU 20 development
  fund on investments it would finance using the
  grant
• priority to LGUs with partnership agreement and
  counterpart support with other LGUs and/or
  private sector.

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Seal of Good Housekeeping
Area Indicator
Good Planning Updated and approved Comprehensive Land Use Plan (optional)
Good Planning Updated and approved Comprehensive Development Plan
Good Planning Updated and approved Annual Investment Plan
Good Planning Presence of Executive- Legislative Agenda
Sound Fiscal Management Result of COA Audit (acceptable level)
Sound Fiscal Management LGU Annual Budget approved and compliant to legal and statutory requirement
Sound Fiscal Management Percentage of cost to collect revenues to total local revenues (50 or less)
Sound Fiscal Management Growth in local revenues over 3 years
Sound Fiscal Management Presence of Updated Revenue Code (every 5 years)
Sound Fiscal Management Presence of updated Schedule of Market Values (every 3 years)
Sound Fiscal Management Regular submission of Statement of Receipts and Expenditures (quarterly)
Values Transparency and Accountability Functionality of Local Special Bodies
Values Transparency and Accountability Transparency of the procurement process
Values Transparency and Accountability Compliance to the Anti-Red Tape Law
Values Transparency and Accountability Full disclosure of local budget and finances, and bids and public offerings through posting in conspicuous places within public buildings in the locality, or in print media of community or general circulation, and in their website
Valuing of Performance Monitoring Performance Monitoring Tool or Scorecard System being utilized
Valuing of Performance Monitoring Published State of Local Governance Performance Report, State of Development Report, and Financial Report
Valuing of Performance Monitoring Awards Received for Exemplary Performance
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ALLOCATION OF GRANT
OPTION PROS CONS
Option 1 P5M grant each for 100 qualified municipalities. This will benefit 100 of 1500 municipalities More LGUs can access (100 municipalities with counterpart from 100 provinces) A province may have to provide counterpart to more than 1 municipality Less coverage 100/1500 munis less impact
Option 2 P10M grant each for 50 provinces. This will benefit 50 of 80 provinces. With more multiplier effect - 50 provinces with counterpart from atleast150 municipalities if each province will have at least 3 component municipal/city partners Strengthens the oversight function over component cities and municipalities Provinces can influence their component cities and municipalities to align their projects with provincial and national priorities Prone to political partiality/bias
Option 3 P10M grant each for 50 cities. This will benefit 50 of 130 cities. In view of having denser population, more constituents to benefit from project Cities are in less need of financial subsidy that provinces and municipalities, in view of higher IRA share No counterparting from provinces
Option 4 By Auction 3 grants of P 20M 40 grants of P 10M This will benefit 43 LGUs. Encourage competition among LGUs to align projects under DF with national priorities (ranking shall be based on LGU equity funding from the 20 DF) Would still require identification of level of LGU as grant beneficiaries
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Illustration of Multiplier Effect for Provinces
as Target Beneficiaries
P10M Performance Challenge Fund
Municipal counterpart
Local Development Project
P 10 M Provincial counterpart
Municipal counterpart
Municipal counterpart
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UTILIZATION OF GRANTS

• Project-Specific Matching Grant vs. Local
  Development Fund top-up
• Will the grants be used to match LGU investments
  in identified projects or will these be allowed
  to enhance the overall LDF of the LGU?

Project-Specific Marching Grant Local Development Fund top-up
Variable grant to LGUs based on the size of proposed capital investment project May limit coverage in view of larger requirements for some projects Will require review of project proposals Uniform grant to LGUs LGUs will have leeway to chose projects projects from a menu of investment projects that support national priorities
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ELIGIBLE PROJECTS

• The grants may support capital investments from a
  menu of investment projects that support national
  priorities, particularly PNnoy priority programs
  on
• Improving Social Services (e.g. school buildings,
  hospital and health centers, housing and
  settlements),
• Providing Public infrastructure (e.g. local roads
  and bridges, railways, ports and wharves),
• Enhancing Economic Services (e.g. tourism
  facilities, irrigation systems, post harvest
  facilities, cold storage facilities, and other
  economic infrastructures and growth enhancing
  projects such as market, slaughterhouses, and
  water supply system)
• Adapting to Climate Change and Preparing for
  Disaster (e.g. flood control, reforestation,
  solid waste management facilities, evacuation
  centers, early warning and devices and rescue
  equipment)
• Promoting Good Governance (Anti-Red Tape/
  Anti-Corruption Systems)

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ELIGIBLE PROJECTS

• In financing projects, the PC Fund may be used
  for the following
• as counterpart funds for foreign-assisted
  projects of the LGUs
• as co-financing for joint projects with other
  LGUs
• as counterpart for projects of the LGUs with the
  private sector in the context of public
  partnership in establishing more economic
  activities
•  
• FC Fund can not be used to finance the following
• Tax payment
• Salaries and recurrent cost
• Micro credits and loans

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Proposed Procedures for Accessing Funds

• Province submits Grant Application with Proofs of
• program/project alignment (AIP),
• partnership with other LGUs and/ or with Private
  Sector (MOA), and
• counterpart fund allocation (Sangunian Resolution)

PC Fund Management Board thru the Regional
Assessment Team conducts assessment of Good
Housekeeping
All Target LGUs
LGUs with Seal of Good Housekeeping
If approved
LGUs w/c qualified for grant
DILG releases funds to LGU
PC Fund Management Board screens applications
If disapproved
LGUs w/c did not qualify
DILG releases notice to LGU
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FUND MANAGEMENT

• DILG with the DBM shall jointly administer the PC
  Fund subject to policy and implementation
  guidelines which shall be formulated by the PC
  Fund Management Board.
• PC Fund Management Board shall be headed by the
  DILG and composed of the DBM, DOF, and League(s)
  of LGUs. The Fund Management Board shall
  prescribe the policy guidelines for the effective
  implementation of the PC Fund including fund
  utilization and project implementation, and
  focusing on the following  
• Mechanics for the availment of grant and
  utilization of fund,
• Evaluation guidelines for assessing LGU
  applications for grant
• Monitoring evaluation mechanism to track the
  progress in the implementation of PC Fund funded
  projects
• Post audit procedures of the program.
•  
• Regional Assessment Team shall be compose of
  DILG, DBM, DOF and COA to assess LGUs on basic
  good housekeeping
• DILG shall as act as the Technical Secretariat of
  the PC Fund Management Board.

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INSTITUTIONAL ARRANGEMENT
Fund Management Board ----------------------- (DIL
G, DBM, DOF, COA and LGU League(s)
DILG as Secretariat
Regional Assessment Teams (DILG, DBM, DOF, COA)
Regional Assessment Teams (DILG, DBM, DOF, COA)
Regional Assessment Teams (DILG, DBM, DOF, COA)
Regional Assessment Teams (DILG, DBM, DOF, COA)
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Proposed Procedures for Accessing Funds
Option 1 P5M/muni. for 100 municipalities
Option 2 P10M / province for 50 provinces.
Option 3 P10M / city for 50 cities.
Option 4 P20M for top 3 province P10M for 40 other provinces
Degree of alignment with national priorities

• Seal of Good Housekeeping
• Good Planning Practices
•  Sound Fiscal Management
•  Values Transparency and Accountability
• Valuing of Performance Monitoring

LGUs with Seal of Good House keeping
Ranking of LGUs which qualify for grant
All Target LGUs
Partnership agreement with component LGUs and/or
with private sector
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THANK YOU