COA asks Cebu City government to stop time deposits

CEBU, Philippines — The Commission on Audit has asked the Cebu City government to terminate time deposits amounting to over P762.27 million under the Special Education Fund (SEF).

In its February Audit Observation Memorandum, COA said that as of December 31, 2018, the city placed P762,276,429.10 of cash under SEF in special savings and high-yield savings accounts, which is not allowed under the Local Government Code.

“Investment of SEF funds in time deposits is not allowed under Sections 100 (c) of R.A. 7160 (Local Government Code) which specifically provides and enumerates the priorities in the disbursement of SEF,” the AOM reads.

SEF can be used for the construction, repair, and maintenance of school buildings and other facilities of public elementary and secondary schools; establishment and maintenance of extension classes when necessary; and sports activities at the division, district, municipal, and barangay levels.

The amount was deposited in the Development Bank of the Philippines-Cebu and Land Bank of the Philippines since 2016 and 2017.

“SEF is created to contribute to the financial support of the goals of education and investing funds out of SEF deprives its intended beneficiaries of the immediate benefits that could have derived therefrom,” the commission said.

The AOM was signed by State Auditor V Maria Daisy Bercede and State Auditor IV Lita Lamparas.

COA asked the city to terminate the time deposits and use the funds for the repair of school buildings, among others.

COA recommended that the Acting City Treasurer Arlene Rentuza to exercise proper management of the funds of the city.

In her answer, Rentuza said the office is dependent on how the Local School Board will utilize its fund.

“One of our strategies in revenue generation, is to invest in time deposit to earn interest income as long as such fund is not needed hence, it was prudently deposited in such a manner,” she said, adding that the office will terminate it if the need arises.

City Councilor Joy Augustus Young agreed with Rentuza in saying that the funds are deposited in time deposit to earn interest while the money is not being used yet.

Young, deputy mayor for education, said the city government is now in the process of making the program of works and estimates of the projects like the construction of new schools in the city that will be charged against the SEF.

The accumulation of the funds in the SEF is because of the few suppliers that are interested to join the bidding because of the tedious processes, he said.

“It’s not easy to disburse money in City Hall. Dugay ang bidding sa BAC which is just following the law. The law is so tedious. One of the requirements is to secure PhilGeps and the suppliers, maglisod og kuha ana,” Young said.

He said there were several instances in previous years that there was failure of bidding because of absence of suppliers.

He asked COA to make representations in the national government to possibly amend the law.

“So while wala pay supplier nga mo-undertake sa projects, we decided to place it in a time deposit kay maka interest pod ang syudad,” he added.

COA, however, said the city should utilize the funds in accordance with the priority programs instead of investing funds in time deposits since the city government is a “service-oriented government office.” — /JMO (FREEMAN)