Electric Cooperative; Budgeting; Approaches in Budgeting, Budget Cycle in the Philippines, and Implementation;

1. DR. JO BITONIO
Professor
JOYCE R. BASCOS
Discussant

2. TOPICAL OUTLINE
• BUDGETING
 Approaches in Budgeting
 Budget Cycle in Government and PANELCO III
 Expenditure by Class and Object
 Budgeting Structure and Processes
• IMPLEMENTATION OF THE PLAN
 Structure and Governance
 Institutional and Individual Accountability
 Plan Financing
 Plan Execution
• EVALUATION AND PLAN UPDATE
 Evaluation Framework
 Stages and Levels of Evaluation

3. BUDGETING THE PLAN
BUDGETING
- is the process of allocating financial
resources for intended programs,
projects, services, and activities to
empower the organization to carry
out stated goals and objectives
(Briones, 1996)

4. Want
Need
Budget
BUDGETING THE PLAN
CAN

5. Three Major Orientation
• process of enforcing or applying limitations and
conditions that are set in the budget and in
appropriation and at the same time securing
compliance with the spending restrictions imposed by
central authorities
CONTROL
• involves the use of budgetary authority at both agency
levels to ensure the efficient use of resources in the
conduct of authorized activities
MANAGEMENT
• process of determining public objectives and the
evaluation of alternative programs. Authorities must
have the information concerning the purpose and
effectiveness to the program
PLANNING

6. APPROACHES IN BUDGETING
1. LINE ITEM BUDGETING
- emphasizes listing of objects for itemized
expenditure such as personnel, supplies, and
equipment without much regard for the purpose
of programs or projects for which such items are
proposed.
2. PERFORMANCE BUDGETING
- Performance budgets use statements of
missions, goals and objectives to explain why
the money is being spent. It is a way to allocate
resources to achieve specific objectives based
on program goals and measured results. (Carter)

7. APPROACHES IN BUDGETING
3. PLANNING PROGRAMMING AND
BUDGETING SYSTEM (PPBS)
-The scheme requires agency managers to identify
program objectives, develop measuring program
output, calculate total program costs over the long-
run, prepare detailed multi-year program and
financial plans, and analyze the costs and benefits of
alternative program designs.
4. ZERO BASED BUDGETING
- a method of budgeting in which all expenses must
be justified for each new period. Starts from a “zero
base” and every function within an organization is
analyzed for its needs and costs. Budgets are then
built around what is needed for the upcoming period.

8. BUDGET CYCLE IN GOVERNMENT
There are four phases in managing the National Budget:

9. BUDGET CYCLE IN GOVERNMENT
During the preparation phase, the Executive
prepares the proposed National Budget.
This is followed by the legislation phase
where the Congress authorizes the
General Appropriations Act. In the
execution phase, agencies utilize their
approved budgets and during the
accountability phase, the executive
monitors and evaluates the use of the
budget.

11. PANELCO III BUDGET CYCLE
Corporate Services
Department
• Inform all Departments and Areas thru writing the schedule of budget hearing, provide
work plan format, costing and forecast sales, system loss, house connection.
Departments/ Areas
• Presentation of accomplishments for the first three quarters of the current year
Budget Analyst
• Analyze accomplishments as compared to actual expenses over budgeted. (variances)
Departments/ Areas
• Budget deliberation, justification, ratification
Corporate Services
Department
• Prepares Consolidated final report, for presentation to the board together with
representatives per Department.
Board of Directors
• Final Deliberation and Approval.
• Approves Budget Supplementation.

12. CURRENT OPERATING EXPENSES
Nature of
Expenditures
2008 2009 2010 2011 2012
Distribution 65,660,600 55,477,654 76,831,855 92,338,076 79,005,114
Consumer
Accounts
42,013,831 49,407,977 85,845,916 86,521,192 77,770,469
Depreciation 44,137,376 46,455,188 47,975,918 53,393,067 54,894,901
General and
Administrative 63,265,382 64,175,311 77,617,372 90,717,553 89,246,017
Interest
Expense
1,936,963 1,745,681 1,346,739 618,815 305,306
EXPENDITURE BY CLASS AND OBJECT

13. CAPITAL OUTLAYS
Nature of
Expenditu
res
2008 2009 2010 2011 2012
Distributio
n Plant 35,322,469 26,526,526 39,847,544 45,108,294 45,235,846
General
Plant 18,938,957 4,900,981 12,281,385 7,551,839 13,898,008
EXPENDITURE BY CLASS AND OBJECT

14. PANELCO III
Calendar
Year
COE % Increase CO % Increase Total
2008 217,014,152 54,261,426 271,275,578
2009 217,261,811 0.11 % 31,427,507 (42.08) % 248,689,318
2010 289,617,800 33.30 % 52,128,929 65.87 % 341,746,729
2011 323,588,703 11.73 % 52,660,133 1.02 % 376,248,836
2012 301,221,807 (6.91) % 59,133,854 12.29 % 360,355,661

15. IMPLEMENTATION OF THE PLAN
This phase answers the following:
1. How do we execute the plan?
2. Who is responsible with which activity?
3. How do we determine whether plan are implemented as
planned?
IMPLEMENTATION
- act of carrying out the plans, programs and projects in accordance
with the strategic plan in order to attain set goals and objectives.
(K. Mathur and Inayatullah, 1980).
Strategy Quality Management
- process by which an organization formulated plans, objectives and
strategies, allocates resource for plans, programs and projects,
identifies accountable entities, managers and front line workers, in
the implementation, monitoring and evaluation of plan and
programs.

16. STRUCTURE AND GOVERNANCE
Formal Structure – is the established patterns of
relationships among the component units of
the organization.
Three basic functions:
1. Designates formal reporting relationships
including the number of levels in the
hierarchy and the span of control of
managers and supervisors.
2. Identifies the grouping together of
individuals into departments and of the
different department’s into the total
organization.
3. Structure includes across departments.

17. Institutional and Individual
Accountability
- accountable executives,
managers and administrative
officers of major programs and
projects should be identified
and their functions and support
staff in these activities.

18. Plan Financing
- Indicate in summary
table the projected
amounts by calendar year
broken down into current
operating expenses and
capital outlay.

19. PANGASINAN III ELECTRIC COOPERATIVE
(PANELCO III)
Urdaneta City
5 YEAR PERFORMANCE IMPROVEMENT PLAN
FOR THE YEARS 2013-2017
TOTAL COST
PLAN FINANCING
0
50000000
100000000
150000000
200000000
250000000
206708036.7
122003787.5
154988619.6
169480344.5
91502093.87
Funding Requirements
2013 2014 2015 2016 2017

20. PLAN EXECUTION
Requires:
1. Preparation of Annual Action
Plans and Budget Estimates
2. Monitoring of Programs and
Projects.
3. Evaluation and Plan Update.

21. PANELCO III BUDGETARY and
IMPLEMENTATION ISSUES
1. Inaccurate or unreasonable assumptions
lead to Unrealistic Budget
2. Failure to follow up and analyze variances
3. Compliance Reports by Departments/Areas
are not submitted to CSD.
4. Unaccomplished projects
5. CAPEX Prioritization
6. No ocular inspection and visitation of
reported accomplishments.
7. Lack of Evaluation framework

22. People at operations
are in the best
position to decide
on the most effective
and efficient use of
resources
to obtain the best
value for money.