In the Philippines, the financing of public education is a shared responsibility between the national government and local government units (LGUs). A critical component of this local support is the Special Education Fund (SEF). Governed primarily by the Local Government Code of 1991 (Republic Act No. 7160), the SEF is a dedicated fund derived from a specific levy on real property, ensuring a steady stream of resources for the enhancement of the public school system at the grassroots level.

The Legal Basis of the SEF

The SEF is not a discretionary allocation but a statutory requirement. Its existence is anchored in two primary laws:

Republic Act No. 5447 (The Special Education Fund Act): The landmark legislation that created the fund to contribute to the financial support of the goals of education.
Republic Act No. 7160 (Local Government Code of 1991): This law decentralized the administration of the fund, granting provinces, cities, and municipalities within the Metropolitan Manila Area the authority to levy and manage the SEF.

The Tax Rate and Computation

Under Section 235 of the Local Government Code, a province or city (or a municipality within Metro Manila) may levy and collect an annual tax of one percent (1%) on the assessed value of real property. This is in addition to the basic real property tax.

The Formula

The SEF is computed based on the Assessed Value of the property, which is the product of the Fair Market Value and the applicable Assessment Level.

$$\text{Total Real Property Tax} = (\text{Assessed Value} \times \text{Basic Tax Rate}) + (\text{Assessed Value} \times 1%)$$

Component	Rate	Purpose
Basic RPT	1% (Province) / 2% (City)	General Fund of the LGU
SEF Levy	1%	Education-specific programs

Utilization of the Fund

The law is very specific about how SEF proceeds may be spent. Under Section 272 of R.A. 7160, the fund shall be allocated for the following purposes:

Operation and Maintenance: Support for the daily needs of public schools.
Construction and Repair: Building of schoolrooms and improvement of existing facilities and school buildings.
Educational Research: Funding for studies aimed at improving instructional quality.
Purchase of Materials: Acquisition of books, periodicals, and other instructional materials.
Sports Development: Funding for athletic competitions and the procurement of sports equipment.
Teachers' Benefits: In certain jurisdictions, the SEF provides for allowances or honoraria for teachers, provided they are approved by the Local School Board and comply with Department of Budget and Management (DBM) guidelines.

Administration: The Local School Board (LSB)

The SEF is not managed directly by the Governor or Mayor alone. Instead, it is administered by the Local School Board, a multi-sectoral body tasked with determining the budgetary priorities for the fund.

Composition of the LSB

Chairperson: The Local Chief Executive (Governor or Mayor).
Co-Chairperson: The Division Superintendent of Schools (DepEd).
Members: * The Chairman of the Education Committee of the Sanggunian.
- The Local Treasurer.
- The Representative of the Pederasyon ng mga Sangguniang Kabataan.
- The President of the Federation of Parents-Teachers Associations.
- The Representative of the Teachers' Organizations.
- The Representative of the Non-Academic Personnel of public schools.

The LSB meets at least once a month to deliberate on the SEF Budget, which must then be integrated into the LGU's local budget process.

Collection and Accountability

The collection of the SEF is performed by the City or Municipal Treasurer. Unlike the basic real property tax, which is shared among the province, municipality, and barangay, the entire proceeds of the 1% SEF levy are retained by the local school board of the collecting LGU.

Strict Audit Requirements

Because these are public funds specifically earmarked for education, the use of the SEF is subject to strict auditing by the Commission on Audit (COA). Common audit issues often involve the "misapplication" of funds for items not explicitly listed in the law, such as administrative expenses of the DepEd division office or non-educational infrastructure.

Legal Note: Real property owners who fail to pay the SEF are subject to the same penalties and interest rates (2% per month) applicable to the basic real property tax, as the SEF is considered an integral part of the total real property tax liability.

Summary of Key Features

Fixed Rate: Always 1% of the assessed value.
Automatic Appropriation: The proceeds are automatically released to the Local School Board.
Geographic Scope: Collected by Cities, Provinces, and Metro Manila Municipalities.
Restricted Use: Can only be used for the specific educational purposes outlined in Section 272 of R.A. 7160.