Introduction

In the Philippines, education is recognized as a fundamental right and a key priority for national development. To support this, the government has established various funding mechanisms, one of which is the Special Education Fund (SEF). The SEF is a dedicated local fund primarily derived from real property taxes, aimed at enhancing the quality of public education at the local level. This article provides an in-depth examination of the SEF, including its legal foundations, sources of revenue, allowable uses, administrative framework, and related legal considerations. It draws from relevant Philippine laws, particularly the Local Government Code of 1991, to offer a thorough understanding of this fiscal tool.

Legal Basis and Historical Context

The SEF traces its origins to earlier legislation but was formalized and strengthened under Republic Act No. 7160, otherwise known as the Local Government Code of 1991 (LGC). Section 272 of the LGC explicitly provides for the creation of the SEF, mandating that it be sourced from an additional levy on real property taxes. This provision builds on prior laws, such as Presidential Decree No. 464 (the Real Property Tax Code of 1974), which introduced the concept of an additional tax for educational purposes.

The rationale behind the SEF aligns with the constitutional mandate under Article XIV, Section 1 of the 1987 Philippine Constitution, which states that the State shall protect and promote the right of all citizens to quality education at all levels. Furthermore, Article XIV, Section 5(5) emphasizes the need for adequate funding for education. The SEF serves as a decentralized funding mechanism, empowering local government units (LGUs) to address specific educational needs within their jurisdictions, complementing national allocations from the Department of Education (DepEd).

Subsequent laws and issuances have refined the SEF's implementation. For instance, Republic Act No. 9155 (Governance of Basic Education Act of 2001) reinforces the role of local school boards in managing the fund. Joint circulars from DepEd, the Department of Budget and Management (DBM), and the Department of the Interior and Local Government (DILG) provide operational guidelines, ensuring alignment with national educational policies.

Sources of Revenue for the SEF

The primary source of the SEF is an additional one percent (1%) tax on the assessed value of real property, as stipulated in Section 235 of the LGC. This levy is imposed over and above the basic real property tax (RPT) rates, which vary by LGU classification: up to 2% for provinces and up to 1% for cities and municipalities in the Metropolitan Manila Area.

Key aspects of revenue generation include:

Imposition and Collection: The additional 1% tax is collected by the provincial, city, or municipal treasurer, depending on the LGU. It applies to all taxable real properties, including lands, buildings, machinery, and other improvements, as defined under the Real Property Taxation provisions of the LGC (Sections 199-273).
Accrual and Allocation: Proceeds from this additional tax accrue exclusively to the SEF of the respective LGU. In provinces, the SEF is divided such that 60% goes to the province and 40% to the component municipalities and cities, unless otherwise provided by local ordinance.
Other Sources: While the core funding comes from the 1% RPT levy, the SEF may also receive augmentations from fines and penalties related to real property tax delinquencies, as well as interest income from SEF deposits. Additionally, LGUs may allocate portions of their general funds or other revenues to supplement the SEF, subject to local school board approval.
Exemptions and Incentives: Certain properties are exempt from the basic RPT and, by extension, the additional SEF levy, such as those owned by the government, charitable institutions, and properties used for religious, educational, or charitable purposes (Section 234, LGC). However, idle lands and properties subject to special assessments may incur higher rates, indirectly boosting SEF revenues.

The collection process is governed by strict timelines: assessments are based on fair market values determined by local assessors, with taxes due annually or in installments. Delinquencies attract penalties and interest, which further contribute to the fund.

Utilization of the SEF

The LGC strictly limits the use of SEF to education-related purposes, ensuring that funds are not diverted to other local expenditures. Section 272 specifies that the SEF shall be used exclusively for:

Operation and Maintenance of Public Schools: This includes salaries for locally-hired teachers and non-teaching personnel, utilities, and minor repairs.
Construction and Repair of School Buildings: Funding for new classrooms, laboratories, libraries, and the rehabilitation of existing facilities to meet safety and accessibility standards.
Facilities and Equipment: Procurement of desks, chairs, computers, laboratory equipment, and other instructional materials.
Educational Research: Support for studies on local educational needs, curriculum development, and teacher training programs.
Purchase of Books and Periodicals: Acquisition of textbooks, reference materials, and subscriptions to educational journals.
Sports Development: Programs for physical education, including equipment for sports activities and support for school athletic teams.

Guidelines from DepEd-DBM-DILG Joint Circular No. 1, series of 2017 (and subsequent updates), emphasize prioritization based on the School Improvement Plan (SIP) and Annual Implementation Plan (AIP). Funds must align with the Basic Education Development Plan and promote inclusive education, including support for learners with special needs.

Prohibited uses include capital outlays not related to education, personal services beyond authorized positions, and administrative expenses of the local school board exceeding reasonable limits. Any misuse can lead to administrative or criminal liabilities under anti-graft laws like Republic Act No. 3019.

Governance and Administration

The administration of the SEF is vested in the Local School Board (LSB), a multi-stakeholder body chaired by the local chief executive (governor, mayor, or punong barangay) and co-chaired by the division superintendent or district supervisor. Membership includes representatives from the sanggunian (local legislative body), treasury, parent-teacher associations, teacher organizations, and non-academic personnel.

Key responsibilities of the LSB include:

Budget Preparation and Approval: Annually preparing the SEF budget based on projected revenues and educational priorities, subject to ratification by the sanggunian.
Monitoring and Evaluation: Overseeing fund utilization, conducting audits, and ensuring compliance with procurement laws (Republic Act No. 9184).
Transparency and Accountability: Requiring public disclosure of SEF budgets and expenditures, often through postings in conspicuous places or online portals.

The DepEd plays a supervisory role, providing technical assistance and ensuring that SEF-funded projects meet national standards. In cases of fund shortages or surpluses, LGUs may carry over unexpended balances to the next fiscal year, but these must remain earmarked for education.

Challenges and Legal Considerations

Despite its benefits, the SEF faces challenges such as inconsistent revenue collection due to outdated assessments, urban-rural disparities in property values, and delays in fund releases. Legal disputes may arise over fund allocation, such as in inter-LGU boundary conflicts or when national policies override local priorities.

Judicial interpretations, such as in Supreme Court rulings on local taxation (e.g., G.R. No. 144525, City of Manila v. Coca-Cola Bottlers Philippines, Inc.), underscore the autonomy of LGUs in imposing the SEF levy, provided it adheres to uniformity and equity principles under Section 234 of the LGC.

Amendments to related laws, like Republic Act No. 11223 (Universal Health Care Act), have indirectly impacted SEF by shifting some health-related school expenditures, allowing more focus on core education needs. Ongoing reforms under the Mandanas-Garcia ruling (G.R. No. 199802) have increased LGU shares from national taxes, potentially enabling greater SEF augmentations.

Conclusion

The Special Education Fund represents a critical intersection of local taxation and educational financing in the Philippines, embodying the principle of fiscal decentralization. By leveraging real property taxes, it empowers LGUs to tailor educational investments to community needs, fostering equitable access to quality learning. However, effective implementation requires robust governance, regular assessments, and stakeholder collaboration to maximize its impact. As the nation continues to prioritize education amid evolving challenges, the SEF remains an indispensable tool for building a stronger, more inclusive public school system.