ANALYSIS: Infrastructure becomes obsolete, education is forever

Jose Galang - Your Business

Posted at Aug 07 2017 03:53 PM | Updated as of Aug 07 2017 05:39 PM

Instead of weeping over the newly enacted law mandating free tuition and other related subsidies for students in the country’s 114 state universities and colleges (SUCs), the administration’s economic managers should now promptly look for ways to raise money to implement President Duterte’s audacious move

It’s a pity that while the Duterte economic officials are gung-ho about spending trillions of pesos on massive infrastructure projects (funded by foreign loans and constructed by foreign contractors bringing in their own workers), they seem to feel bitter about investing a few billions on educating young minds that would help them rise from poverty and someday lead the nation to new heights.

While it’s true that gleaming new infrastructure could indicate signs of progress (if the economy survives a resulting bloated foreign debt burden), it is also a fact that such structures of cement and steel eventually become obsolete and unusable. A reservoir of educated minds, on the other hand, undoubtedly can serve as a strong foundation for a nation’s rise to development and prosperity.

And, guess what, along with guidance from responsible adults, education that will keep students busy in school and at a job later could be the youth’s powerful shield against the drug menace. That would be a most welcome reversal from the current war on drugs using guns and bullets.

The proposed 2018 national budget is labelled as “a budget that reforms and transforms”. While it puts high importance to large increase in infrastructure spending, the proposed budget also identifies the following key social service priorities “to lift our people from poverty”: education, employment, housing, and social protection.

Now that President Duterte has signed into law a free-tuition program that was hammered out in months-long deliberations in the two chambers of Congress, the administration’s economic managers are complaining about the cost of implementing it instead of looking for ways to achieve a key priority in the proposed national budget.

Weeping boys

Finance Secretary Carlos Dominguez, in early statements after the signing of Republic Act 10931, groaned that the measure could “put pressure” on the government’s budget deficit target for the coming year. Budget Secretary Ben Diokno complains that “P100 billion would be needed” to fully cover the annual tuition subsidies, even as he says he still has to determine how many students will actually be getting the subsidies.

In the months leading to the August 3 signing of RA 10931, the economic managers went to the extent of submitting a position paper to the president to register their opposition to the measure. They argued that tuition comprises only a third of all expenses in sending a student to tertiary school and that the free-tuition scheme only benefits students whose families can already afford it, echoing points raised by economists at the state think tank Philippine Institute of Development Studies (PIDS) in a February 2017 policy paper.

The PIDS paper, authored by Aniceto Orbeta Jr. and Vicente Paqueo, notes that the bulk of students enrolled in public higher education institutions are from the higher income groups, with “only 12 percent” coming from the ranks of the “poor” and the “poorest” households in the country. “Giving free tuition to SUCs will benefit mostly the richer students,” according to the PIDS economists.

But data from the Philippine Association of State Universities and Colleges indicate that up to 77 percent of students enrolled in SUCs come from families that earn near the minimum wage or less. To them, noted Senator Bam Aquino recently, tuition represents a major expense and they need help in coping with it.

The PIDS paper, while calling for a more careful study on the implications of providing tuition subsidy for everyone enrolled in SUCs, also concedes that “there are occasions when subsidies are justified.”

“College education improves both individual and societal welfare,” says the paper. “It would be detrimental to society if gifted and talented students, who could help advance knowledge and produce innovations later on, cannot enroll in college due to their economic circumstances. Equity objectives also justify funding the college education of poor but college-ready students.”

At any rate, the economic managers have asked the members of Congress, who are now deliberating the proposed P3.77-trillion budget for 2018, to pass new revenue measures—imposing more taxes instead of realigning expenditure items—to fund the scholarship program. A number of senators and congressmen, however, believe that the “P100 billion” mentioned by the economic managers was an overstatement and that the most likely cost would be about a quarter of that.

Subsidy program’s scope

RA 10931 provides initially for “full tuition subsidy” to all students in SUCs, local universities and colleges in the regions, and state-run technical-vocational schools. The economic managers say that the subsidy will be launched at the start of academic year 2018-2019, although Diokno says that in this year’s budget around P16 billion is allotted for “various types of scholarships”.

Also to be covered in the subsidies are other expenses such as for the use of public school libraries, computers, laboratories, school IDs, athletic needs, admission requirements, student development, student guidance counseling, handbooks, entrance exams, registration fees, medical, dental, cultural and other school fees.

Other subsidies or stipends—room and board, books and transactions—will also be covered in the future, together with a student loan program that will still be developed. Students who can afford to shoulder the tuition and other expenses may choose to opt out of the program and still continue studies in SUCs.

To fund the free tuition program, the government will use proceeds from tax collections, as well as official development assistance (ODA) coming from the country’s trading partners and donations from local and international groups or individuals.

Among recommendations for funding the free tuition program is that of Senator Panfilo Lacson for the transfer of some P20-25 billion worth of what he views as “pork barrel” allocations in the budget. Lacson notes that the national budget allocates discretionary funds—P300 million for each senator and P80 million for each congressman—which should go instead to the new scholarship program.

Tagged as administrator of the subsidy program is the board of the United Student Financial Assistance System for Tertiary Education (UniFAST), a scheme created under RA 10687 that was approved during the previous administration. UniFAST is said to have a financially sustainable strategy of extending assistance to deserving but poor students, who are also given the option to enroll either in SUCs or in private schools.

As in many other assistance programs in the past, the devil is in the details. The implementing rules and regulations for RA 10931 are still to be drafted by the economic managers. The authors of the law are hoping that the subsidy program’s implementation will lead to results that are equitable as envisioned.

Disclaimer: The views in this blog are those of the blogger and do not necessarily reflect the views of ABS-CBN Corp.