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Republic of the Philippines To
HOUSE OF REPRESENTATIVES > onte cee
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SEVENTEENTH CONGRESS ‘SG &
Third Regular Session £ inpex SA

House Bill No. 9164
Introduced by Representative JOEY SARTE SALCEDA

EXPLANATORY NOTE

For most Filipino families, education is the investment that pays the best interest. This
is why parents dream to provide the best possible education to their children. Except for food
which stood at 41.5 percent of total household allocation in 2018, Filipinos spend the most on
education, allocating around 15.4 percent of the monthly household budget, exceeding the
global average of 8 percent’, This is reflective on how much Filipinos give premium on
education. Education is seen as a levelling factor that will help them compete for better jobs
and better salaries.

However, according to the Philippine Statistics Administration’s 2017 Annual Poverty
Indicators Survey (APIS) the percentage of drop outs remains high. In its 2017survey of out-
of-school children and youth (OSCY), the PSA determined that of the 39.2 million Filipinos
aged 6 to 24 years old 9.1% belong to OSCY. In 2016, the equivalent percentage was 9.8%.
The most common reasons cited for not attending school were marriage or family matters
(42.3%); high cost of education/financial concern (20.2%), and lack of personal interest
(19.7%).5 The PSA said around 50% of OSCYs belong to families whose incomes were in the
bottom 30% on a per capita basis.*

+ https://news.abs-cbn..com/focus/08/22/18/average-pinoy-family-spends-almost-half-
of-funds-on-food-study

2 https://www. bworldonline.com/out-of-school-population-declines-in-2017-psa-says/)
> Philippines Statistics Authority, Reference Number: 2017-068 Release Date: Tuesday, June
13, 2017.

“ https://www.bworldonline.com/out-of-school-population-declines-in-2017-psa-says/)



Figure 1. Reason for Not Attending School of the OSCYs
Philippines, 2016

Marriage/famity matters

High cost of education/financial concem
Lack of personal interest
Employment/looking for work
Niness/sability

Omers

Acces sibility of school

Finisheds chooling

Problem withschool record:

Tooyoung to go to school | 0.4

o 2 50 75 100
‘Source: Phitppine Stat stics Authorty

The numbers are very clear. Poverty is the greatest single driving force that keeps
children away from school. Poverty restricts a child’s view of the future. Poor families are more
preoccupied with providing themselves with food, shelter and paying the bills so that education
is relegated to the backburner. Often, the children are forced to do odd jobs in order to help
their parents make ends meet. According to the PSA’s Multidimensional Poverty Index,
poverty impacts most heavily on education with the education dimension having the largest
share or contribution to overall deprivation (MPI) at 36.5 percent and 36.9 percent in 2016 and
2017, respectively.

Despite the many financial assistance programs extended by the government and
private sector to poor students, the education system remains plagued with deep inequalities.
Millions of children and young adults remain out of school due primarily to poverty. While
laws are in place to assist students financially like Universal Access to Quality Tertiary
Education Act for instance that institutionalises free tuition and exemption from other fees in
state universities and colleges (SUCS), local universities and colleges (LUCs), these may not
be adequate. Education policies by the government as well as the capacity to send children to
school may be subject to political and economic vicissitudes. A government of the day may
shift its concern on other areas away from education which may restrict universal access just
as because of inflation and unemployment, thus parents may be hard pressed sending their
children to school. As the above graph shows, financial capacity plays a major role in keeping
our children in school; stated negatively, poverty keeps our children away from school.

In order to negate these future uncertainties, the proposed bill endeavours to require the
Government of the Philippines, through the Bureau of Treasury, to issue treasury bonds in
favour of every child born at any given year with a maturity date extending until the beneficiary

2


reaches eighteen (18) years of age. The treasury bond shall have the unconditional backing by
the full faith and credit of the Philippine government, with guaranteed return of both interest
and principal as they fall due. The proceeds of the bond shall be used exclusively to augment
any and all financial assistance extended by the government to students whether enrolled in a
public or private educational institution.

The number of treasury bonds to be issues shall be based on the average yearly live
births as officially declared by the Philippine Statistics Authority at any given year. Thus, for
instance in 2017, the PSA declared that a total of 1,700,618 live births was registered which is
equivalent to a crude birth rate (CBR) of 16.2 or 16 births per thousand population’ According
to the PSA, the number of registered live births showed a decreasing trend, noticeably from
2012 to 2017. The decrease in the last five years was 5.0 percent, from 1,790,367 live births in
2012 to 1,700,618 recorded births in 2017. (See Figure | and Table 1). It is projected that the
yearly birth rate will vary, hence, the volume of treasury bonds issuable shall likewise adjust
accordingly.

1.800
on a ee ee

2007 2008 2009 2010 2011 2012-2013 2014-2015 2016 2017

Figure 1. Number of Registered Live Births, Philippines: 2007-2017

On the basis of the above cited figures, the Bureau Treasury shall issue a corresponding
number of treasury bonds with par value of Twenty Five Thousand Pesos (Php 25,000.00) each
and maturity of up to eighteen (18) years. All proceeds of the bond shall be pooled and held in
trust by the National Treasurer, in a fund called “Educational Bond Fund”, which will then be
applied to school expenditures to support the cost of tertiary education or any part or portion
thereof. Release of the amount to the beneficiary shall be subject to the following conditions:

1, At the time he or she reaches eighteen (18) years of age, he or she must be enrolled
in undergraduate-post-secondary programs of State Universities or Colleges, Local
Universities and Colleges, private Higher Education Institutions and all Technical
Vocational Institutions;

5 https://psa.gov.ph/content/births-philippines-2017


2. That at the time of bond maturity, the student is part of household included in the

National Household Targeting System for Poverty Reduction (NHTS-PR) or
Listahanan 2.0;

The primary objective of the proposed bill is to put up a mechanism, that is the issuance
of government securities or treasury bonds that would guarantee future funds for the education

of the underprivileged Filipino youth that is insulated from the vagaries of politics and
economic uncertainties.

In view of the foregoing, the passage of the proposed bill ght,



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
Third Regular Session

House Bill No. 9164

Introduced by Representative JOEY SARTE SALCEDA

AN ACT
REQUIRING THE PHILIPPINE GOVERNMENT TO ISSUE EDUCATIONAL
BONDS FOR THE BENEFIT OF TERTIARY STUDENTS, APPROPRIATING
FUNDS THEREFOR AND FOR OTHER PURPOSES

SECTION 1. Short Title. — This Act Shall be known as the “Educational Bond Act of 2019.”

SEC. 2. Declaration of Policy. — It is the declared policy of the State to make education
accessible to all irrespective of social and economic status. Towards this end, the State shall
harness all available financial resources to increase participation by Filipinos across all socio-
economic strata in tertiary education and, as far as practicable, enable them to complete their
education.

SEC. 3. Definition of Terms. —

a. Educational Bond refers to a long-term government security issued by a national
government with corresponding interest and sovereign guarantee;

b. Educational Bond Trustee refers to the government agency, in this case the
Commission on Higher Education (CHED). Any and all funds derived from the
proceeds of the issuance of the treasury bond shall be entrusted to CHED for
safekeeping.

SEC. 4. Issuance of Educational Bond. ~ The Government, through the Bureau of Treasury
and the Department of Finance, shall issue an educational bond in the name of every Filipino
at birth which gives him or her the inchoate right to the proceeds of said security instrument
upon maturity.

SEC. 5. Number of Educational Bonds to be Issued. ~The number of educational bonds for
issuance shall be based on the yearly average birth rate as officially declared by the Philippine
Statistics Authority.


SEC. 6. Key Features of the Educational Bond. ~ For purposes of this Act, the educational
bond issued by the Bureau of Treasury and Department of Finance shall have the following
key features:

With a maturity period of eighteen (18) years;
With a face value of Twenty Five Thousand Pesos (Php 25,000.00);
With fixed interest rate;

Risk free; and

Non-negotiable and non-transferable.

enege

For purposes of this Act, no other class or category of bonds or securities shall be issued
by the government other than that specified herein.

SEC. 7. Qualified Beneficiary. — The proceeds from the educational bond shall be released to
the qualified beneficiary only under the following conditions:

1, At the time he or she reaches eighteen (18) years of age which
coincides with the maturity date of the bond, he or she must be
enrolled in undergraduate-post-secondary programs of any State
Universities or Colleges, Local Universities and Colleges, private
Higher Education Institutions and all Technical Vocational
Institutions;

2. That at the time of bond maturity, the beneficiary is part of
household included in the National Household Targeting System
for Poverty Reduction (NHTS-PR) or Listahanan 2.0;

SEC. 8. Placing Educational Bond for Public Auction. ~ Any and all educational bonds
assigned to unqualified and disqualified beneficiaries shall be placed on the auction block one
(1) year after the date of maturity. The proceeds therefrom shall revert to the national treasury.

SEC. 9. Educational Bond Trustee. — The Commission of Higher Education (CHED) shall
hereby appointed as trustee of the bond. Any and all funds derived from the proceeds of the
issuance of the bond shall be held by the CHED for safekeeping. The CHED, in close
coordination with the Bureau of Treasury and Department of Finance, shall adapt a mechanism
for the efficient, fool-proof, and speedy release of the proceeds accruing from the securities to
qualified beneficiaries.

SEC. 10. Rule Making Authority. — The Commission on Higher Education, Department of
Finance and the National Treasury are charged with the administration and enforcement of this
Act, shall promulgate the necessary implementing rules and regulations.

SEC. 11. Appropriations. — Such sums as may be necessary to implement the provisions of
this Act are hereby appropriated out of any funds of the National Treasury not otherwise
appropriated. Henceforth, the same shall be included in the annual General Appropriations Act.


SEC. 12. Separability Clause. —If any provision of this Act or the application of such provision
to any person or circumstances is declared invalid, the remainder of this Act or the application
of such provision to any other person or circumstances shall not be affected by such declaration.

SEC. 13. Repealing Clause. ~ All laws, decrees, ordinances, rules and regulations, executive
or administrative orders and other presidential issuances inconsistent with this Act, are hereby
repealed, amended or modified accordingly.

SEC. 14. Effectivity. — This Act shall take effect after fifteen (15) days from publication in two
(2) national newspapers of general circulation.

Approved.