NINETEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES )
Third Regular Session 
)
2^1 GCT IQ P3 :26
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SENATE
Senate Bill No. 2850
Introduced by Senator PIA S. CAYETANO
AN ACT
EXPANDING THE PURPOSE AND APPLICATION OF THE SPECIAL EDUCATION 
FUND, AMENDING FOR THE PURPOSE SECTION 272 OF REPUBLIC ACT NO. 
7160, OTHERWISE KNOWN AS THE wLOCAL GOVERNMENT CODE OF 1991" AND 
FOR OTHER PURPOSES
EXPLANATORY NOTE
Article XIV of the Constitution recognizes that "the State shall take into account 
regional and sectoral needs and conditions and shall encourage local planning in the 
development of educational policies and programs."1
Local Government Units (LGUs) play a crucial role in the successful delivery of 
quality education to our students. The Local Government Code of 1991 (LGC) established 
the Special Education Fund (SEF), derived from an additional one percent (1%) levy on 
the assessed value of real property, which is collected by local government units.2 The SEF 
is intended to fund essential aspects of public education, including the operation and 
maintenance of public schools, the construction and repair of school buildings, 
procurement of educational facilities and equipment, educational research, the purchase 
of books and periodicals, and sports development, as determined by the Local School 
Board.3
1 Sec. 5, Art. XIV of the 1987 Constitution
2 Republic Act (R.A.) No. 7160, Sec. 235
1 Ibid, Sec. 272


Studies, however, bring to light that SEF allocation is not maximized. In 2024, the 
Second Congressional Commission on Education (EDCOM 2) found that the SEF of LGUs 
are underutilized despite an increase in income. Based on EDCOM 2's analysis, SEF 
underutilization amounted to Php Fifteen billion (Php 15,000,000,000.00) in 2022, with 
underutilization highest in the cities at fifty-seven percent (57%).4
An evaluation of the Local Government Code and Republic Act No. 9155 revealed 
that while the two laws are not inherently in conflict, inconsistencies - particularly 
regarding the interpretation of "operation and maintenance of public schools" in Section 
272 of the LGC - have led to confusion over the appropriate use of the SEF.5 This raised 
concerns about accountability and efficient fiscal decentralization.
This proposed bill aims to amend Section 272 of the LGC to broaden the scope of 
the Special Education Fund (SEF) usage. By clearly delineating the allowable uses of the 
SEF, this bill ensures that the resources are directed towards where they are most needed. 
This seeks to strengthen the education sector, ensure fair compensation for personnel, 
enhance resources for learners, and lay stronger foundations for the future workforce. 
This expansion is critical not only for addressing current educational challenges but also 
for enhancing the competitiveness of Filipino talent in the global economy.
In view of the foregoing, the passage of this bill is earnestly sought.
>IA a CAYI
AN(
4 LGU Special Education Fund underutilized, inequitable - EDCOM 2 . (2024, March 11). The Second 
Congressional Commission on Education, https://edcom2.gov.ph/lgu-special-educatlon-fund-underutilized/
5 Orbeta, A. (2023, February 20). Comments on the Senate Bill Nos. 15 and 1633, 21st CENTURY SCHOOL 
BOARDS ACT and Senate Bill No. 1110, EXPANDING SPECIAL EDUCATION FUND. Philippine Institute for 
Development Studies (PIDS).
https://pidswebs.pids.gov.ph/CDN/document/1676859471_63f2d84f3e4aa.pdf


NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES
Third Regular Session
SENATE
S. No. 2850
24 OCT 10 P3 -26
Introduced by Senator PIA S. CAYETANO
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AN ACT
EXPANDING THE PURPOSE AND APPLICATION OF THE SPECIAL EDUCATION 
FUND, AMENDING FOR THE PURPOSE SECTION 272 OF REPUBLIC ACT NO. 
7160, OTHERWISE KNOWN AS THE "LOCAL GOVERNMENT CODE OF 1991" AND 
FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled:
Section 1. Section 111 of Republic Act No. 7160 is hereby amended to read as
follows:
"Sec. 111. Application of the Proceeds of the Additional One Percent SEF Tax. - 
The proceeds from the additional one percent (1%) tax on real property 
accruing to the Special Education Fund (SEF) shall be automatically released to 
the local school boards: Provided, That in case of provinces, the proceeds shall 
be divided equally between the provincial and municipal school boards: 
Provided, however, That the proceeds shall be allocated, [for the operation and 
maintcnanec of public schools, construction and rcpoir of school buildings,
focilitics and equipment, cducationol rosGorch, purchase of books and
periodicals7 and-sports development as determined and approved by the Local
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School Board.] AS DETERMINED AND APPROVED BY THE LOCAL 
SCHOOL BOARD, FOR THE FOLLOWING EXPENSES:
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OPERATION AND MAINTENANCE OF PUBLIC SCHOOLS;
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ACQUISITION OF SCHOOL SITES OR LANDS;
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CONSTRUCTION AND REPAIR OF SCHOOL BUILDINGS, 
LEARNING CENTERS, LIBRARIES, AND SCHOOL 
DORMITORIES;
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FACILITIES AND EQUIPMENT INCLUDING BUT NOT LIMITED 
TO INFORMATION TECHNOLOGY EQUIPMENT AND 
COROLLARY SUPPORT SERVICES, SCHOOL FURNITURE AND 
FIXTURES, MEDICAL AND DENTAL SUPPLIES, AND 
INSTALLATION OF RADIO FREQUENCY IDENTIFICATION 
(RFID) SYSTEM AND CLOSED-CIRCUIT TELEVISION (CCTV);
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PURCHASE AND MAINTENANCE OF SERVICE VEHICLES;
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PAYMENT OF VOLUNTARY CONTRIBUTIONS AUTHORIZED 
UNDER EXISTING LAWS;
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PAYMENT OF COMPENSATION AND AUTHORIZED 
ALLOWANCES, COMPETENCY TRAININGS, BENCHMARKING, 
AND OTHER BENEFITS OF LOCALLY-HIRED TEACHING AND 
NON-TEACHING PERSONNEL: PROVIDED, THAT THE RATES OF 
COMPENSATION AND AUTHORIZED ALLOWANCES OF 
LOCALLY-HIRED TEACHING AND NON-TEACHING PERSONNEL 
SHALL BE DETERMINED BY THE LSB- BASED ON FUNDS


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AVAILABLE, BUT AT RATES NOT TO EXCEED THE SALARY 
SCHEDULE BEING IMPLEMENTED BY THE LGU CONCERNED;
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ANY ADDITIONAL AUTHORIZED ALLOWANCES GRANTED BY 
LGUS TO NATIONALLY-HIRED TEACHING AND NON­
TEACHING PERSONNEL CHARGEABLE AGAINST THE SEF AS OF 
31 DECEMBER 1997: PROVIDED, THAT SUCH ADDITIONAL 
AUTHORIZED ALLOWANCES GRANTED THEREAFTER SHALL BE 
CHARGED TO THE GENERAL FUND: PROVIDED, FURTHER, 
THAT IN CASE OF FOURTH TO SIXTH CLASS MUNICIPALITIES, 
SUCH ADDITIONAL AUTHORIZED ALLOWANCES MAY STILL BE 
CHARGED TO SEF SO LONG AS THE SAME DOES NOT EXCEED 
10% THEREOF, SUBJECT TO EXISTING BUDGETING RULES 
AND REGULATIONS;
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OPERATION OF (I) NON-FORMAL EDUCATION PROGRAMS, 
(II) EARLY CHILDHOOD EDUCATION, (III) SPECIAL 
EDUCATION, (IV) SENIOR HIGH SCHOOL, (V) OPEN HIGH 
SCHOOL PROGRAM, (VI) MADRASAH CLASSES, AND (VII) 
REMEDIAL CLASSES, INCLUDING THE PAYMENT OF SALARIES, 
AUTHORIZED ALLOWANCES, AND OTHER BENEFITS OF 
LOCALLY-HIRED TEACHING AND NON-TEACHING PERSONNEL 
OF THE PROGRAM, AND THE CONDUCT OF TEACHERS' 
COMPETENCY TRAININGS;


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10. OPERATION OF ALTERNATIVE LEARNING SYSTEM (ALS) 
INCLUDING PAYMENT OF SALARIES, AUTHORIZED 
ALLOWANCES AND OTHER BENEFITS OF THE LOCALLY-HIRED 
ALS LEARNING FACILITATORS;
11. EDUCATIONAL RESEARCH AND STUDY TRIPS, INCLUDING 
PARTICIPATION IN ACADEMIC AND ATHLETIC 
COMPETITIONS;
12. PURCHASE OF BOOKS AND PERIODICALS; AND
13. SPORTS DEVELOPMENT.
NOTWITHSTANDING ANY PROVISION TO THE CONTRARY, ALL
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EXPENSES ENUMERATED UNDER THIS SECTION SHALL BE SUBJECT TO THE
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PREVAILING POLICIES AND GUIDELINES OF THE DEPARTMENT OF
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EDUCATION (DEPED).
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ALL LOCAL SCHOOL BOARDS SHALL SUBMIT AN ANNUAL REPORT ON THE
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COLLECTION, ALLOCATION, AND UTILIZATION OF THE SPECIAL EDUCATION
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FUND TO THE BUREAU OF LOCAL GOVERNMENT FINANCE UNDER THE
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DEPARTMENT OF FINANCE (DOF-BLGF), COPY FURNISHED THE LOCAL
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SANGGUNIAN CONCERNED, REGIONAL OFFICES OF THE DEPARTMENT OF
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INTERIOR AND LOCAL GOVERNMENT (DILG), DEPED AND THE DEPARTMENT
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OF BUDGET AND MANAGEMENT (DBM) ON OR BEFORE 31 MARCH OF THE
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SUCCEEDING YEAR.
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THE DOF-BLGF SHALL THEN SUBMIT TO THE SENATE COMMITTEES ON
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LOCAL GOVERNMENT AND EDUCATION, ARTS AND CULTURE AND HOUSE


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COMMITTEES ON LOCAL GOVERNMENT AND BASIC EDUCATION AND CULTURE,
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A CONSOLIDATED REPORT ON THE COLLECTION AND UTILIZATION OF THE SEF
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WITHIN NINETY (90) DAYS FROM RECEIPT OF REPORTS FROM THE LGUS.
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ALL REPORTS ON THE SEF SHALL BE POSTED IN AT LEAST THREE
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CONSPICUOUS PUBLIC PLACES, WEBSITES OF ALL LOCAL GOVERNMENT
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UNITS, AND THE FULL DISCLOSURE POLICY PORTAL BEING ADMINISTERED BY
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DILG.
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Sec. 2. Implementing Rules and Regulations. -The DILG, DEPED AND DBM,
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shall jointly promulgate the necessary rules and regulations for the faithful and effective
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implementation of the provisions of this Act within ninety (90) days from the date of its
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effectivity.
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Sec. 3. Repealing Clause. - Any provision of laws, orders, agreements, rules, or
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regulations contrary to and inconsistent with this Act is hereby repealed, amended or
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modified accordingly.
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Sec. 4. Effectivity. -This Act shall take effect fifteen (15) days after its complete
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publication either in the Official Gazette, or in at least two (2) newspapers of general
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circulation.
Approved,