State auditors have once again flagged the UP System over failures to enact the timely completion of infrastructure and numerous deficiencies in the university’s investments in the annual audit reports for fiscal year 2023.

This is a familiar situation for UP: Commission on Audit (COA) reports after the pandemic have continuously noted lapses in finishing projects on time. The state auditors alerted the university of uncompleted buildings worth P2 billion refunded projects costing P1.9 billion, and questioned P27 billion worth of investments.

“[These] significantly [affect] the timeliness and efficient delivery of services and program implementation and deferment of intended benefits to various stakeholders,” the state auditors wrote. 

Questioned Investments

Deficiencies in the university’s investments, trust funds, and foreign-assisted funds, totaling P27.8 billion, still persist despite an already similar flag from COA for fiscal year 2022, in which P400 million of P15 billion in allotments and trust funds were converted to time deposits.

A time deposit is a deposit in a bank account that cannot be withdrawn before a set date or for which notice of withdrawal is required. State auditors argued that these kinds of investments are contrary to the financial transactions and operations of government agencies, appropriations laws, and laws from the national budget.

The UP System rebutted COA’s flagging last year, citing Section 24(c) of the UP Charter, which states that an independent trust committee, of which the UP president is part, shall provide the Board of Regents with directions on appropriate investments to preserve the value of funds while allowing the university to earn a reasonable return.

UP Vice President for Planning and Finance Iryn Balmores explained in the statement that the university puts the investments in short-term placements “as part of good stewardship of funds.” She also divulged that income earned from these investments is used for educational purposes, despite not specifying any projects.

COA also raised the insufficient transparency of the state university regarding the nature of the invested funds and the absence of information on the utilization of its interest. 

Additionally, these investments are not covered by the Philippine Deposit Insurance Corporation, meaning any losses incurred shall be accounted for solely by the university, alerting state auditors of the riskiness of such endeavors. 

“The fiscal autonomy of the university is not absolute as well as the power of the UP [Board of Regents],” state auditors said, warning that failure to comply with the General Appropriations Act and memoranda of agreement regulations could warrant criminal action under existing penal laws.

Wasted Projects

For the UP System, UP Diliman, and the Philippine General Hospital (PGH), unobligated allotments totaled to P1.4 billion, which means that the projects granted to them can no longer be implemented and completed using the allocation for fiscal year 2023.

Lapsed projects include provisions on higher education services (P1 billion), implementation of research projects (P43 million), and the upgrading of classrooms in Palma Hall (P50 million).

Meanwhile in Taft, UP Manila also failed to fully utilize its annual budget. Of the university’s appropriations, P295 million remains unreleased. Furthermore, state auditors noted that UP Manila only completed one out of 15 locally funded projects worth P673 million in all.

“Unimplemented projects are lost opportunities for the university to serve the stakeholders and community with better school facilities and equipment while the funds allotted remain idle,” the audit team said on UP Manila’s budget utilization failure.

COA also pointed out that a total of P178 million in projects shared between the UP System and PGH were neither utilized nor disbursed at all. The delayed procurement process of seven projects in PGH constituted the lion’s share of this deficiency (P171 million). The remaining unutilized P7 million by the UP System was due to the non-usage of fund transfers and grants from various departments.

Poor Infra Planning

Despite the distinct desire of UP for infrastructure projects as seen in past budget proposals, COA flagged the university for its poor infrastructure planning yet again–about P2.4 billion in infrastructure projects from 2016 to 2021 remain unfinished as of December 2023.

This lack of proper infrastructure construction is felt by numerous colleges, like the College of Arts and Letters, who are struggling to find space within the university.

Highlights of the ongoing projects under the Department of Public Works and Highways include phases 1 and 2 of the Faculty Center (P675 million), phases 3 and 4 of the renovation of the University Health Service (P137 million), and the modernization of the University Library (P401 million).

Meanwhile, a number of projects were refunded to the Philippine International Trading Corporation due to their failed implementation. Missed opportunities include the construction of PGH Diliman (P100 million), and the multispecialty center, neuroscience institute building, and cancer care center (P300 million).

“The inability of the university to pursue and complete their projects on time contradicts the cash budgeting system being implemented by the General Appropriations Act,” state auditors wrote. “Likewise, allocated funds for the [projects] were unnecessarily kept idle and the maximum benefits to be derived by the end-users from completed projects were not realized due to the delays.” ●