New rules push LGUs to tap billions in unspent funds for reading programs

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December 4, 2025 | 1:49pm

MANILA, Philippines — The Department of Education and three other departments have jointly signed new guidelines that aim to push local governments into using up billions of pesos in idle school funds to address gaps in students' reading skills.

From 2018 to 2022, local governments failed to spend at least P15 billion of their Special Education Fund — funding support for public schools collected from tax on real property, EDCOM 2 reported last year. Cities had the worst underutilization rate at 57%, despite persistent shortages in classrooms and learning materials in their schools.

The Joint Circular signed yesterday by DepEd, the Department of Budget and Management, Department of the Interior and Local Government, and Department of Finance updates rules that previously limited how municipalities, cities, and provinces could spend the fund.

"This landmark Joint Circular is what will enable us to fix the foundations," EDCOM 2 Executive Director Karol Yee said. 

By updating and rationalizing the rules for its use, Yee said, local governments can use their SEFs to support programs in early chilldhood education, nutrition, the Alternative Learning System. It can also be used for DepEd's ARAL program. 

All this, Yee added, is to "make sure that the SEF could be used by LGUs to support the needs of our learners and schools today, especially in literacy."

Linking funds to student performance

Under the new circular, local governments must use their schools' results from literacy and numeracy tests — the Comprehensive Rapid Literacy Assessment, Philippine Informal Reading Inventory, and Rapid Mathematics Assessment — when preparing their Special Education Fund budgets.

"More than just providing a list of allowable expenses, the new Circular puts a strong focus on improving learning outcomes," Yee said. "Through these updated guidelines, LGUs and schools can work more closely together to make sure every Filipino learner attains literacy and numeracy."

The fund comes from a one percent real property tax. Provinces get 50% of collections while municipalities receive the other 50%. Cities keep all their collections.

EDCOM previously reported that the Special Education Fund has been persistently underutilized and inequitable, with large disparities between different local government units despite its potential to support inclusive education.

First class municipalities have SEF income 68 times more than sixth class municipalities, while the median SEF income of municipalities stands at P1.6 million — just 4% of what cities and provinces collect.

EDCOM 2 was created through Republic Act 11899 in 2022 to assess the Philippine education sector's performance and recommend legislation addressing the education crisis over the next three years.