Excess PhilHealth and GOCC Funds to Finance Government Workers’ Salary Hikes, Benefits — DBM

Billions of pesos in excess funds from state-run corporations, including P89.9 billion from PhilHealth, will be redirected to the Treasury to finance salary increases and benefits for government workers this year. This move is part of the priority programs under unprogrammed appropriations outlined by the Department of Budget and Management (DBM).

The DBM’s list of 2024 unprogrammed appropriations has earmarked a total of P67.6 billion for Personnel Benefits and the Salary Standardization Law VI (SSL 6).

In March, the Department of Finance (DOF) issued Circular No. 003-2024, directing government-owned and -controlled corporations (GOCCs), such as PhilHealth, to remit excess funds back to the Treasury. This was to enable the government to fund unprogrammed appropriations.

Of the total amount, P40 billion will specifically cover salary adjustments for approximately 1.8 million government workers. The DBM previously announced that the first wave of the Marcos administration’s four-tranche salary hikes, retroactive to January 2024, will start this year following the issuance of Executive Order No. 64. This order increases salaries and grants additional allowances to government employees.

The first tranche of the SSL 6 will cost about P36 billion, sourced from the Fiscal Year 2024 General Appropriations Act (GAA), including the miscellaneous personnel benefits fund (MPBF) and unprogrammed appropriations. The average salary adjustment rate across all salary grades (SG 1 to SG 31) will be 4.41%.

Additionally, P27.6 billion has been allocated to cover government personnel benefits, such as performance-based bonuses, allowances, medical expenses, compensation adjustments, and staffing modifications.

Due to the DOF’s directive, PhilHealth was required to remit P89.9 billion in excess subsidies, with P20 billion already remitted in the first quarter to fund over P27 billion in unpaid COVID-19-related service allowances or health emergency allowances (HEA) for frontliners. As of August 21, PhilHealth had remitted an additional P10 billion to the Treasury.

Other GOCCs, such as the Philippine Deposit Insurance Corp. (PDIC), have also been tasked with remitting excess funds, with PDIC transferring P80 billion of the mandated P117 billion to the Treasury.

In total, P203.1 billion worth of unprogrammed appropriations, covering 11 priority programs and projects, will be funded by excess funds from GOCCs. These programs include:

• Government counterpart of foreign-assisted projects: P51.7 billion
• Personnel benefits: P27.6 billion
• Public Health Emergency Benefits and Allowances for Health Care and Non-healthcare Workers: P27.7 billion
• NEDA-PSA: Community-Based Monitoring System: P3.6 billion
• Payment of right-of-way: P3 billion
• Maintenance, repair, and rehabilitation of infrastructure facilities: P6 billion
• Proposed Salary Standardization Law VI: P40 billion
• Fiscal support arrearages for the Comprehensive Automotive Resurgence Strategy (CARS) Program: P415 million
• Support to Barangay Development Program of NTF-ELCAG: P6.5 billion
• Department of Public Works and Highway’s various projects: P26.6 billion
• Revised Armed Forces of the Philippines Modernization Program: P10 billion

Several parties, including the Philippine Medical Association, Senator Aquilino “Koko” Pimentel III, and others, have filed a petition with the Supreme Court to block the transfer of PhilHealth’s P89.9 billion excess funds to the Treasury to fund unprogrammed appropriations. Last week, the Supreme Court ordered senior government officials to submit their comments on this petition.

In response to the criticisms, Finance Secretary Ralph Recto defended the move, stating that it has a legal basis and complies with Congress’s directives under the 2024 GAA. Recto emphasized the importance of using idle funds to support priority programs in health, education, and infrastructure.