An Act Providing for a Full Tuition Subsidy for Students Enrolled in State Universities and Colleges (SUCs), and Appropriating Funds Therefor

• This bill seeks to provide for a full tuition subsidy to students enrolled in SUCs. This translates to an estimated additional subsidy to SUCs equivalent to the amount collected from tuition fees and other fees collected from students.
• The initial funding requirement shall be sourced from the fifty percent (50%) share of the National Government from the annual gross income of the Philippine Amusement and Gaming Corporation (PAGCOR).

Explanatory Note

The system of free public basic education has long been in existence in the Philippines. Free and compulsory elementary education was established by the Malolos Constitution in 1899, whereas free secondary education was formalized with the enactment of Republic Act No. 6655 in 1988. Tertiary education in State Universities and Colleges (SUCs), however, has never been free albeit government subsidy.

The budget allocation to basic education has been getting a substantial share in the national expenditures and has continued to increase over the years. It has gone from 12.3% of the National budget in 2009 to 14.4% in 2016. Whereas, the subsidy provided to SUCs by the National Government (NG) has remained at lower levels. Since 2005 to date, the SUCs’ share of the NG budget has never gone beyond the 2% mark .

According to FY 2014 data, the estimated annual government cost per student in an SUC is at an average of P21,000. This drives SUCs to internally generate their own income through the collection of tuition fees and through grants and donations, among others, to sustain the cost of their operations. In 2014, income collected by 114 SUCs nationwide from tuition fees amounted to P7.9 Billion while other income collected from students totaled P4.7 Billion . Tuition fees that form part of students’ out-of-pocket expenses for their college education range from as low as P12 to as high as P1,000 per unit and are expected to increase further to adjust for inflation. These fees become one of the compelling reasons that discourage some students to pursue and finish tertiary education.

Results from the 2013 Functional Literacy, Education and Mass Media Survey (FLEMMS) show that among the primary reasons for not attending school were insufficient family income and high cost of education.

Finishing higher education has a significant impact on income and employment. The average daily wage that a college graduate could receive is 140% more than that of a high school graduate . The significant difference in income is a good reason to put sustained investments in tertiary education.

Thus, this bill seeks to provide for a full tuition subsidy to students enrolled in SUCs. This translates to an estimated additional subsidy to SUCs equivalent to the amount collected from tuition fees and other fees collected from students. The initial funding requirement shall be sourced from the fifty percent (50%) share of the National Government from the annual gross income of the Philippine Amusement and Gaming Corporation (PAGCOR).

The goal of this measure is to reduce the out-of-pocket expenses which hinder some students from completing tertiary education. The government can now afford this reform due to its more stable macroeconomic position brought about by prudent fiscal policies, an improved tax collection efficiency, and a remarkable economic performance.

Accordingly, in 2014, government spending fell short of its targets. The underspent funds of the SUCs which amounted to P4.2 Billion in 2014 could already form a substantial part of the fund needed for the full tuition subsidy. The total amount to make SUCs tuition-free would be equivalent to just about 0.4 percent of the 2016 budget, which is a rational and sustainable allocation given its positive impact to economic and social development.

As expressed in the Philippine Development Plan, the country’s vision of inclusive growth and development entails sustained investment in human capital, particularly through the provision of quality basic education, competitive technical vocational skills training, and relevant and responsive higher education. Significant results can then be realized by making higher education competitive and responsive to national development goals.

In view of the foregoing, approval of this bill is earnestly sought.

RALPH G. RECTO

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