LOCAL BUDGET CIRCULAR Foc ers REPUBLIC OF THE PHILIPPINES Department of Budget and Management Building I, General Solano Street, San Miguel, Manila No. 386 June 18, 2007 TO : All Provincial Governors; City and Municipal Mayors; Barangay Chairpersons, Provincial/City/Municipa/) Barangay Sangunian Members, Regional Directors of the Department of the Interior and Local Government, Department of Finance, and Department of Budget and = Management; —_ Provincial/City/Municipal Treasurers/ Budget Officers/Auditors; and Other Officials Concerned SUBJECT : Rules and Regulations for the Grant of Ten Percent (10%) Salary Adjustment to Local Government Personnel effective July 1, 2007 1.0 Purpose This Circular is issued to prescribe the rules and regulations to govem the implementation of new Salary Schedules in the local government in view of the ance of Executive Order (EO) No. 611 dated March 14, 2007, which provides, among others, for a 10% salary adjustment over the monthly basic salaries as of June 30, 2007 of civilian goverament personnel effective July 1, 2007. 2.0 Coverage All authorized permanent, contractual or casual positions, appointive or elective, on full-time or part-time basis, now existing or hereafter created in local government units (LGUs) are covered by this Circular. 3.0 Exemptions The following are not covered by this Circular: 3.1 Consultants and experts hired by LGUs for a limited period to perform specific activities or services with expected outputs, Who shall be continually compensated pursuant to existing applicable laws, rules and regulations; Leow ay va a Recease Ben wee32 3.3 3.4 Student laborers, apprentices and others similarly situated who shall be continually compensated pursuant to existing applicable laws, rules and regulations; Laborers hired as part of a job contract (pakyaw), those paid on piecework bases, and others similarly situated; and Those whose services are hired without employee-employer relationships and funded from Maintenance and Other Operating Expenses appropriations. 4.0 Definition of Terms 41 4.2 For purposes of this Circular, the present monthly salary of an incumbent is the actual monthly salary received as of June 30, 2007, inclusive of Transition Allowance, but exclusive of Personnel Economic Relief Allowance, Additional Compensation, Representation and Transportation Allowances (RATA) as the case may be, honoraria, and other forms of additional compensation usually paid in addition to the monthly basic salary. The Transition Allowance is the amount of excess of the present basic salary of an incumbent over the salary corresponding to Step § of the salary grade allocation of his/her position. 5.0 Rules and Regulations 5. While Adopting Salary Schedules Appropriate for the LGUs? Income Classes S.1.1 Pursuant to EO No. 611, the monetary values of the salaries corresponding to the salary steps of each salary grade in the Salary Schedules for LGUs under Local Budget Circular No. 74 are hereby increased by 10% effective July 1, 2007 as indicated in the Salary Schedules attached as Annexes “A1” to “A8.” 5.1.2 The incumbents of positions shall receive the salaries in the appropriate Salary Schedules in Annexes “AI” to “AS” which correspond to the designated salary steps in the salary grade allocation of their positions as of June 30, 2007. 5.1.3 If the present monthly salary of an incumbent as of June 30, 2007, already exceeds the salary corresponding to Step 8 of the salary grade allocation of his/her position in the applicable new Salary Schedule, he/she is no longer entitled to the 10% salary adjustment. The incumbent shall continue to receive such excess which shall be referred to as Transition Allowance. Said allowance is ultimately reduced depending on the magnitude of future salary adjustments. It shall be treated as part of basic salary of an incumbent for purposes ofdetermining retirement benefit, year-end bonus and other compensation/benefits based on salary. The salary rate for a new appointee effective July 1, 2007 and thereafter shall be the salary corresponding to Step | of the salary grade allocation of a position in the applicable new Salary Schedule. If an appointee has previously received under an approved permanent appointment a salary higher than Step 1 of the salary grade allocation of his/her new position, the pertinent salary rule in Annex “B” of this Circular shall apply. Pursuant to RA No. 7305, “Magna Carta of Public Heath Workers,” the salary rates of devolved and organic Public Health Workers (PHWs) shall be as indicated in Annex “Al,” notwithstanding the income classification of the LGUs where they are assigned. Devolved personnel, except PHWs, whose salaries are now equal to or the same’ as their organic LGU counterparts, shall be entitled to the same salary adjustment as their organic LGU counterparts. The wages/salarics as of June 30, 2007 of casual and contractual employees who occupy classified positions and whose salaries are paid out of lump-sum appropriations or project funds, shall be adjusted to the wagesisalaries corresponding to Step 1 of the salary grade allocation of their positions effective July 1, 2007. The daily wage rates of casual employees shall be computed by dividing the monthly salaries corresponding to Step 1 of the salary grade allocation of their positions in their applicable new Salary Schedules by 22 work days. In the event that an LGU’s funds are not sufficient to implement the Salary Schedule prescribed for its income class, the implementation of the salary adjustments under this Circular shall be partial at a uniform percentage rate for all positions in the LGU concerned. An illustrative example is shown in Annex “C.” LGUs, however, should make sure that such implementation is sustainable in succeeding years. 5.2 While Adopting Salary Schedules for Higher Income Class LGUs 5.21 If as of June 30, 2007, a LGU adopts the Salary Schedule for a higher income class LGU as previously authorized, the incumbents of positions shall receive the salaries in the new Salary Schedule for the same higher income class LGU effective July 1, 2007, which correspond to the designated salary steps in the salary grade allocation of their positions as of June 30, 2007.6.0 7.0 5.22 If a LGU which was authorized to adopt a higher Salary Schedule is unable to implement fully the salary adjustment, it may opt to revert to the Salary Schedule prescribed for its income class provided no employees shall suffer diminution in salaries as a result thereof. 5.3 Honoraria for Barangay Officials and Employees 5.3.1 The maximum honoraria rates prescribed under Local Budget Circular (LBC) No. 63 dated October 22, 1996, for the barangay officials and employees are » adjusted accordingly based on the attached Salary Schedules. 5.3.2 If barangay funds are not sufficient to implement the maximum honoraria, the implementation of the honoraria adjustment shall be partial at a uniform percentage rate for all barangay officials and employees, Annex “D” shows an illustrative example of how honoraria increase is proportionately and uniformly implemented. 5.4 Non-Proportionate Increase in Allowances and Benefits Except for the year-end bonus and fixed personnel benefit contributions for Retirement and Life Insurance Premium, PAG-IB.LG., PHILHEALTH and Employees Compensation and Insurance Premium, there shall be no corresponding increase in the present allowances and benefits being received by or paid for local government personnel which are computed at percentages of their basic salaries, notwithstanding said 10% salary adjustment. Prohibition The Local Chief Executives and/or the Sangguniang Panlalawigan/Panlungsod/ Bayan/Barangay are prohibited from granting any salary adjustment in excess of the amounts herein authorized. Fund Source 71 7.3 The amounts necessary to implement the 10% salary adjustment shall be sourced exclusively from the funds of the concemed LGU. The personal services appropriation to implement said salary adjustment in LGUs adopting the Salary Schedules for their income classes are exempt from the Personal Services limitation provided under Sections 325(a) and 331(b) of RA No. 7160, “Local Government Code of 1991.” The differentials arising from the adoption of the higher Salary Schedule is subject to the budgetary and general limitations on personal services expenditures mandated under Sections 324 and 325(a) of RA No. 7160.8.0 9.0 10.0 11.0 12.0 Said amounts shall be provided for in an appropriation ordinance to be enacted by the Sangguniang Panalalawigan/Panlungsod/Bayan/Barangay taking into account items 5.1.9 and 5.3.2 hereof. Notice of Salary Adjustment 8.1 The Local Chief Executives shall notify each incumbent of a permanent, contractual and casual position concemed of any salary adjustment in accordance with this Circular through a Notice of Salary Adjustment (for an employee without Transition Allowance, Annex “E1;” for an employee with Transition Allowance, Annex “E2) 82 Copies of said Notices shall be furnished the Government Service Insurance System if the employee is a member thereof. Post-Audit 9.1 Copies of said Notice of Salary Adjustment shall be furnished the Commission on Audit (COA) for post-audit purposes. 9.2 Any salary adjustment granted to employees shall be subject to appropriate corrective action if found not in order. Responsibility of the Local Chief Executive The Le provisi salary prejudi ocal Chief Executive shall be responsible for the implementation of the ions of the Circular. He/She shall be held personally liable for any payment of adjustments not in accordance with the provisions of this Circular without ice, however, to the refund by the employees concemed of any excess payments made to them. Saving Clause Cases not covered by the provisions of this Circular shall be referred to the DBM for resoluti Effeeti ion. . ivity ‘This Circular shall take effect July 1, 2007.