Financial Corporations

Data Sources

• For pre-need corporations, data on education expenditures were taken from the financial statements submitted to the Securities and Exchange Commission (SEC). Additional information was obtained from the financial statement of a pre-need corporation that was published through the Internet. The data on total expenses and net sales were extracted from a special tabulation also prepared by the SEC. Meanwhile, data on benefit payments for educational plans were obtained from the annual reports of a selected pre-need company.

• Actual data on the education expenditures and total expenses of insurance companies were drawn from the annual financial statements of all private insurance corporations, which are consolidated by the Insurance Commission (IC) and published in its annual reports.

• For the public banks, the detailed financial statement of the Bangko Sentral ng Pilipinas (BSP) for 1994 provided data on the bank’s outlay for personnel training programs, which was considered as its education expenses. On the other hand, one of the country’s largest private banks responded to NSCB’s request for data on their education expenses but provided only the 2000 figure.

• The consolidated operating expenses of public and private banks were obtained from the BSP Philippine Financial System Factbook. For non-banks, data on total operating expenses were gathered from the Census of Establishments (CE) and the Annual Survey of Establishments (ASE) of NSO.

• Actual data on the education expenditures and total expenses of insurance GOCCs were drawn from the annual reports of the Government Service Insurance System (GSIS) and the Social Security System (SSS).

• Employment data of BSP and public non-banks were culled from the COA AFR Volume II. Meanwhile, employment data of SGBs and private banks and non-banks were taken from NSO’s CE and ASE.

Coverage and Estimation

• The specific expense items that were considered as education expenditures of financial corporations were those incurred for manpower training and development, personnel improvement, training and seminars, professional books and periodicals, and scholarships, as well as the benefit payments made by pre-need corporations for their educational plan holders.

• The average percentage share of education expenditures out of the total expenses of pre-need corporations was calculated based on the data of four pre-need corporations, the only corporations with available financial statements that reflected specific education expenses. This was done by computing for the average of education expenditures and total expenses, and getting the ratio of these two items. The resulting parameter was then applied to the total expenses of all pre-need companies to estimate their education expenditures from 1991 to 1998.

• For the benefit payments for educational plans, the data culled from the 1991 to 1998 annual reports of one pre-need company were used to establish the ratio of education plan benefits to net sales. Since the breakdown of plan benefits by type of plan (education, pension, and memorial) is given only for 1994 to 1997, the four-year average was used to estimate the structure for the years 1991-1993 and 1998. Each ratio was then applied to the corresponding net sales of all pre-need corporations to come up with estimates of the total benefit payments of pre-need companies from 1991 to 1998.

• Actual data on the 1991 to 1998 total expenses of insurance companies were obtained from the Insurance Commission. However, actual data on education expenditures were available only from 1994 to 1997. The estimates for 1991 to 1993 were computed using the ratio of the 1994 figures. On the other hand, the 1997 ratio was used to estimate the 1998 education expenses of insurance companies.

• Two methods of estimation were employed for the education expenses of banks and non-banks: the ratio method and the per capita method. In the absence of any other indicators during the period of estimation, the estimation parameters used for both methods were calculated based on a sample of only one public bank, one private bank, and one non-bank.

• The first method made use of the ratio of education expenditures to the total operating expenses as estimation parameter, while the second method employed the ratio of education expenditures to total employment. These parameters were computed based on the data for the sample bank/non-bank and were then applied on the total operating expenses and on total employment.

• Option 1 (ratio method) resulted in slightly higher estimates for public banks and non-banks, but very low estimates for private banks and non-banks. Option 2 (per capita method) estimates displayed the opposite trends. A third option was therefore adopted wherein the average of options 1 and 2 was used.