Umalusi 2010/11 Budget Review

Meeting report

Umalusi briefing
Dr Mafu Rakometsi, Chief Executive Officer: Umalusi, gave the Committee a brief overview of Umalusi’s mandate, vision, mission and goals. Umalusi hoped to improve and maintain the system for quality assuring assessments for certification, to establish and implement a system for evaluation and accreditation of providers, and to develop and maintain management support structures and governance.

The current 2009/10 budget was compared with the actual expenditure budget for the financial year. R40 623 735 was the amount spent of the R53 843 713 allocated budget. Umalusi had under-spent on quite a few programmes such as Quality Assurance of Assessments (QAA), Information Technology (IT) services and finance services. They overspent on their Statistical Information and Research (SIR) programme.

Umalusi prepared a 2010/11 budget forecast for all of its programmes. They required a 96% budget increase for QAA, a 17% increase for Evaluation and Accreditation, an 18% increase for Qualifications, Curriculum and Certification, a 30% increase for SIR, a 14% increase for Management Support Structures, a 15% increase for IT and a 14% increase for both Human Resources and Finance services. This gave a total budget increase of 29% for 2010/11. 

The three year budget forecast showed a 29% increase in 2010/11, a 16% increase for 2011/12 and a 15% increase for 2012/13. Umalusi showed that the total grant that they required was much less than the actual grant they would receive for 2011-2013. For 2011, Umalusi required a 47% grant increase; however, they would only receive a 25% increase. Umalusi required a 56% budget increase for 2012 but would only receive a 23% increase. They would receive a 21% increase in their grant for 2013 as opposed to the 60% increase that was required.

Umalusi’s challenges revolved around its financial stability, which relied on increased funding from the Department of Basic Education as approved by National Treasury.  Umalusi wanted to focus on the possibility of a new funding model, they wanted to move from a certificate fee structure to a QA levy, and they wanted to increase the baseline allocation of the grant.

Discussion
The Chairperson asked if Umalusi was like other institutions that received a “ring-fenced” amount of money from the Department of Basic Education’s budget through the National Treasury. She asked if the Department sat down with Umalusi and decided how much money it needed to request from the National Treasury. Did the figures presented by Umalusi have the concurrence of the Department?

Mr Theuns Tredoux, Chief Financial Officer: Department of Basic Education, answered that the Department had approached National Treasury and asked for an increase in Umalusi’s budget. The Department even approached the National Treasury in the 2008/09 financial year to ask them to increase Umalusi’s subsidy for 2009/10. Unfortunately, this bid was not successful. This year, together with Umalusi, the Department prepared a proposal showing that many of the costs that Umalusi carried were functions for which they had to invoice as services rendered. There was a problem with the method of invoicing as well as with the payments of some of the invoices and this placed a burden on Umalusi. The Department’s proposal was that the National Treasury deducts these amounts from the equitable share to provinces and allocates it directly to Umalusi. Umalusi and the Department were still waiting for an official response from the Treasury. In the last discussion that was held with Treasury, they indicated that there was tremendous pressure on provincial budgets over the Medium Term Expenditure Framework (MTEF) so they could not easily support a deduction from the equitable share to province. The Department had already had a discussion in their senior management meeting and decided to approach the heads of the Education Department’s committee with a detailed budget proposal. The Department would also approach the Council of Education Ministers to ask them to support the proposal. The Department and Umalusi hoped to resolve this matter by 2011/12.

The Chairperson noted that the presentation showed the budget versus the actual expenditure for the financial year for 2009/10. There was quite a bit of under-expenditure in relation to Information Technology (IT) services. She also noted that Umalusi was asking for a 15% increase in its IT services budget for 2010/11. She asked Umalusi to explain this.

Mr Thomas replied that there were some aspects of the budget that they would have to discuss, as they did not know what the next budget increases were going to be like. There was a large IT project centered on disaster recovery that was planned for 2011. The project entailed all of Umalusi’s information automatically being stored off site. A large amount of money was therefore required. An increase in the budget was also needed for the hosting of an onsite website and integration with requirements for an electronic data documents management system. Umalusi was also looking at implementing an item bank system for question papers and developing a system for the capturing and managing of irregularities.

The Chairperson stated that it was very difficult for the Committee to establish Umalusi’s priorities in the current budget even though they were very forceful about the budget they needed. Parliament was now in the process of rolling out the legislation that allowed Parliament to amend budgets. It was important for all institutions that reported to Parliament to take this into consideration. In order for the Committee to make any suggestions to the parliamentary committees that would scrutinise and amend the budgets, Umalusi had to convince Members that they were a priority. At this point, the Chairperson did not even know what the increases in Umalusi’s budget proposal entailed. She suggested that Umalusi provide the Committee with a set of analyses for all the budget increases they were asking for in the future. This would give the Committee a sense of what the big issues were.

Mr J Lorimer (DA) noted that there was a gap between the amounts of money that Umalusi invoiced and the payments they received. How big was this gap in terms of actual money? He asked why Umalusi increased their sample sizes. The members heard that there would be new external testing for Grade 3, 6 and 9. Was Umalusi involved in that?

Mr Thomas replied that Umalusi’s outstanding debtors at this point in time stood at approximately R6 million. The amounts were made up of provincial departments as well as Further Education and Training (FET) colleges that failed to pay Umalusi on time. Umalusi had to institute a mechanism to force FET institutions and provincial departments to pay the money that was owed.

Ms Eugenie Rabie, Chief Operating Officer: Umalusi, answered that there would be a vertical and horizontal increase in sample sizes. The National Senior Certificate was a three year qualification that began in Grade 10. Umalusi currently focused only on Grade 12 and was looking to expand their focus to Grade 10 and 11 in terms of how they looked at qualifications, the quality assurance aspect and the curriculum. Umalusi would be looking at areas where the standard of education could be compromised. She added that Umalusi was not involved in the Grade 3, 6 and 9 external testing.

Ms N Gina (ANC) said that she did not think that the Committee could talk to the presentation as it seemed to be very vague. She did not want to wait until October to have a meeting with Umalusi again, since there were a lot of changes that needed to be made to their budget presentation. She asked if Umalusi could return to Parliament as soon as possible so they could re-do their presentation.

The Chairperson suggested that Umalusi would have to send the Committee a report of an analysis of their budget and the increases that they were proposing. The Committee had a tight schedule and could only sit in Parliament at certain times; therefore, they could not just end the meeting and re-schedule it.

Ms M Kubayi (ANC) asked Mr Tredoux what model they used in their decision to fund entities such as Umalusi. What informed the Department’s priorities in allocating its budget? How did the Department and Umalusi determine the percentage increases in the budget requests?

Mr Tredoux answered that there was a shifting of functions between Umalusi, the South African Qualifications Authority (SAQA) and the Council on Higher Education (CHE). SAQA and CHE would fall under the Department of Higher Education (DoHE). The DoBE and DoHE would relook at the budgets of those three public entities. The possible remodeling of the subsidies that Umalusi would receive was part of the discussions the DoBE was having with National Treasury to reduce the administrative burden experienced by Umalusi and the provinces. In the past, subsidies to public entities, in general, were based on the relative percentage of the total budget of those public entities. Since then, due to economic pressures on the DoBE budget, it was not possible to simply increase these subsidies. In the case of Umalusi, there was a backlog of subsidies that they should receive due to the additional functions that it had to perform.

Ms F Mushwana (ANC) addressed the section of the presentation that focused on the grants Umalusi required and the actual amounts they would be receiving for 2011, 2012 and 2013. She stated that comparison between what was needed and what Umalusi was actually getting painted a bleak picture and showed that Umalusi was quite underfunded. However, Umalusi had also under spent on their current budget. This did not motivate people to want to give the entity more money.

Mr Thomas replied that the difficulty about the presentation Umalusi made to the Committee today was the whole aspect of timing with regards to the response they received from the Ministry. They should have presented their budget to the Committee after re-working it and basing it on Umalusi’s secure funding. The strategic plan and budgets for the next three financial years were submitted to the Ministry in September 2009. Umalusi had received a response from the Ministry on 26 February 2010 about the secured funding and approval of the budget. Umalusi had not had to re-work the budget; therefore, the presentation that the Committee received was the actual budget that was presented to the Ministry.

Ms J Kloppers-Lourens (DA) asked Umalusi to explain their need for an item bank and what the implementation of this bank would entail.

Ms Rabie replied that Umalusi was currently involved in a project that had “two legs”. In terms of the National Senior Certificate, Umalusi was currently developing a set of anchor items that would be included in exam papers. These items would be written in a specific way and would be graded according to cognitive difficulty. There was quite a process in writing questions out, pre-testing and then selecting them. The same questions would not be tested; Umalusi would look to include questions with the same cognitive difficulty. This “anchored” the standard in a way. This was what Umalusi wanted to move towards in terms of quality assurance and setting the standard. There was a new qualification that Umalusi was proposing. It was an alternative matric qualification for adults and was intended to cater to a large market of young people that were not in school. Umalusi was looking at how they could develop item banking along with the DoBE and DoHE so they could deliver this idea on demand. Item banking itself required quite a sophisticated IT platform. Not only were the items banked, the bank had to grade the items and select the tests on demand. The idea was to build up a bank of questions and use them over time to form a standard setting mechanism for exam papers that were set.

The Chairperson clarified that the bank would be used to assist the exams unit that set the questions.

Ms Rabie stated that this was correct.

The Chairperson wondered why the unit that prepared the exam papers did not form the item bank. This was not part of Umalusi’s core function and they were doing it so the exams could have a certain scientific basis. This should not be done at Umalusi’s level. Umalusi’s core mandate focused on quality assurance.

Ms Rabie replied that this was joint venture with the DoBE. Umalusi’s new mandate was to set a standard, not just to quality assure. The item bank would make it possible to set the standard year upon year in a more reliable way. Umalusi was not taking over the role of setting the exam papers.

In response to Ms Kloppers-Lourens asking if the Human Sciences Research Council (HSRC) was involved in this venture, Ms Rabie answered that the HSRC was involved. 

The Chairperson stated that the Committee would need to engage with Umalusi on their strategies and priorities at some point. Umalusi would have to amend their budget proposal. For now, the Committee would request that a report showing an analysis of the budget be sent to Members. The Committee would have a detailed discussion about the budget once it was reprioritised.

The meeting was adjourned.