Under-spending on HIV and AIDS Grants: Provincial Departments of Education public hearings

Meeting report

National Treasury Presentation
Mr Edgar Sishi, Director, National Treasury, said that the education budgets of the majority of provinces had, particularly in relation to compensation budgets, been placed under significant pressure. As of 31 December 2009 the total overspend figure of the provinces stood at R1.7 billion. The bulk was in the Eastern Cape with R640 million on personnel. A number of provinces were, however, projecting an under-spending on their goods and services budgets (such as learner support materials) by R700 million in 2009/10. Specifically, compensation appeared to be crowding out other spending items.

There was a projected overspending of R211.2 million in seven provinces on capital spending. Transfers were at R8.1 billion (90.5%) against adjusted budgets.

In the Public Ordinary Schools Programme, the largest programme in education, the Eastern Cape and North-West provinces had the fastest rate of spending their budgets compared to the same period in the previous financial year.

In the HIV and AIDS Life Skills Grant, there had been a projected under-expenditure of R1.628 m. Year-on-year growth for spending on this grant was negative with provinces spending at a rate10% slower compared to the same time last year. The largest declines were noted in the Eastern Cape (-24%), Mpumalanga (-28%) and North West (-47%). National Treasury had discussed with provinces that, as this was a purpose-specific grant, there could not be any projected over-expenditure. Provincial and national Education needed to manage cash flows accurately, as funds were made available to provinces during parts of the year in which they are not needed.

Spending in the National School Nutrition Programme had accelerated quite significantly - (46%) compared to the same time last year. Most notable in this regard were Gauteng (78%), the Western Cape (72%) and Mpumalanga (66%). At the end of 2008/09 the Grant under-spent by R402 million.  Current trends indicated that under-spending would not exceed R40 million.

Discussion
The Chairperson asked why expenditure had so significantly slowed down in certain provinces.

Mr Sishi answered that many of these provinces had not sufficient capacity to spend the money; therefore expenditure was not taking place as it should have. National Treasury had asked these provinces to ensure that sufficient capacity to address this issue. Another contributing factor was the delay in the approval of plans and training requests.

Mr T Harris (DA, Western Cape) asked whether Limpopo’s projection of spending the R15 million remaining of its budget within the one month remaining for the financial year was achievable.

Mr Sishi answered that National Treasury also had doubts around this projection, especially as the province had under spent in the previous financial years.

Mr Harris asked where, in terms of the grant, additional funds came from.

Mr Sishi answered that, as grants were purpose-specific, provinces should not be reporting over-expenditure. This implied poor financial management on their part.

Mr C de Beer (ANC, Northern Cape) asked whether the National Treasury audited the competencies of chief financial officers (CFOs) in the provinces.

Mr Sishi answered that the National Treasury could not influence this as accounting officers needed to judge this at the recruitment stage. It did, however, engage with CFOs from the various Departments through Quarterly CFO Forums during which it informed these CFOs around issues around finance management. It had also conducted a survey to garner more information about CFOs. There was, however, a poor response to this survey.

Eastern Cape Department of Education Presentation
Mr Mahlubandile Qwase, Member of the Executive Council (MEC), Eastern Cape Department of Education, said that the province’s allocation and transfers had increased from around R25 million in 2006/7 to R30.168 million in 2009/2010. Its actual expenditure had also increased since 2006/07, though it had decreased from 2008/09 (R29.451 million) to 2009/10 (R27. 577). Its total expenditure spend for 2009/10 stood at 91%, down from the 2008/09 figure of 103.4%.

In relation to the overall management and coordination of the programme, there were, in addition to the one provincial Life skills and AIDS Coordinator, seven provincial officials and 23 district co-ordinators. With regards to the Peer Education programme, there were 223 out-of-school youths who were peer group trainers.

With respect to orphans and vulnerable children, there were 30 volunteers (caregivers), one project manager and 19 project officers. There were also health advisory committees in 300 schools with 23 district co-ordinators, one project manager and 19 project officers.

The reasons for its under-expenditure were as follows. Fewer activities in the business plan were planned for the third quarter of the financial year as the emphasis placed on preparations for examinations affected the availability of the targeted groups (learners and educators) for the Life Skills and AIDS programme; the provincial Department did not determine the payment schedule for the tranches of the conditional grant, the third tranch of which was transferred on 30 October of each financial year. The mechanisms it had to deal with under-expenditure were as follows. In motivating for a rollover from the 2009/10 financial year to deal with the under-expenditure of R2 519 000, the under-expenditure would be offset by the accruals of the 2009/10 financial year (R3 345 958).

In terms of compliance with reporting, monthly in-year monitoring meetings were held and monthly reports were submitted. The programme complied with the submission of reports to the national Department of Education as the transferring Department. All schools implementing the programme had also been monitored by Districts. An annual evaluation for 2009/10 would also be conducted from 03 to 07 May 2010. This report would be forwarded to the national Department of Education.

There was a challenge around the Director for HIV & AIDS Life Skills and Social Planning, who was suspended for irregularities. This matter was currently being investigated.

Discussion
Mr De Beer asked how many learners there were in the province.

Mr Qwase answered that there were in excess of two million learners in the province. Ten thousand peer educators were trained and these in turn targeted other learners.

The Chairperson asked why the targets set against those achieved were not listed in the presentation. What was the impact of its under-expenditure on efforts to fight HIV/AIDS? Why was there a focus on only one part of the province?

Mr Qwase answered that the Department followed the information requested by the Committee. The Department was contributing towards the fight against HIV/AIDS by being active in the Provincial AIDS Council. The Department focussed on areas in which HIV/AIDS rates were high.

Mr Harris said that the rollover motivating for was not an adequate means of addressing under-expenditure.

Mr Qwase responded that, in relation to the under-expenditure noted in the presentation, although work had already been done, the constraints placed on all Departments by the Provincial Treasury with regards to expenditure had led to the Department’s not being able to pay a number of invoices.

Mr S Montsitsi (ANC, Gauteng) asked whether there was any capacity to deal with over-expenditure of its compensation budget.

Mr Qwase answered that there had been problems in this regard as a result of the Department not having a CFO. Positions in its finance section were being filled so as to better address these concerns. The amount allocated for occupation specific dispensation (OSD) was insufficient. This led to over-expenditure of the compensation budget. The Department was currently working with Provincial Treasury in order to address this over-expenditure.

Limpopo Province Department of Education Presentation
Mr Namane Masemola, MEC, Limpopo Department of Education, said the spending in the 2009/10 financial year had improved from previous years. The initial allocated amount of R25 882 000 had been spent, though the rollover from 2008/09 (R3 907 000) had pushed the adjusted budget to R29 789 000. The reasons for its under-expenditure were as follows: the delay in the appointment of home-based caregivers and the fact that they were only appointed towards to the end of the financial year; and the appointment of the service provider for the training of ABET coordinators and practitioners did not take place due to a delay in the supply chain processes.

In order to address its under-expenditure the Department would ensure that all activities which involved supply chain processes were conducted early in the year; and appoint additional staff to coordinate Life Skills HIV & AIDS programme at district level to assist the three officials at Head Office who were currently managing and coordinating all these activities.

Discussion
Mr Harris asked how the Department would spend R9 million in one month when it had spent only R15 million over 11 months. How had its initial forecast of breaking even in terms of its spending had turned into an under-expenditure of R3 million?

Mr Masemola answered that he was confident that, with the present team’s level leadership and commitment, the Department would be able to redress many of the issues not dealt with effectively before. The paying of outstanding invoices would also affect this.

Mr M Makhubele (COPE, Limpopo) asked by when it planned to have its procurement unit strengthened.

Mr Masemola answered that all the necessary posts in the Department’s finance section would be filled by July 2010.

The Chairperson asked why targets set were not listed in the presentation against those achieved. What was the impact of its under-expenditure? The pace at which it was addressing the lack of capacity was slow and therefore ineffective. Timelines needed to be set in this regard.

Mr Masemola answered that the Department was not hiding anything by not including this information. It had merely responded to the information requested by the Committee. It could forward this information to the Committee in writing. The HIV/AIDS programme had to be monitored closely so as for it to have a positive impact. Certain internal activities had negatively affected the Department’s capacity. The Department had, however, brought different teams together so as to address this.

Mpumalanga Department of Education Presentation
Ms Regina Mhaule, MEC, Mpumalanga Department of Education, said that the Department’s total budget allocation was R14 982 000 and its actual expenditure was R8 116 000 with commitments to the value of R2 745 000. Its expenditure percentage stood at 91%, up from 90% in 2008/9.

In terms of the Department’s annual planned output, it had by the end of the third term exceeded its target of empowering 1 800 educators around sexuality education and the prevention of drugs and substance abuse. It had also empowered 600 SMT members on policy development. In addition it had empowered 1 680 Grade 10 learners on a Peer Support programme to promote healthy lifestyles, hosted one Soul Buddyz congress and established 637 Soul Buddyz clubs.  Also, it had provided 4 666 educators and 3 000 learners with learner and teacher support materials (LTSMs). Nine open discussions between parents and learners were held, 12 clusters of school governing bodies (SGBs) were empowered and three workshops with traditional healers were held.

Monitoring was done as per the requirements set out in the Division of Revenue Act and the Public Finance Management Act. This was done within the broader monitoring process led by the Department of Basic Education. Three Life Skills officials monitored and supported the effective implementation of the programme on a quarterly basis. Ten Life Skills Regional Officials monitored the implementation of the programme by visiting the schools and submitting reports to the Provincial office for effective monitoring and the provision of adequate support for all schools. Quarterly and Annual Reports were compiled and sent to the Department and National Treasury by the Provincial Officials reporting on financial and non-financial indicators. A Provincial evaluation team conducted pre-evaluation of between 10 and 20 schools before the final evaluation by the National Department was conducted at the end of each financial year. Evaluation reports were compiled by the Provincial evaluation team at the end of each financial year. The National Coordinator of Life Skill, together with the Development Support Directorate, monitored the implementation of the programme twice a year. Twelve monthly, four quarterly as well as annual reports were compiled, signed by the Accounting Officer and submitted to the national Department of Education as well as National Treasury. Four Regions submitted monthly, quarterly and annual reports to the Regional Director and Provincial Officer.

Challenges faced by the Department included the availability of cash flow and the monitoring of the delivery of activities due to non-availability of staff at regional level. It hoped to address these challenges by reviewing the arrangement with Provincial Treasury and by including curriculum support staff in order to assist with the monitoring of the delivery of the programme at schools.

Discussion
Mr Harris asked how the Department intended spending 30% of its budget in the last term.

Ms Mhaule replied that the Department had a cash flow problem. By 31 December 2009 it had had commitments which had not been paid.

Mr Makhubele asked why there was the issue of non-availability of staff.

Ms Mhaule answered that there were not dedicated officials to deal specifically with this issue; the Department added responsibility to officials in the regions. Curriculum implementers would be trained so as to address this issue.

Northern Cape Department of Education Presentation
Mr E Kistoo, Director, Northern Cape Department of Education, said that the Department’s allocated budget was R3 828 000 with expenditure at R3 680 242. Its percentage expenditure stood at 96%. It had also reached 485 learners through advocacy programmes in order to raise awareness, monitored 84 schools, ABET centres and FET Colleges, motivated 105 learners through the Matric Intervention Programme, trained 33 educators in Care and Support, trained 74 educators as Lay Counsellors, trained 25 educators in drug abuse, and trained 196 learners as Peer Educators.

In terms of the monitoring of the programme, a monitoring tool was utilised for schools and district offices to monitor the implementation of the programme. Monitoring was also done against the approved plan and was a continuous process. Bi-monthly meetings were held with districts to monitor progress and address any challenges. Monthly, quarterly and annual reports were submitted by the districts, though there were challenges in districts in which there were no coordinators. Other challenges included the lack of clerical staff in the Life Skills and HIV/AIDS Unit, which resulted in challenges with data capturing and the processing of payments; new educators for the programme due to reshuffling at schools resulted in constant need for retraining; and dysfunctional Health Advisory Committees at sites.

Discussion
Mr De Beer asked how the Department had turned the over-expenditure it noted two years prior around.

Mr W Oosthuizen, Chief Financial Officer, Northern Cape Department of Education, answered that, should the Department have had received its OSD allocations, it would have noted a break-even budget.  The Department had reshuffled R92 million so as to prevent the Province falling into financial difficulties.

Mr Harris asked how the Department budgeted for over-expenditure.

Mr Oosthuizen answered that the Department would never over-spend on a conditional grant.

Mr Sishi added that though the Department had improved significantly with regards to its spending. The Department had, however, not submitted its performance report as required by the Division of Revenue Act.

Mr Oosthuizen responded that the Report had been drawn up and signed. The Department would follow up this matter and inform the Committee.

The meeting was adjourned.