Mpumalanga & Limpopo Departments of Education on under/over-expenditure on the National School Nutrition Programme: public hearings

Meeting report

National Treasury Presentation
In his presentation, Mr E Sishi, Director, National Treasury, said that as at 30 June 2010, provinces had spent around R523 million of the R3.7 billion budget allocated for the National School Nutrition Programme Grant.  Although there had been an overall growth in expenditure of 12.5%, provinces such as Gauteng, the Eastern Cape and North West had seen a decline in expenditure. The Eastern Cape was already projecting to under-spend by approximately R101 million at the end of the 2010/11 financial year. The province had spent R10 million of the R190 million it had been allocated as a result of the late approval of the tender for April to June feeding. This had also led to reduced spending for the first quarter as many schools were then forced to revert to cheaper, bread-based meals pending the confirmation of a new tender. Gauteng had spent only R39 million of its R109 million budget as a result of the late submission of invoices by suppliers. KwaZulu-Natal had spent R133 of its allocated R235 million as a result of the large number of claims which had to be sent back to districts to be corrected and re-submitted. Mpumalanga had spent R49 million of the R97 million allocated to it due to delays in the system which was used to validate claims. The North West province had spent R26 million of its R68 million budget due to delays caused by the process of migrating from the Walker System to the Basic Accounting System (BAS). The Western Cape had spent R31 million of its R49 million budget due to the late submission of invoices by suppliers.

Discussion
The Chairperson asked what had informed the Eastern Cape’s projection of under-expenditure. What were the deadlines for provinces to submit business plans by?

Mr Sishi answered that this was largely related to challenges regarding supply chains. The provincial department’s CFO would be in a better position to provide more details around this. Though there were different deadlines for the submission of business plans, the Division of Revenue Act (DORA) did require these plans to be submitted prior to the beginning of the given financial year.

Mpumalanga Presentation
In her presentation, Ms M Mhlabane, Head of Department, Mpumalanga Department of Basic Education, said that the Department was able to pay for operational costs as well as finalise its planning session for the year. The Department had spent R3.5 million of its allocated budget. This under-expenditure was as a result of challenges with service providers. In order to address this, the Department would be entering into maintenance agreements with its service providers. For the first quarter of this financial year the Department was able to feed 589 607 primary school learners (at 1 304 schools) and 162 160 secondary school learners. Emphasis was also placed on learners in Quintile Four and Five schools as these were poor, rural schools. Monitoring and evaluation of this grant was done by the monitors appointed by the provincial department. This in addition to the quarterly meetings it held with its suppliers in order to prevent any problems arising during the implementation of the programme. Challenges faced by the Department included: cash-flow, a lack of adequate funds and monitoring and evaluation and schools being listed in the wrong quintile. As the funds the Department had been allocated for the occupation specific dispensation (OSD) in the 2009 financial year was insufficient for this purpose, the money for this came out of the funds allocated for the grant. In order to improve monitoring of the grant the Department was looking to capacitate School Governing Bodies (SGBs) around monitoring. The issue of schools being in the wrong quintile would be addressed through having all schools within a certain area as the same quintile.

Discussion
Mr M Makhubela (COPE, Limpopo ) asked when the Service Level Agreements would be entered into. Were there any plans to deal with schools in the wrong quintile prior to 2011?

Ms Mhlabane answered that these should be finalised by the end of September 2010. The financial implications of the quintile issue were huge as they affected all schools in the province.

The Chairperson asked for more details around the challenges in relation to cash-flow and monitoring. When would the capacitating of SGBs commence?

Ms Mhlabane answered that, as the money allocated to the Department for OSD in the 2009/10 financial year was insufficient for this purpose, the remaining money needed came from the funds set aside for the grant. The programme’s service providers could therefore not be paid. In order to address this, the Provincial Treasury had subsequently requested it to submit a revised cash-flow by the end of August 2010. The Department conducted workshops with SGBs on a continual basis. This was necessary as, when the terms of SGBs expired, new SGBs were appointed and these new members were also in need of training. All schools were Section 21 schools and money was therefore not spent on the purposes for which it was allocated. The Department was therefore looking to improve the financial management skills of these bodies.  

The Chairperson asked how service delivery was affected by the use of money for purposes other than it had been allocated for.

Ms Mhlabane answered that service delivery was affected negatively by this but that it could not be averted as all the Department’s money was held in a single bank account.

The Chairperson asked what assurance the Department had that its proposed cash-flow management solutions would be effective.

Ms Mhlabane answered that the Department would request money as it was needed in order to pay its service providers on time. The payment of the service providers for conditional grants would also be prioritised.

The Chairperson asked the National Treasury representatives what happened to money left unspent by provinces.

Mr Sishi answered that money that was under-spent had to be returned to the national revenue fund unless it could be proven that this money had already been committed.

Limpopo Presentation
Mr N Masemula, MEC, Limpopo Department of Basic Education, said that, as at the end of June 2010, the province had spent 23% of its allocated budget. Through the programme it had been feeding in excess of 1.4 million learners in 3 692 primary and secondary schools. The Department was looking into the possibility of increasing the stipends of food handlers as they had voiced their dissatisfaction with the present stipend they were receiving. There were 134 monitors who were responsible for effective monitoring of this grant. These monitors’ work was impaired by lack of transport. To address this money had been set aside for the purchasing of vehicles in order for these monitors to better execute their duties.

Discussion
Mr C De Beer (ANC, Northern Cape) asked whether there were problems around its circuit managers not having enough vehicles.

Mr Masemula answered that, as there were numerous functions needed to be performed by circuit managers, there was a need for more vehicles. The Department was looking at clustering the circuits and acquiring enough vehicles in order to ensure that monitoring functions could be more effectively executed.

Mr T Harris (DA, Western Cape) asked how the Department spent only R14 million in July. How did the issuing of penalties to non-compliant service providers result in poor expenditure?

Mr Masemula answered that this was mainly due to the late submission of invoices. Service providers were penalised when they did not supply the full menu agreed upon.

Mr Harris asked what the amounts here were.

Mr Masemula answered that he could provide these figures to the Committee in writing.

Ms G Ndebele, Director-General, Limpopo Department of Basic Education, said that one of the province’s strengths was the appointment of monitors.

Mr Harris asked the National Treasury how the province’s cash flow management could be improved given that there was only one bank account.

The National Treasury replied that the answer here was effective financial management and not necessarily having more than one bank account. The costs of multiple bank accounts outweighed the seeming benefits.

The meeting was adjourned.