Social Sector Expanded Public Works Programme: briefing by National Treasury & Public Works

Meeting report

Expanded Public Works Programme: Department of Public Works (DPW) presentation
Ms Kelebogile Sethibelo, DPW Chief Director: EPWP Operations, gave an introduction to the Extended Public Works Programme (EPWP) in the Social Sector whose main focus was the delivery of human development outcomes and improving the quality of life in the areas of Education, Health, Welfare and Protection. The services provided through key social sector programmes, such as Early Childhood Development (ECD) and Home Community Based Care (HCBC), were critically important from a long term human development perspective but were not provided to the scale actually required, with many of those in need not yet receiving these services. The sector was one in which the targeting of women was relatively easy. This was important because the unemployment rate among women was markedly higher and the other sectors of the EPWP had difficulties in targeting women. It was a sector that was highly labour-intensive and investments in this sector resulted in a higher number of people employed per unit of expenditure of all the EPWP sectors.

Ms Sethibelo said that initially participating departments were Social Development, Basic Education and Health which were respectively responsible for the delivery of ECD and HCBC programmes. To realise the commitment to expand services and massify the creation of additional work opportunities in the social sector sphere a study was conducted in 2007 which revealed 18 additional programmes with a potential to create work opportunities in the sector. These programmes include School Nutrition, Adult Literacy and Sport Coaches. The sector participated in the EPWP incentive grant to augment the slow growth in Social Development budgets which stood to jeopardise creation of additional work opportunities among national and provincial sector public bodies to meet the EPWP Phase 2 target.

Ms Sethibelo outlined the institutional arrangements whereby the social sector delivers EPWP in the three spheres of government. EPWP’s two social sector goals were:
▪ create 750 000 work opportunities with 513 043 Full-time Equivalents as a contribution to achieve 4.5 million work opportunities and 2 million Full-Time Equivalent jobs target of EPWP Phase 2, by 2013/14.
▪ deliver health, early childhood, community crime prevention, school nutrition and other social development oriented services and
▪ involve municipalities to deliver EPWP outputs.

Ms Sethibelo said that as part of EPWP within the job creation agenda to achieve the New Growth Path, the sector aimed to draw significant numbers of the unemployed into productive work to enable them to earn a wage or stipend income and to provide unemployed people with education and skills. The sector also aimed to utilise public sector budgets, to halve unemployment by 2014 and alleviate poverty. The department wanted to ensure that beneficiaries in the EPWP acquired experience and accessed career paths to participate in the mainstream economy by starting their own economic ventures or becoming employable.

Ms Sethibelo then gave a breakdown of targets for EPWP social sector Phase 2 per government spheres (work opportunities). A total of 96 000 work opportunities were created in the social sector and a total of 67 826 Full-Time Equivalents (FTEs) were created for 2010/11. She explained some log frame sector programmes which were ECD, Mass Literacy Campaign, National School Nutrition Programme, Expansion programme, HCBC, Mass Participation Programme and Community Safety Programme. She outlined the involvement in the EPWP Incentive Grant, noting that the social sector started participating in the EPWP Incentive Grant in its second year of implementation, that is, the 2010/11 financial year. An amount of R56 637 million was allocated as a HCBC subsidy in the provincial departments of Health and Social Development for the creation of an additional 4 926 FTEs.

Ms Sethibelo said that in the 2011/12 financial year, the sector developed a comprehensive incentive grant model for the “Social Sector EPWP Grant to Provinces” and Conditions for creation of work opportunities in one National Department programme. An amount of R200 358 was allocated by National Treasury to create an additional  11 615 FTEs in provinces and R43 million to create 4 345 FTEs in the Kha Ri Gude programme of the National Department of Basic Education. The same model has been utilised to facilitate access, implementation and management of the grant in provinces and, NDBE Kha Ri Gude in 2012/13 financial year. An allocation of R217 401 has been made for provinces to generate an additional 11 968 FTEs. Another 1 557 FTEs based on a R51 511 allocation for Kha Ri Gude would be achieved.

Ms Sethibelo gave the description and performance of Social Sector EPWP incentive grant 2011/12 which was R56 637 million. She said that this was a wage subsidy schedule 5 Conditional Grant allocated to provincial departments of Social Development and Health, accessed via Provincial Treasuries for the payment of HCBC caregivers working in NGOs. The grant’s purpose was to pay stipends to existing non-stipend caregivers in NGOs to achieve the notion of decent work creation. An additional number of 4 291 individuals benefited and 4 926 FTEs were created. A total of 98,8% of the allocations was spent with the 1,1 % under-expenditure accounted for in the Free State, Western Cape and Northern Cape.

Ms Sethibelo continued by explaining how programmes within public bodies was incentivised. She said that behaviours incentivised were the expansion of job creation without disruption of programmes, achievements of EPWP targets, fulfilling EPWP requirements, promoting the sustainability of EPWP interventions and promoting service delivery outputs. She said that the eligibility for the grant depended on reporting the prior year and adhering to EPWP Monitoring and Evaluation (M&E) requirements as well as the score for FTE performance (year 1 minimum of 35%, year 2 minimum of 45% and year 3 minimum of 55%). Determining an incentive allocation calculation was based on the average of 3 scores: score for FTE performance in 2009/2010, score for compliance to EPWP and sector service standards (average of 6 scores) and score for adherence to programme quality standards (average of 2 scores).

Ms Sethibelo  explained that only the first two scores were used for the calculation of allocation for 2011/12. Going forward the scores for adherence to programme quality standards, will be determined through a mid-year sample survey. The performance score qualified the public body for an incentive reward, expressed as a percentage of their FTE cost. For example, incentive amount earned = % performance score x FTE Cost (= R70ppd x 230days). This methodology guaranteed that if year-on-year performance was maintained, the same incentive grant would be earned. This dealt with the issue of sustainability of funding; while guaranteeing continued annual EPWP performance.

Ms Sethibelo explained the stipulation of use. Incentive funding had to be used to expand job creation programmes. She listed the goals in order of priority:
▪ Increasing the subsidies to NGOs for creating more sustainable work opportunities by increasing the number of work days available to existing workers
▪ Increasing the subsidies to NGOs for providing stipends to non-stipend volunteers
▪ Expanding the existing well performing social sector programmes by targeting a higher number of workers and increased service delivery outcomes by increasing the amount of funding available
▪ Creating new EPWP programmes for the identified opportunities in the social sectors
▪ Supplement management capacity for EPWP management and reporting (maximum of 10% of the incentive amount).

Ms Sethibelo gave a breakdown of funding per department. From an amount of R200 million, R117.3 million was allocated to Health, R44.5 million to Social Development, R0.2 million to Safety and Liaison, and R38 million to Education. The DPW had managed to transfer a total amount of R199 684 million (about 100%) to provinces by 30 January 2012, in compliance with the payment schedule for the grant according to the Division of Revenue Act (DORA) 2011. This included 4^th payments for 17 provincial departments out of 18. A total number of 10 240 Work Opportunities (WOs) and 8014 FTEs had been achieved in provinces by the end of the 3^rd quarter of 2011/12 financial year. The grant had reached an expenditure level of R126,764 million (63%) of the amounts received at provincial level by the end of the 3^rd quarter 2011/12. To date, withholding of the grant due to non-compliance of the grant requirements was effected in Free State, Kwazulu Natal and Western Cape. She explained that the department gave the money to these provinces but they failed to disburse these funds to the relevant beneficiaries on time or they did not give the full amount. All three provinces managed to resolve non-compliance and withheld transfers were released.

Ms Sethibelo outlined the performance of the Social Sector EPWP grant for 2011/12 (see presentation slide 21) and the Social Sector grant to provinces (2012/2013 reward) based on 45% FTE level performance (slide 22). She explained that this was only a projection and had not yet been determined fully.

Ms Sethibelo spoke about progress in preparation for the incentive grant 2012/2013 up-take. Progress had been made to ensure buy-in and successful implementation and management of the grant. Communication of grant allocation to EPWP coordinators in provinces was completed in December 2011. Communication to programme implementation managers was completed in January 2012. Draft provincial business plans for the grant were completed on 26 January 2012. The draft incentive grant agreements were forwarded to provinces for scrutiny by department’s public bodies and for their acceptance. The DPW was waiting for endorsement by HODs and provincial treasuries and first tranche payments were scheduled for 1 April 2012.

Ms Sethibelo highlighted the inclusion of the social sector in the integrated incentive grant allocations at municipal level only. Social services was a concurrent mandate at the local government sphere and should be implemented through Inter-governmental Relation (IGR) frameworks according to Chapter 3 of the Constitution. Municipalities received allocations for Health, ECD and other social-related services, though marginal. Currently a total of 26 municipalities were participating in the EPWP social sector. A research study on the involvement of municipalities in the social sector revealed that municipalities had a potential of creating 64 702 work opportunities by 2013/14 through different existing programme streams. In the study, SALGA recommended ear-marked funding for social related programmes and disapproved of “silo” approaches. The social sector should be structured to permeate local government horizontally and vertically. It endeavoured to develop a model to enable rewarding of involved municipalities.

Ms Sethibelo presented the Social Sector grant challenges. Accountability for the sphere targets in provinces was lacking. There were capacity challenges where public bodies still did not have dedicated personnel for the management of EPWP. Employment conditions remained a problem as some provinces still attempted to pay stipends below the EPWP minimum requirements. Programmes did not cater for UIF and Compensation for Occupational Injuries and Diseases Act (COIDA). There were also reporting challenges as departments required a systems programme of information and data for reliable reporting and monitoring and evaluation (according to DORA and the Public Finance Management Act) to ensure accountability, was still an issue. Expansion and absorption of incentive funded work opportunities was needed as unfunded mandates and a reduction in budget allocation persists. Meeting service delivery norms and standards was a challenge due to budget limitations.

Expanded Public Works Programme: National Treasury presentation
Mr Edgar Sishi, Director: Provincial Budget Analysis at National Treasury, noted that the Director General had requested that departments should not discuss 2012/213 allocations as these had not been finalised yet. He said the purpose of the grant was to incentivise provincial social sector departments identified in the log-frame administered by the National Department of Public Works to increase job creation by focusing on the strengthening and expansion of social service programmes that have employment potential. Based on past performance data, DPW used an incentive model to identify eligible departments in provinces. These departments received an allocation from national government through the DPW. Provincial departments were supposed to use these funds to pay the stipends or wages of community caregivers and other community workers. Mr Sishi explained that the allocation criteria to provincial departments was based on the minimum payment of stipends for volunteers and wages for other community development workers at a minimum of R60 per day. Provinces may use a portion of the funds to expand the programme to different social service benefit areas such as community sport development and community safety awareness. Provincial departments signed an incentive agreement with the DPW to ensure that conditions were met and targets achieved. Provincial departments were required to submit quarterly reports on performance.

Mr Sishi said that the provincial departments who received an allocation in 2011/12 were the Eastern Cape Department of Social Development, the Free State Department of Health, the Gauteng Departments of Social Development and Health, the Kwazulu Natal Departments of Social Development and Health, the Limpopo Departments of Social Development and Health, the Mpumalanga Departments of Health, Education and Safety, the Northern Cape Departments of Social Development, Health and Education, the North West Departments of Social Development, Health and Education and the Western Cape Departments of Health and Education.

By 31 December 2011, a total of 54.1% of payments had been made. Issues affecting spending included delays by provinces in approving incentive agreements and business plans as well as poor communication between provincial treasuries and provincial departments in respect of allocation splits between departments within each province. Transfers to provinces were thus delayed due to non-compliance. As a result the grant 1st quarter spending (at 30 June 2011) was only 2.8%, with only North West spending a significant portion of its allocation. Since then there had been a steady improvement, with some notable exceptions. There were still challenges in reflecting uniform expenditure numbers as submissions through the national departments were not the same as those reflected in the official submissions in terms of section 40 of the PFMA.

Mr Sishi said that they had a challenge with regards to spending numbers. The numbers submitted to the department and those submitted to National Treasury were different and the flow of reports was inconsistent. Reports came through the Chief Financial Officer of the department, signed off to the HOD which then signed it off to the Provincial Treasury. There was confusion in this process as to how data was recorded and this was mostly an administrative problem. He agreed with the department that spending was a problem. Spending outcomes for 2012/13 would be better as some provinces seemed to move more quickly in the last quarter of 2011. Last year provinces had a late start to the programme as money was only given to provinces in May / June.

Mr Sishi presented significant challenges in some provinces. In the Eastern Cape, spending was at zero as at 31 December 2011. There were inconsistencies in the reporting to the National Treasury versus the National Department of Public Works. It was not clear if NGOs were being compensated by the department with regards to the stipends for volunteers. In the Free State, the provincial Department of Health was paying beneficiaries R55 per day instead of R60 per day. The national DPW was currently engaging with the province on this matter. In Gauteng, a number of NGOs had not been paid by the provincial Department of  Health. In Kwazulu Natal, slow submission of reports had led to transfers being delayed and in Mpumalanga there were slow submissions by the Department of Education. In the Western Cape, the province was paying care-givers in a fluctuating manner, from R52 per day to R65 per day. The national DPW had been engaging with the province on this matter.

Ms Sishi gave the proposals and efforts to resolve challenges. DPW had held workshops with all provinces during March and April 2011 to outline requirements and related matters of the grant. National Treasury had participated and assisted with these workshops. After identifying challenges in the Eastern Cape regarding reporting, National Treasury held special training sessions with the provincial Treasury and provincial departments in June 2011. Mr Sishi said that the late approval of plans indicated bureaucratic inefficiencies in certain provinces. There was a need for several provinces to fast track their internal administration processes so that disbursements and support to care-givers and other community workers were not jeopardised or delayed.

Discussion
Mr C De Beer (ANC, Northern Cape) said that when the process was started with the grant, the department was supposed to give details to participants on how the grant was to be administered. When you do something, you should do it right the first time. Attending workshops was not enough, a case study or test had to be conducted afterwards.

Mr B Mashile (ANC, Mpumalanga) asked how business plans not being signed could still be an issue when the budget was done on a three-year cycle. What was the cause?

Ms Sethibelo replied that departments receiving this grant had to sign performance agreements year-on-year as this grant was performance based. One of the eligibility criterions for renewal was based on this.

Ms T Memela (ANC, Kwazulu Natal) said there was a serious concern about the non-existence of monitoring programmes. If there were consistent follow-ups by the department, most discrepancies could have been avoided.

Mr J Bekker (DA, Western Cape) said that this grant was a good thing but the implementation was lacking.

The Chairperson asked what the actual payment for stipends had to be. R60 or R70?

Ms Sethibelo replied that the minimum wage was R60 for 2011/12. This was only the minimum and the rate could go up to R150. Before, in 2010/11, there had been no set wage rate.

Mr De Beer suggested that both the reports of the departments to DPW as well as the report to National Treasury had to be signed off by one person at the same time, to remove discrepancies.

Mr Mashile said that both the Department of Public Works and National Treasury must have a clearer focus on reporting. Certain people had to be assigned to focus on reporting.

Ms Sithibelo replied that the department received reports on a monthly basis, the challenge was in when it was received as some provinces delayed submission of these. Due to this, the department had no choice but to grant extensions and National Treasury did not allow for extensions therefore the information differed in the two presentations.

Ms Memela asked whether the department analysed the persons given the workshop to assess whether they understand what was being presented to them.

Ms Sethibelo replied that the department held workshops on the grant framework and how to implement and manage the grant. Dedicated capacity was a problem at provincial level.

Ms Pearl Mugerwa, DPW Director, EPWP Social Sector, agreed that the department had experienced trouble finding people to coordinate the workshops in provinces. The department had found that it was necessary to present the workshop over and over again and have continued training on how the grant is to be managed as staff constantly revolved.

The Chairperson noted the job opportunities reported. He said by now there should have been more than 26 municipalities involved in this grant.

Mr Henderson replied that the department was now engaging more municipalities to come on board and this financial year would see more municipalities involved.

Mr De Beer said that the slow expenditure by provinces indicated that operations at grassroots level were also slow, showing that oversight was not good.

Ms Sethibelo replied that work at grassroots level was underway as they were working closely with volunteers. The problem was that money did not reach them on time; some volunteers worked from April 2011 to September 2011 and were only paid at the end of September 2011. But eventually they were being back-paid. 

Ms Memela asked what criteria was used to come up with the allocation figures.

Ms Sethibelo explained that it was calculated based on the performance of these departments in the previous year’s allocation and according to expenditure, using a formula as explained in the presentation.

The Chairperson felt that the meeting had to adjourn because DPW representatives were contradicting each other with their answers, especially on the issue of signing business plans. He did not want them to lie to the Committee and it would be best if they made sure of their facts.

Mr Bekker requested that the department send the information on municipalities to the Committee, within 14 days, such as which municipalities in which provinces were taking part in this grant. They would need this information for oversight visits to the provinces.

Mr Henderson said that he would forwards the relevant information to the Committee within 14 days.

The meeting was adjourned.