Conditional Grants: Dinaledi Schools, Technical Secondary Schools Recapitalisation, School Infrastructure Backlog: 4th Quarter 2011/12 performance reports: National Treasury and Department of Basic Education with Mpumalanga department and Western Cape MEC

Meeting report

MEC Apologies
The Chairperson noted an apology from the KwaZulu-Natal (KZN) Member of the Executive Council (MEC) for education who was attending a meeting of the Executive Committee (Exco) of the KZN provincial legislature, and was seriously concerned that the KZN and Gauteng MECs for education, in particular, consistently failed to attend such meetings. They always apologised. He would have to take up the matter with the relevant authorities. An apology was received also from Limpopo, whose MEC was on study leave. So only two provinces would be heard.

Discussion
Ms Mahlasedi Mhlabane, Mpumalanga Department of Education Head of Department (HOD), tendered a written apology from the MEC.

The Chairperson acknowledged that he had spoken to the MEC by telephone, and had agreed that, without setting any precedent, the MEC could send the HOD in her place.

Mr C de Beer (Northern Cape/ANC) said that the Committee could not just leave the absent MECs off the hook. Perhaps the Committee could engage with them during an oversight visit.

The Chairperson accepted Mr De Beer's suggestion.

Members agreed that the apologies should be accepted and noted.

Department of Basic Education School Infrastructure Backlogs Grant Spending for 2011/12
Mr Paddy Padayachee, national DBE Deputy Director-General (DDG): Planning, Information and Assessment, who was representing the Director-General (DG), introduced the presentation.

Ms Tsholofelo Diale, Accelerated School Infrastructure Delivery Initiative (ASIDI) Programme Manager, reported that the School Infrastructure Backlog Grant aimed to address the backlogs at schools over a period of three years. Targets for the ASIDI Programme by the end of 2013/14 were 492 inappropriate schools replaced, 882 electrification projects, 689 sanitation projects, and 1 107 water projects (table, slide 2). She gave the totals, by province, for the commitments on these projects made in the previous financial year (table, slide 3). It had a baseline budget allocated in the previous financial year of R700 million. She reported on the schools or the projects that were undertaken. In 2011/12, the scope of the work was 50 schools to replace existing inappropriate schools, electrifying 190 schools, providing basic sanitation to 235 schools. The Department had begun projects to provide water in 173 schools. She gave an analysis by province (table, slide 2).

Ms Diale explained who the implementing agents were (slide 4). The Development Bank of Southern Africa (DBSA) was doing inappropriate schools. The Mvula Trust was doing the Department's projects in Limpopo and the Eastern Cape. Eskom was doing the Department's electrification projects. KZN Department of Education was carrying out the sanitation projects. Also the Free State, Gauteng, and Western Cape were serving as implementing agents. Completed projects were indicated.

Payments to implementing agents by 31 March were indicated (slide 5). She noted that the Department had made to the DBSA the tranche payment of R17.85 million in November 2011, and the next tranche of R191 million was made by 31 March 2012. The total transferred to DBSA was R208 million to date. The Department had transferred R46 million to Eskom. R8.6 million had been paid to the Mvula Trust. Therefore the total payments made by 31 March 2012 to these three implementing agents were R263 million (slide 5).

Payments made to provinces as implementing agents were shown. However, the Department had received claims amounting to R8.7 million from Free State, from Gauteng R5.5 million, and from KZN R15 million, from Western Cape R6.3 million. By the end of the financial year, the Department was processing those claims (table, notes, slide 6).
 
The Department had made payments including the tranche payments as advanced payments to some of the implementing agents, amounting to 50% of the Department's R700 million allocation, but it was to be noted that by 31 March the Department had actually recorded expenditure of R59 million. Ms Diale explained that this figure reflected the reconciliations that the Department received from advances made from implementing agents. Therefore there was a figure of R266 million which included the advances and the invoices that the Department had received by the fourth quarter; therefore the total was R349 million (see table at the bottom of slide 7).

The Chairperson observed that the report had many mistakes and inconsistencies, and that the Department was adding information to the presentation document provided to Members.

Department of Basic Education Dinaledi Schools Presentation
​Mr Allan Subban, DBE Director: Enhancement of Programmes and Evaluation of School Performance, gave an overview of the Dinaledi Schools Grant, specifically on the 2011/12 financial year. The Dinaledi Grant began in 2011 as part of the national maths, science and technology education strategy. It focused on quality of teaching in mathematics and science. In 2005 Government reaffirmed its commitment to the strategy with the specific target of doubling learner performance in mathematics and science to 50 000 by 2008.

The Dinaledi Schools Project was a targeted support to raise participation and performance especially among black and girl learners in these subjects in selected schools.

The objectives of the strategy were to set performance targets, to provide every classroom with a qualified and competent teacher, improve language, teaching and learning, identifying and nurturing talent and potential, partnerships with relevant stakeholders, evaluation and monitoring of maths, science and technology (MST) in provinces, and introducing information and communications technology (ICT) in schools.

The number of schools that were part of this project in each province was indicated. At the approach to 2008 there were 500 schools in total in all provinces as part of this project. The objective was to raise participation in historically disadvantaged learners in physical sciences and mathematics.

The total number of learners who wrote examinations and passed in 2011 was given. The percentage pass of Dinaledi learners in each of the provinces was given, with a total of 54% of mathematics in Dinaledi schools in 2011.

An analysis was given of the performance over the subsequent years from 2009 to 2011. The budget came into effect only from 2011/12. Previously provinces had financed Dinaledi schools out of their own provincial budgets.

Mr Subban noted the number of learners enrolling and passing in physical sciences in Dinaledi schools across provinces. A comparison of 2009 and 2011 was given of the examination success of learners in Dinaledi schools. This was above 50% as compared to the national rate. 

Mr Subban noted the budgetary issues in the implementation of the grant. Mr Subban noted that the budget came into effect only from 2011/12. Previously provinces had financed Dinaledi schools out of their own provincial budgets. The Dinaledi grant was a conditional grant. R70 million was provided in the 2011/12 financial year. Over R100 million was allocated for 2012/13 and R105 million for 2013/14. Allocations for provinces for the 2011 financial year were shown. Mr Subban noted provincial transfers as at March 2012 . Most of the provinces were quite high in their expenditure, with KZN having over-expenditure of 109%. Mr Subban noted the under-expenditure in Mpumalanga of 88.45%, and North West 88.17%. The low expenditure in Limpopo was as a result of the province's being placed under administration. Expenditure was not effected because due diligence had to be done on the budget and expenditure of the province before expenditure on the grant could take place. The last tranche was withheld due to this process of due diligence. Mr Subban explained what the grant was intended to achieve. The objectives had been achieved in most of the provinces. He gave details. The provincial allocations for the current financial year were shown. The transfers that were expected in the tranche were shown.

The grant was managed at national level by four officials - two as assistant directors and two as administrative clerks. This was a challenge. A subsequent reconceptualisation had been submitted to increase capacity for monitoring of the grant at provincial level.

The challenges were indicated. Procurement processes in provinces were noted as a challenge, in particular in so far as the tranches were provided on a quarterly basis, while procurement was made for an academic year. Provinces tended to accumulate the funding so that they could procure all that was required on their business plan in one procurement process. So most of the expenditure took place at the end of the year.

Department of Basic Education Technical Secondary Schools Recapitalisation Grant
Dr Arrow Nkosi, DBE Chief Education Specialist (CES), indicated the grant's strategic goal of improving the conditions of technical high schools and modernising them to meet the requirements of learners in the technical fields, and to increase the number of suitably qualified graduates from these schools. The purpose was to recapitalise up to 200 technical secondary schools to improve the capacity to contribute to skills development and training in the country by building, redesigning or refurbishing workshops, buying and installing new equipment, and training and up-skilling of teachers.

The Department of Basic Education was initially allocated R8 million for the year 2010/11. It was allocated R200 million in 2011/12, and R210 million for 2013/14, to implement the grant through provinces respectively. During the budget review period of 2011/12, the financial allocations were revised (see document).

Dr Nkosi described the financial performance for this period (see document). The total expenditure, excluding commitment, was R151.76 million. This was 72%. An analysis was provided. It was interesting to note that the Eastern Cape had minus R2.97 million, which indicated the over-expenditure. The figure for Limpopo was plus R11.451 million, which meant an under-expenditure.

If the commitments were included, the 72% total expenditure became 92%.

Total targets completed and projections were given. The Eastern Cape had managed to meet 50% of the targets. Free State had achieved 100%. Gauteng had achieved 40%. KZN had achieved 77%. Limpopo had achieved 102%. Mpumalanga had achieved 100%. Northern Cape had achieved 100%. North West had achieved 67%. Western Cape had achieved 134%. The total in terms of targets met was 89%.

A performance analysis was given. The financial expenditures had declined by 3% compared with the previous period.

The output performance had increased from 70% to 89%. The number of outputs completed for this period was 949 out of 1 072 compared to 516 out of 731 in the previous period. The nature of the outputs was indicated.

The overall expenditure, including financial commitments, was 92%.

An amount of R16 million might be surrendered to the National Treasury because it was not committed at the close of financial books (March 2011/12).

The most completed output was refurbishing of workshops, followed by teacher training and building of new workshops, while the supply of equipment lagged behind.

Provinces that performed well in terms of expenditure and outputs were Free State, Mpumalanga, Northern Cape, and Western Cape. The performance for Eastern Cape and KZN required verification before confirmation. Limpopo had recorded the highest completion of output with the lowest expenditure. This might be due to the capital expenditure paid for by the infrastructure department instead of by the department of education. This was why the DBE was saying that Limpopo had underspent, since Limpopo had not used much money from the grant but rather used money from the infrastructure department. The Eastern Cape had recorded the highest expenditure with the lowest outputs. This was because of the high charge or cost of building new workshops.

The following provinces had recorded over-expenditure: the Eastern Cape (7%), KZN (1%), Mpumlanga (1%), and Northern Cape (2%). This would be dealt with by the provincial treasuries and provincial equitable shares would also be considered to supplement where necessary.

Financial commitments for incomplete projects or unpaid invoices amounted to R42 million. In non-financial terms the output performance had significantly improved from 71% to 89% in achievement of targets. The Department had met the requirements of the Division of Revenue Act (DoRA).

Discussion
Mr De Beer noted that the intervention in Limpopo had begun in December 2011. It was not enough to say that there was an intervention. Details were required. He asked who had typed the document.

Mr Lees complained that it was a large amount of documentation to deal with without preparation. Members had only just received the documents. He 'battled' with the figures and asked what the difference was between invoiced amounts and amounts actually paid. He asked for confirmation from the DBE and National Treasury that roll-overs had been allowed for a sum of R42.7 million that had been committed. What kind of verification was required for the performance of the Eastern Cape and KwaZulu-Natal to be confirmed? The level of performance did not match the underspending in Limpopo. Did the DBE have benchmarks for the cost of projects and assist provincial departments to reduce the cost of projects.

Mr J Bekker (Western Cape/DA) asked about the school infrastructure backlog. What had happened to all that money? One could not be sure if there was control over all this money spent for the Dinaledi schools, and one could not see progress.

Mr M Makhubela, (Limpopo/COPE) said that the spending recorded by the Eastern Cape and KwaZulu-Natal was questionable. What accelerated their spending? What progress had been achieved on the various grants as against targets, allocations and expenditure?

The Chairperson complained of the inadequate quality of the DBE's report. The DBE was not a municipality but a national department, and should have done better in preparing its documentation. He gave the Technical Secondary Schools Recapitalisation Grant as an example. The DBE had gone straight to combined totals of outputs. It seemed that the DBE intended the tables only to be understood by itself, but for what purpose? It was the same with the reporting on the Dinaledi Grant. How could Members help the DBE if it gave such unclear and half-baked information. The DBE's tables were not consistent. Why blank spaces? Members were required to make realistic recommendations. For this Members needed proper information. He asked the DBE to just sit and listen but not respond and return with a proper report so that it could make a reasonable contribution under the leadership of the Minister, since it was the Minister who reported to Parliament.

Mr Lees assured the Chairperson of his support.

The Chairperson asked Mr Lees to save his further questions for the next meeting with the DBE.

Western Cape Education Department (WCED) ASIDI Presentation
The Hon. Donald Grant, Western Cape MEC for Education, introduced the presentation.

Ms Penny Vinjevold, WCED Superintendent-General [HOD], said that the DBE had allocated to the WCED R6.383 million. The WCED had submitted the invoices. The WCED had seen this as a perfect opportunity to expand the 23 projects and the WCED had put in R2 million. That might explain why the funding came from the province. These infrastructure projects provided opportunities to provide water and electricity, if the WCED was already undertaking a sanitation project. However, the WCED was still waiting for the R6.383 million. All projects in the Western Cape had been completed. Those targets had been met. This related to one of the questions from the Members.

Western Cape Education Department (WCED) Conditional Grants Presentation
Ms Vinjevold said that the WCED had included in the first slide its expenditure on all the grants. The HIV/AIDS Grant was the only grant on which the WCED had underspent – by R14 million. Two factors impacted here – the WCED's own poor planning in putting procurement processes in place meant that the WCED was not able to spend the money; also the Western Cape had a very large HIV grant from the Global Fund. The WCED found that its schools were saturated and there was message fatigue as to HIV/AIDS. Therefore the WCED was collaborating with the national DBE to examine how the WCED could present a healthy living angle to make sure that both the HIV/AIDS grant and the global grant was spent appropriately.

The WCED had nine schools which benefited from Technical Secondary Schools Recapitalisation Grant. Targets set by National Treasury and the national DBE in relation to the workshops, computers and equipment had been met. Two of the subjects required computers – engineering graphics and design & civil technology. These were two wonderful, practical subjects that were in the new curriculum. The targets for retraining of teachers on this more, high-level curriculum had been met. In the last two pages of the WCED's report, details were provided of how much was spent in relation to each of the nine schools. More was spent at Kuilsrivier Technical High School since it was new. Dr Nkosi as a curriculum specialist at the national DBE collaborated with the WCED's own curriculum specialist. After looking at the nine schools, the WCED considered what equipment was available and needed against the benchmark that the WCED wanted to meet. Then the WCED 'topped-up' towards that end. This explained the varying spends across the nine schools.

In the same way the WCED examined what the Dinaledi Conditional Grant, a very strict grant, required it to do in relation to textbooks, equipment, and training. The WCED had achieved targets for 46 of the 48 schools. The WCED had taken 16 schools that were under-performing in maths and science and put them into an incentive initiative, supported by the province's own local funds, because they were not fulfilling the requirements of being Dinaledi Schools. The aim was to restore these schools to a level at which they could qualify for support through the conditional grant. The WCED was about to select two more schools to make up the total of 48.
 
MEC Grant referred to what Ms Vinjevold had said on under-performance on HIV/AIDS. The appointments of personnel needed to be revised. Consequently the WCED had fallen marginally behind. However, coupled with that, in the global grant, which the Western Cape did receive, the WCED worked transversely with the Departments of Health and Social Development to try to effect changes in behaviour. Most of these programmes were going into peer education. Children, through the curriculum, particularly life-orientation, were absolutely saturated with the bombardment of information on HIV/AIDS. What the WCED needed to do was to assess more effective spending on changing behaviour. This was a big challenge to the WCED, which the WCED was working towards through the Global Fund. The grant was very prescriptive and the WCED was possibly over-expended on HIV/AIDS if the two programmes were coupled together. This might explain the apparent underspending on the HIV/AIDS grant. The WCED had reviewed its policies with a view to ensuring better performance from its expenditure on its maths and science strategy. It was not yet happy with those outcomes, but it was a long, uphill road ahead.

Discussion
The Chairperson appreciated the brief presentation that was to the point. He noted the lack of statistics on the number of learners enrolled, the pass rate, and related matters.

Ms Vinjevold said she could provide details per school. However, the information was in the national DBE's documentation. She apologised that the WCED had not been expected to report on that, but she would email that information to the Committee that afternoon.

The Chairperson said that the targeted number of Dinaledi schools was 48, but the WCED referred to 46 as the target met. Was this a typing mistake?

Ms Vinjevold replied that the national DBE had allocated 48 Dinaledi schools, out of a national total of 500, to the Western Cape. However, the Western Cape had only 46 that had qualified. However, the WCED had now chosen two schools that it would add to its list for the 2012/13 budget.

Members had no further questions.

Mpumalanga Department of Education (MDoE) Presentation
Ms Mhlabane briefed Members on allocations, transfers and actual expenditure trends; monitoring capacity; actual achievements for 2011/12; challenges and proposed solutions; the 2012/13 business plan; and recommendations.

Technical Secondary Schools Recapitalisation Grant
Ms Mhlabane provided allocation trends for 2010/11, 2011/12 and 2012/13 – budget allocation, actual transfer, actual expenditure, and percentage expenditure (table, slide 4). Monitoring capacity was described (slide 5). 2011/12 achievements – that a total of five projects were implemented with two complete and three still in progress - were noted (slide 6). Challenges were noted - under-expenditure because of the time taken to finalise standard design and drawings; cost of construction higher than anticipated; capacity of contractors to complete their work on time; vacancies in the infrastructure unit; and high turnover of works inspectors at district level (slide 7). Solutions implemented or proposed were given – the technical assistant appointed by National Treasury had assumed duty on 02 May 2012; three technical posts were to be filled at head office by 01 July 2012; and the programme management unit (PMU) was to be appointed to assist the Department with planning, costing of the scope of the work, budgeting, monitoring, and skills transfer to officials by the end of September 2012 (slide 8). The 2012/13 plan was: the completion of the three incomplete schools from 2011/12 [refer back to slide 6]; the constructing of workshops in Elukhanyisweni Comprehensive School to begin in 2012/13; the procurement of equipment for the school workshops; and to submit quarterly reports as per the requirements of the Division of Revenue Act (DoRA).

Dinaledi grant
Ms Mhlabane provided allocation trends for 2011/12 and 2012/13 – budget allocation, actual transfer, actual expenditure, and percentage expenditure (table, slide 11). Monitoring capacity was described (slide 12). 2011/12 achievements were noted (slide 13). Challenges were noted and solutions proposed (slide 14). The 2012/13 plan was to provide additional learner-teacher support materials to schools; to continue training for educators on content knowledge of their subjects; and to plan for science laboratories (slide 15). The Select Committee was recommended to note the report, and the proposed solutions to challenges and the plan for the 2012/13 financial year (slide 16).

Ms Mhlabane commented that 38 Dinaledi schools had functional laboratories. In the 2011/12 financial year it was possible to provide learner-teacher support material to the schools; it was possible to provide 175 computers; 908 science kits; as well as 3 600 calculators to the 46 schools; and 24 principals of the schools were trained on curriculum management so that they could monitor the use of these in their schools; and 96 educators were put through a year's programme started in 2011/12 through the National Institute of Higher Education so that they could be trained in the content of the subject which they were teaching in order to improve on learner outcomes. The challenges on this particular grant were: around the vacancy rate of office-based educators required to support the educators in various schools; in the 2012/13 financial year it was planned to fill 13 posts for curriculum implementers in maths and science as well as languages. The initial plan was to train them in the June/July holidays in 2011, but the union concerned disengaged and the training could not take place as planned. In 2012/13 it was planned to continue to provide the additional learner-teacher support materials required by the 46 schools. It was also planned to conclude the training of the educators on the content-knowledge of their subjects. It was also planned to start the planning of the laboratories in the Dinaledi schools which were without laboratories. She requested the Committee to put its report on record.

Discussion
The Chairperson said that figures should be indicated against targets as the Western Cape had done. The same applied with reference to Dinaledi schools.

Mr M Makhubela, (Limpopo/COPE) asked why Mabande Comprehensive School was 95% complete. What was left to be done? He asked what the 95% figure represented.

Mr Makhubela asked about learner-teacher support (LTS) materials and computers provided to the schools. It was interesting to hear of computers delivered to schools, but were there electrical outlets into which to plug them? He had seen many schools with computers in their classrooms but no electrical outlets.

Mr De Beer asked what was meant by 'no capacity to handle construction matters' (slide 5, first bullet). What was the Mpumalanga Department of Education doing about it. What was the solution?

Mr De Beer asked what the Mpumlanga Department of Education's action plan to address 'the rest of the staff not technically qualified' (slide 5, second bullet).

Mr De Beer asked what the Mpumalanga Department of Education staff speak to if they 'do not speak to technical matters' (slide 5, third bullet).

Mr De Beer asked out of what allocation was the figure in the sentence 'the cost of the five projects was R39.0 million' (slide 6, at the bottom). Members could not measure that from the information provided. It was a function of this Committee to measure expenditure. Against which of the Department's figures must the Committee measure the Department's expenditure?

Mr De Beer asked if the laboratories for physical science in the high schools in Mpumalanga were in operational mode. It was one thing for a learner to watch a teacher doing an experiment, but in order to learn effectively, and prepare themselves for university, they must do such experiments themselves. For too many children watching a teacher perform an experiment and not to be able to participate themselves was just like watching television. This need had also been referred to on a previous occasion by the Hon. Trevor Manuel, Minister in the Presidency: National Planning Commission.

The Chairperson asked about technical secondary schools: Mabande, Lekete and Ramoshidi (slide 6) – he was aware that the MDoE anticipated completion in this financial year. But when exactly? The target had been 31 March 2011. What was the aim of those projects? Was it refurbishment or equipment or building? Merely to refer to five projects in five schools was not enough – details were required. Was five the original target? The Western Cape had mentioned its targets and indicated its progress, but Mpumalanga had not given such information as the Committee had requested. The same applied to the Dinaledi schools. How many such schools were there in Mpumalanga? What were the targets and had Mpumalanga met those targets? Mpumalanga's report was, unfortunately, quite general. He sought a picture of the situation in Mpumalanga on these two conditional grants. He already had a picture of the situation in the Western Cape and could visit those schools to confirm it.

Mr Lees was also 'battling' with targets. He had since referred to the Department of Basic Education's presentation from which he could observe a notable divergence. Refurbishment of workshops seemed not to be mentioned in Mpumalanga's report. There was talk about teacher training, but then the union had intervened and no training had taken place. It had been converted into a year-long training programme but it had to be asked when that started and when it would end. It was difficult to link Mpumalanga's targets with the national Department's report.

Ms Mhlabane replied that there were 48 Dinaledi schools. With the R 6.4 million budget obtained in the 2011/12 financial year, the MDoE tried to make sure that each school had some learner-teacher support material in order for them to do some of the work that they were supposed to do. In the current year this material would be supplemented. But out of those 48 Dinaledi schools 38 had functional science laboratories. In eight of them the MDoE had to provide science kits to enable teachers to do experiments together with the learners. The capacity challenges in the infrastructure unit were being addressed with assistance from the National Treasury, through the plan of having a programme management unit (PMU), and by advertising the three posts. The MDoE sought people with the required technical knowledge. Originally when the MDoE had submitted its business plan for the technical schools recapitalisation grant, it had targeted 15 schools to benefit over the MTEF. The Department of Public Works was the implementing agent. The challenge was that the cost of construction proved to be higher than the available budget. So the MDoE had to submit a revised business plan to the national department so as to reduce the number of schools.

Mr Cekiso Kajeni, MdoE Director of Infrastructure, described what the MDoE was doing in the five schools. at Ithafa Comprehensive School the MDoE was refurbishing three workshops and constructing one new one. At Mphanama Comprehensive School, the Department was refurbishing four workshops. At Mabande Comprehensive School, the Department was refurbishing also four workshops. At Lekete Secondary School, the Department was constructing three new workshops and refurbishing one. At Ramoshidi Secondary School the Department was constructing four new workshops.

Mr Kajeni replied that the MDoE intended completing the three incomplete schools (slide 6); according to its interactions with the implementing agent it anticipated that the Mabande Comprehensive School should now be completed by June. In Lekete there was a challenge: the contractor had died. The MDoE was searching for another contractor to complete that project. If an appointment was made, that project could be concluded around October. Ramoshidi Secondary School was at 66%. It was aimed to complete the project in December and for the school to open in January 2013.

The Chairperson struggled to understand the figure 95%. The remaining 5% should not take six to nine months. Who determined the completion date? He did not understand why the death of the contractor should affect completion since the company presumably still existed and the support staff remained. Who decided on these extensions and what impact did they have on future projects? There were continued unnecessary delays.

Mr Kajeni replied that, if everything went well, a project could be completed as per the project execution plan. If a project was reported as 95% complete, more often than not it would be the small items that remained. Some contractors were very quick at starting a project. But when it came to completing that project, it then became a problem. It was necessary physically to follow up those contractors. Issues around the final account were then put into process after the practical completion. In the case of Lekete, where the contractor had passed away, one might not be sure that the company concerned could continue the work. More often than not the owner of the company actually was the key person in procurement of materials. In such a situation, the Department would have recourse to the implementing agent to determine the situation. Delayed projects would inevitably affect future projects. Hence those existing projects must be completed this financial year so as to infuse new projects in the subsequent financial year.

The Chairperson asked what the status of payment to those contractors was.

Mr Kajeni replied that the Department had paid what was due to the contractors 'up to a point where they are now'. He explained that the Department made progress payments. The only challenge was those invoices submitted towards the end of the financial year which could not be paid at that point and would serve as accruals in the current financial year.

The Chairperson observed that the MdoD had paid for progress made on projects thus far but had spent the entire conditional grant, yet the work was not yet complete. It followed that there would be a shortfall. Hence there would be overspending. Where would the MDoE source the funding for that overspending?

Mr Kajeni replied that costing factors had affected the scaling down of the projects. In the case of a big project, a sum was budgeted in the year of inception. Whatever was not completed in that year was budgeted for in the subsequent year because that project was not necessarily a one year project but a multi-year project.

The Chairperson did not accept this answer. If the MDoE was going to tap into year two transfers to complete year one projects it would not complete year two projects. Then the MDoE would never reach its targets. It seemed that MDoE was running these projects like a one person spaza shop. One had to plan in accordance with the requirements of the DoRA. The manner in which the MDoE was rolling over funds was surely not allowed. He appealed to the MDoE to be honest.

Ms Mhlabane replied that when the MDoE had originally made its submission to the DBE it had wanted to refurbish 15 schools. It had costed them and determined that within the conditional grant and the MTEF from 2010/11 to 2012/13 the MDoE would be in a position to do the 15 schools. However, the costs came to R39 million. On the basis of that the trend, the MDoE realised that it would not be in a position to do the 15 schools originally targeted. It then submitted a revised business plan on the technical high schools so as to be in a position to complete the five schools and their equipment so that the schools would be in a position to open to learners.

The Chairperson was not convinced by this explanation.

Mr Makhubela said that his question on computers was not answered.

Mr Lees thought that part of the confusion was that the reporting did not match the targets. It was a confusing misalignment of terminology. The MDoE had talked about the MTEF – a three year period, but the Committee was considering a one year period. On slide 6 the total cost for the five projects was given as R39 million, but the budget for the year was R21.7 million. Yet some of those schools, as the Chairperson had pointed out, had not been completed. The Department was saying that these projects might extend over more than one year, but the Committee was trying to assess performance against targets for this specific year of 2011/12.

The Chairperson asked the national DBE to work with together with MDoE to give the Committee a better understanding of the situation. He asked MDoE to look into its report again and liaise with the national DBE because some of the figures did not match what the MDoE was presenting, as Mr Lees had pointed out.

National Treasury said that it had not received any motivation from the Eastern Cape for its request of a roll-over on under-expenditure on the Technical Secondary Schools Recapitalisation Grant. Gauteng had requested a roll-over of the full amount that was underspent. KwaZulu-Natal's underspending was R3.3 million. National Treasury had received a request for R1.8 million. In Limpopo the underspending was R21 million and the request was for R9.5 million. North West had requested a roll-over of the full amount underspent of R10.5 million.

National Treasury 4th Quarter Conditional Grant outcomes presentation
Mr Mosimanegape Bogosi, Director, National Treasury, reported that most of the provinces had recorded an under-expenditure in total of R8.4 million on the Dinaledi Grant. Only KwaZulu-Natal recorded an overspending of about R1.2 million, because it had not budgeted appropriately for learner-teacher support materials. This R1.2 million would be defrayed by funds from the equitable share. Given that in the Division of Revenue 2010/11 there was an indication already of the amount that would be allocated for 2011/12, one would have expected to see expenditure moving quite quickly but nonetheless it seemed that there were still teething problems in the spending on this grant, for example, Limpopo, which had spent only 8.5%. Mpumalanga had spent 88.4%. The North West had spent 88.2%. (Table, slide 3). However there was a challenge as to the modality of the procurement which was corrected during the adjustment budget process. There were still challenges on the spending of this grant. Reporting especially needed to be improved and to be focused, for example, the DoRA clearly indicated output, such as seven text books for each learner. Yet the reports were not focused on such outputs. National Treasury had already taken up this output with the national DBE and National Treasury expected improvements in reporting on this grant (see slide 5).

Mr Bogosi reported that for the School Infrastructure Backlogs Grant an amount of R700 million was allocated. Only about R839 000 had been spent up to 31 March 2011. The main reason for the slow spending was the delay in the appointment of the implementing agents and contractors. However, these had since been appointed and were on site. Currently in terms of the target, about 38 schools were under construction currently, and it was projected that 49 of the schools would be completed around 31 August 2012. Planning was a challenge in implementing this grant. It was a Schedule 7 grant in which the national department was responsible for implementation. (Slide 11).

Mr Bogosi reported that the Technical Secondary Schools Recapitalisation Grant was allocated R250 million. In total at the end of March about 70% had been spent. Some of the provinces did quite well in spending, for example, Free State, Mpumalanga, and Western Cape which had each spent about 100% of their grants. There were other provinces which really battled to spend. The Eastern Cape did not submit a request for a rollover although it had spent only R85 million. Apparently, the Eastern Cape department's submission to the provincial treasury was not sufficiently convincing for it to forward the submission to the National Treasury to request a roll-over. However, National Treasury was going to engage with that province on whether there was a commitment to spend or not or whether the province would have to surrender its unspent allocation to the national revenue fund. Limpopo had spent only 34%, with a recorded under-expenditure of R21 million. However, Limpopo was requesting only R9.5 million as a roll-over which was all that it could prove to be committed from the previous financial year. KwaZulu-Natal, although it had recorded R3.2 million as under-expenditure, had only requested R1.8 million as a roll-over which was all that it could prove as a commitment to spend from the previous financial year. Other provinces had provided proof of commitments from the previous financial year. [See presentation document, slide 10, for the purpose of this grant; however, the document provided no financial figures for this grant].
 
Discussion
The Chairperson noted that the National Treasury had the same concerns as Members on the national DBE's reporting. He trusted that the DBE's promised revised report would accommodate all these concerns.

Mr Makhubela commented on poor planning as contributing to poor expenditure on the School Infrastructure Backlogs Grant. How could poor planning be improved so as to achieve better service delivery?

Mr Lees observed that the national DBE reflected under the Technical Secondary Schools Recapitalisation Grant funds allocated for the year as R210.5 million, but National Treasury reflected R215.98 million. Why the difference? Was this again a question of adjustment budgets? Roll-overs had not been applied for all the unspent monies. None had been approved. The national DBE in its presentation had reassured the Committee that the under-expenditure was not so bad. The Committee had asked the DBE to relook at its report. He asked why the Development Bank of Southern Africa (DBSA) was used for projects like this.

Mr De Beer said that it was quite alarming if one calculated all the funds underspent, since this affected service delivery. What Members had presented to them was not in line with the State of the Nation Address (SONA). The national DBE must take note, as must the provinces, both those present and those not present. He asked Mpumalanga why it appointed teachers who were not qualified in mathematics and sciences. This was not in line with the SONA. It was, moreover, not enough to identify a problem; it was necessary to identify a solution.

National Treasury replied that the DBE should explain why the DBSA was chosen as an implementing agent.

Mr Bogosi noted that building capacity had been identified as a challenge. Technical advisors had been appointed to try and build capacity. It was also necessary to ensure the appointment of people to whom skills could be transferred.

Mr Padayachee replied that DBSA had a contract with the DBE to be an implementing agent for 49 schools. The DBE had done an analysis and decided that if projects were not completed it would not enter into any agreement with any implementing agent or contractor until they had completed their work. DBSA was chosen after discussion between the DBE and National Treasury.

Ms Mhlabane replied that Mpumalanga had already in the system educators who had been trained a long time previously. Also there were areas of work in the new curriculum with which they were not familiar, so it was necessary to upgrade their skills as part of the capacity building in the Dinaledi schools.

Mr Lees noted that the massive underspending had a huge impact on service delivery in education. 49 schools had been allocated to DBSA. He asked if there was any reason why 19 schools in the Western Cape had not been built. Were they part of the DBSA allocation? Was one dealing with implementing agents in this grant efficiently if one had spent barely R1 million out of R700 million?

The Chairperson asked for all those details in the report that he had asked the DBE to prepare. This report should cover all the provinces.

The Chairperson would review the Committee's programme and find a date to meet with the DBE and the Minister.

Committee minutes: adoption
The Committee adopted its minutes of 24 April 2012. [Mr De Beer proposed; Mr Lees seconded.]

The meeting was adjourned.