Dinaledi Schools Grant expenditure report for the third quarter of 2012/13: hearings with National Treasury & Western Cape

NCOP Appropriations

07 May 2013
Chairperson: Mr T Chaane (ANC, North West)
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Meeting Summary

Presenting the report on the Dinaledi Schools Grant 3rd and 4th Quarter Expenditure for 2012/13, the National Treasury said that during the first year of implementation the grant had targeted 500 schools, with most of the beneficiaries in Gauteng, KwaZulu-Natal and the Eastern Cape.  The strategic goal of the grant was to increase the number of learners taking mathematics and physical science, with special focus on female learners.

The Department of Basic Education (DBE) had created a dedicated Dinaledi Unit in August 2012 that would, among other projects, assist and liaise with private partners who wished to adopt or support a Dinaledi school – the Adopt-a-School programme was part of this initiative -- and assist provincial departments with implementation issues.

As a sector, education was still facing a number of challenges, such as learner perceptions of difficulty in respect of maths and science and the poor skills of teachers to actually teach the subjects.  The Department indicated that its bursary schemes were a key vehicle towards addressing this challenge. There were indications that certain provinces needed to have a better management focus on the programme, in order to address avoidable implementation challenges.  Although Dinaledi schools had scored approximately 10% higher than normal schools in the relevant subjects, the department had indicated that it was focused on at least doubling this performance.

The Committee raised questions about the transgression of the Public Finance Management Act by the provincial treasuries, the introduction of a fourth practical year for teachers, and the transfer of funds by Gauteng to external service providers.

The Western Cape presentation focussed extensively on the reasons for its under-expenditure.  The Auditor-General had recommended that the Western Cape consider a different method of procurement on the Dinaledi grant. As a result, the Western Cape Education Department Executive Committee had decided to change to a more accountable procurement process, with central procurement and with nationally approved service providers.  The decision meant that the procurement process for the months of July and August 2012 had had to be started over again in order to fit in with the legal requirements of Supply Chain Management. The implications were that a Procurement Item List had to be developed based on the outputs as set out in the Conditional Grant Framework  and schools had had to re-do their procurement because the cost of items on a central tender was higher compared to one done locally.  The consequence was delays in finalising the processes and low spending by the end of the third quarter. This explained why there was almost no spend of the allocated funds at the end of the third quarter (December 2012) as the Supply Chain Management had been unable to deliver all the procurement processes according to the tenders by the end of the financial year.
Capacity constraints, such as human resource challenges, had also contributed to the low spending.
 

Meeting report

The Chairperson said that following a comprehensive presentation of a report to the Committee by Limpopo last week -- which also covered the Dinaledi Grant --  the agreement had been that Limpopo would just send through written submissions to save time and travelling costs. There had been an apology from Ms Moruakgomo L Mabe, Member of the Executive Council from the North West Province, who was attending the Basic Education budget vote.  Mr Bobby Soobrayan, Director-General: Department of Basic Education, could not attend, as he was tabling the strategic plan before the Standing Committee on Education.

National Treasury: Dinaledi Schools Grant 3rd and 4th Quarter Expenditure – 2012/13
Mr Edgar Sishi, Chief Director, Provincial Budget Analysis: National Treasury, said in his introduction that the grant had commenced in April 2011 and that provincial departments had been made aware of this grant before it started to avoid problems of poor expenditure.  In the Division of Revenue Bill 2011, the grant had been available, but allocations had started only in the second year, to prepare the provinces.

The strategic goal of the grant was to increase the number of learners taking mathematics and physical science, with special focus on female learners. During the first year of implementation --  2011/12 -- provinces had been allocated R70 million and of the allocation, about R61.5 million (or 88%) was spent by the end of the financial year. The grant targeted 500 schools, with most of the beneficiary schools in Gauteng, KZN and Eastern Cape. Other provinces, such as Limpopo, Mpumalanga, North West and Western Cape, had a sizeable number.  

Spending as at 31 December 2012
Out of a total budget of R105.465 million, which included a roll-over from the previous year, the spending by provinces at the end of December 2012 was 61% of the overall budget. There was also an improvement in the year-on-year growth at the end of December 2012, compared to the third quarter performance for the previous financial year.

Spending as at 31 March 2013
There was under-expenditure of less than R19.2 million, with most of the under-spending in Limpopo, at 39.8% of the total allocation, Free State at 70.3%, North West at 77.8% and Western Cape at 48.2%.  There was a decline in the spending of the Western Cape in its Department of Education by 31%.  There had been a number of issues that had even led to the withholding of monies from this province for a certain period of time.

Key developments during 2012/13
The Department of Basic Education (DBE) had created a dedicated Dinaledi Unit in August 2012 that would, among other projects, assist and liaise with private partners who wished to adopt or support a Dinaledi school – the Adopt a School was part of this initiative -- and assist provincial departments with implementation issues.

An annual evaluation of the programme was expected from the DBE on 15 May 2013, as required by the Division of Revenue Act. This report would be submitted to the National Treasury and it would detail the challenges that the sector was grappling with. 

As a sector, education was still facing a number of challenges, such as: learner perceptions of difficulty in respect of maths and science; poor skills of teachers to actually teach the subjects – the Department indicated that its bursary schemes were a key vehicle towards addressing this challenge. There were indications that certain provinces needed to have a better management focus on the programme, in order to address avoidable implementation challenges.

Although Dinaledi schools had scored approximately 10% higher than normal schools in the relevant subjects, the department had indicated that it was focused on at least doubling this performance.

Challenges related to financial issues
National Treasury and Provincial Treasuries were working to address with the national and provincial departments the following issues: procurement processes – provinces needed to procure from service providers identified by the national department. The Western Cape in particular had experienced some difficulties with this arrangement and had also spent poorly; poor supply chain management skills still resulting in procurement delays in Mpumalanga and Free State. There was now a Chief Procurement Officer to see to it that these issues were resolved.  

Advanced payments to service providers (transfers) – there was poor reporting from Gauteng and Mpumalanga on what the service providers had actually delivered with the funds.  For instance Gauteng was transferring 100 per cent of its funds to external service providers and showing all their expenditure with regards to the money in estimates. National Treasury engaged with the Provincial Treasuries of both provinces as well as DBE to enforce the reporting requirements and a report was expected on 15 May 2013. Further action on a breach of reporting requirements would be taken, following the receipt by the National Treasury of the report.

National Treasury’s view was that the above challenges were avoidable and solvable, because they essentially related to a lack of internal management focus within provincial departments to drive the programme. The Head of Department, as an accounting officer, had full authority to take decisions and put in place the right skills, and even to address cases of insufficient capacity.

Discussion
Mr C De Beer (ANC, Northern Cape) proposed that the National Treasury should submit to the Select Committee a copy of the report to be received on 15 May 2013.

Transgression of the Public Finance Management Act (PFMA) by the provincial treasuries through the advance transfer of funds to external service providers should result in consequences. Upon receipt of the report, the relevant provinces should appear before the Committee so that it could ‘crack the whip.’

Concerning the skills of teachers with regard to subjects like maths and science, a fourth year should be introduced into the curriculum of training teachers – a higher education diploma, which would be more of a practical year.

Mr B Mashile (ANC, Mpumalanga) said that in addressing the Gauteng problem, the Committee was being turned into ‘talk show’. The National Treasury should look into the provincial treasuries. He wondered if Gauteng was even worried about its actions and if so, what its reaction was.   What of the Western Cape and its under-spending? There was non-commitment from the provincial treasuries and administrative problems, with people sitting in offices without doing the work. The Committee was tired of listening to the same excuses each year.


Mr A Lees (Alt) (DA, KZN) said that no report had been given on Limpopo and North West provinces, which had under spent.

The Chief Director said that the National Treasury had been upfront with the Committee in admitting to the fact that there were challenges with the provincial treasuries. The National Treasury had launched a capacity-building and support program for provincial treasuries. National Treasury analysts had been sent to the provincial treasuries to establish why they were unable to perform in accordance with the PFMA, and this was going to be a phased project carried out over a period of time. Provinces like KZN, North West and Western Cape had been brought on board in terms of the diagnostic process, and more detail would be given to the Committee.

The problems in Limpopo and North West were not grant-related, but rather departmental, especially in the areas of capacity and supply chain management. There were a number of problems for the North West, including a lack of a permanent head for the provincial treasury for the past three years, with people filling this position only in acting roles.

Mr Lees wanted the Chief Director to illustrate the political issues in the North West and the implication of not having an MEC present at the Committee.

Mr D Joseph (DA, Western Cape) asked what the funding proposal was for preparing future leaders in the foundation phase. 

The Chief Director said that the National Treasury had added considerably to the budgets on early childhood development and grade R teachers. Implementation had to be monitored to see the impact of the increased budget, with the Department of Basic Education taking the lead.

Mr Jack Mithileni, Deputy Director: Department of Basic Education said that the Department was adopting a four-pronged intervention strategy called CAWI (Curriculum, Annual National Assessment, Wordbooks and Infrastructure.) to consider not only grade 12 results, but also a child’s elementary and primary education.

Mr Mashile said that the grant monies for the Danaledi schools had to be utilised properly and the DBE had a fundamental role to play. The intervention and principles had to be applied from the foundation, and to all schools in the country.

Western Cape: Dinaledi Conditional Grant: 2012-2013 – 3rd Quarter Performance
Mr Donald Grant, Minister of Education, Western Cape clarified that although the Western Cape had spent 48 per cent at the end of the financial year, there were commitments in the pipeline as at 31 March 2013, with orders placed and delivery in progress of some R3 269 976. This took the actual and committed expenditure up to a total of R82.1 per cent, leaving an unspent balance for roll-over as approved by the provincial treasury of R1 716 000 (17.9 per cent).

Mr Brian Schreuder, Deputy Director-General: Curriculum and Assessment Management, Western Cape Education Department, said that the Western Cape, with an allocation of 48 schools, had 46 schools participating in Dinaledi. Two more schools were to be added, with careful selection of schools that met the requirements of the grant to reach the total number for the allocation.

Although there had been delays for the financial year ending 31 March 2013, the Western Cape had a good record of spending, having spent 99.5 per cent in the previous financial year. There had been a retention of some funding for a while and this had been released only following an explanation on the reason for the delays.

Grant size
In 2011-2012, the Western Cape had received a R6.7 million conditional grant and 99.5 per cent of this grant had been spent.  In 2012-2013, the conditional grant was R9.57 million, all of which had been transferred following the reasons given for slow spending and delays. The R10 million allocation for 2013-2014 was yet to commence, but the business plans and operational plans were in place. There was regularly monthly and quarterly reporting.

Deliberation
Prior to the past financial year, there had been a procurement system whereby funds were transferred directly to the schools which in turn procured goods and services according to their needs within the framework of the Dinaledi Grant. This was different from Gauteng, where funds were transferred to the service providers instead of the schools. 

The advantages of transferring funds directly to schools were that procurement could be local where there were local resources available and there was financial gain, with utilisation often cheaper than through a central or national procurement process. Schools would also purchase and procure locally exactly what they needed.

In June 2012 a meeting had been held with all Dinaledi schools informing them of the amount of money that had been allocated to them, how the funding would be transferred to them, and that the goods and services had to be procured according to their individual needs within the conditional framework of the grant. They were also aware of the guidelines, quotations process and reporting mechanisms. 

However, the Auditor-General had made comments on the process of transferring funds to schools, including the possibility of some schools being unable to follow the correct procurement procedures (such as the three quotation requirement for a tender process). The Auditor-General had recommended that the Western Cape consider a different way for procurement on the Dinaledi grant. As a result, the Western Cape Education Department Executive Committee had decided to change to a more accountable procurement process, with central procurement and with nationally approved service providers.

The decision meant that the procurement process for the months of July and August 2012 had had to be started over again in order to fit in with the legal requirements of Supply Chain Management. The implications were that a Procurement Item List had to be developed based on the outputs as set out in the Conditional Grant Framework  and schools had to re-do their procurement because the cost of items on a central tender was higher compared to one done locally.  The consequence was delays in finalising the processes and low spending by the end of the third quarter. This explained why there was almost no spend of the allocated funds at the end of the third quarter (December 2012) as the Supply Chain Management had been unable to deliver all the procurement processes according to the tenders by the end of the financial year.

Special project plans for ICT and special procurement processes for ICT had to be followed, and in the case of infrastructure projects -- cabling, burglar proofing, furniture and counters -- site meetings had to be organised for potential service providers, resulting in further delays. At the end of the fourth quarter of the financial year, 48 per cent of the allocated funds had been spent with a further 34 per cent committed, for which approval for a roll-over was requested from the Western Cape provincial treasury.       

Capacity constraints
A number of capacity constraints had contributed to the low-spending by the third quarter such as: human resource challenges with regards to limited administrative support.  There were only two people to monitor and support schools in terms of conditional grant requirements, and instructions had not been followed to the letter, such as the late return of documentation by schools and districts, as a result of the new procurement process.

Monitoring capacity and monthly reporting
Although Supply Chain Management was under stress in all departments, it was staffed by a  dedicated group of people. The challenge had arisen in the busy months of October and November while December and January were dead months, as payments could not be effected during this period.

There was a district official to monitor Dinaledi schools’ compliance with Western Cape Education Department head office requirements effectively in terms of issues pertaining to the conditional grant. The principals were accountable for identifying schools’ needs and complying with the procurement of goods and services, in addition to monitoring the use of resources. Reports and information were received from schools regularly on a monthly basis.

Discussion
Mr Joseph asked for an explanation for the differences in actual and committed expenditure.
 
The Deputy Director-General said that the books were closed on a given date and that committed funding was not reflected in a financial year if it was not spent at the closing of the books. A roll-over would have to be requested for the balance, so it would be reflected in the next financial year.

Mr Mashile said that from the presentation of the Western Cape Education Department, it appeared that the grant was not needed, but the truth was that there were schools in the Western Cape that needed this money to improve their performance.  

Although the Committee accepted the issue of commitment, there was an inherent problem, with people running around on the deadlines at the end of the financial year to make sure that the money did not disappear. What one would draw from this was the suspension of expenditure or delivery of goods and services in a particular year, and pushing it into the next year. The capacity in the Department to spend the allocated funds would be stretched because of accumulated work from the previous year.

Mr A Lees (DA, KZN) asked whether the Dinaledi Grant was achieving its objectives.

The Chairperson asked if there had been any impact on the performance of learners and teachers as a result of the delays experienced.

He asked the Department on Basic Education what the actual measuring tool was, other than waiting for year-end results of students.  How were teachers measured?

He asked the Western Cape how the weekly reports drawn up for the directorate related to the reports that were supplied by schools and the final monthly report that was submitted to the National Treasury or the National Department.

Mr David Silman, Director, Dinaledi Unit: Department of Basic Education addressing the issue of measurement, said that there was a major deficiency in the execution and management of the Dinaledi grant, with little done in baseline assessment to see where teachers were in terms of their content knowledge.  There was no history of any baseline assessments done in terms of pupils’ levels of achievement in the course of the past two years of the grant’s existence, with the Grade 12 exit results the only exception.

The proposal to the other provinces was a nation-wide assessment system , and required the use of ICT infrastructure in schools.  The difference between the national averages and the averages generated by schools in the Dinaledi programme was nowhere near commensurate with amount of money spent. The Western Cape had taken a step back and returned to the basics - the needs analysis -- which was never done in any of the provinces.  There was need to extend the funding to the primary level.

Mr Mithileni, commenting on the impact of the delays, said that in preparing business plans for approval by the Director-General and the National Treasury, the Department accompanied the submission with a compliance certificate. The provinces were always cautioned not to create an unnecessary administrative burden in delivering the Dinaledi grant.

Mr Silman added that the provinces ought to have carried out assessments of the teachers targeted for extra training, but these assessments did not exist. The overall situation was that the pre-assessment of teachers was not being done.  Provinces were unable to cope with the Dinaledi grant because of existing workloads. As a way forward, the Department of Basic Education was going to appoint a provincial manager for the grant in each province, so that some of the load would be taken off the provincial officials.   

Mr Mashile asked how the reporting was managed on the work being done in the Dinaledi Unit and to whom it was reporting?   When would the measures be in place for the Dinaledi Unit so that the Department of Basic Education would be able to monitor and measure the performance of the provincial departments on the Dinaledi grants and the Dinaledi Unit itself?

Mr De Beer proposed that the Department of Education should be called back to make a full presentation before the Committee with the National Treasury present, as well as the provincial departments of education, otherwise it would be a case of throwing money around with no measurement of delivery.

Mr Schreuder said that the Dinaledi grant was R105 million, of which the Western Cape had received R9 million.  It was a relatively small grant in financial terms, but the potential impact in the Western Cape was huge.

In terms of the commitments that yielded no fruition, he said that the intention of an annual grant was that the money would be spent in the financial year but for the reasons given, the Western Cape had been unable to spend as expected.  Nevertheless, judgment had to be based on the track record of previous spending.

Lack of capacity was not the principle issue that had led to the delays in spending for the past financial year. Although capacity was a constraint, it was manageable by the Department. The principle cause of the delay was the change in the procurement process during the year. The business plan outputs for this year indicated that most of the funds were going to resources – teacher training was a small component of the fund.

The measurement of impact of the learning and teacher performance was difficult, as educational impact delivery was a long process that worked through the system. The measurables included more learners taking maths and science – all Dinaledi schools had targets to enhance this. This could not be done in Grade 12, but rather in Grade 10.  Maths and science levels and competency had to be enhanced at the primary level – the Literacy and Numeracy Strategy launched in 2006 was used in testing the performance of learners annually. The science and maths numbers improved at the matric level.

On the measurability of teachers, he said that the Cape Teaching and Leadership Institute served the purpose of training teachers. There were pre-tests and post-tests for all programmes at the Institute, which provided an indication of improvements in teachers’ capacity.  There was also a maths and science strategy that was launched in 2012, with Dinaledi being an integral part of the strategy.

The weekly reports were the management reports of the Dinaledi Unit, with the monthly reports coming in from the schools.  These were collated and sent to the National Treasury, provincial treasury and the Department of Basic Education. 

The Minister of Education, Western Cape, added that about R125 million was spent on the capacitation of teachers, but this was a long term project. The School Improvement Program in the Western Cape for every grade and every subject was a medium to long term programme to enhance education outcomes.  It was supported by a comprehensive IT system, with targets set by the Principal of the school with the Head of Department, and reviewed at the district level.

Dr Nhlanhla Nduna-Watson, Director: Department of Basic Education, said that a diagnostics report had been produced, with a remedial plan indicating the gaps and what needed to be done.  The foundational skills in maths and science were found lacking. Other issues identified were language, pedagogy and methodology, and lack of content knowledge. The Department had been involved in road shows between the months of February to April 2013, where information had been shared with various provinces on the gaps and what had to be done with regard to the core challenges in teacher training. Subject specialists were to be sent to cluster meetings to engage with the lead teachers on the core challenges. Although some schools had the equipment, teachers did not know how to do practicals and so had created a gap.  The Department was creating DVDs with self-study guides. 

The meeting was adjourned. 

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