Further Education & Training Grant 2012/13: Department of Higher Education & National Treasury evaluation reports

Meeting report

Chairperson’s opening remarks
The Chairperson noted that since the responsibility for administering the Further Education and Training (FET) grant was administered by the Department of Higher Education and Training (DHET), that Department, as well as National Treasury, had been asked to outline its experiences and achievements on the grant.

He noted an apology from Mr Qonde, Director General of the DHET.

Further Education and Training Conditional Grant: 2012/13 Annual Performance Evaluation by Department of Higher Education and Training
Mr Theuns Tredoux, Chief Financial Officer, Department of Higher Education and Training, briefed the Committee on the FET grant, noting that it was introduced in order to prepare for the shifting of the public FET Colleges function to the DHET, when this Department was established in April 2010. Although the function shift had taken place, there were still processes to complete before the money could move from the provincial revenue share to the national, so it was necessary to introduce the conditional grant. At that time, the grant consisted of Programme 5 allocations, representing FET College funding, in the Provincial Education Department.

The grant was intended to assist all 50 FET Colleges to achieve:
- Enrolment of National Certificate (NC) or Vocational (NCV) Programmes set out in college enrolment target planning
- Enrolment in approved Report 191 Programmes, as set out in College Enrolment Target planning
- Expansion of their Information and Communication Technology (ICT) for teaching and learning, utilising connectivity norms
- Continued implementation of Management Information Systems (MIS) for the delivery of transversal MIS services
- Implementation of the funding norms for FET Colleges
- Upgrades, alterations, refurbishment and modernisation of classrooms, workshops and laboratories, as well as maintenance and repairs of equipment to support the delivery of approved programmes
- Infrastructure development.

This evaluation and methodology now being presented was done to comply with the requirements of the Division of Revenue Act (DORA) as well as to evaluate the grant in order to determine any corrective measures that might be needed for improved performance. The annual performance evaluation report of the 2012/13 FET Colleges conditional grant was submitted on 31 July 2013, in compliance with the Act.

Mr Tredoux explained the methods and sources for data collection for the report. Desktop performance evaluations were done, and there was review of quarterly reports, enrolment reports and operational plans for all 50 FET Colleges. It was not possible for the DHET to visit and perform live evaluations of all 50 Colleges, so one College per province was selected and assessed, and some of the achievements of the grant were verified there. During that process, interviews were conducted with the various FET College principals, campus managers, lecturers, student organisations and provincial officials responsible for the FET function.

Mr Tredoux described the budget allocations for the grant. In 2010/11, R3.8 billion was allocated, rising substantially to R4.3 billion in 2011/12, and to R4.8 billion in 2012/13. This represented 27% growth over three years. After 2013/14, growth would slacken. The purpose of the increases in the grant was to support increased enrolments in the sector.

The expenditure was also set out. From 2010 onwards, almost all the funds were spent, with R3.6 billion in 2010/11, R4.6 billion in 2011/12, and R4.8 billion in 2012/13. In 2012/13, the Eastern Cape had R12.7 million under expenditure, the Free State underspent by R15.5 million, and North West underspent by R2.9 million. However, KwaZulu-Natal had over expenditure of R11.6 million. In Eastern Cape, the grant was put to paying salaries and compensation of employees at provincial and FET College level. The savings had been returned to the provincial revenue fund and utilised for goods and services. In Free State there was over provision for compensation of employees. KwaZulu-Natal had under-budgeted for compensation of employees, mainly because of the implementation of the Occupation Service Dispensation (OSD) and wage agreements, but that was corrected through normal allocations. North West’s under spending related to the provincial portion of goods and services, and again the funding reverted back.

Mr Tredoux explained the system for performance reporting, monitoring and capacity. Three Deputy Directors in the Monitoring and Evaluation Unit (Financial, Planning and Management Information System). attended to monitoring of the conditional grant, supported by Provincial Education Department (PED) officials. The organisational structure was being revised to accommodate more officials for monitoring and evaluation.

Findings
Mr Tredoux then proceeded to present a summary of the key findings and recommendations contained in the 2012/13 Evaluation Report

In respect of the budget allocation, it was found that:
- Allocations were commensurate with learner enrolments
- Transfers of the conditional grant were made according to the approved payment schedule
- Conditional grant budgets were utilised according to the funding norms
- 99.6% was spent of the total adjusted budget allocation
- In North West transfers to Taletso FET College as well as Mopani FET College in Limpopo were delayed, but subsequently paid

The findings on the funding norms and planning, in terms of Outputs 2 and 3, were as follows:
- There was commendable achievement, as colleges ensured the inclusion of Outputs 2 and 3 of the Minister’s Delivery Agreement in their Colleges’ strategic or operational plans and planning
- The PDEs and Colleges confirmed contribution of additional funding, as well as other forms of support to colleges in order to deal with growth projections
- All FET Colleges exceeded their projected student enrolment, funded mainly through special allocations received from the National Skills Fund. The conditional grant was not able to accommodate all the learner numbers for the FET Colleges, and special allocations were provided for that purpose.
- Colleges reported increased collaborations with Sector Education and Training Authorities (SETAs). This was associated with high-value benefits in training and skills development for students, with particular value gained from experiential learning, or work-based exposure and placement, of FET students by SETAs.

In respect of enrolments for the certificate courses, and Report 191, it was found that:
- All FET Colleges exceeded targets for student enrolments for NC(V) and Report 191 programmes during the 2012/13 financial year, despite insufficient infrastructure capacity.
- Colleges reported having made extra efforts not to turn away students
- They also reported a notable shift in enrolments, with more students enrolling for National Technical Education (NATED) (Report 191) courses, than for the NC(V) programmes.
- The DHET would continue with advocacy for NC(V) programmes as part of profiling FET Colleges as possible options for further education. It was noted that the Minister specifically had done much to market FET Colleges as viable options for students.

Findings around the delays in issuing of certificates were noted.
- There were concerns about the delays in the issuing of certificates for National Certificate (Vocational), but that was resolved during July 2013, when 131 474 full NC(V) certificates for Levels 2 to 4 were issued to candidates.
- Results for the 2012 November examinations were released in April 2013. Results for those registering late were released in June 2013.
- The DHET must find and implement a solution to address the challenge, so that results were issued on time to allow  students to proceed to the next level, and for those exiting the system to seek employment.

The findings in regard to Capital Expenditure and ICT Infrastructure included that:
- Colleges provided varying levels of achievement and implementation during the 2012/13 financial year.
- Although there was notable achievement against investment made under the grant, for the refurbishment and upgrading of infrastructure, there was still a need for development of new infrastructure.
- The majority of colleges had to supplement the conditional grant budgets with own funds to install or improve ICT, while others were unable to implement due to lack of funds.
- Some of the FET Colleges reported satisfaction with their Management Information Systems, saying that they were functional, and enabled the generation of requisite reports such as student data, academic reports, salaries, financial reports and even survey reports.

Mr Tredoux noted that the DHET was giving attention to the needs around infrastructure, as well as ICT. In the FET sector, there was a substantial challenge for infrastructure, because there was no dedicated subsidy or grant such as the universities and universities of technology received. The Minister of Higher Education and Training was discussing the issue with the Minister of Finance, with a view to getting a dedicated grant for infrastructure in FET Colleges.

The Medium Term Expenditure Framework (MTEF) allocations showed an increase of 27%, to assist with the increase in enrolments. Mr Tredoux noted that the allocation for 2013/14 was R5.4 billion, an increase of 12.6% on the previous year, which increased incrementally by 6.2% (to R5.8 billion) in 2014/15, and a further 5.6% (to R6.1 billion) in 2015/16.

As part of the function shift, National Treasury had agreed with DHET that as from 1 April 2013 that Department would take over the direct transfer, to the FET colleges, of subsidies that were previously part of the conditional grant. The grant would now to be split into two, as follows:
1) FET Colleges Conditional Grant, which would include salaries of lecturers and support staff paid through PERSAL, and provincial goods and services. The Department would transfer funds to PDEs on a monthly basis, in line with the approved payment schedule.
2) FET Colleges Subsidies, which would cover salaries of non-PERSAL lecturers and support staff, and other operational costs at FET College level. The Department would transfer funds to FET Colleges on a quarterly basis, in line with the approved payment schedule.
 
Mr Tredoux summarised that Committee Members would be provided with hard copies of the evaluation report. DHET was of the view that the objectives of the FET Colleges Schedule 4 conditional grant programme were satisfactorily achieved, in an efficient and effective manner. DHET further believed that commendable performance on the programme outputs was achieved by the Colleges, commensurate with the investment made through the conditional grant.

Discussion
The Chairperson thanked Mr Tredoux for the presentation. He noted that the supplementary report was available, but asked if it covered all the FET Colleges.

Mr Tredoux replied that the main focus was on only the nine colleges where the Department had done physical visits, although some parts did cover the full spectrum.

Mr D Joseph (DA, Western Cape) was interested in what was seen in the balance of the colleges, over and above the nine physically inspected. He asked if there had been online communication with those colleges to collect that information.

Mr Tredoux explained the evaluation process in more detail. In respect of all 50 FET Colleges, there was a desktop review done, specifically based on the performance reports collected by the FET Colleges. However, only one college per province was physically visited, with a full evaluation then being done on the whole sector.

Mr Joseph referred to the budget allocation and was interested to know whether the latest census results had been taken into account for future trends, which would include the increased urbanisation, migrations to various provinces, and indicators of the need for more colleges, based on the population growth.  

Mr Tredoux responded that the MTEF allocations by government did not yet factor in the specific population changes in various areas, and were currently still based on old population data. However, there had been specific considerations of certain enrolment and population data when making physical allocations to each college. Tenders had been issued for building twelve new FET College campuses in Limpopo, KwaZulu-Natal and the Eastern Cape, in rural areas, to try to bring colleges to places where there were needs. In addition, there were major refurbishments planned for two other FET College campuses.

Mr Joseph asked for clarification of the R11.5 million overspending by KwaZulu-Natal, asking where the money had been sourced; whether National Treasury had given a top-up, or whether there was a virement from another budget.

Mr Tredoux responded that that was dealt with within the current allocation, and no additional funding was provided.

Mr A Lees (DA, KwaZulu-Natal) noted that a great deal of money under this grant was spent on equipment. The DHET had only physically monitored nine of the colleges. He asked how it had found that the spending took place, whether good or poor equipment was purchased, and whether any standards were enforced.

Mr Tredoux said the Department was aware of how colleges spent their money, because all FET Colleges submitted monthly reports on actual expenditure. The spending was based on funding norms. Details of all spending had to be given. The DHET had indeed identified that in some areas, quality of spending was poor, for instance in relation to photocopiers, faxes and the like, and had therefore initiated a process where FET Colleges were assisted with buying against some of National Treasury’s government contracts. Some colleges were already participating in sharing government contracts.

Mr Lees understood that the DHET had not yet taken over these FET Colleges, but asked for confirmation that the FET Colleges were aware of the pending transfer of the function, and for clarity on the movement of funds.

Mr Tredoux explained that the function shift itself was largely technical. There had been the necessary changes to the PFMA and Treasury regulations, and Provisions by the Public Service, but a function was not formally shifted until the last step was taken. He said that the current legislation afforded partial control by DHET over the FET colleges – such as the DHET and the Minister having the legal responsibility to appoint, college principals and college managers, which was previously a provincial responsibility. As from 1 April 2013, the DHET was paying subsidies to the FET colleges and was directly responsible for monitoring. The DHET had intervened where there was poor financial management in many colleges. The DHET also had entered into agreements resulting in temporary Chief Financial Officers who held chartered accountancy qualifications being appointed to colleges who previously lacked these positions. All 50 colleges now had  a Chief Financial Officer contracted to them. In three FET colleges, forensic audits were currently running to address problems and suspicions of fraud. Essentially, despite the formal completion of the function shift, the DHET had effective control over the FET Colleges. In addition, the transfer of staff still had to take place.

Mr Lees asked why, if the transfer was in progress, the funds were being channelled through the provincial PERSAL. If this was a national competence, he questioned why the provinces were being used, and whether this was a temporary or interim measure, or would continue into the future.

Mr Tredoux explained that because the function was not fully shifted, the responsibility still lay officially with the PDEs, and so the funding was also linked to that responsibility. That explained the split in the grant with effect from 1 April 2013. Part of the grant remained with the province to cover the functions still being performed at provincial level, although the DHET was dealing with direct funding to colleges. When the function shift was completed, the DHET would take over all funding, and the conditional grant would end. There were ongoing discussions and processes with National Treasury and the provinces.

Mr Lees was surprised that the Department seemed to be proud of issuing results in April, when the graduates had been expecting to start work in January, and questioned if it was normal for results to be issued five months after the examinations.

Dr Bheki Mahlobo, Chief Director, DHET, said that this was not the norm. FET Colleges ran five examinations in a year, divided into two semesters ending in June and November An annual examination for NC(V) was held in October/November, and there were three trimester examinations for N1 Engineering. In this instance, there had been delays at the end of the supplementary examinations. The results for 2012 were issued at the end of 2012, save for the supplementary examinations, whose results were concluded in April.

Mr Lees thought the SETAs used much money, but achieved very little. He enquired if there was any monitoring of the employment take-up outside SETAs, and if there were statistics about employment of students graduating from the FET Colleges. In his own experience in business he would think seriously before employing anyone graduating from an FET College, and said that the students’ expectations and standards that they reached did not match up to how they in fact performed.

Dr Mahlobo replied that the DHET was not able to determine where the graduates were employed, or what the take-up rate was. DHET had started to compile a list of a number of students from the N6 programme and the NC(V) Level 4, giving that to the relevant SETAs to expose the graduates to the workplace. N6 students required 12 months, 18 months, or 24 months experience in order to graduate and get their diploma whilst NC(V) Level 4 required more than twelve months work experience before being employed. The Department was working with SETAs and hoped to reach the situation where more students were exposed to workplace opportunities, to increase their chances of final employment.

Mr C de Beer (ANC, Northern Cape) was unable to find any indication of how performance was measured, what the targets were, or what was accomplished. The presentation also did not give figures as to precisely what was spent, and how.

Mr Tredoux said that information would be made available to the Committee.

Dr Mahlobo added that the salient targets mentioned in the Conditional Grant Framework were enrolment on the Report 191, and the enrolment on the NC(V). The conditional grant covered 500 199 in a head-count, but when this was converted into “full-time equivalent” it related to about 360 people. Investment was not enough; quality outputs were also desired. When the DHET took over this function in 2009, there was about 11% certification each year, but this had risen, by 2012, to about 40% a year. Despite this, the output was not yet commensurate with investment. However, he was confident that the DHET was progressing in the right direction.

Mr de Beer proposed that Members should visit FET Colleges. He said he would make appointments for O’Kiep, De Aar, Kuruman and Upington, in order to see what was happening at grass roots level, how they were performing, and the challenges experienced in the classroom.

Mr B Mashile (ANC, Mpumalanga) referred to a radio report that a student studying motor mechanics at an FET College was unable to do practical training because there was no equipment, no workshop, and machinery standing idle. The presentation had claimed that all FET Colleges exceeded targets for student enrolment, but this was less important than producing quality skills outputs.

Dr Mahlobo responded that there were two types of programmes in FET Colleges, the Report 191 Programme and the NC(V) programmes. The Report 191 Programmes were designed in the early 1980s to complement the apprenticeship programmes. Students were employed, and had to do the theoretical part at a college. However, as the numbers of apprentices increased, the workplace opportunities decreased. Industry still needed the programme, and the FET Colleges had then produced a programme without a corresponding requirement to undertake practical work. DHET had now engaged with the Quality Council for Trades and Occupations (QCTO) to structure a programme that would require completion of theory, practical, and workplace exposure components, in order to complete the qualification. He agreed that if a person was attempting to train as a motor mechanic and could not do a practical, then the programme was not responding to the needs, which was why the DHET wanted to phase out these kinds of programmes.

He added that in the NC(V), for a person doing mechanical engineering, 50% of performance assessment was based on theory, and 50% on the practical component, and this was checked. However, when the Minister had called upon colleges to expand, the DHET noticed that their expansion was based on their capacity. If colleges were expanding at the expense of quality, DHET had intervened to re-route the students elsewhere. All colleges must have teaching, infrastructure and workshop capacity. There may be instances where the DHET had not picked up all the problems, but would follow up wherever it could.

The Chairperson wanted to know whether the Department had capacity to do monitoring at provincial level. He also enquired how far the Department had gone in rolling out connectivity in all the provinces.

Dr Mahlobo responded that not all colleges had ICT connectivity as yet, but the ideal expansion of ICT was in practice limited by funding. The 2009 conditional grant had gone about halfway to meeting the need.

The Chairperson noted that the high volumes of enrolment had put financial pressure on every college, and some colleges were struggling financially. He asked how the DHET would manage that. He also asked how the DHET would do to address the challenges of high student debt, and the need for many colleges to write off unrecoverable debt.

Dr Mahlobo responded that the increase in enrolment had indeed put financial pressure on FET Colleges. Many of the students were not able to pay fees, but this was also coupled, in some instances, with the fact that the colleges themselves were unable to keep track of, or deal with the debts. Part of the capacity building that DHET had done in the colleges was geared to improving this situation. Firstly, bursaries would be awarded to deserving students, and a strict policy instituted that those not eligible for bursaries should pay. Where the college was unable to track and check which students should be paying, that was to its own detriment as it may be forced to write off, so the DHET was also trying to build financial management capacity in the colleges.

Mr Zirk Joubert, Chief Director, DHET, added that there were quite high write-off rates for student debts, and he reiterated that one of the DHET’s objectives was to streamline the bursary recognition criteria, to ensure that money was allocated to the correct students. Another was to try to ensure that there would be no write-off while the student was still in the system, but to concentrate on trying to recover.

Dr Mahlobo returned to the issue of accelerating targets. In 2009 the Department targeted a 550 000 head count, but in 2012 the Department had a head count enrolment of 650 690 students, of whom around 500 199 were supported by the conditional grant. The difference was found in the occupational programmes, National Skills Fund projects, or industry or SETAs using colleges as sites for their own training.

Mr Mashile was interested in the outcomes, mentioned previously as 11% and 40%. He asked if the DHET had done any assessment in the backlogs of certification, and whether this arose because students were not performing or performing the theoretical part, or the training part. He also wanted to know how many passed their theoretical tuition, but were still waiting for the work experience to be able to get their certificate.

Dr Mahlobo responded that for N1, N2, N3, N4, N5 and N6 certificates, where there was no practical requirement, there was no backlog in certification. The major backlog related to the NC(V) Programme, where at one time there had been uncertainty as to whether the DHET or Umalusi must issue the certificates. Once that was resolved, the Department had to submit data to Umalusi for the latter to issue the certificates. Almost 99% of certificates had been issued. The remainder related to exceptions or rejections, where the first data set did not seem to correspond with the second data set. Once these were resolved, there would be no backlog.

He added that the N6 diplomas were issued on request by the student. Once the student had completed the required period of 18 months, evidence could be submitted by the student, and the Diploma in Public Management issued. The same applied to the Diploma in Engineering, where the student had to ask for the certificate, and attach proof of workplace experience.

Mr Mashile understood Dr Mahlobo’s explanation of the curriculum but said that surely if a student was doing theory only at the FET college, the lecturer should be able to demonstrate what was being spoken of on a real piece of equipment.

Dr Mahlobo said it was in the Department’s best interests to verify the equitable distribution of equipment for practical work in FET Colleges, taking into account both the main colleges and the satellites. It was a requirement of the curriculum that there should at least be a functional engine or a functional car at the college for demonstration purposes to students of the motor mechanics NC(V) Programme. That might be the case for colleges that were in the public view, but perhaps not in the satellite campuses. The DHET would need to follow up on this as it tracked the conditional grant for this year.

Mr Lees asked which of the three colleges were subject to forensic investigation.

Mr Tredoux named them, and said that severe circumstances had led to their investigation. A fourth investigation was pending.

Mr D Bloem (COPE, Free State) followed up on the issue of certificates and results, questioning how students writing exams in November, but receiving their certificates only in April, could apply for employment.

Dr Mahlobo clarified that in most cases, November results were issued to students in mid December. Some students had to write supplementary examinations in February/March, and for these, results could only be issues at the end of March or beginning of April.

Mr Joseph commented that there were Schools of Skills that offered courses such as home based care, welding, catering, or hospitality, and asked for an explanation of the difference between these and the FET Colleges.

Mr Keith Loynes, Project Manager: Function Shift, DHET, clarified that this was an initiative that fell under the Department of Basic Education, and was aimed at providing an alternative to the conventional schooling that was primarily academic. The Schools of Skills were not featured widely, and seemed to be unique to the Western Cape, where they were pursued as an option by the Western Cape Education Department. They were not related to FET Colleges, although the students could move from a School of Skills to an FET College if they wished to.

National Treasury submission on the grants
Mr Emmanuel Pillay, National Treasury representative, wanted to make some comment, noting that the numbers on the spending slide of the DHET differed from the figures that National Treasury had, which were derived from what the provinces had handed to the auditors. For example, according to National Treasury figures, KwaZulu-Natal underspent by R13.5 million, although the DHET had reported a R11.5 million overspend. North West was close to spending 100% at the end of the day. For KwaZulu-Natal, most of the services were delivered in the 2011/12 financial year but the payment was not done, and National Treasury was advised that the province’s payment was done in the current financial year, and that there would be an application made for rollover of that funding.

He noted, in respect of the evaluation itself, that some years back, the provincial and national departments had experienced difficulty combining their evaluations, and National Treasury had issued a circular, which, although not prescriptive, gave the departments guidance as to what National Treasury expected to see, at minimum, in the evaluations.

The Departments would normally report on those minimum requirements. In respect of evaluations, the National Treasury Circular spoke to the ways in which the evaluation should be conducted, who should conduct the evaluation, what teams should be set up, and the composition of those teams. The DHET had complied with that.

National Treasury had also been satisfied with the DHET’s responses in relation to what data should be collected and how it should be collected, and had provided questionnaires answered by the FET Colleges.

National Treasury did feel that there was room for improvement in the evaluation report itself. There was not particularly clear reporting on targets and delivery outputs. Most of the report was taken up by a description of the nine sites visited, whereas Treasury would prefer to have seen, for example, the provincial perspectives. If the DHET had visited only one campus per province, it would have been difficult to extrapolate what was happening across the whole provincial level.

In relation to the DHET’s reporting on enrolment numbers, Mr Pillay made the point that these were very high numbers and it would, in future evaluations, be necessary to set out what the numbers meant, and what was happening, in each of the provinces. For instance, the framework should be set out, with the output, targets and a statement of what was achieved, what was not achieved, and why it was not achieved. Both under and over-achievements must be included, because over-achievement might be an indicator that the targets were not properly set.

The Chairperson thanked Mr Pillay and said there was some detail he would like to take up with the Department.

Dr Mahlobo also requested to be furnished with the figures that were not the same, so that figures could be corrected.

Mr Mashile commented that it was problematic if the DHET and Treasury figures differed. He would have expected the DHET to report to National Treasury, and he questioned how the Western Cape and North West figures could be so far apart, particularly if they were higher; if they were lower it could be ascribed to older figures.

Mr Tredoux responded that all the figures for the final audit came from the Provincial Education Departments, although there were adjustments and changes within provinces, for which the DHET did not yet have the final result. The Department would ensure that its final numbers correlated with those of National Treasury. It had received an e-mail from National Treasury two days before, with final results for 2012/13, and DHET would now consolidate and clarify any differences.

Ms M Dikgale (ANC, Limpopo) asked whether there were anxieties around the function shift.

Mr Tredoux responded that there were such anxieties, but they were being managed by the task teams put in place for the function shift.

Adoption of minutes
The minutes of the Committee meeting held on 9 April 2013 were adopted.

The minutes of the Committee meeting held on 31 July 2013 were adopted, subject to a minor technical correction.

The meeting was adjourned.