National Student Financial Aid Scheme & Council on Higher Education on their Strategic Plans

Meeting report

National Student Financial Aid Scheme (NSFAS) 2014/15 Budget and Annual Performance Plan briefing
Mr Zamayedwa Sogayise, Chairperson, National Student Financial Aid Scheme (NSFAS) firstly explained that the new logo for NSFAS, which appeared at the bottom of the slides, was implemented when NSFAS came up with the new logo when was covering a million students.

He gave a quick overview of the presentation, noting that it would touch upon the NSFAS strategic focus and the new transformation model, referred to as the student-centred model.

NSFAS was introduced as a public entity that reported to the Department of Higher Education and Training (DEHT or the Department) and it was governed by the NSFAS Act, No 56 of 1999. Since its inception, it had disbursed more than R415 billion in loans and bursaries to 1.4 million students. In 2013, NSFAS had disbursed R8.7 billion to 416 000 students at 23 public universities and 50 public Technical and Vocational Education and Training (TVET) colleges throughout the country, compared to 2012 where it had disbursed R7.7 billion to 383 000 students.

Mr Msulwa Daca, Chief Executive Officer, NSFAS, took the Committee through the vision, mission and values of NSFAS (see attached presentation). The key partners of NSFAS were the Department of Higher Education and Training and under it, the National Skills Fund (NSF) and the Sector Education and Training Authorities that were started in 2013, as well as other key partners. He also presented on the strategic goals of NSFAS noting that in 2012, Parliament approved a transformation programme to introduce a new student-centred model for financial aid, with the pilot phase starting in 2014. NSFAS’s strategic goals were also highlighted (see attached presentation) The strategic plan overview contained two programmes, one on Administration and the second on the Student-Centred Financial Aid.

Mr Lerato Nage, Chief Financial Officer, NSFAS, outlined the slides presenting the NSFAS loans and bursaries budget, as well as the budget overview (see attached presentation for all figures).

Discussion
Mr Y Cassim (DA) noted that the vision of NSFAS was to provide financial aid to all eligible public university and Training and Vocational Education and Training (TVET) college students from poor and working class families. However, there was a shortfall in meeting that vision; as it had indicated from its presentation only half of those who are eligible in the country could be assisted. The NSFAS budget indicated a very small increase from the 2013/2014 year to the 2014/2015 year, under the loans and bursaries, and he questioned the implications of this for the indicators, and how much each of the nine items listed in slide 20 would have to be changed, in order for NSFAS to fully meet its vision.

Mr Cassim asked who was handling the social development bursary funding, and whether there was any role that NSFAS was playing.

Mr Cassim said that the NSFAS Annual Performance Plan medium term expenditure estimates for 2016 increased only to R9.2 billion, and questioned why so little had been budgeted, by how much each of those nine items needed to change, and by how much the entire budget needed to be increased, in order to meet NSFAS’s vision.

Mr Cassim commented on the tables for financial means testing, and the NSFAS strategic objective 2.4 to try to address the ‘missing middle’ – namely, students above the band and families were expected to make contributions that were in fact so high that they could not afford to study at all. He questioned what form of funding NSFAS was looking into in order to assist such students. He suggested that perhaps it would be better to increase the band in order to reduce the burden of financial means testing, so that those students whose parents earned more, according to the current financial means testing, would still be included. He further questioned how the formula for calculating the expected family contribution could be changed so that NSFAS could increase funding to this number of students, who were currently sitting in a no man’s land. He also wanted to know what time frames NSFAS was considering to address this concern.

Mr Cassim noted that student satisfaction measures were contained in NSFAS’s Annual Performance Plan, but thought the way of measuring student satisfaction was a concern and the report was very vague on that. Whilst he understood that this was relevant to the pilot project, which had seen may problems, he called for a brief summary of the problems and how they might be addressed.

Mr Cassim said that his own alma mater, the Nelson Mandela Metropolitan University, was one of the institutions in the pilot project, and there were problems with the number of students who were eligible but who were not being funded, in comparison with previous years, because the system had been centralised. A further problem was that since the system had been centralised in Cape Town, students who needed assistance, or to appeal, were not able to do so properly, as much of the communication had to be done via electronic communication and no responses  were received, according to his own experiences. There was  no formal appeal process and no specific criteria, and NSFAS needed to pick on that concern, especially because there were specific circumstances, and discretion should be exercised on a case by case basis.

Mr Cassim noted that there were also problems with the new system that NSFAS was marketing, in relation t how they were being assisted and how they were accessing funds for their living expenses. Students had to have airtime to access the funding and some students could not afford airtime; he wondered if NSFAS had taken note of that and if institutions might be able to step in to assist those students. Currently, he said, students living off-campus or not in student residences would receive about R700-800 a month as living allowances, and he was aware of some students, with no other options, sleeping in laboratories or finding couches on campus. He asked if there were plans to increase that living allowance, or whether it was part of the new pilot project being undertaken by NSFAS, to make sure such students were not being prejudiced.

Mr Cassim made the point that student debt was a perennial problem, and the particular issue of returning students who have debts for a number of reasons was discussed. A student who had a debt with the institution might not able to register with the institution. Such a student may qualify and even be granted funding by NSFAS or be put in a waiting list, but the debt precluded that student being registered, so s/he was not then able to access NSFAS funding. He asked what NSFAS was doing to assist them.

Mr Cassim said that for Honours or Course-work funding, there was another “missing middle”, which was not addressed in some of NSFAS reports. Most of the post-graduate courses required a certain number of credits for research purposes. However, the first two years – or even the entire course at undergraduate level – may lack research content and underprivileged students in such courses were not able to access funding. BCom, for instance, was one such course that had no research content. He asked what would happen to these students.

Mrs J Killian (ANC) noted that one of NSFAS’s mandate was to recover loans, and asked what the percentage recovery rate was.

Ms Kilian referred to the slide 8 on the student centred model, and asked what the qualifications for funding were. She wanted to know what position NSFAS took if students failed, and whether such students had the opportunity to carry through, where reconfiguration of courses was possible, bearing in mind that funding was not adequate to cover all needy students who qualified for such funding.

Ms Kilian wondered, in relation to the financial means test, whether NSFAS at the moment was linked with other government databases such as that of the Department of Home Affairs, to be made aware of and able to assist needy students.

Ms Kilian wondered if the strategic goals were aligned with the government priorities in terms of careers and courses that were really needed in the country, whether loans and bursaries were allocated with that in mind, and how NSFAS redirected people towards sciences.

Ms Kilian questioned whether NSFAS was receiving any funding from the private sector and whether it was also managing that.

Noting that there was an increase in postage, stationery and computer services, she questioned NSFAS budget priorities vis a vis those in the last year, and whether there was any particular reason for such increase. It was also noted that the business development had shrunk by about 10%, and she asked whether there was any particular reason for that.

NSFAS was asked to explain the six senior posts that were advertised in June.

Ms Kilian noted the indication of a budget shortfall, and she asked whether NSFAS expected to run on another budget shortfall this year, and how it had managed the previous year’s financial problems.

Ms Kilian observed that no allegations on corruption and collusion, even though they may not be factually based, were good for an institution. She asked if NSFAS had done any investigations and whether there was any substantiation of the rumours. She asked what it was doing to stop any possibility of corruption or collusion between students and staff, perhaps if students were getting away without repaying loans or were recipients of such loans and bursaries and should not have qualified.

Prof N Khubisa (NFP) asked about the students’ ability to access funding, which would be premised on knowing whether there was funding available and asked how NSFAS attended to publicity on funding.

Prof Khubisa asked about the  profiling of students, saying that it was pertinent to get an overview of how students are being funded, in terms of their geographical spread, qualifications they were undertaking, in which institutions and other information.

Prof Khubisa questioned the NSFAS record, especially whether there had been any improvements compared to previous audit reports.

Prof Khubisa sought clarity on the Truth and Reconciliation Fund.

Ms S Mchunu (ANC) felt that the new student-centred model was a good idea in terms of management and resources. She noted the spread of strikes at the beginning of the year, and questioned whether NSFAS had the capacity to deal with all the applications from the tertiary institutions, owing to the fact that everything was now being centralised. She noted that the new model required a student to apply only once, with the possibility of funding then extending for four years after first qualifying, and asked whether NSFAS had a way of monitoring student progress.

Ms M Nkadimeng (ANC) noted the NSFAS mission to identify eligible students and provide loans and bursaries but was concerned whether NSFAS had a plan for the very poor learners who completed their academic qualifications and thereafter remained unemployed for many years, being thus unable to refund NSFAS.

Prof B Bozzoli (DA) asked whether any student got a full bursary and, if not, the average proportion of funding to costs.

Prof Bozzoli said that a previous presentation by DHET had indicated that there were more students envisaged to enrol in universities, and about 150 000 more students in TVETs. She questioned whether NSFAS long term plans matched the Department’s enrolment planning.

Prof Bozzoli noted that under the new scheme NSFAS paid fees and residence accommodation directly to the universities, but the rest of the money was paid directly to students’ accounts, so that it was monitored and accounted for, but wondered how that was done, to ensure that it was used for the purpose intended, and that a student would not succumb to pressure to share that money with his/her family.

Prof Bozzoli assumed that the budget of  R3 billion came from the DHET, which was a decline, and said that the rest of the funding was ring-fenced. She noted that this meant that departmental funding only was being used for the general student body.

Prof Bozzoli questioned why NSFAS needed a R3 million budget for official functions.

Prof Bozzoli questioned which government department was going to furnish NSFAS with student information that it required to determine if students were being truthful about their financial means. The Department of Home Affairs was surely only able to give information on the citizenship of students.

Mr C Kekana (ANC) noted that from 1994 to the present, a lot of money had been spent in financing students, and, although it was not part of NSFAS’s jurisdiction, he wanted to know whether it had any idea what eventually happened to all the students who were assisted, whether they were successful, and whether NSFAS would be able to assist those without jobs.

Mr Kekana asked how much of the R1 billion had gone to tertiary universities, and how much had gone to technical and vocational colleges. He also asked how much the private sector was sponsoring and whether there was a way to do a comparison between what government and what the private sector were doing.

Mr Kekana wondered whether, from the rural areas where teachers were not well known and schools might still be made from mud, there was any way to pick out the brightest students, to ensure that their gifts were nurtured.

The Chairperson asked how the student centred model identified students who dropped out but had benefitted from NSFAS funds. She asked when the system was going to be rolled out to all institutions of higher learning and TVET colleges, and when the “missing middle” would be funded. NSFAS had indicated that the MTEC funding would be phased out and she wondered if there was a transitional plan, whether  other institutions were aware of this and how students had received the news of its phasing out.

The Chairperson said that on 8 June 2014 NSFAS advertised six senior positions. She asked if there were other vacant positions also, and what the vacancy rate was.

The Chairperson called for a progress report on the NSFAS investigations into the possibility of providing laptops for the beneficiaries, and whether there was financing available.

The Chairperson noted the appointment of a Chief Financial Officer without approval from the Accounting Authority and asked what plans were in place to prevent a recurrence. She enquired if NSFAS had a risk management strategy as well as implementation and management plans.

The Chairperson wanted to know what improvement was planned in relation to later disbursement to students, sometimes in the second semester.

Mr Sogayise responded to the issue of the ‘missing middle’. He explained that NSFAS board, together with the Minister for Higher Education and Training, had found that the means test criteria, relating to R122 000, was prejudicing many students whose families could not even qualify to borrow money from banks. The NSFAS board was busy developing a plan around that and would be reporting back to the Committee on the progress and further consultation with the Minister.

He said that the new student model was developed for purposes of profiling students who accessed NSFAS funding, as well as to help get to the deep rural areas of the country. The ‘money follows students’ and thus NSFAS, together with its partners, was going not only to universities and colleges but down to schools. The transformation model was taking care of the mapping concern raised. Currently, NSFAS was so far piloting into seven universities and five TVET colleges and may pilot again if it did not get proper results.

Mr Sogayise clarified that NSFAS agreed with the Minister that one laptop per student would greatly assist the students. However, funding was still an issue and NSFAS was implementing the initiative together with the transformation programme, and would report back to the Committee after further discussions with the Minister.

Mr Daca noted that the transformation programme was currently at year 1 piloting stage in a few universities and other institutions. One of the reasons for piloting was to understand the impact on the students and on NSFAS in terms of resourcing and technology. NSFAS was now able to access on-line applications of students throughout the whole country, but because of the nature of the country, it retained the ability to accept paper applications.

Mr Daca said that NSFAS had the ability to link up with other government departments, and South African Social Security Agency (SASSA) had information on students who were assisted through from a social grant programme, and NSFAS would also be able to get the name and address of an employer and from that information NSFAS is able to know whether or not a person was employed. The Department of Home Affairs was able to assist with information whether or not the parent of a student was deceased. All the information NSFAS gathered was put together to assess whether or not a student was telling the truth when applying.

Mr Daca explained the issue of allowances for students. NSFAS had implemented X-PACS, which was a voucher based system for things such as food, books and other allowances that a student qualified for, and the vouchers were linked to certain ventures such as Shoprite, Spur, Pick & Pay and certain bookshops. Through that system details on student spending could be obtained. NSFAS did not intend to analyse every transaction but get some information on student transactions. In relation to the question on access to vouchers by students who did not have airtime, he clarified that the system did not in fact require that airtime be loaded to access or transact. NSFAS did not intend to disadvantage any student.

Mr Daca said that the rollout plan would be determined by the institution after NSFAS had assessed the first year of the plan, and the extent of its challenges, in order to determine how it would move forward from 2015.

Mr Daca confirmed that social development bursaries were managed by NSFAS but the application and selection process was run by the Grant and Social Development Project. NSFAS was concerned with the disbursements and payment of money to students.

Mr Daca then addressed the questions around student debt or what NSFAS refers to as “historical debt”. A few years ago, some money was provided to fund the historical debt for a year or two. The challenge of student debt applied across the globe, and this also had applied to the old system of financial aid, because there was simply not enough money, as the applications received exceeded the available funds. Although there had been an intervention through the Truth and Reconciliation Fund that helped to clear some debt, the reality was that there had to be a trade off system, because if money was used to clear historical debts, that meant that there will be less for the current year. Shortfalls experienced at the beginning of the year were a subset of bigger issues linked to finance.

Mr Daca noted the questions on post-graduate funding but explained that NSFAS was a first degree funding institution. Last year NSFAS paid R8.7 billion for undergraduate studies, leaving only R60 million available for post-graduate funding. That post-graduate funding was a small scheme for NSFAS. He confirmed that there would not be a phasing out of the BTEC, because it was an honours qualification and not a first degree funding. NSFAS was primarily concerned with seeing students through their first degree.

NSFAS had profiled students for the past two years and the information was contained in some of its reports just to give information on what NSFAS was doing when financing students.

Mr Daca said that NSFAS had not yet done any analysis on private sector funding, but from its perspective, there was one private funder, Nedbank, and this was a good platform from which it hoped to launch and further engage with he private sector.

Mr Daca commented that the questions about what qualifications NSFAS should fund was rather political, but said that NSFAS was an institution that funded poor students, regardless of the course that they were doing. NSFAS took the view that students should have the option of choosing whichever course they wanted to pursue, regardless of the background. However, there was money that had been set aside for scarce skills and the purpose was to encourage students to pursue courses relating to the development needs of the country.

Mr Daca confirmed that the final appointment of the CFO was approved and ratified by the board, and in that regard, the appointment now had the stamp of authority. The jobs advertised and vacancy rates arose as part of a new organisational structure that was approved by the NSFAS board in August last year as part of the transformation. NSFAS was in need of more employees for the active management and administration of bursaries. From an administrative perspective, NSFAS spent R150 million to disburse R8.7 billion, and there was thus need to expand its capacity.

Mr Daca noted that NSFAS did not require students to pay anything while studying and no interest was charged during that period. After studies, a grace period of one year was given, after which interest started to accrue. It was expected that during this time the graduates would seek employment. NSFAS did not pursue those who were unemployed. A generous interest rate of 4.4% applied. In the course of their studies, if a student passed all courses, 40% of the loan was written off, and for the final year programme, for a student who passed all the courses in the final year, would get a 100% recon version to a bursary. All the repayments collected were ploughed back to the scheme. The scheme required external funding as it was designed to help and encourage needy students.

Mr Lerato Nage responded to questions on the business development budget drop in the 2013/14 financial year and explained that R73 million was related to the implementation of the student centred model, and the R7 million for the coming fiscal year related to money left for the support contract to ensure that after implementation the system could be sustained.

Postage, stationery and computer services budgets were all due to the implementation of the student centred model, as NSFAS was now spending a lot of money on all applications.

The functions allocation of R3 million was for travel and workshops that NSFAS undertook to various institutions, and the normal tea and coffee refreshments.

Ms Xolisa Peter, Chief Information Officer, NSFAS, answered the question on qualifications. She stated that under the new model NSFAS received the results directly from the institutions, and informed the student if s/he had not passed and thus had not met the requirements. NSFAS did not pay for a repeat subject but if a student failed, s/he would be allowed to carry through with the other subjects until exhausting the N+2. Under the transformed system,  NSFAS now processed the applications itself, so it was possible to pick students who had failed. The appeals process had been refined. Institutions undertook an initial appeal and thereafter reported to NSFAS after which it would make a final decision on the award.

Ms Peter confirmed that NSFAS did not fully fund students; the maximum it provided was R64 thousand, but there were full bursary schemes such as the Funza Lushaka bursaries, which had specific qualification requirements.

The Chairperson asked for any input from the Department of Higher Education and Training.

Dr Diane Parker, Acting Deputy Director General, DHET, stated that it must be acknowledged that NSFAS was one of the flagship programmes important in aiding access to higher education in universities and colleges. The Department was aware of the challenges and had been having meetings with NSFAS, and they were working together to improve. On the issue on shortfalls, she stated that the Department and NSFAS were planning a workshop very soon to discuss in detail this issue, and particularly in how to manage the expectations in the next registration period. She concluded that students needed to have some understanding that funding was limited but was nonetheless available to aid access to education. In regard to allegations of corruption, she felt there was a need for regulations to ensure transparency in the management of funds.

Mr Sogayise added, in relation to the corruption allegations, that prior to the strategy formulated by the Minister in 2010, there had been a number of unqualified audit opinions. There were no investigations launched by the internal auditors into allegations of corruption following the transformation, and allegations at this point in time must be considered unfounded.

Mr Sogayise spoke to the protests at the beginning of the year, and said that NSFAS analysis concluded that more money was needed by NSFAS. It had engaged with the Minister on this issue.  

Mr Daca answered comments on monitoring and explained that NSFAS often got information from universities relating to students who were in their system. If it was discovered that a student was no longer in the system, allowances were discontinued. In relation to investigations of fraud, he stated that the universities made decisions on behalf of NSFAS on which students should be funded, and NSFAS did send a team of internal auditors to universities and colleges to ensure the process was not flawed. The Truth and Reconciliation Fund was an old fund that was set up under the Truth and Reconciliation legislation, which was  still managed by NSFAS. He admitted that reaching out to rural areas was still a challenge for NSFAS but some of the biggest beneficiaries of funding were the rural universities.

Dr Parker clarified the fraud allegations, and pointed out that there was no indication of fraud within NSFAS itself, but that there had been many allegations of fraud happening at institutions where particular students claimed they should get funding when this was not in fact so. The new process would deal with that. She added that the Minister was particularly aware of and was concerned about that issue, and had indicated that he wanted forensic investigations to be taken up to understand where and what caused the fraud.

Mr Nage added to comment on data analysis and said that in order to ensure that there was value for money, NSFAS had, with the new internal auditors, now embarked on a three year plan to do most of the data analysis based on the information received from the universities and colleges and compare that with NSFAS information. Also, the auditors had been asked to have a focussed audit approach for the different universities and colleges. Through the new student model, NSFAS had been able to identify some colleges and had directed the auditors to do forensic work on them.

Mr Cassim wanted to follow up on the issue of shortfall. He asked exactly what shortfall NSFAS had and the extent of it. He asked how the student satisfaction model would be measured. He questioned the pilot project in relation to the appeals process, and in particular the highly publicised appeal at Port Elizabeth about a student who was informed late about the outcome of the appeal, and sought to know long the appeal process took.

Mr Cassim reiterated that the system was centralised in Cape Town, and asked whether there was any possibility of regional offices at institutions with NSFAS staff to offer assistance.

Mr Cassim asked for more information on time frames.

Mr Cassim repeated the concerns about the disbursements of living allowances to students who were not in residence, and were receiving only R700-800, leaving them with  not enough money for transport, for instance. This could affect their academic performance and he wondered if there was any possibility of making urgent revisions on that amount, and what the budget implications would be.

Mr Cassim asked whether NSFAS had looked into circumstances experienced with the final year programme. A student on the final year programme who failed one course in the final year would not later be eligible for more funding, meaning that such a student was not able to graduate, and could not contribute economically to the country.

Mr Cassim noted the Minister’s statement on the student protests. He asked what criteria were used for disbursements of the R1 billion, and how students were assisted. There seemed to be a discrepancy, because it was stated that there was a R2.6 billion shortfall, whilst only 50% of those eligible for funding were in fact funded, so it seemed to him that the shortfall was larger. Given that the NSFAS budget had not increased and yet there was an increase in the number of students, he wanted to know if long term plans were in place to address the issue.

Mr Cassim asked on the actual cost implications for the one student per laptop initiative, whether there had been any consultation with the private sector, or whether NSFAS had considered engagement with the private sector as a marketing initiative.

Mr Cassim wanted more clarification, for purposes of accountability, on the social development bursary, on the actual amount, disbursement process, money that was sent back and what was being done to bridge the existing gap.

Mr Cassim wanted to know when NSFAS expected to be able to address the “missing middle”.

Mr Cassim wanted to know if there would be any rules on the academic threshold and whether there would, academically, be an appeal process.

Ms Mchunu asked on the capacity of the head office to handle all the applications.

Ms M Nkadimeng (ANC) asked whether data relating to vulnerable learners would also be sourced from the Department of Home Affairs.

The Chairperson followed up on the appointment of the CFO, basing on the Auditor-General’s report and wondered whether the same ought to have been done concurrently with the Accounting Authority. Due to the lack of agreement, she stated that there would be further discussions on that. Finally she asked for further clarification on disbursement of funds.

Mr Sogayise responded to the question on time frames for the “missing middle” and said that the implementation of this should not take more than one year.

The Chairperson asked whether Mr Sogayise was referring to the Annual Performance Plan. She suggested that, because of the pressure on Parliament to deliver, the time be reduced to six months.

Mr Sogayise stated that NSFAS would comply with the six months time frame suggested by the Chairperson.

Mr Daca stated that NSFAS had started a connect centre to call students and find out their experiences as part of the student satisfaction survey. He confirmed that the appeal process had always existed in institutions, and under the new pilot project NSFAS had tried to bring in some standardisation across these processes. He reminded the Committee that because NSFAS was not an academic institution, but rather a financial aid provider, academic appeals did not lie within its jurisdiction, but rather with the universities.  Academic information and details whether or not a student was registered were sourced from universities, and NSFAS would then disburse the funding to students in need.

Mr Daca confirmed that the issue of accommodation allowances were a challenge, and NSFAS was working with the universities to try to deal with them. He confirmed that the financial aid offices in institutions were very important because they provided the link between NSFAS and students.

Mr Daca confirmed that the discussions on regional offices were ongoing, but even if they existed they would still be far away from the students, so once again the financial aid offices in institutions were a better model to link NSFAS to students and to help in advising students.

Mr Daca clarified that there would not necessarily be exclusion of final year programme students. A student could revert back to the NSFAS general programme provided s/he appealed within NSFAS N+2 rule, which stated that a student could stay in the university for four years plus two extra years to finish the academic qualifications. He reiterated that the final year programme was not an automatic exclusion programme, but that a student still could get funding once s/he qualified within the criteria for general funding.

Mr Daca confirmed that the R1 billion that came from NSF was provided for as a top up to the shortfall. Unfortunately he did not have details in terms of the number of students who were funded. In terms of funding from 2012 to 2013, he pointed out that the funding interest was R7.7 billion, rising to about R 8.7 billion. He explained that there was a need to keep a form of reserve to make sure there was continuity of funding because part of the responsibility of fiscal management when funding students was that the student would still be there the following year.

Mr Daca confirmed that the late disbursement of funding was as a result of misalignment between the academic year which started in January and the financial year that started in April. At the moment there was a recovery account for purposes of disbursing funds early enough to the student. To enable students to register in January, NSFAS now approached the Department and requested release of funds early enough to be disbursed to the students.

Mr Daca did not have the detailed numbers in relation to the one student one laptop initiative. This project had not been dropped, but was being further investigated to try to reach solutions.

Mr Daca explained that, in relation to disbursements, there was an Audit and Risk Committee of the board that was in place to handle accountability and governance concerns, and it had approved a risk management policy that would amend the practice of risk management of the institution. NSFAS was concentrating on risk management in order to ensure that it improved. He explained the two bursary transmission models that NSFAS was running and which provided different levels of risks.

Dr Diane Parker, speaking to the shortfall concerns, said that the initial R.2.5 billion that was recognised last year was related to a report that came from institutions on students who had not been covered by the loan, and the Department’s investigation arrived at that amount.  It was clear that it was not possible to cover all students. Additional funding was found just to cover continuing students. The exercise related to students who were already in the system. He added that there were also two other reports. In 2010 there was a ministerial review of NSFAS that identified a shortfall in the system. The report estimated that NSFAS probably needed to have more than three times the amount of funding that was available. The second report in 2013 came from a Ministerial Working Group, on no-fee education, which tried to understand various categories of students that would potentially come into the universities. The report moved the threshold to about 300 000 families’ contribution and the exercise showed that NSFAS would require about R630 billion in order to fund all students over the period of study. That was an indication of the huge amount that was required for NSFAS to meet its vision.

Mr Theuns Tredoux, Chief Financial Officer, DHET, raised three critical points relating to additional funding. The question was whether this could be done progressively, the priorities and suggested that it was possible to look at different ways, based on family income ratio or specific periods of study. He also talked about effectiveness and efficiency, noting that these were key to the process. He asked whether NSFAS should continue to fund students who kept failing. In relation to recovery rates by NSFAS itself he took account of the billions allocated to students since 1991 and what actually NSFAS had recovered. He concluded that there were no answers to all the critical points but they were counter arguments that need to be looked into.

The Chairperson thanked Members for a robust and fruitful discussion, and NSFAS for its good work, although she pointed out that it must address the corruption allegations and report back to the Committee, to avoid negative impact on its work. The “missing middle” would be reported upon within six months and NSFAS was also asked to improve on disbursement of the funding to students. She finally requested that future reports be sent early enough to allow the Committee Members to study them.

The Committee unanimously accepted the Annual Performance Plan. .

Council on Higher Education (CHE) 2014/2015 Annual Performance Plan and Budget
Professor Themba Mosia, Chairperson, Council on Higher Education, pointing out that this Council (CHE) was established to contribute towards informing policy and influencing all debates happening in higher education. The strategic imperatives of CHE concerned policy analysis and information and the development of a quality assurance model which hinged on three pillars: quality assurance, planning and funding; contribution by the entire qualification structure for the development of the needed human resources and the management of intellectual capability; and enabling an organisational climate in higher education.

Dr Denyse Webbstock, Director: Programme Accreditation, Council on Higher Education, explained that CHE mainly attended to providing advise and doing research into the sector; carrying out quality assurance; and examining the quality of qualifications through the qualifications framework. Its strategic imperatives included policy analysis; management of the Higher Education and Quality Staff Assurance (HEQSF) and Standards in Higher Education (HE); quality assurance development and providing an enabling organisational climate.

Mr Thulaganyo Mothusi, Chief Financial Officer, Council on Higher Education, briefed the Committee on CHE’s budget allocation. The MTEF allocation was R42 million, but CHE would top up its own budget to address all the needs identified, to about R51 million, although this still left a shortfall of about R8.4 million. He noted that the total budget allocation included ‘standards directorate grant budget’ allocation of about R2.6 million, which was funded separately, so when that was subtracted, the total budget shortfall was around R5.8 million. He elaborated how the budget shortfall would be funded. He noted that in 2014/2015 the challenge was the need for more money to achieve CHE’s mandate. He finally presented the 2014/15 budget figures. He noted that the final audit outcomes would be reported upon during September or October, and the final management report would be submitted at the end of July.

Discussion
Mrs Kilian asked whether CHE had copies available of the publications mentioned, which would be useful to the new Committee. Owing to expansion of its mandate, she asked whether it would be possible for CHE to achieve its strategic objectives if it did not fill the new posts. She wondered if it had budgeted adequately for certain works mentioned.

Professor Khubisa asked CHE whether it had intervened by way of peer learning in higher education institutions and sought clarity on the institutions that were offering degrees, diplomas or even modules that were not accredited.

Professor Bozzoli sought clarity on the budget shortfall and how that would be funded, and asked when and how the vital statistics would be made available to the committee. The word “excellence” was missing from CHE’s reports and she wanted to know what CHE was doing to establish the best institutions in the world.

The Chairperson wanted clarification on MTEF allocation, personnel savings, vacancy rate and whether CHE, during the accreditation process, had withdrawn any programmes.

Professor Mosia stated that the vacancy rate as reported to the board was 9%. CHE had a total of 53 staff, of whom 49 were currently working. Positions had been advertised but CHE was competing with the universities for staff and was not able to afford very good people, but was nonetheless looking into filling the positions urgently. The publications mentioned were available and would be submitted to the Committee.

On the issues of strategic objectives he stated that it was indeed a risk for CHE not to have the requisite number of people to assist in its work. As highlighted in the presentation, CHE relied heavily on peers to assist with its work.

The presentation also explained that CHE is doing some peer learning work, together with the student governance and leadership. It was trying to give an overview of the last 20 year period and the report soon to be delivered would outline the best strategies to improve the position. In relation to courses, CHE had made efforts to get groupings together who could actually learn from one another in order to advance the project nationally.  Excellence was embedded in all the work that CHE did.

Dr Webbstock added to the comment on peer learning, which was a major part of the quality enhancement project. CHE was looking into student enrolment, how different institutions coped with those annual concerns and the best management practices. It was key for institutions to share better practices and try to learn from each other. Similarly, this was part of the 20 year review project and there was a group that was working on management and governance challenges, as well as another project on student governance. She further explained that all the projects were concerned with problematic issues, so that better advice could be given to the Minister and to institutions.

She said that CHE did actually accredit quite a lot and would revert to the institutions with conditions which it then monitored to confirm if institutions were complying. Sometimes monitoring may last over a number of years. CHE was also undertaking a national review of existing programmes.

Mr Mothusi addressed the budget questions. He confirmed that the workshops by CHE had been budgeted for.

He explained the shortfall in greater depth. The MTEF allocation from DHET was R42 million, received by way of a grant from the Department. CHE, however, had annual sources of income, which also had to be taken into account; the shortfall related to the anticipated income and when it was received, it would be reflected in the books. The presentation had compared the MTEF allocation against the actual allocation. The total income expected was thus R51 million, inclusive of the standard directorate budget which was allocated by DHET. R2.6 million was a roll over which was not used in the previous year and was still available for use. Taking all this into account, there was still a shortfall of R5 million against the budget, which would be funded from personnel savings.

CHE had also requested and received approval for a R10 million rollover of funds. The same would apply at the end of the financial year, when funds would again be requested for rollover to the next year. He explained that CHE had not fully used the money because the directorate project ran from one year to the next, and was not a once-off project. National Treasury had approved additional funding; it usually approved rollovers only to complete a project.

CHE operated on the accrual accounting system, and the figures had been properly reflected in the books. Essentially this was a cash flow issue.

Mr Mothusi added, in respect of the vacancies, that although the positions were not filled CHE would still be able to achieve its objectives, and that it was busy trying to fill positions.

The Chairperson was still not convinced on how CHE budgeted for shortfalls.

Ms Kilian also questioned why CHE was budgeting for a shortfall, for there were strict Treasury regulations around budget shortfalls and virements.

Professor Khubisa also wanted more explanation.

Professor Bozzoli thought that the problem was how the matters were presented, rather than a problem of budgeting in itself.

Mr Theuns Tredoux agreed with Professor Bozzoli that the setting out was confusing. What was referred to as “the MTEF allocation” was actually an “MTEF grant” or subsidy paid by the DHET to CHE. CHE should have referred to the “budget” and not the “allocation” – CHE had budgeted to spend R51 million but would receive R42.6 million from the DHET. Although CHE had then calculated a “shortfall” it did not in fact exist, because CHE had obtained approval from Treasury for a rollover of an unspent amount from the previous year to funds the “shortfall”. The money came out of reserves and there was no shortfall in fact.

He noted that the Treasury rules on virements applied to departments, not to public entities. Departments were not permitted to use savings under compensations of employees to fund any other area, but a public entity could do so, with the approval of the Council of that entity.

The Chairperson thanked Mr Tredoux for the clarification and asked that CHE corrected and resubmitted its report.

Mr Mothusi stated that at the time of preparing the presentation, CHE did not have the actual approval from Treasury and thus could not have reflected the amount as already approved.

Mr Tredoux suggested that the report should not refer to a shortfall, but merely list the DHET subsidy, and refer to the reserves.

The Chairperson asked if CHE required the Committee to recommend that it be given additional funding r whether the DHET would assist it.

Mr Mothusi stated that the CHE and DHET were consulting on that, and he would revert to the Committee.

Professor Mosia interjected that the CHE needed all the help it could get to meet its mandate.

The Chairperson stated that she was concerned that there seemed to be wastage on catering, transport and accommodation, and suggested that CHE should also look into cost-cutting exercises, although the Committee would consider a recommendation to increase its funding.

The meeting was adjourned.