NSFAS & Council on Higher Education on their Annual Reports 2013/2014

Meeting report

Opening Remarks by Chairperson
The Chairperson welcomed members from the previous session with officials from the Attorney General’s office and mentioned the purpose of the meeting which was to hear the financial performance of NSFAS for the year 2013/2014.The Chairperson also wanted to know if NSFAS is taking any action against the strikes which have been rampant in the year 2014 most of which have been attributed to its poor performance. The committee received a report that 50% of the students who qualified for funding did not receive it because it was inadequate.

Apologies were received from Mr Mbatha who could not make it for the meeting as he had to attend to an urgent family matter. The Chairperson also delivered apologies from the Honorable Minister Dr Bonginkosi Nzimande and his deputy, Mr Mduduzi Manana. The Chairperson invited all members for a Council of Higher Education and Training meeting scheduled for 21 October 2014.

The Chairperson requested NSFAS to brief the committee on their 2013/2014 report. She asked Members to listen attentively in order to get quality outcome of the meeting.

Briefing by National Student Financial Aid Scheme (NSFAS)
Mr Zamayedwa Sogayise, NSFAS Chairperson, said NSFAS was excited and happy to present their report. He invited Mr Msulwa Daca, NSFAS Chief Executive Officer, to take the committee through the report.

Mr Daca told the Committee that although 2014 has experienced unprecedented strikes from several campuses, media attention had been drawn on what NSFAS does not do. The meeting was an opportunity to show what NSFAS does. NSFAS had assisted more than 1.4m students since its inception. The number of students assisted since 2013 increased to 416 174 in line with the funding increase from DHET and other departments. The transformation programme for new student-centered model was initiated and phase one was implemented as planned

Mr Lerato Nage, NSFAS Chief Finance Officer, stated that NSFAS distributed financial aid of R8.7billion to 4167 174 students registering an increase of 8.6% from 2012. He said NSFAS provided funding to students at the 23 public universities in 7 provinces and 50 public technical and vocational Education and training (TVET) colleges in all 9 provinces.

Mr Daca highlighted areas where progress had been made through the performance indicators from the strategic goals. The first was an unqualified audit report from goal one on establishing NSFAS as an effective public entity in student financial aid and administration. The second achievement ,is that the number of students assisted increased to 416,174, an increase of 33,231 more than the students assisted in 2013 from goal two on increasing access, success and progression to contribute to improving both throughput and pass rate. Lastly but not least disbursements increased from R7.7 billion to R8.7 billion through strategic goal number 3 on improved student financial aid environment, a remarkable increase of over  R1 billion.

Discussion
Mrs J Kilian (ANC) said she found the presentation superficial. She was concerned because the report looks like a copy and paste exercise of previous annual reports. The reference to march 2013 instead of 2014 in strategic goal 1 on page 15 of the report shows recklessness. On the strategic objectives, she said, only 2 of the 3 set objectives were achieved. She was concerned as to why the goals do not have deadlines, stating in the report that an objective was “achieved” was not accurate information and re-echoed the comment in the Attorney General’s (AG) report that the information has to be reliable. She asked for more details. Reacting to the report on the student financial information, the issue is not increasing the number of students but rather whether the funds reached the right people and whether students are getting value for their money. She also asked how NSFAS hopes to remedy the various compliance deficiencies in the AG’s report.

Mr Y Cassim (ANC) said he was deeply disappointed in the report considering the issues which had happened throughout the year weighed against the thread bear information in the report. He said the indicators were not well defined, how does NSFAS verify the aspects which have not been met? For instance, of the 17 planned targets 13 were not achieved. He wanted to know why a lot of things are not reported. He also asked for feedback on the transformation programme on how the money was spent and the outcomes. He considered the entire report an injustice to the society and proposed that NSFAS rectifies the report.

Ms S Mchunu (ANC) said the quality of the report was not what was expected. She pointed out a lot of copy and paste in the report. On the loan recovery system on page 22 of the report, she wanted to know what plans are in place to increase monthly payments from debtors. She asked for an explanation on why NSFAS would procure goods worth R154 000 without price quotation as required by law. She also wanted to know how NSFAS is addressing the issue of students accessing basic services such as airtime. She reminded NSFAS that student funding is a make or break issue and if we do not get it right the entire system collapses.

Dr B Bozzoli (ANC) said what the committee needed to see is defined targets. She asked NSFAS to take the students strikes very seriously and take responsibility for the strikes instead of putting it on the universities. NSFAS must get involved in how universities are managing the funds so that the strikes do not happen again next year. She emphasised that this is not an academic issue but rather a financial management issue. She wanted to know whether the decision to take funds from DHET because NSFAS was short of money was well thought through.

Mr E Siwela (ANC) wanted to know whether the appointment of more staff translates into better output. He referred to page 93 of the report and asked whether disciplinary action was taken against employees who had mismanaged the funds, if yes what nature? And what was the outcome? He asked whether NFSAS has a database for all students owing it.
  
Ms M Nkandimeng (ANC) asked whether NSFAS had any plans of addressing the cause for unrest in all the universities. She also wanted to know whether the new model had been introduced and if so whether it was working and how many students were using it in 2014.

Mr C Kekana (ANC) said the issue of strikes has been raised by students and universities an indication that funds are not being managed properly. This should have been the core of their report. NSFAS needs to change their way of reporting to show more concern.

The Chairperson said cut and paste could not be allowed by the Committee. She wanted to know NSFAS’s intervention strategy in cases where funds are not going where they are supposed to go and for unclaimed funds. She referred to page 91 of the report and asked how NSFAS hopes to recover money from drop out students and how many students are involved. She expressed concern on the students who had applied for funding from NSFAS, met the requirements but were not funded. She wanted to know NSFAS’s plan for these students since there are new applicants each year. She wanted NSFAS’s comments on the forensic audit. She also emphasised quarterly and monthly monitoring as a tool for ensuring that NSFAS fulfills its set targets.

Mr Sogayise responded to the inadequacies in the report by saying that it was by no means intended to disrespect the committee. He said NSFAS was very prepared to address all the issues pointed out.

On the issue of NSFAS getting involved in student’s affairs, he welcomed the advice and said it was the reason for the transformation model. The model is still being piloted in 12 institutions, 6 universities and 6 FT colleges involved. They hope to learn from it and the intention of pilot is to get NSFAS involved in student’s affairs.

He acknowledged the comment by the Attorney General in terms of leadership and took it as a concern for the board and NSFAS to rectify the gaps that have been there. He stated that board members do not get salaries for being on the board, they merely play an oversight role.

Mr Daca responded to the cut and paste issue pointed out by the Committee by referring to page 15 of the report and said that the appearance of a march 2013 date is part of the cycle of the strategic plan system of reporting and assured the Committee that information in the Annual report is credible.

On the issue of performance and targets, he said on pages 17-22 he said the formats of drafting targets is such that they cannot be redrafted in the middle of the year.

He said getting funds for NSFAS was the effort of the DG. On average NSFA funds 30 000 students but this year they got around 50 000 applications over and above the funds that were available.

On the pilot he said it is being used to ascertain and launch the transformation model. The service providers were appointed in the previous year to implement the new system.

 In terms of the loan recovery strategy, NSFAS has set up a committee to improve the loan recovery system.

On the question of airtime, NSFAS is employing a zero rating system to students where service providers will bill all costs incurred by students to NSFAS.

On the question of strikes, it is a welcome idea that NSFAS works out an interim plan on how to resolve protests .NSFAS is working with the Vice Chancellors of the universities to remedy the problem because most of the strikes are due to miscommunication at the universities.

The financial year ends in the middle of the academic year thus NSFAS cannot afford not to have money at the end of the year.

Last time NSFAS appeared before the committee it was rebuked for hiring consultants to do their work, and were, advised to hire their own staff to do the work and now that they have done they do not think it is fair to be rebuked by the committee.

Mr Lerato responded to the money for the transformation project, money owed by institutions to NSFAS. The debt recovery system works in such a way that students are eligible to pay after 12 months of being in employment. Drop out students were not eligible to pay. NSFAS was working with employers in the private sector to encourage their employees to pay.

Mr Sogayise said the audit was not something new, it was meant to ensure efficiency of NSFAS work. He agreed with the committee that monitoring was an important area .NSFAS had established focus committees in different areas such as IT, human resource, remuneration, audit and risk committee which meet often. They also drew in expertise from outside to ensure there was very close monitoring.

Dr Diane Parker responded to the need for a forensic audit and said that NSFAS is going to advertise for a service provider soon. There are allegations of applicants providing false information, service providers who collude with students to defraud NSFAS. There were so many complaints so the Minister suggested the need for a forensic audit, it is happening piece meal, to create possibility of whistle blowers to come forward to get NSFAS to function better. Funds for it had been requisitioned and are pending approval.

The Chairperson said government is serious about social economic transformation and being in the second phase, we cannot do things the same way. She asked NSFAS to take things seriously as quality education was at the center of this transformation. The department had come up with a white paper to address equality issues. The committee is aware of the budgetary constraints and thanks the department for what it has done so far done for NSFAS with little and implementing the policy to the letter. There is need for Legal framework in the form of PFA to avoid wasteful expenditure, bringing down administrative costs in favor of service delivery. She said she is not happy with the confidence NSFAS has in the unqualified audit it received from the Attorney General, she urged NSFA to work towards a clean audit.

Briefing by Council on Higher Education (CHE)
Prof Thembo Mosia, CHE Chairperson, delivered a presentation on the functions of the council which include advising the minister on any aspect on higher education and quality assurance.

Mr Ahmed Essop, CHE Chief Executive Officer, made a presentation on the objectives and ongoing projects and what the council had achieved so far in the year 2013/2014 which included publications on the state of higher education, transformation of the higher education system, monitoring the state of higher education through conferences, seminars and workshops in which all institutions participated. The Higher education Quality Framework review and enhancement project was finalised and a total of 5,381 category programmes were aligned. He mentioned the ongoing pilot standards development in Bachelor of Social Work, MBA and LLB programmes, completed audits for CPUT, UJ and UL, routine accreditation and re-accreditation including site visits registered a 42% increase from 302 in 2012/2013 to 429 in 2013/2014.He highlighted the accreditation of programmes offered by university of Mpumalanga and Sol Plaatje University. Regional seminars were held on student success, training and capacity building.  

Mr Essop said recruitment and retention remains a challenge with staff turnover at 10.9% down from 23.8% only 46 out of 53 posts were filled while 4 were frozen by the council. Other challenges is that Services in public sector are going up yet budget is going to be cut to R40million and projects overlapping from one financial year to another.

Other milestones registered included flexible remuneration framework which was approved by the minister in order to improve the terms of service for senior staff, 30 training courses held and bursaries awarded for further study, employee wellness programme introduced. The race profile favours black South Africans at 72%, 17% coloured, 9 Indian and 2% white. The gender profile however still tilted with women taking up 76% of the positions and men taking up 24% of the positions.CHE received an unqualified audit opinion with a matter of emphasis for restating prior year balances.

Mr Theuris Tredoux, CHE Chief Finance Officer, said that the claims and performance management system now done electronically, accreditation fee policies to learn for private owned providers changed to facilitate administrative processes. He also mentioned the accumulated surplus.

Dr Bozzoli was concerned that CHE was not fulfilling its role. She said advising the Minister was not its primary mandate. She cited an instance where CHE conducted an audit but it was not released because the vice chancellor of the university did not like the contents of the audit. She asked institutions to take responsibility for non-delivery even though it depends on other people. This was in regards to the delay in pilot of Bachelor of Social Work, MBA and LLB programmes. She also sought an explanation on the source of the accumulated surplus on page 77 of the report.

Ms Kilian commended CHE on the excellent work they are doing with limited funds and it is impressive that many of them are doing it for the love of the job. She commented on the mandate of CHE under the education Act, to be an independent body that ensures quality education. The role of CHE as a quality assurance institution is very welcome and commendable.

Ms Mchunu welcomed the excellent report and commended CHE on exceeding their performance on various targets. However she wanted to know the impact on the budget of having 8 workshops yet only 1 had been in the target. She was concerned that there were 53 approved positions but CHE froze two posts. She wanted to know whether the posts were budgeted for and if so what happened to the money budgeted for them. She also wanted to know the career path if the BTEC is replaced by the advanced diploma. She asked for the difference in credits of BTEC and advanced diploma.

Ms Nkandimeng congratulated the department on a job well done. Two main officials were recruited in the year under the review but they left before the end of the financial year. What could be the problem? She also requested the department to check its equity plan in terms of gender consideration on why two male senior officials were recruited and not a male and female.

Mr Siwela wanted to know how many programmes are going to be accredited for the universities that have been established in Mpumalanga and Sol Plaatje. He asked about the delay in completing the pilot for the  Bachelor of Social Work, LLB and MBA due to lack of academics expected to pursue evaluate the diplomas. He wanted to know whether CHE has considered using retired professors in the evaluation of qualifications.

Mr Kekana asked why the department conducted 8 workshops when only 1 was targeted. What is the effect of this on the education system? He suggested that CHE should advise the minister to change the academic year so that it starts at the same time the financial year starts. He commented on the proposal to change the certificate to diploma and asked to know whether the department has considered structuring the qualification so that it carries more weight and is more respected by the population.

Mr Essop replied that CHE continued to fulfill its role in terms of the Act on advising the minister on a number of things especially on matters that fall within the framework of operation .The issue about the institution that did not accept the audit was an unfortunate one. Because of the size of the problem in the sector, CHE decided to focus on teaching and learning in order to produce better graduates in LLB and other qualifications. This is aimed at addressing the complaints coming in from employers that graduates are not performing according to expected standards.

Prof Mathobe answered the audit query raised by Dr Bozzoli using examples of two institutional audits, one she organized at her own institution and another as a member of the audit panel of another institution. If the institutional management does not take the audit process seriously and decide to use the process for internal improvement of the institution it becomes a democratic process. The major role of CHE lies in programme accreditation and national reviews and this work is spot on in addressing the problem of high education in South Africa.

Prof Thaver added that CHE in performing its role tries to balance the needs of both the government and high institutions. The key challenge CHE faces is that it does not matter what it does in terms of intervention because institutions always claim to have the preserve of institutional autonomy.

The Chairperson requested the Head of Department to brief the committee on the regulations that are in place to ensure that universities are flexible in terms of their autonomy vis-a-vis CHE intervention.

Prof Pearl Whittle, a Director at the DHE, said there are regulations which have just been published and will be introduced into the system next year. The department is also in the process of developing financial indicators that will be used to determine expenditure misallocations. The department is in charge of funding while CHE is in charge of quality assurance and these two need to work together to improve quality of high education.

Mr Essop said it wa wrong to say the main role of CHE is to advise the Minister. The advisory role was a mandatory role in terms of advice that has to come from CHE such as quality assurance and accreditation. On the issue of audits, he said the audit and quality enhancement process has nothing to do with the fiasco mentioned. The challenge is to get the sectors to work together to improve teaching and learning in order to address the key problems.

On the issue of accumulated surplus, Mr Essop said the document does not relate to billions but thousands. Accumulated surplus relates to the fact that in the last 4 or 5 years CHE got a large number of deficits which impacted on the projects they were meant to do or not to do. CHE got an accumulated surplus of over R10million which is pending approval in the coming year.

The reason why the BTEC was taken out is because it was being equated to an honors degree and on over view, it was a mistake to put a three year diploma and a three year degree on the same level.it is being replaced by an advanced diploma which is a superior qualification.

For the newly established universities of Mpumelanga and Sol Plaatje four programmes have been accredited for each.

The issue of delay in the pilot for the Bachelor of social Work, MBA and LLB, Mr Essop said, it is not procrastination but CHE wants the academic community to decide the standard of the programmes they are going to work with. The nature of the process is that CHE does not have the ability to impose a standard.

On the issue of low retention for employees, one of employees was recruited at a very high salary which the council could not afford. Secondly there are limited opportunities for career progression in CHE. It is mostly women who are interested in working there and has nothing to do with gender inequality.

The 8 workshops that were conducted instead of 1 which was targeted were necessitated in order to train more people than was projected but it was all done within the budget.

The Chairperson asked for an explanation from the Chief Finance Officer on why fraud which was committed in 2007 was only detected in 2012. Did CHE have a fraud prevention strategy? Does CHE have an internal risk management unit? He also requested him to comment on the financial statement.

Mr Theuris responded that the fraud occurred internally in 2007 where money was received and was not posted on the council account. The system in place at the time was a manual system and that is why it took long for the fraud to be detected. He assured the committee that the problem has been addressed in the last two years and that if something like that happened now it would be detected immediately by the new system. Unfortunately CHE does not have an internal risk unit because it is a small organization.

The Chairperson in her closing remarks emphasised that education has a key role to play and quality should not be compromised and for that they are counting on NCHE. She commended CHE for the work done so far in ensuring quality high education for the country. It should work towards an upward movement from an unqualified audit to a clean audit and for that the sky is the limit.

Consideration and adoption of outstanding reports

The consideration of the Report on oversight visit to NSFAS, Report of the meetings with University of Limpopo, Mangosuthu University of Technology and University of Fort Hare and Report on the oversight visit to North West was postponed.

The meeting was adjourned.