Financial, Resourcing and Costs of Education in Public Schools: briefing

Basic Education

04 March 2003
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Meeting Summary

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Meeting report


4 March 2003


Prof S Mayatula (ANC)

Documents handed out:
Presentation on Financial, Resourcing and Costs of Education in Public Schools

The Department presented the findings of a comprehensive and systematic review of the pressures related to financing, costs and resourcing of education, which were contributing to present trends. The report of this study focussed on ten areas, including financial transfers from the national level to the school, school nutrition and national norms and standards for school funding. The review included a number of recommendations. These included setting up an education budget monitoring and support office to increase the Department's capacity to analyse and influence national and provincial budgets as well as exploring, through research and consultation, the options available to increase the efficiency of educators utilisation. The Department invited public comment on the review by mid-April.

Professor Bobby Soobryan, Deputy Director-General of the Department of Education, presented a review of the financing, resourcing and costs of education in public schools.

He said that since 1994 the Department had noted an improvement in terms of access, Medium Term Economic Framework (MTEF) expenditure and equity, especially inter-provincial equity but that there were concerns around the following issues:
-Degraded physical conditions at schools.
-Persistent backlogs in infrastructure development and maintenance.
-Inadequate allocations to some schools for teaching and learning materials.
-Costs relating to transport, textbooks, school uniforms and other education materials.
-Exclusion of learners from schools.

The Minister had received many letters of concern from parents about fees, the cost of uniforms, fees and exemptions from them. In addition, the media has also increasingly focused on matters related to the financing, resourcing and costs of education. He had directed the Department to conduct a comprehensive and systematic review of the pressures related to financing, costs and resourcing of education, and to identify the factors contributing to the present trends.

The resulting report focused on ten areas:
-Financial transfers from the national level to the school.
-Achieving optimal educator utilisation and development.
-Translating school allocations to non-personnel resources.
-Influencing the prices of education inputs.
-Preserving physical assets in schools.
-Respecting basic human rights.
-School nutrition.
-National norms and standards for school funding.
-School allocations.
-School fees and other private inputs.
-Physical infrastructure.
-Translating school resources to learner performance.

The net enrolment rate of children aged seven to fifteen was 97% in 2001. Some 300 000 children in this age group are therefore not in any institution. (The number schooling at home is negligible.) In 1991 it was 92%.

Prof Soobryan said that this has not been at the expense of lower per learner expenditure. Although this had peaked in 1995/96, and fallen until 1999, he said that salary pressures had caused this increase and rationalisation had corrected it. He therefore discounted it as an exceptional deviation in the overall trend that showed in increase in expenditure per learner of 1.3% from 1999 to 2004.

A shift in the budgets for poorer provinces had resulted in the present inequality index of approximately 0.15, at worst, from 0.29 in 1995. The resource targeting list prescribed by the School Funding Norms was used until 2002 only to effect expenditure redress in non-personnel, non-capital expenditure but from 2003 the post provisioning norms, that allocate educators to schools, will also be driven by pro-poor allocations. A graph illustrating total pro-poor provincial transfer of non-personnel funds in 2001, 2002 and 2003 showed greater intra-provincial inequality from year to year than inter-provincial inequality. The sharp increase in the Northern Province in 2001 was because of a rollover of funds in that year. It was therefore imperative for Provincial Education Departments (PEDS) to have mechanisms to ensure that transferred resources reached the poor, that is, inter-provincial transfers should directly address the problem of intra-provincial inequality.

Prof Soobryan provided more details on the ten focus areas.

Financial transfers from the national level to the school
Prof Soobryan said that the revenue system was progressive in theory in that poor provinces got more funding per capita than rich provinces, but regressive in practice. For example, in 2002 the Western Cape spent R4 950 per learner while Limpopo spent R4 400. This is because some provinces have greater tax revenue and some have greater health and welfare pressures. He said the decisions by provincial governments could be legitimate and well informed but that if education funding was crowded out by exceptional health, social or other pressures, the national funding mechanism should take cognisance. Also, education should not compete with other social sectors but take part in decisions around the relative funding for education and other social service delivery.

Besides spending different proportions of their funds on education, provinces also differ in the way they divide up the education budget. In some cases, the budgeting decisions are not easily explained but budgets in the poorer provinces, which spend less per learner, are spent mostly on educators.

The efficiency loss inherent in having five learners share one textbook is greater than the per capita expenditure might suggest. Although non-personnel recurrent items of expenditure account for only 5% of total inputs, they represent the first systematic effort by the state to bring about pro-poor redress and can have a considerable impact on learning.

In terms of the School Funding Norms policy, PEDs may divert some of these funds from the schools allocation to minor repairs in poorer schools, for instance. Gauteng, the Northern Cape and KZN got close to allocating all funds as school allocations increased substantially in real terms between 2000, when they were made, and 2002 in all provinces, except for the North West and Limpopo.

Until now national education budget targets have dealt with problems, for instance, what he referred to as the unsustainable, high personnel expenditure in the mid 1990s. However, targets should be underpinned by a comprehensive and holistic analysis of the education package, which would depend on the availability of reliable data. In line with the National Treasury's budget reform process, the education system now had strategic planning and reporting formats and standardised budget programmes and economic classifications across all provinces.

The review recommended an education budget monitoring and support office to increase the Department's capacity to analyse and influence national and provincial budgets. Reasons for unequal education expenditure across and within provinces, and where poorly informed budget processes are the detected should receive special attention. PED planners should receive training and the office should produce support material such as manuals and analysis tools. Pro-poor funding should be carefully monitored to track the implementation of national policies. This office should also be involved in reviewing the equitable share formula.

Achieving optimal educator utilisation and development
In most provinces, personnel expenditure accounts for over 90% of POS expenditure. Prof Soobryan highlighted some key issues in this area:
-Educator utilisation.
This is contingent on how educators are managed and how they manage themselves and the degree to which policies, physical infrastructure, curriculum and culture permit optimum efficiency.
-The quality of educator input.
Compared with other countries, the average educator quality is low, relative to cost. Assessment of teacher quality needed to take curriculum knowledge and generic teaching skills into account. The number of fully qualified educators increased from 64% to 84% between 1994 and 2002 because of bursaries, monetary incentives and educators' initiatives.

The review recommended that the Department should:
-Explore, through research and consultation, the options available to increase the efficiency of educators utilisation. The results of this study should be produced during 2003 and 2004.
-Look into ways of improving the way in which the school day, term and year are structured.
-Schools' capacity to set timetable should be enhanced.
-Examine the mix of teaching aids, from computers to educator assistants and consolidate past research into technology solutions.
-Assess the learner: educator ratios and how they impact on efficiency.
-Explore options to provide better administrative support capacity in schools.
-Expand, with PEDs, current initiatives to develop teacher capacity and reward professional excellence.

Translating school allocations to non-personnel resources
School allocations are issued in terms of the School Funding Norms and are to be spent on items such as textbooks, stationery and electricity.

Ultimately, all schools are to become Section 21 schools and to play a role in managing resources. The overlap between Section 21 status and ex-white Model C schools is decreasing.

Non-Section 21 schools experience a range of problems in translating their allocations into goods and services. These are caused by difficulties in school-level governance and/or management and insufficient PED-level use of accounting and budget tracking systems and skills in creating and using linkages between budgeting and procurements within PEDs. Evidence shows that schools governance and management teams can be trained and improved. At PED level, efforts to re-engineer management and information systems should be redoubled. Although, in the long term, all schools should become responsible for contracting directly with suppliers, there would always be a need for PEDs to act as a goods resourcing service. The bureaucracy should be improved to prevent schools not spending their budgets.

Only Section 21 schools are free to save their schools allocations from one year to the next. Unspent funds for non-Section 21 schools have, in terms of National Treasury regulations, to be returned at the end of the financial year. The Department would look at means to give both kinds of schools equal powers to save allocations

Wasteful consumption of water and electricity is rife, partly because neighbouring communities tap into the school's supply for private consumption and partly because schools themselves tend to be wasteful. Schools often do not have information about their utility bills because the PED pays the bills, sometimes from the allocation, and sometimes from other funds.

The review recommended that the Department should:
-Improve the current resourcing services to non-Section 21 schools.
-Increase capacity to manage finances and resources, particularly at school and district level.
-Determine the optimal delivery functions of the PEDs in the long term, when more schools will be Section 21 entities.
-Find ways to enable non-Section 21 schools to save their unspent allocations.
-Tackle excessive water and electricity consumption.

Influencing the prices of education inputs
Large numbers of schools purchase similar goods at the same time in provinces, but as these orders are placed by individual schools in the case of Section 21 schools, they do not get bulk buying discounts.

Where the PED purchases goods on behalf of non-Section 21 schools, government procurement policy regulations are that SMMEs must be given preference.

Mr Soobryan alleged that the textbook market was insufficiently competitive and that costs could be reduced by using cheaper paper and binding and by better co-ordination when ordering.

School uniforms are cost-effective but prices escalate when schools stipulate specialised emblems that lead to sole suppliers. Uniforms should be a social equaliser but are not when poor learners are alienated when they cannot afford excessively expensive uniforms.

The review included the following recommendations for the Department:
-Negotiate contracts on behalf of schools
-Secure better rates for utilities, telecommunications, copiers etc.
-Find ways to lower the prices that non Section 21 schools pay owing to the procurement policies of government and individual Departments.
-Engage with the clothing industry.
-Begin a process of long-range fundamental change in the country's approach to uniforms.

Preserving physical assets in schools
Inadequate systems for preserving physical assets such as copiers, textbooks, stationery etc are cause for substantial financial losses.

A 1999 estimate put the textbook retrieval rate as low as 40-50%.

The review recommended that the Department should:
-Strengthen accounting procedures, including simple asset registers.
-Provide storage facilities.
-Improvement measurement and monitoring of textbook retrieval rates.
-Look into a system of tracking what physical assets learners have received from the state, regardless of where learners migrate.
-Integrate retrieval targets into general school management processes.

Respecting basic human rights
Rich and poor schools marginalise learners whose parents cannot pay fees by withhold reports, not issuing books, turning learners away from school and 'naming and shaming'. Prof Soobryan stressed that this violation of the SASA and the Bill of Rights is viewed very seriously. The extent suggested a cultural and attitudinal problem.

The review recommended that the Department of Education should:
-Conduct a campaign to counteract the marginalisation of the poor by bureaucrats and teachers.
-Take strong disciplinary action against transgressors.

School nutrition
The major system failure of 2002 in the Eastern Cape and KwaZulu-Natal had attracted much media coverage. The 2001 Systemic Evaluation showed considerable coverage but suggested that there could be a problem in poorer schools. Due to the link between nourishment and learner performance and because school meals are an incentive for poor learners to attend school, there is a need for the Department to take a more proactive stand.

The review recommended that the Department should:
-Develop strategies to counter the organisational failure in the roll-out of feeding schemes in collaboration with health and education authorities at provincial levels.
-Research the value added by different kinds of school feeding schemes
-Promote school involvement, for example through vegetable gardens
-Ensure that all GET learners receive a balanced meal each school day

National Norms and Standards for School Funding
School allocations

These govern non-personnel recurrent items. Prof Soobryan said that technical research on the relationship between costs and learning was needed, but that many poor schools in the country receive allocations that are worth R50 per learner and others receive R400, both of which are inadequate.

A long-term objective is the costed norms approach to funding and the DoE is to research the production functions applicable in South Africa. The functions or formula would tell us what level and mix of inputs is needed, given a particular context, to produce a particular level of learner performance. A short-term aim is the formulation of a set of costed minimum packages for schools, which would probably be best regarded as benchmarks and not ends in themselves.

Provinces differ in their poverty profiles. For instance, a learner whose family income is average according to national standards would be considered close to rich in the Eastern Cape and definitely poor in the Western Cape. A national resource targeting list approach had been proposed to ensure that equally poor learners in different provinces were funded equally. If provincial educational expenditure increases by 1% per annum and this increase is directed towards GET learners whose family income is in the lowest 40% nationally, the allocations for these learners could rise to R700 for the poorest 20% and R500 for the second poorest 20%.

Prof Soobryan said that there was no easy, equitable solution to the problem of poor learners in rich schools e.g. the children of domestic workers or children who commute because their parents regard the local school as inferior. Giving such learners more funding than poor learners in poor schools would effectively be moving funds from poorer to richer schools, would undermine community-based schooling. It would also not promote equity if very poor learners in average schools were also not to receive preferential funding.

The included the following recommendations for the Department:
-Complete the determination of a costed minimum package required by learners, to be used as a benchmark for planning.
Research the optimality of the pro-poor distribution curve currently used.
Complete a comprehensive, empirical study of the education production functions applicable to South African schools.
Gain a better understanding of where allocations are inadequate.
Consider changes to the way in which school poverty is measured.
Clarify policy on poor learners in non-poor schools.

School fees and other private inputs
The South African Schools Act obliges the School Governing Body to supplement state funding of the schools through reasonable means. Nearly 60% of learners' fees are below R100/annum. There is most variation in the fees paid by the richest 20% of learners, because of personal choice. The very poorest spend on average 2% of income on school fees, while the figure for middle and high income groups is around 1%, Some 85% of parents find fees reasonable but only 65% are paying them, possibly because they cannot afford to or because they can evade payment. "Hidden' fees are estimated to be as high as 25% f the formal fees. 6% of learners spend more than an hour getting to school. Regarding criteria for exemptions, Prof Soobryan said that the Department could assess whether households getting a child support grant should also get exemption from school fees.

The review included the following recommendations for the Department:
-Improve monitoring of fees.
-Improve parent participation in the fee-setting process.
-Pursue adequate public resourcing to eliminate the need for fees in poor schools.

Physical infrastructure
Despite the infrastructure grant tripling capital investment in schools between 2000 and 2002, physical infrastructure is the educational input that is most unequal, especially in some regions, e.g. the ex-Transkei. Migration of learners from year to year results in absolute classroom shortages that are greater than net classroom shortages. Learners might migrate for reasons of quality or language policy. Infrastructure planning is a highly complex issue and capacity for it, both nationally and provincially, is inadequate.

The review recommended that the Department of Education should, in designing a capital investment and maintenance policy:
-Conclude formulation of a policy and tools for physical planning at local level.
-Take a holistic approach (including migration) to deal with physical planning.
-Revise the current weightings that inform funding to capture the quality of classrooms better and the availability of using excess classrooms.
-Formulate a new medium to long term capital investment plan.

Translating school resources to learner performance
Much evidence suggests that quality of education in South Africa is low, relative to expenditure. Performance monitoring mechanisms are also inadequate, but improving. Existing monitoring systems such as the Systemic Evaluation, SACMEQ, the GETC, matric etc are being integrated into one evaluation model. Dissemination of this information has the potential to generate pressure to improve school or district performance.

The review recommended that the Department should:
-Integrate data from current monitoring mechanisms.
-Research ways to measure performance at different levels of resourcing and socio-economic disadvantage.
-Disseminate performance scores to improve accountability.

Prof Soobryan said that the period for public comment on the review and its recommendations would last until 21 April.

Prof Mayatula congratulated the Department on the comprehensiveness of the review.

A Member asked whether money necessarily led to improved education at poor schools.

A plea was made for poor learners in rich schools not 'to fall through the net'.

A Member asked whether the report was commissioned in-house. He noted that coefficients would not take one to a developmental approach if one was satisfied with these coefficients. He also said that managers should receive training in economics as well as management.

A Member said that the ranking for a school that he was involved in, in Lenasia, was average, based on the houses in the area, but that 60% of the learners came from the surrounding informal settlements. The ranking was superficial and he questioned whether the country was really moving to free public education, because, for him, the system was not working.

Prof Soobryan said that the focus of the review had looked at funding for poor schools especially, and the objective was to provide free education for the poorest 40%. He felt that parents should have a stake in education, even if the fees were R10 per annum.

Regarding poor learners in rich schools, Prof Soobryan said that the richest schools consumed way above basic education costs. He did not feel that it was reasonable for these learners to be subsidised to the extent of perhaps R6000 per annum by the state, when poor learners in poor schools received so much less.

Regarding the ranking of the school in Lenasia, Prof Soobryan said that this was an example of the need to improve administration. The policy was that the school population, more than the area, should determine how a school was ranked; whether a school was located in Brits or Soweto should be irrelevant. The bottom line was basic adequacy for all, defined according to available budgets and resources.

He said that the report was completed in-house. He agreed that the Department should be careful not to let any learners 'fall through the net'.

The meeting was adjourned.


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