SAQA & CHE on their 2015/16 Annual Reports

Higher Education, Science and Innovation

26 October 2016
Chairperson: Ms C September (ANC)
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Meeting Summary

Annual Reports 2015/16 

The South African Qualifications Authority (SAQA) noted that 92% of its 50 annual targets were achieved; of which six targets were exceeded and four targets were partially achieved. It received an unqualified audit outcome and 92% of the budget was spent. Key achievements were for the year included adding 1 078 302 new learners to the National Learner Record Database which in total had 16 819 020 learners (it was the biggest database in country) at the end of March 2016.

The top 10 countries from where qualifications originated that were compared and recognised:
Zimbabwe: 18.7%; India: 12%; Nigeria: 9.6%; United Kingdom: 9.1%; Lesotho: 6.1%; DRC: 3.7%; USA: 3.3%; Thailand: 2.4%; Swaziland: 2.3%; Pakistan: 2.1%. More than two-thirds of qualifications compared and recognised originated from 10 of 154 countries.

It reported on South African misrepresented qualifications that:
- Of 72 543 South African qualifications verified, only 92 of those were misrepresented = 0.1%
- These 92 were not employed in the public sector, contrary to the misnomer.

SAQA had achieved 19 consecutive unqualified audit reports, however, this year it may not have achieved a clean audit, because of a delayed approval of a contract with the Durban University of Technology. SAQA spent 92% of its budget of R106.8 million with a net saving of R8.04 million. Revenue sources were: Government Grant: 59.6%; Foreign Qualification Evaluation: 23.8%; National Qualification Verification: 9.2%; Sundry Income from fundraising initiatives: 3.8%; Interest received: 2.2%; Rental income: 1.4%.

In discussion, Members questioned whether the findings by AGSA of non-compliance to supply chain procedure was an indication that SAQA leadership had not exercised oversight effectively; had SAQA conducted an investigation into the irregular expenditure of R710 000, and if so, what were the outcomes for the transgressors; had SAQA exercised beyond its mandate by verifying qualifications and if it might mean that the NQF Act has to be amended; with the transfer from analogue to digital was there an increase or decrease of costs; whether the curriculum of TVET colleges was too theoretical; given the current economic climate was it not profitable to amalgamate all quality assurance bodies under one umbrella; whose responsibility was it to ensure that the qualifications on offer were reviewed for relevance; the cause for the number of resignations at SAQA; what was the strategy to recruit more disabled staff; what plans were there to recruit interns; what bad debt was written off; were the targets not achieved not measurable; simplification of NQF by de-registering qualifications with no uptake two years after registration, should the same attitude be adopted with faulty programme and discontinue them immediately, rather than letting students graduate with a faulty qualification; SAQA should verify qualifications of those who applied for board membership at public enterprises, and for senior posts in the public service.

The Council of Higher Education (CHE) highlighted its key outputs such as its publication "South African Higher Education Reviewed - Two Decades of Democracy";  the Higher Education Qualification Sub-Framework (HEQSF) Alignment Project was completed one year ahead of schedule; Five standards statements were completed: B. Social Work, MBA, LLB, B. Eng and Dip. Eng; Its database of learner achievements, HEQIS, had data from 95% of private HEIs in 2015/16; Record numbers of new applications for accreditation were processed and 292 (from 483 submissions) new programmes were accredited. Key outputs for institutional audits plus promotion and capacity development were also noted.

CHE received an unqualified audit report and had incurred a deficit of nearly R5 million but had rollover of R14 million from the previous year. It noted its top ten cost drivers. It outlined its audit action plan to clear up audit findings.

Challenges were identified as operational capacity; legal challenges to CHE/ HEQC decisions and litigation; staff turnover at 20% and attraction and retention of competent staff.

In discussion, Members asked about the possible amalgamation of quality assurance councils; the significant increase in consultancy services and significant decrease in peer academics costs although the largest cost driver; the tripling of expenditure for publications; the reason that overseas travel had doubled; and what gave rise to legal fees escalating by 14%. A critical question to CHE was about the pressure for universities to acquire funding but was there return on investment; did CHE have figures on how many students funded by government, especially poor students, had actually graduated; was there a percentage pass rate available; were any of those funded by NSFAS within the critical skills criterion; why the CHE audit recommendations given to University of Zululand since 2010 were still not implemented; and what teeth does CHE actually have.

The Committee adopted its Budgetary Review and Recommendations Report.

Meeting report

South African Qualifications Authority (SAQA) 2015/16 Annual Report
Dr Vuyelwa Toni Penxa, SAQA Chairperson, introduced the sixth board composition of SAQA which had ten members appointed by the Minister in their individual capacities in the education and training sector, professional bodies, organized business and the community; with two members appointed by the Minister in their personal capacities, and three Chief Executive Directors (CEO) from the Quality Councils as well as SAQA appointed by virtue of their positions. SAQA has had nine committees that had at least two board members per committee who were appointed for five years. The equity division of the board had 81% black representation and 19% white representation, whilst 44% were female and 56% were male members. The legislative and policy frameworks included the Public Finance Management Act, National Qualifications Framework (NQF) Act, Ministerial guidelines and White Paper on Post-school Education and Training.

Mr Joe Samuels, Chief Executive Officer, SAQA, noted that 92% of its 50 annual targets were achieved; of which six targets were exceeded and four targets were partially achieved. It received an unqualified audit outcome and 92% of the budget was spent. Key achievements were:
- 1 078 302 new learners added to National Learner Record Database (NLRD)
- 856 702 qualification achievements added to NLRD
- 216 qualifications registered
- 23 professional bodies
- 36 professional designations registered
- 13 professional bodies recognised
- 72 543 national qualifications verified
- 23 622 foreign qualifications recognised (non-South Africans had their qualifications recognised) which was fewer than the 26000 of the preceding year
- 57 962 new people with designations recorded.

The Committee had requested the NLRD numbers at the previous meeting with SAQA and this was a snapshot of the NLRD as at 31 March 2016:
- 16 819 020 learners (it was the biggest database in country)
- 13 411 070 qualification achievements
- 28 969 achievements through RPL (Recognized Prior Learning)
- 5 664 accredited providers for unit standards
- 4 293 accredited providers for qualifications
- 125 684 people with designations
- 85 professional bodies
- 11 492 unit standards
- 10 590 qualifications
- 294 professional designations.

The top 10 countries from where qualifications originated that were compared and recognised:
Zimbabwe: 18.7%; India: 12%; Nigeria: 9.6%; United Kingdom: 9.1%; Lesotho: 6.1%; DRC: 3.7%; USA: 3.3%; Thailand: 2.4%; Swaziland: 2.3%; Pakistan: 2.1%. More than two-thirds of qualifications compared and recognised originated from 10 of 154 countries.

There were 111 misrepresented foreign qualifications, even though the private sector had always cited a larger number: DRC: 40 ; Rest of Africa: 12; Ghana: 9; Zimbabwe: 8; Nigeria: 7; Lesotho: 5; Cameroon: 5; Swaziland: 5; Angola: 5; Other countries, excluding Africa: 5; Pakistan: 4; India: 3; Bangladesh: 3; Types of certification misrepresented: 41% on NQF level 4 (matriculation); 23% on NQF level 7 (degree).

It was highlighted about South African misrepresented qualifications that:
- 72 543 total of South African qualifications were verified
- Only 92 of those were misrepresented national qualifications = 0.1% of total verified
- These 92 were not employed in the public sector, contrary to the misnomer.
SAQA had those discovered accredited with a misrepresented qualification sign a letter. Then SAQA alerted the police to the 92 misrepresented qualifications, as it was not in the power of SAQA to have alleged it as fraudulent certification.

Ms Julie Reddy, Deputy Chief Executive Officer, SAQA, spoke about international initiatives, sustainability and the communication with stakeholders. International initiatives included: African Qualifications Verification Network; World Reference Levels; Technical assistance to Namibia; Groningen Declaration Network; Addis Convention; Validation of teacher professional standards

Sustainability in terms of economic viability meant they used a cost recovery plus 5% margin model. Funding for priority projects included the R2 million raised for the digitization project which focused on digitizing Senior Certificates acquired before 1992.

Communication with stakeholders included engaging in strategic conversations such on the NQF Act and
seeking public comment on policy such as the evaluation of foreign qualifications had first sought public comment before it was implemented.

The staff count had decreased from 214 in 2014 to 148 in 2015, due to a project conducted by the DHET that had absorbed SAQA staff. However, the staff count had since increased in 2016 to 167 members. The staff composition had received a bronze recognition: 89% black, 63% women and 1.8% disabled.

Mr Mark Albertyn, SAQA Chief Financial Officer, said SAQA had achieved 19 consecutive unqualified audit reports. However, this year it may not have achieved a clean audit, SAQA had achieved 19 consecutive unqualified audit reports, however, this year it may not have achieved a clean audit, because of a delayed approval of a contract with the Durban University of Technology (DUT) to conduct research into TVET colleges’ articulation initiatives. The process to appoint a research partner was not a straightforward process. The only final part of the process not to occur before the year-end was the approval process for the transaction. The new board was only approved in the last week of February 2016, thus, in essence, there were no authority to have approved it. However, the chairperson of the audit and risk committee had done an investigation and brought the findings to the board in July and it was condoned.

The budget versus the expenditure for the year under review was that it spent 92% of its budget, which was R98.7 million of the R106.8 million with a net saving of R8.04 million. The year preceding, 2014/15, SAQA had spent 91% of its budget that was R114.8 million of R126.1 million. The savings included Staff (R 4.65m) as the challenge for SAQA was to find the right people, particularly at senior level in research; Consulting and Project Fees (R1.73m of which R1m was allocated to digitization of Senior Certification prior to 1992); Training and Recruitment: R1.16m: this pertained to wellness; Research, legal and verification fees: R550 000: this was due to the local national database; Print and Photocopies: R500 000: since SAQA had explored digital space; Conferences: R490 000: SAQA had used its own premises for conferences, as opposed to renting.

Expenditure over the budget included: Advertising: R470 000; IT: R 460 000; Property, plant and equipment & intangible assets: R 282 000; Loss (foreign exchange, disposal of PPE): R 21 000

Total revenue received for SAQA was R91 857 000. Revenue sources were: Government Grant: 59.6%; Foreign Qualification Evaluation: 23.8%; National Qualification Verification: 9.2%; Sundry Income from fundraising initiatives: 3.8%; Interest received: 2.2%; Rental income: 1.4%

Mr E Siwela (ANC) noted that SAQA had some internal controls, which ensured that funds were managed responsibly and efficiently. The findings by AGSA of non-compliance to supply-chain procedure was an indication that leadership at SAQA had not exercised their oversight effectively with regards to internal controls and accountancy. On the irregular expenditure of R710 000, had SAQA conducted an investigation for the causes of the irregular expenditure? If so, what were the outcomes and what had been done about the transgressors?

Ms J Killian (ANC) appreciated the presentation, and noted that SAQA was quite modest, because the NQF was something that South Africa was to be very proud of in itself, as well as that South Africa took the lead in many countries concerning it. The fact that SAQA had exercised over and above its mandate, by means of the function of identifying and verifying qualifications, was it a transgression of law? Since if so, it might mean that the NQF Act has to be amended.

Mr C Kekana (ANC) asked if the transfer from analogue to digital meant an increase or decrease in costs? He noted its sub-committee on curriculum, and said that on visits to five or six TVET campuses in Soweto, students raised a concern that their curriculum was much too theoretical. For instance, if one was to go to CTMA, citizens from Mozambique would be the employees that would be changing the tyres off vehicles, because South Africans do not have such skills readily available. Those skills did not require academic staff, it was simply on-the-job training that was required. Therefore, students noted that they wished that 70-80% of their TVET curriculum was practical, and in so having, the failure rate would not be as high. Since those students were not interested in facing the blackboard, but wanted to gain the skills needed for employment.

The Chairperson agreed that it might be dangerous ground that SAQA had entered due to lacking a legislative framework. Also there was expenditure in areas that SAQA did not have a legislative mandate for. DHET was asked to respond on what was to be done in that regard? It might have been good to cite unprecedented areas, but had it adhered to the financial controls? If not financially compliant, that was not the preferred manner of operation.

Ms S Mchunu (ANC) congratulated SAQA for developing, fostering and maintaining an integrated and transparent framework for the recognition of learning achievements, and in so doing it ensured that South African qualifications were of an acceptable quality. The report on funds raised for the digitization project was welcomed, because previously financial constraints were noted; yet it had not stopped SAQA from achieving its objective to digitize. However, whilst presenting there was a lack of celebratory zest, as 20 years was quite a milestone. Citing ’19 consecutive unqualified audit reports’ might imply that SAQA had become complacent, and it was advised that clean audits should continually be aimed for. On quality assurance bodies, there were several boards in the higher education sector that ultimately have the same mandate to assure quality. Given the current economic situation, was it not profitable to amalgamate all of them under one umbrella? If one reviews the board composition of SAQA, there were individuals who held CEO positions in other entities too. For example, Prof Baijnath was both a SAQA board member and CHE CEO; and Ms G Mashabela was a SAQA board member, chairperson of the Quality Council for Trades and Occupations and on the TUT Council. Hence, if there was merely one board that served as an umbrella board, it should compartmentalise and ensure improved quality assurance, as currently there was overlapping of roles, since the same people fulfilled duties on multiple entities. It was a concern to see the same faces. Even though the expertise that the board members possessed was required, a reconfiguration of the boards in the higher education sector should be considered. When oversight was conducted at the TVET colleges, there was contention about subject matter, some said it was relevant, whilst others claimed it was outdated, and others were concerned that the qualification had limitations because of the inability to find employment once qualified. It was understood that there were a division of duties between Umalusi and the Quality Council for Trades and Occupations. Yet when QCTO personnel were notified of the concern, they had responded that they were in the process of reviewing part of the curriculum, as though they were doing the Portfolio Committee a favour. Therefore, clarity was necessary; whose responsibility was it to ensure that the qualifications on offer were reviewed for relevance? That was a matter of urgency, because the higher education sector cannot continue to produce any qualifications that are outdated.

Ms M Nkadimeng (ANC) appreciated the presentation and congratulated SAQA on 20 years of NQF implementation as well as 19 consecutive unqualified audits. The warnings and written warnings that occurred in 2015/16 showed accountability for transgressions. However, the preceding year had 17 resignations and 2015/16 had 16 resignations, what was the cause for this number of resignations? On employment equity at SAQA, the proportions of race and gender were well appropriated, but representation of disabled staff was merely 1.8%. What was the recruitment strategy to recruit more disabled staff? What had the bad debt that was written off entailed? What were the plans to recruit interns and to open the workplace so as to have work integrated learning for students?

Dr B Bozzoli (DA) appreciated the excellent Annual Report by SAQA. The targets that were not achieved had a shortfall, because it was not measurable. Therefore, there was some wrong with the target setting of SAQA. For instance, one of the targets stipulated that SAQA would recognise 6000 of X, but then at the end of the year merely 5000 of X were recognised, because its recognition was unpredictable in the first place. A better manner of setting targets was how CHE sets them, by setting a percentage target within a timeframe, thus quantity was valued by percentage and its timing would be the key that drove public interest in SAQA. Lastly, in answer to Ms Mchunu, SAQA was the umbrella board with the three councils that were beneath it. It might not be that they were sitting on each other’s boards, but that there was a senior board and junior boards beneath it for the sake of representation. However, SAQA could clarify.

Mr M Mbatha (EFF) noted that slide 19 stated that there was simplification of NQF by de-registering qualifications with no uptake two years after its registration. Should it not be discontinued immediately, as opposed to permitting the students to graduate with a faulty qualification? There was a qualification that had hundreds of youth registered for it, but subsequent to enrolment, there was a discovery that ultimately the qualification was useless or not registered with SAQA. In such a case, the action of discontinuation was required. Since if one considers the energies of young people, it would indicate an inevitable dampener on the spirits of the youth. It was not their fault that the qualification was either useless or that the institution had not registered it, as it was the responsibility of the institutions to accredit their qualifications via SAQA. In South Africa, there were a number of boards, in particular state and parastatals that had revealed that some of its sitting persons were actually unqualified or they had lied about their qualifications. It was recommended that SAQA should address the Minister to approve their involvement in verifying qualifications of those who applied for board membership at public enterprises. It was imperative, because those positions required specific expertise. Since once appointed the matter then becomes political, for instance, the SAA board chairperson.

SAQA should also request permission from Cabinet to verify qualifications of frontline state applicants such as Directors General, so that there should not be any shortlist of candidates without the qualifications having been first confirmed by SAQA. There were instances where candidates were appointed then later dismissed due to invalid qualifications, because they were not checked upfront. Mr Mbatha spoke about the concept of best providers or well established providers which were letting state institutions down. Such established relationships between ‘best-providers’ and the state entities become a "partnership". The objective was fairness and transparency. Therefore, recognise that business was conducted well in the past, but also recognise that protocol should not be compromised, because it had served as a problem.

Dr Penxa, SAQA Chairperson, clarified that the board observed in the process of advertising for research partners, there was a tendency that historically advantaged institutions, which were mainly research based, have been ready, available and fully met the criteria for partnering with SAQA. Thus, the board said that SAQA needed to develop a different approach so all universities were given a fair chance, particularly historical disadvantaged universities. They ensured that the contact details of all universities were submitted to management, so that they were all made aware of and invited to be involved in research projects. From the perspective of the board, management had tried to be inclusive, by including emerging and historical disadvantaged universities as well as the advantaged. In that process, irregular expenditure occurred.

Mr Samuels, SAQA CEO, noted that the CFO had elaborated on the cause of the irregular expenditure, and a follow-up summary would be given. The point that was made was that SAQA had, indeed, followed the single source procurement process. At the time that the co-signing was required by the Executive Committee, the Executive was not in operation, the matter was escalated to the board, and the board members had the matter investigated and came to the conclusions that were no problems with delivery,  neither had any fraud or corruption been committed, but it was merely lacking final signing. Thus, the board then condoned the expenditure. The audit and risk committee had already done the investigation. Further, the board had also considered how such matter could be prevented in the future - a set of proposals was made at its most recent meeting. Therefore, the concern was fully resolved by the board.

He then thanked the Committee for the positive feedback and assured them that once SAQA turns 21, celebratory means shall accompany the presentation, such as balloons and music, for a cheerful atmosphere. To clarify the matter of SAQA and its quality councils; it should be understood that the Minister of Higher Education and Training had put out a Green Paper, which had a number of proposed options. One of the options was that SAQA would co-exist with the quality councils in one body. There were other options as well. In actual fact, in the White Paper, the point was made that at the time the Green Paper came about, the NQF was just promulgated and it had not made sense to have all of these quality assurers put into one body. If such structural changes were implemented now, it would take a long time for the system to update accordingly. Hence, it was wise of the Minister to decide to keep the bodies as proposed in the legislative implementation of the NQF, as the progress made by the bodies could clearly be seen. The ideal of having a CEO on various boards was a way to ensure that the communication was better and that it would ensure the implementation of the NQF in a coherent, consistent way. It was not a matter of junior and senior bodies. The point was that SAQA has a particular mandate and the quality council has a particular mandate, yet everyone was working together to implement the NQF. Therefore the proposal given by Committee Members was initially found in the Green Paper and the Minister had moved away from it. It shall, however, be reconsidered, but it seems that the argument was made that it was about costs, but it was not only money that was the issue, but the consideration of the efficiency of the system as well.

Mr Samuels assured them that SAQA shall not be complacent, but shall continue to strive for clean audits, even the APP had clearly stated that a clean audit was wanted for 2017 onwards. The only reason SAQA had not achieved the unqualified audit for the current year was due to the unprecedented irregular expenditure of the transaction with DUT.

On reviewing the N qualifications, he said it would take a whole day to clarify the complications that had occurred when the entity came into existence 20 years ago. However, there was an agreement that Umalusi was responsible for the N1-N3 qualifications and the Quality Council for Trades and Occupations (QCTO) was responsible for the N4. There was clear responsibility and both bodies were aware of what it was responsible for. There was a document as well as an agreement stipulating what they were supposed to do.

He noted that the targets would take an entire day to clarify too. It took long conversations with the Office of the Auditor-General. SAQA had wanted to resort to percentages in actual fact. The advice was taken and shall be considered for implementation after consulting with the Office of the Auditor-General.

The staff turnover of SAQA was 9.5%, but he was unsure if this was an issue, because some employees have received job offers elsewhere. Another example was that a former employee had worked for SAQA for sixteen years and motivated by a need for change, he had left. This did not indicate that there was something wrong with organization, because SAQA was well below the national turnover. There was one person who was dismissed, because after having not performed well on his probation, he was given a further opportunity to change by extending the probation, but he had failed to improve and was consequently let go. The other instances of dismissal were when individuals were late. Therefore, there was no problem about staff turnover at SAQA.

Mr Samuels elaborated on the queries about the legislative mandate. The NQF Act allowed the Minister to add a function that was in aligned to the Act. Thus, the need for SAQA to verify the qualifications listed in its large database had provision for the verifications within the legislation - it was not SAQA that made provision for it. Firstly, the Minister had asked SAQA to set up the list of the qualifications and then the Department of Public Service and Administration (DPSA) had issued a directive on the verification of public service employees in 2015, of which all public organizations should use SAQA to verify the qualifications of public servants. Therefore, the verifications were not a matter of legislative conflict, but were already outlined in the legislative framework. However, when working on policies together with the DHET, consideration of amendments to the NQF Act was noted. SAQA was unsure of the progress of its amendment, but the DHET was attempting to fulfil the gap. Firstly, the NQF legislation would be strengthened as required from within, and secondly, the timing dimension needed to be considered.

On the appointments of Directors General and high-level staff, this was already happening. Before the appointments were made, the qualifications of the applicants were verified by SAQA and a Cabinet letter was drafted. On the basis of that letter, the appointments were made. The Minister of Higher Education and Training had taken the lead, in terms of quality councils and boards which report to him and the qualifications that he expected from those who held such positions. In fact, before the sixth SAQA board was appointed the Minister had ensured that verification was done. The process of verifying the quality councils and boards of TVET colleges had begun too.

Council on Higher Education (CHE) on their 2015/16 Annual Report
Prof John Mubangizi, CHE chair of the Higher Education Quality Committee (HEQC) and representing the CHE chairperson, Prof Themba Mosia, presented background and context to the Annual Report, noting the austerity conditions that have impacted on the range and number of initiatives; the upheaval at universities due to fees protests leading to the postponement of several interventions because of access challenges and re-prioritisation by institutions; the proliferation of programmes from private providers, and the budgetary pressures impelling levying fees on publics for accreditation processes.

Challenges posed for CHE were identified as operational capacity; legal challenges to CHE/ HEQC decisions and litigation; staff turnover at 20% and attraction and retention of competent staff.

Prof Narend Baijnath, CHE CEO, highlighted key outputs in such as its publication "South African Higher Education Reviewed - Two Decades of Democracy";  the Higher Education Qualification Sub-Framework (HEQSF) Alignment Project was completed one year ahead of schedule; Five standards statements completed: B. Social Work, MBA, LLB, B. Eng and Dip. Eng; Its database of learner achievements, HEQIS, had data from 95% of private HEIs in 2015/16; Record numbers of new applications for accreditation were processed and 292 (from 483 submissions) new programmes were accredited. He also noted key outputs for institutional audits plus promotion and capacity development

Targets not achieved included submission of institutional reports for the Quality Enhancement Project (QEP); finalisation of National Report on Review of Bachelor of Social Work programme and the LLB review – site visits and self-evaluation reports; and national reviews – training of evaluators.

He concluded with an evaluation of CHE performance and emerging operational issues, which included:
• Projects are not completed within time frames, which impacts on achievement of performance targets:
• Lack of sufficient capacity in some directorates
• Some projects heavily rely on peer experts from the sector who deliver at their own pace
• CHE Annual Performance Plans are normally scoped to cover all areas of the legislated mandate, but not in relation to capacity and resources available: mismatch between requirements and resources.
• Increasing deficit.

Mr Thulaganyo Mothusi, CHE CFO, said that CHE received an unqualified audit report but had incurred a deficit of R4 909 708, and explained the reasons for the variance.

Top ten cost drivers and their percentage of the general expenses: Peer academics 17%; Legal fees contribute 14%; Travel costs local 12%; Printing and Stationery 8%; Outsourced services include SAQA HEQCIS online system, governance committees minutes taking and payroll services 7%; Auditors remuneration 6%; IT expenses include licence fees, computer consumables, contract on support for HEQC online system, contract on support maintenance, contract on system development and contract on website and communication 6%; Remuneration of Council/committee members, recruitment, venue, catering 4%.

A strategic audit action has been developed to address all audit findings identified by the AG and progress is monitored by the Audit and Risk Committee. These findings included: Performance targets not SMART; General expense not paid within 30 days of receipt of invoice; Quarterly reports not reviewed; Baseline numbers not set for performance targets expressed as percentage; Functionality included as an assessment criterion; Inconsistency between the planned and reported indicators.

Ms Kilian noted that South Africa was experiencing a difficult economic period, in fact, not just South Africa but globally. As a result government had engaged in all sorts of mechanisms to reduce expenditure. Was it not time that quality assurance councils were amalgamated into one body under the leadership of SAQA,  that oversaw the Higher Education and Training Sector? Secondly, both SAQA and CHE had encountered budget constraints, and CHE had a deficit, which was a serious concern. Obviously, pressure cannot be placed on the Department, because National Treasury determined the baseline for all entities. It was commendable that SAQA has found other sources, and perhaps CHE should approach donor funding as well, although it was understood that donor funding could come with strings-attached as cited by CHE, but perhaps a creative manner of acquiring donor funding should be considered, specifically for CHE. If page 116 of the Annual Report was viewed together with the cost driver analysis given by the CFO, what was meant by Consultancy Services - did it refer to SAQA, as there was a significant increase for the year? Also, there was a significant decrease for Peer academics (from R129 192 in 2015 to R96 714 in 2016), yet it was cited as the largest component of cost drivers? The expenditure for publications had tripled (from R6 287 in 2015 to R27 086 in 2016), but it was cited that CHE had gone digital, hence it did not seem practical that both the cost of publications and IT expenses had escalated. Overseas travel had doubled from R112 486 in 2015 to R290 638 in 2016, was there any particular reason for that? It was understood that local travel was significant, because peer academics have had to travel around the country. What gave rise to legal fees that escalated by 14%? If legal fees were compared to last year, the increase may have been eightfold. This poses a concern, and what was the reason for it? Another concern was the ability of CHE to both train then retain those trained. This was a concern, because the type of people who were lost was professional, academically qualified and skilled. The salary of the CEO on page 78 was significantly lower than the Senior Manager - was there an explanation for this or simply a calculation error?

Ms Kilian said the critical question to CHE was there was a lot of pressure from universities to acquire funding and even government was providing additional funding, but was there return on investment? Does CHE have any figures on how many students funded by the government, especially the poor students, had actually graduated? Was there a figure of the percentage pass-rate available? And were any of those funded by NFAS of the critical skills criterion?

The Chairperson questioned that given 22 years of democracy, were the programmes under review and the subject matter sufficiently addressing the progress of democracy, or was the focus yet on inherited problems? For instance, there was limited involvement to implement the internationalisation of higher education, as the closest that South Africa achieved internationalisation was with the debate on GATS (General Agreement on Trade Services), but non involvement existed thereafter. The late Prof Kadar Asmal was quite active about this, and one of his arguments was, ‘the state was to never allow sacrifice of the public good to the market’. Did CHE perceive that sacrifice as already taking place? After the years of input into higher education, was it possible to focus on the individual? Could engagements about the individual’s intellectualisation; cultural influence; political influence and social development be done, so that it could address the issues that StatsSA raised?

Ms Mchunu noted the non-achievement of targets was worrying, even though the shortfalls were accounted for. The increasing deficit from R1 049 517 of 2015 to almost R5 million was a concern. Therefore, CHE should work harder this financial year to reduce this.

Dr Bozzoli queried that the CHE audit report recommendations given to the University of Zululand since 2010 were still not implemented. It raises the question what teeth does CHE actually have? In theory, if one were accredited with targets by the accreditation body and one failed to meet the targets, one would face closure. Technically, this was what should happen to the University of Zululand, it should close down. The accreditation body that oversaw its accreditation had set targets for the university but six years later it has not meet them. If CHE has not teeth to act on these failures, what was the point? Secondly, it was pleasing that CHE was reverting back to audits, because it seemed that the measures of quality review were quite tame. Since it would take institutions like the University of Zululand that had low quality, review possibilities of improvement, but result with slight improvement, and mistake it for thorough progress, due to the lack of ambition that should align improvement with the standard of CHE. It was cited that the quality improvement project was set up, because of the need for teachers and high failure rates, but had it any effect on failure rates? It was personally doubted and perceived as a pointless exercise. What was the catalyst for the legal fees, also indicate how watertight, as well as the quality of the legal situation at CHE? Were the judgements also in the favour of CHE, and if so, should expenses not reflect such? If the legal cases were lost, it seemed that the processes lacked watertight cases when accreditation was denied. The fact that legal cases had risen implied that there was ambiguity in the kinds of decisions that were made that opened up the way to be legally challenged, because the more legal challenges were made, the more the existence of the legal challenges would grow. It was suggested that the legality of CHE should become more watertight. It should be assured that the Portfolio Committee was pro-funding for both CHE and SAQA, and considered it a travesty that there were insufficient funding for greater efficiency of the work that it had conducted.

Prof Mubangizi answered that the comments of concern raised was taken into consideration. The sentiment about the various quality assurance bodies raised by Committee Members should be understood with caution that the bodies was established as statutory by Parliament. CHE have had a function of quality assurance that other entities such as SAQA and ESAP had not fulfilled, and in so doing, its board members may be seen within other roles in the higher education sector, however, the relationship was not incestuous, but rather complimentary. The questions posed by the Chairperson were interesting. However, the query of the subject matter and how it had related to the individual were to be answered by the academic institutions itself as well as by the DHET, because even though CHE ensures that the accreditation had adhered to national standard, ultimately it was not responsible for the development of the subject matter of the programmes, and so its influence was restricted to the analysis of quality, but not its creation.

Mr Mothusi, CHE CFO, explained the consultancy expenditure pertained to the Human Resource, Peer System and the outsourced services, all of which amounted to 32% of the expenditure reflected. The peer system was like support staff that when CHE did not have a licence to operate in a matter in the system, it would rely on the peer system. The staff plan and its APP had been reviewed, and would incur changes. For instance, the outsourced services had included the SAQA HEQCIS online system that had consumed the bulk of the money, the governance committee minute taking staff was replaced by having the secretary take the minutes instead, and the payroll service was also replaced by moving payroll responsibilities to human resources. The escalation in the printing costs was due to five publications, for example, ‘The South African Higher Education Reviewed: 20 years of Democracy’. Since the CEO was appointed in October 2015, his salary did not reflect a full year. On legal costs, it should be understood that legal costs had not only derived from the SANTS Private Higher Education Institution case, although that had comprised 72% of the legal costs, but also CHE had a specialised independent legal case that was paid for under legal costs, and there was the matter of green field where litigation costs had also arisen in terms of college projects and their management. Most importantly, there was no legal person in the structure of CHE. On supply chain management, before the CEO would finalize the contracts, legal advice was needed which was outsourced as legal costs too. The bad debt written off related to a debt that was incurred in 2014. The current year did not have debt carried over that required it to be written off. The debt was in relation to the case with SARS as they had claimed that CHE had not paid them, but it was written off based on evidence by SARS.

Prof Baijnath, CHE CEO, explained that to collapse the different functions into one body looked pragmatic at face value, but, firstly, both the cost and benefits needed to be considered. As much as there was the framework that covered the distinctive different areas, one being Basic Education, another being Technical and Vocational Education, and the other being Higher Education, it could be argued that there was sufficient critical mass, in terms of size, complexity and distinctiveness in each of these. Consequently, it has its own quality assurance function focus. The danger was that while the imperative might be to rationalize it would actually end up costing more. It also had a dilating effect, because if one who was a specialist in Basic Education appointed to make decisions about higher education, one may not fully comprehend the aspirations, purpose or the imperatives for the development of that sector. Also, if one was of the vocational / technical domain, one may have a technicist view on higher education, and making decisions on higher education that could then cause concern. The methodology, instruments, expertise, focus areas and approach were very specific to the particular domain. Thus, practically it may seem possible, but it shall come at a cost that shall affect quality assurance. However, in creating a single entity with very diverse functions, it was inevitable that a bureaucratic structure would be created with more layers and not necessarily a simplification.

Prof Baijnath explained the halving of the huge costs of peer academics as follows: what accounts for that was if the number of publications were analysed, especially the 20 year review, which was a multi-year project, a lot of the work was done by peer academics who were paid in the preceding financial year. Thus, after they had completed their work, the following year, which 2015/16, the editorial work and publication happened and that was when the reduction in peer academic costs reflected. The peer academic work for 2015/16 related to quality assurance, site visits and participation in national reviews. There was an increase in the legal fees, because when a recurring citation  impacted a provider, it posed private or public legal challenges. CHE had not had any public challenges yet, but was not immune to it. When CHE de-accredits, as it had de-accredited a programme with 22 000 students at a public institution, they could have challenged CHE, because it was a huge loss of 22 000 students enrolled in the programme, but the institution had accepted the de-accreditation. The private sector was a different matter, because it was a huge enterprise as its turnover was usually R60-150 million per annum. Thus, CHE would go through the accreditation process and if a programme was found wanting in any way, such as quality of its curriculum, capacity, facility, exit level or outcomes, it would be a candidate for closure. Of course, an institution sitting on a chest of R50-60 million would take CHE to court. Hence, they would come to court with four senior counsel and CHE could barely afford one. Thus, they could spend R10 million on a case, but CHE in comparison had a modest budget. Fortunately, CHE was affiliated with good lawyers who understood the sector and its work. It was, however, an ongoing expense, because whenever a programme was de-accredited there was the potential for legal challenge.

Prof Baijnath elaborated on the percentage pass rate and whether CHE was able to illuminate on performance of NFSAS recipients in critical skills. CHE had received and analysed data and yet not all of the data that should be available, was available. That meant that CHE was to compute the data warranted, create analytical categories and information streams in different ways into the national aggregate database. As it is, there were around 140-150 different analytical tabled outputs, which gave a very good indication of performance of the system. It was a massive resource and was guided by entities such as CHE and others that had different information and responded accordingly.

During a long and retroactive period the University of Zululand has had its unsatisfactory improvement plans sent back. Simultaneously there was tremendous upheaval at the management level with regular appointments of new leadership for a long period of time, so that it was not fair to impose an outcome on the new leadership. There was a window in any self improvement report, of which the conditions that the report was written within or as the audit was described, but if it was five years later, it had ceased to be useful. The more useful categorisation of an institution there was, the more power it had. CHE had teeth over organizations, in terms of its programmes and the ability to shut down programmes, but CHE did not have the power to shut down universities. That was a much more difficult thing to do, because the innocent, such as the students and staff, would become victims. Yet it was government and management crises in addition to other factors, that had contributed to its institutional dysfunction. It is considered not to make everyone, including the region it was located in, victims and to suffer for errors of management. However, it can be assured that the University of Zululand had improved and was revitalized with the entire new quality assurance framework, which had a key element of forensic capability. Hence forensic audits were conducted throughout the financial year and not merely at the end of a five- year cycle or as a response to AGSA findings. CHE wanted to in a short period of time institute a forensic audit that would focus on the problem areas, which was built into the legislative framework, thus it was a new framework that immediately gave its attention to areas of shortfall.

Mr Mothusi added that the deficit excluded a R14 million that was a roll-over amount (page 99 in the Annual Report had the total amounts, including the surplus amounts and the roll-over of R14 million). CHE has had interns and two graduates have just started their internship.

The Committee adopted its Budgetary Review and Recommendations Report.

The meeting was adjourned.

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