2017 Readiness of universities and TVET colleges; Financial statistics on Higher Education Institutions in 2015: Stats SA

Meeting report

Statistics South Africa (StatsSA)

Dr Pali Lehohla, Statistician-General, Statistics South Africa, opened with a clip of a speech from President Mandela that referred to major issues within the country needing to be resolved, one being education. Mandela had stated that there were inherited issues, but ultimately it was the support of the child that would determine academic success, and it was beyond having books at home. There was an extensive difference in the domestic support of a white child compared to black children (Indian, Coloured and African). The failure of the institutions may be underlined by the lack of domestic support for Black children.

Dr Lehohla then elaborated on the age structure based on Census 2016 that reflected the age population. The South Africans who were children in 1996 had encountered their education in the democracy, and were known as the First Demographic Wave. The life circumstances of first demographic wave had not achieved their full potential. They were also the children, who now in their twenties, had become young parents. Therefore, there was now a need to invest in the second demographic wave to achieve outcomes not seen in their parents’ generation.

South Africa had lost the first demographic wave. The challenge now posed was, what now needed to be done? The first demographic wave had suffered from the drivers of poverty that limited access to education. Drivers of poverty included unemployment, years of schooling, sanitation, assets, energy for heating water, energy for cooking, energy for lighting, type of dwelling, school attendance and child mortality. Currently, the first demographic wave constituted 25% of the unemployed citizens.

He then described the ethnic demarcation of the population since 1994 in the percentage of workers in each group who were skilled, such as managers, professionals and technicians. The percentage of workers in skilled occupations had increased in all age and all race groups, except for black Africans aged 25-34, which had decreased and Coloured youths aged 25-34 had experienced a minimal increase, compared to their Indian/Asian and White counterparts that had grown by 54-55%. The Whites aged 25-34 in skilled occupations had constituted 40% in 1994, but by 2014 they had increased to almost 70%. The Indian/Asians aged 25-34 in skilled occupations had comprised of almost 30% in 1994, but had increased to almost 60% by 2014. The Coloureds aged 25-34 with skilled occupations comprised just over 10% in 1994, and had increased to only slightly over 20% by 2014. The black Africans aged 25-34 with skilled occupations had been comprised of over 15% in 1994, but had grown to only slightly less than 20% by 2014.

The sources of higher education data in Statistics South Africa were derived from household surveys, population data, government finances and national accounts. The reference period for Higher Education Institutions (HEIs) had been the 2015 calendar year 1 Jan – 31 Dec 2015. The scope had been 26 HEIs, involving 20 universities and six universities of technology, but excluding private institutions. The time series had consisted of data for the last ten years, from 2006 to 2015. Higher education enrolment had started in 2006 at 742 06, and had grown to 985 212 in 2015. This formed part of the discussion, for if almost a million students were enrolled in 2015, why were there not as many of them still in the system? Thus, if 171 930 (17.5%) were enrolled as first year students in 2015, why were there fewer than 150 000 still registered at the end of the year? The proportion of those completing grade 12 after completing grade 9 showed a significant disparities among the ethnicities. The Indian/Asians showed an upward trend, which indicated a progression almost on par with the White population. Black African and Coloured populations had shown a minor upward trend in the 1990s, but since then the trend had remained somewhat constant for the black African, and matriculation had declined for the Coloured population. Hence, when the proportion of those completing bachelors degree after completing grade 12 was reviewed within the same ethnic divisions, the same trend was indicated. The White and Indian/Asian populations progressed with their number of graduates, but both the black African and Coloured populations experienced a significant regression.

The University of South Africa (UNISA) had the highest enrolment in 2015, with 337 944 out of the 985 212 students enrolled nation-wide. All institutions’ enrolments had grown by 32.8% from 2006 to 2015.

HEI receipts for 2015 had been R63.1 billion, of which 23.3% was derived from receipts other than tuition fees and grants. The payments for HEI in 2015 had amounted to R54.1 billion, of which compensation of employees comprised 58%. Revenue per institution in 2015 was derived from tuition fees, government grants and other sources that included the sale of goods and services, research contracts and donations. The universities of Sefako Makgatho, Mpumalanga and Sol Plaatjie had the biggest reliance on government grants, with 76%, 82% and 97% respectively. The tuition fees received for the same universities amounted to 20%, 5% and 2% respectively, but nationally all of the universities had received a mark-up of 34% for tuition fees. The total national tuition fees received by HEIs for 2015 amounted to R21.5 billion, and that included the new universities of Mpumalanga and Sol Plaatjie. Donations made to HEIs had amounted to R4 billion, with Stellenbosch University receiving R1.126 billion in 2015.

Dr Lehohla said that the HEI payments made in 2015 had been comprised of compensation of employees (R31.4 billion), goods and services (R19.2 billion), and other payments that included bursaries amounting to R3.1 billion, as well as interest. The HEI capital expenditure spent nationally had amounted to R7.2 billion in 2015, with Wits having spent R1.142 billion on its own.

16 universities had recorded surpluses before financing activities in 2015, amounting to only R2 billion, while the University of Johannesburg had broken even.  Nine universities had encountered a negative inflow, ranging from Rhodes University, with a R55 million deficit, to UNISA with a R474 million loss before net financing activities. Even though UNISA had a negative cash balance before net financing activities, the movement of cash during the year caused UNISA to have stock of cash amounting to R208 million. However, the movement of cash during 2015 had caused the universities of Johannesburg, Wits, Zululand and Kwazulu-Natal to result in negative balances, while the other universities that remained had had a negative balance that either lessened or expanded.

Dr Lehohla pointed out some other important statistics:

• The number of students enrolled in higher education grew by 32.8% from 2006 to 2015.
• First-year students constituted 17.5% of the total HEI student intake in 2015. This percentage indicated challenges within the system.
• Grants by national government to HEIs increased by 144% over the ten-year period 2006 to 2015.
• Salaries comprised about 58% of total current HEI expenditure over the ten-year period.
• On average, income from tuition fees increased by 12.7% p.a. over the ten-year period.
•  The annual rise in tuition fees for tertiary education in 2015 had been 9.8%. In 2016, it was 0%. In 2017 it had been set to no more than 8%.

He concluded that the first demographic wave, which had been children aged 0-14 in 1996, had grown to youths aged 15-34 in 2016. Unfortunately, many of them were unemployed and without a systematic resolve to create sustainable means. It should be prioritised that their children, the second demographic wave, would not fall prey to the poor educational outcomes as well, since it seemed inevitable that they may suffer the same fate, because their parents were currently unemployed and thus incapable of producing the domestic support infrastructure required.

For a few years, the statistics of unemployment of South Africa’s youth had been a staggering 25%, and its interpretation meant a low standard of living and perpetuation of poverty that prohibited social upward mobility. Unemployment was the driver of poverty. The years of schooling contributed as the second most significant driver of poverty. The major contributor to the poverty situation of the youth, aged 15-24, in South Africa was educational attainment. In other words, their poverty was a consequence of not being in school. Exacerbating the situation of poverty would be if no one else was either employed or employable in the household. A continuation of this situation could not be right, and Madiba had captured the situation immaculately. The question was, what had been done since?

Discussion

Dr B Bozzoli (DA) commented that to some extent, StatsSA was preaching to the converted, because many of the highlighted concerns echoed concerns already raised by the Portfolio Committee for a long time. An unprecedented number of universities had had a negative net change in their stock of cash, from Rhodes University, with a deficit of R19 million, to the University of Kwazulu-Natal, with the deficit of R176 million. The concern was that these were not capitalist institutions, but were dependent on cash income for their very survival. The slightly neutral tone in expressing the change in cash stock had been surprising. However, in the opinion of StatsSA, was the situation worse than reflected on the graph? Much of the funding that was derived from outside sources could not be used to run those universities, because it was for a particular purpose or explicitly stipulated by the donor. Thus, millions of Rands may be counted as donor funds by StatsSA, and equated as income, but in actual fact it would not pay for the electricity bills, basic salaries of university personnel, maintenance of buildings or contributes to any other expense for the university’s upkeep. Many people had complained that donor funds had cost the university added expenditure, due to explicit stipulations that they would piggyback on other expenses. If the grants that were outsourced were included in the inflow of cash, as amounts available for consumption by the university, those amounts were then distorted. Since the figures may not be a true reflection, how many universities were actually bankrupt, or were nearing bankruptcy? For instance, if the huge amount given to Sol Plaatjie University for the purpose of development and training was scrutinized, the funds had no impact on the operation of the university whatsoever. There may be other such grants too. What was the stance of StatsSA on that concern?

Ms J Kilian (ANC) commented that the figures were thought provoking. It was clear that during the period described as the first demographic wave, there were specific sectors of society that had improved, and it was significant that, notwithstanding the large number of enrolments, the tertiary sector had failed to produce an outcome that proved social improvement, such as the high drop-out rate. There was also the concern of the vast numbers in society without the qualifications to enable them to obtain sustainable employment. Was any data available to demonstrate that those who had the opportunity to enter early childhood development facilities had had a better opportunity to move through the schooling system to the point of attaining a tertiary qualification? The issue was, where should Government invest in order to receive return on its investment at the end of the system? Understanding where the critical needs were would ensure proper prioritisation. With the exception of UNISA, which did not have the same salary expenses as face-to-face institutions, were the overall salary expenses of South African universities comparable to international academic institutions? Domestically, the average spent on salaries was 58% of expenditure, but what was the international benchmark for salaries? Household expenditure on education had declined from 12.3% in 2006 to 9.4% in 2015, yet simultaneously there had been an increase in tertiary educational expenditure from 7% in 2008 to 9.8% in 2015, so how could the gap be bridged if there was no increase in household funding? Did StatsSA speculate that part of the investment in the entire system might perhaps be distorted? Could StatsSA suggest if funds should be diverted in a particular direction, contrary to their current allocations, to ensure the realisation of the required outcomes within both the basic education system (BES) and the post-school education sector (PSET)? Had StatsSA any information about the TVET system on its impact in skilling the nation for the market place?

Mr M Mbatha (EFF) questioned if StatsSA had the impression that the reduction of subsidies that had taken place, especially from 1997, had contributed to general under-funding and, coupled with it, to underperformance in the PSET sector? There were approximately ten universities and universities of technology that had merged to form the TVET colleges since 2005. If the consequence of those mergers were reviewed, it would indicate that if a formerly ‘white’ technikon had merged with a ‘black’ technikon, there been an inherent need to harmonise the quality of the services and the benefits. Supposedly, those who had come from the previously disadvantaged institutions would have received an improved package of benefits, including medical provision, which would have added increased expenses for personnel. Also, due to the reduction of the state subsidies and no additional funding made available by the DHET, coupled with expenditure on new initiatives imposed by the state, it was inevitable that the academic institutions had had to resort to consuming their reserve funding for their maintenance. The combined factors of long-term under-funding and depreciation of reserve funding had led to the PSET sector unavoidably finding itself with reduced financing. Therefore universities had no other significant means, and had to rely solely on the income of student fees, either from the current parents or the alumni. The combination of these factors had also resulted in increasing fees that were too expensive for the poor. Therefore, considering the first demographic wave and backtracking to 1998, what would StatsSA have advised to anyone of political standing who would have listened and taken action, to make a difference for 2015?

It was appreciated that the presentation had opened up by reflecting on the social background from 1994, because the first demographic wave were meant to have been the real beneficiaries of higher education. There had been an expectation that the majority of them were going to be the first-generation graduates within their families, but now they were lost in the system. This indicated that poverty had not only failed individuals, but had broken families apart, because the families had put their hope on the individuals succeeding academically due to the enormous sacrifices made for them. Had the academic exclusion not contributed to the decline in the domestic standard of living among people of colour? This referred to the reality of the standard of living, and not the perceived standard of living, as it normally would be politicised anyway. There was a feeling that the circumstances of black people, particularly black Africans, had actually declined, and yet no one cared to explain the regression. StatsSA had partially explained it today by clarifying its relation to higher education. However, there were all sorts of multi-causal factors that had affected the regression, and no account for them had been given.

The universities that could achieve self-sustenance were those which were historically advantaged. They could continue to sustain themselves through the disparity of fees -- for instance, they could charge R120 000 per annum, as opposed to a poorer university that charged R69 000 for the same kinds of courses. Given the sentiment of students that education was a right, the students felt neglected and so had caused damage as a means of voicing their frustration. Therefore, even though free education was a pursuit, to restore resources would require extra funds beyond the short supply of funds it already available, and this would result ultimately in higher fees being charged.

Mr E Siwela (ANC) commented that the Statistician-General had cited the lack of domestic support that black African youngsters received compared to their counterparts, as a factor contributing to poor outputs at the end of the schooling system. Did the fact that the White and Indian/Asian counterparts received better domestic support contribute to their ability to compete academically and improve their chance of completing their degrees? Had the quality of education available in the public schools within the demographic locations affected the ability of the different ethnicities to acquire tertiary education, and if so, what should be done to reduce the disparity in quality? There had been a decrease in college enrolments, from 3% in 2011 to 1% in 2015, but simultaneously an increase in enrolments at the universities of technology, from 3% in 2011 to 5% in 2015. In the opinion of StatsSA, what was the cause of this?

Ms S Mchunu (ANC) said the ethnic division regarding the probability of black Africans and Coloureds completing Bachelors degrees was a major concern, due to their low possibility of attainment. From the viewpoint of the government, it seemed that there was a limited return on investment, because millions of Rands were spent via the NSFAS scheme, but few of those who had been eligible for the NSFAS loans had actually graduated, and many had dropped out instead. The PSET sector was under-funded, yet the commitment from the government was evident in its perpetual search for sources of funding. However, it seemed this had not been reciprocated by a commitment from NSFAS students, due to the low graduation rates. What did StatsSA think could be done to garner student commitment to succeed academically, and so yield an equilibrium between enrolment and graduates?

The Chairperson asked whether it was an international phenomenon that universities would fund-raise and accumulate donations from the private sector in addition to their public subsidies, or were universities prohibited of raising funds and acquiring donations from the private sector due to the public subsidies. Did StatsSA think the role of the private sector was a significant one?

StatsSA’s response

Dr Lehohla said that if the data was reviewed among the ethnic division of White, Indian/Asian, Coloured and black Africans, the outcome of education in 1994 had been expressed as a reflection of the ability to attain skilled occupations. Prior to 1994, black Africans aged 15 to 24 had almost 10% of skilled occupations; Coloured in the same age group had slightly over 5%; Indian/Asians had over 15%, and the White counterparts had about 25%. By 2014, black Africans in this age category officially had 10%; Coloureds still had much less than 10%; Indian/Asians had almost 30%, and Whites had almost 30% of skilled occupations. Taking that information forward to 2015, the statistics showed the capability to acquire Bachelor degrees as having the same ethnic demarcation as the marketplace. If there were low levels of unemployment, there were higher probabilities of completing tertiary education. Similarly, those who were qualified with degrees were less likely to be unemployed.

The options for black people in the country were limited – firstly, for educational attainment, and next for skilled occupations. This was not naturally due to their race, but it became natural due to its inevitability from their circumstances, especially regarding the first demographic wave, because those who were older achieved higher levels of success. StatsSA had investigated exactly what the driver of poverty was, and it had discovered that since 2001 unemployment had been the biggest driver of poverty, constituting of 33% of poverty causality. In 2011, unemployment had increased to a 40% causality of poverty and in 2015, unemployment had become a 52% poverty-driving factor. Hence, it had grown faster in the period of the recent five years than in the preceding decade. This indicated a tipping point. However, the next biggest driver of poverty was the years of schooling, which was the precursor to acquire skills to become employable.

Quite frankly, when the students had cried that #FeesMustFall at the end of last year and this year, no politician had spoken about schooling. In fact, schooling would not be a priority, unless society made it a priority. What politicians had prioritised were the other factors that drove poverty, such as housing, energy and water, which were no longer the strong drivers of poverty. This was understandable, because if civil society was interviewed regarding which social need they had wanted first delivered, housing would be the immediate answer, and as a politician, who were you to contest the very people who had voted you into power in order to fulfil their social needs? Social development required the resolution of those factors too, but the facts showed that those factors had not directly contributed to poverty as significantly as schooling had.

Since it was impractical to expect households to prioritise tertiary qualification attainment if basic schooling was neglected, schooling should be at the centre of the government’s resource allocation. For effective change, the years of schooling required attention, because it would influence the tertiary education attainment that would result in employment, which would combat poverty. South had already lost the first demographic wave, and it seemed that the second wave would be lost too unless a different strategy unfolded.

Regarding the ethnic division, the situation for black citizens had somewhat improved, but the inequality amongst the black population was the highest. The inequality amongst the White population had subsided. Therefore, it was imperative to start reviewing the statistics and question the message behind them, even though the national problems would not be resolved overnight.

To put it bluntly, the current number of university admissions in relation to the population was a horror. For instance, in the 80s, for every black African student at university, there were 1.2 White students at university, but currently, for every one black African or Coloured person at university, there were six White people at university. This was due to the drop in domestic standards of living, which meant a lack of support of infrastructure. This was reflected in the high drop-out rates at universities too, because if a student was financially assisted with tertiary fees, but lacked funds for accommodation, books or food, it was inevitable that the student would drop-out due to the lack of support. Thus, students who required financial assistance should be given the full-package in order to ensure his/her academic success, since where else would the student get the funds to sustain him/herself while at university? Of course, there would be the mischievous students who would do drugs and consume alcohol -- it could not be denied -- but the greater good should be considered above the risk of the mischievous. The current rate of failure could not be due to an indulgence in drugs.

Mr Joe de Beer, Deputy Director-General, StatsSA, said that the individual circumstances behind each HEI differed, so a general picture had been painted of its financial disposition. He advised caution when reviewing the graph of the net change in the stock of cash in isolation for a financial year. The net change in stock of cash did not take into account the mobility that individual institutions may have; for instance, a negative change in 2015 might not guarantee bankruptcy thereafter. Furthermore, over the ten-year period shown, mergers of HEIs had taken place. For example, the North West University was an amalgamation of different campuses, and as a result its percentages of cash stock may have given a distorted view, had the background information regarding it been unknown.

StatsSA did not have the same detailed information regarding the TVET colleges as it had for the other HEIs in the PSET sector. Expenses on the TVET colleges occurred at different spheres of government. At the National Government (NG) level, the expenses in the TVET college sector for goods and services in 2015 had been R3.2 billion, and the expenditure on salaries had been R2.6 billion. To research the benchmarks of the salary component in the PSET sector was a difficult task, as well as to research the reasons and regulations behind donor funding. StatsSA noted the finances received from an accounting perspective, without investigating the explanations behind their receipt. The domestic expenditure on education by households, included pre-primary up to tertiary education, and its decline in proportion, had not meant that the nominal cost of the education itself had increased, but supporting expenses might have increased -- for example, transport fees.

Dr Lehohla added that it should be accepted that there were no ‘no-fee’ schools. Schools that expected payment had increased their school fees over a period of time. Notably, the high schools were not performing, and the current crises had arisen as a result of under-performing high schools and a lack of domestic support and household expenditure on education. In comparison, South Korea had had a similar situation to South Africa’s apartheid, due to the occupation of the Japanese. Yet upon freedom, they had prioritized and invested a lot into education, currently resulting in 65% of South Koreans aged 15 to34 with tertiary education, or en route to it. That figure was higher than under their former oppressors for the same age group. One could argue that the context of South Korea was entirely different, such as their culture lacking the diversity of South Africa. However, it did not deviate from the fact that there had been a discriminatory system set against them, but within 50 years they had managed to alter its outcomes. Currently, South Africa had not reflected such a desire for social development and in actual fact had regressed.

Mr Risenga Maluleke, Deputy Director-General, StatsSA, said that it was necessary to look at the role of evidence, and not solely to review the data from StatsSA. The Department of Basic Education (DBE) and the DHET also collected data in the form of administrative records and conducted surveys. Collectively, the role of evidence in building a case of evidence or policy formulation was as follows: if policy-makers informed policies that matured, but the data that accompanied it had not matured according to the expected outcomes, that result was called ‘evidence-influenced policy formulation’. Another policy formulation was called the ‘opinion-based policy formulation’, and it was interesting how supposed opinions influenced the outcomes of data and its interpretation. The issue of maturity regarding data and the formulation of policy was very critical. However, StatsSA had been proposing since 2011 that the entire collective black race --, African, Indian/Asian and Coloured -- had had a low household income. For black Africans, the average household income was only R60 000 per annum. For Coloured households, the average household income was only R125 000 per annum. Indian/Asians had had an average of R250 000 household income per annum. However, White households had had an average income of R860 000 per annum. When reviewing that data and reviewing the income brackets ethnically, it would reflect that amongst black Africans and Coloureds, there were low income brackets of R0 to R4 999 monthly earnings per household, and then there was a hump for those who earned R5 000 to R10 000. However, significantly, within the Indian/Asian and White communities there were normal distributions amongst their monthly earnings, with the majority being middle ground, and those who earned substantially less as well those who earned substantially more were minorities. However, the Coloured and African communities still faced a structural issue that showed that the legacy of apartheid was still prevalent. Sometimes the talk was that reference should no longer be made to apartheid, because the democracy was over 20 years old, but the reality was that the systematic exclusion from resources and the ability to attain it had followed those two communities in particular. This insinuated that if they had grade eleven schooling or a matriculation certificate, the only time they would have a better chance of earning would be at the age of 60 years, with a SA Social Security Agency pension. It meant that the chances of not acquiring income during the twenties, for them were about 75%. These were serious issues that could affect the quality of living for the household and its expenditure capacity. However, in the long term, it was necessary to get policy formulation and its evidence to mature to a certain level, so that evidence-based policy formulation could result.

Post-School Education and Training: DHET presentation

Mr Mduduzi Manana, Deputy Minister, DHET said that the post-school education and training (PSET) sector was under-funded and unless strategies were changed, the problems cited by StatsSA would not change. The DHET had noted the report by the Statistician-General, but it felt that the sooner a funding model for higher education was devised for the PSET system as a whole, the better it would be to address the problems that had been presented. The DHET had considered a number of areas of concern before it had compiled the report to be presented on the readiness of universities and the TVET colleges for 2017.

Mr Gwebinkundla Qonde, Director General, DHET, said that the report on the readiness of the HEI would elaborate on what the Department was doing to ensure that enrolment was actually taking place and, more importantly, the measures that it would enforce, as it had to mitigate the type of pressures endured during 2016.

Dr Diane Parker, Deputy Director General, DHET, said that the stability of higher education institutions rested upon the completion of the academic year. All universities had completed their 2016 academic year. Some had had to utilize innovative technologies and multi-modal teaching methods to do so. By 11 November 2016, most universities were either writing examinations or preparing to write. The HEIs were aware of the possible threats of disruption to their examinations, which had subsided with the exception of the University of the Western Cape (UWC). HEIs had had the support of the police, but tight security was not the ideal situation under which to write examinations. They had indicated that they were now processing new applications, but there was a delay in the system, due to the disruptions encountered earlier in the year.

Regarding the fee adjustment, on 19 September 2016 the Minister had announced that the government would support a fee adjustment up to a cap of 8% on the 2015 university fees. It had undertaken to provide R2.46 billion required for grants to all students from families whose income was below R600 000 per annum -- the poor and missing middle – who would experience a 0% increase in 2017, and this had been supported by the Minister of Finance. This included gap funding to provide the adjustments for the academic year. Individual university councils, after negotiations with their various stakeholders, would announce their fee adjustments. Some universities had already announced their adjustments, while others still needed to do so, but the DHET had requested of them to notify the Department of their decisions.

Regarding NSFAS, an additional amount of R2.36 billion in 2017/18 – and R2.60 billion in 2018/19 and R2.76 billion in 2019/20 -- would be allocated to ensure that NSFAS-qualifying students were supported at universities. This effectively meant that all NSFAS-qualifying students at universities would be supported at the average full cost of study in the 2017 academic year. There was disparity among tuition fees at HEIs, but what was important was assisting the poor.

The 2015 Presidential task team report had recommended a reviewed funding model to cover poor and missing middle students should be developed and tested in the 2017 academic year. A Ministerial task team (MTT) had been established on 13 April 2016 to develop a support and funding model for poor and “missing middle” students, chaired by Sizwe Nxasana, Chairperson of NSFAS. The MTT had presented its report to the Minister in October 2016. A revised funding model through a public-private partnership had been recommended to fund poor, working class and “missing middle” students through grants and loans The model had been presented to Cabinet and a pilot to test the model for “missing middle” students would be rolled out in 2017. Whether or not the model would be fully implemented would depend on the outcome of the Presidential Fees Commission. The report was being prepared for publishing for public comment.

Dr Parker said that applications for 2017 had closed at most universities at the end of September 2016. Some students had received offers of conditional spaces at institutions, to be confirmed once the national senior certificate (NSC) examination results were out. Some students who had written their NSC in previous years would already have received notification as to whether or not their applications had been successful. All universities had indicated that they would process applications in January as normal, once the NCS examination results were received. Registration/upfront fees would be a feature at all institutions. These were part of fees, and not additional to fees, and were required for sustainability. NSFAS-qualifying students would not have to pay registration fees. “Missing middle” students (family incomes of up to R600 000) would be covered by the 8% gap funding grant.

The Apply Now Campaign!, which had been ongoing from March 2016, encouraged youths to apply for PSET opportunities in time to secure a place within the institution of their choice. Opportunities at universities, TVET colleges, artisanships and Sector Education and Training Authority (SETA) learnerships were the focus, The Central Applications Clearing House (CACH) service would go live on 3 January 2017 and would continue until the end of February 2017. The service would operate from Mondays to Sundays between 8am to 6pm. The CACH service was responsive to the needs of prospective applicants and institutions. The Department would continue to expand and enhance CACH as the prototype for the development of the full Central Application Service (CAS). The CAS development was proceeding and was expected to be ready for testing in the 2018 academic year. Total enrolments for 2017 were expected to be 1 041 100 students.

Dr Parker said that the higher education system was still reliant on student fees to provide affordable and quality education, and would continue to be until such time as a new policy position was adopted at the political level. The Presidential Fees Commission continued to undertake its work. It had submitted an interim report to the President and was expected to present its final report by the end of June 2017. It would make recommendations on the feasibility of fee-free higher education and training (including university education and TVET) in South Africa. The Council on Higher Education was working on a possible regulatory framework for setting university fees in the future. However, this would fall into line based on decisions made after the Presidential Commission Reports.

All universities had to communicate transparent student debt policies and have plans in place to deal with academically deserving students so that the financially needy students not covered by NSFAS -- the “missing middle” -- were not denied access to higher education on financial grounds. No NSFAS student will be required to pay a registration fee in 2017, as this would be covered by upfront payments. “Missing middle” students at universities, where an 8% fee adjustment had been implemented, would not be required to pay a registration fee, as this would be covered via the gap-funding grant. All institutions must manage their enrolments (especially first year enrolments) in terms of the targets in the enrolment plan. Over-enrolment must be avoided. Protesting students must stop destroying and burning university property and attacking non-protesting students and staff. All stakeholders must ensure that universities remain safe and open spaces for learning.

Ms Thembisa Futshane, Chief Director, DHET, elaborated on the TVET college sector and its registration and enrolment processes for 2017. Some colleges had been open for student applications from September 2016. Applications would be accepted until end of January 2017. Colleges commenced with registration from January to February, based on enrolment targets. Most colleges administered placement tests, not for exclusion but for correct placement of students and identification of possible intervention areas which may be required. Students underwent induction, and individually signed a code of conduct and attendance policy. The TVET colleges’ academic year calendar was standard across the sector and was issued by the Department. Classes commenced on the date set by the Department. On 9 January 2017, college staff would report for duty and on 16 January, classes would commence. During the 2017 preliminary registration period, trained Departmental regional/provincial and national officials would visit college campuses to identify challenges and assist where necessary. Student Representative Councils would also assist new students with the registration process. Campuses had been visited and provided with standardised guidelines for the student registration process. Student surveys were conducted for analysis of the registration process and experiences. Placement tests used at colleges assisted students in identifying strong and weak academic areas, and areas where academic support would be required. 60% of National Certificate (Vocational) NC(V) students were Grade 12 learners, thus repeating three years of study at the same level. 12 colleges were slowly introducing Higher Certificates (offered in partnerships with UNISA and the Cape Peninsula University of Technology (CPUT), but the offerings were not adequate due to funding constraints.

Mr Z Joubert, Acting Deputy Director General, DHET, said that current enrolment in the TVET college sector was 710 535, of which 45 787 were third-stream, funded by SETAs, the National Skills Fund (NSF) and other sources in respect of occupational qualifications. Of the balance of 664 748, which were for Ministerial-approved National Accredited Technical Education Diploma (NATED) and NC(V) qualifications, only 429 638 were fully funded in terms of the TVET funding norms (57% of the required 80% funding level). Collective student debt, according to the 2015 annual financial statement analysis, had been approximately R1.25 billion, of which 75% to 80% had been fully provided for as irrecoverable -- bad debt due to low payment rates by TVET students. Colleges had been informed that the 2017 enrolment target of 829 000 would not be reached and the targets going forward would not increase if additional funding was not available, which meant maintaining the 2016 baseline of 710 535. The decision announced by the Minister, that institutions could increase fees by up to 8%, also applied to TVET colleges.  Government would “carry” the 8% fee increase for students coming from poor, working class and ‘missing middle’ families

He said that with the funds required for achieving the White Paper targets for Ministerial-approved programmes for 2016/17, there was a funding shortfall for the TVET college sector -- R4.732 billion on the programme funding (80%), and   R2.489 billion on the NSFAS. Further expansion would not be possible without additional funding. The 8% fee increase would have an implication of R1.836 billion over the MTEF period, of which only R504.729 million had been allocated over the 2017 MTEF to compensate for 0% fee increase for the poor and “missing middle”. The total estimated budget required for 2016/17 was R19.8 billion, resulting in an estimated budget shortfall of R10.7 billion, based on the current baseline allocation of R9.072 billion. The estimated total shortfall over the 2016 MTEF period was R43.4 billion. However, if the current 2016 enrolment was maintained over the 2016 MTEF without any growth, at 664 748 students for Ministerial-approved programmes, the estimated total shortfall over the 2016 MTEF period would be R37.8 billion. The ability of the Department to implement its oversight role was also being seriously compromised due to the inadequate funding. The Department would have to revise its enrolment targets as per the White Paper downwards, to cater for the lack of required funding.  

Challenges facing the TVET college sector were:

• Insufficient funding for both college state subsidies and DHET/NSFAS bursaries.
• Low certification rates and throughput rates.
• Students coming late to register at TVET colleges, often after failing to secure spaces at universities.
• Limited spaces for new entrants into colleges, due to limited resources and funding.
• Influx of Grade 12 students who register for the NC(V) programmes starting at Level 2, thereby repeating 3 years of study.
• Insufficient resources to adequately monitor the enrolment and registration process.
• Due to limited spaces for new entrants at TVET colleges, it was envisaged that some students may be turned away.
• The remainder of the outstanding certificates for students.

He concluded that the way forward for the TVET college sector was working towards building capacity, including human capacity, as well as continuous interaction with and support for TVET college councils; working with the South African Institute of Chartered Accountants (SAICA) and the Auditor-General of South Africa (AGSA) to improve the internal control environment; and developing systems and standardised policies for the sector in areas such as human resources and finance. A TVET curriculum review was in progress, due to some of the outdated courses offered.

Discussion

Dr Bozzoli complimented the DHET on the manner in which they had to progressed through a difficult academic year, and wished it a better year for 2017. However, it seemed that the DHET had had a two-fold report -- one on the “missing middle,” and the on the Presidential Commission regarding fees. Had not the implementation of support for the “missing middle” students served as a contradiction, because the amount of money had first required confirmation from the Commission, and if so, how would it be harmonized? Secondly, it would be useful for the Portfolio Committee to receive a briefing on the overall offering for students within the PSET sector by the various departments of government. For instance, the Department of Agriculture, Forestry and Fisheries (DAFF) may have offered funds to TVET colleges that specialized in agriculture, and if so, the Portfolio Committee on Higher Education and Training should be made aware of it, as well as other funding offered. Lastly, it seemed that it would prove too expensive for DHET to achieve its White Paper goals. The current state of the economy also indicated that it was unlikely that it would be implemented anytime soon. In the opinion of the Deputy Minister, would now not be an appropriate time to begin implementing a fallback provision that was more pragmatic, instead of the White Paper, since its complete implementation may prove burdensome to an already demoralised Department?

Ms M Nkadimeng (ANC) asked who would pay for the outstanding balances from the previous academic year upon registration of the “missing middle” students? Would it be NSFAS, and if not, which other resource would? Would the two TVET colleges under construction be ready for operation in 2017? NSFAS had indicated that the maximum target for applications from grade 12 pupils had already been reached, but could further applications been considered after 30 November 2016? With reference to the statement that ‘all NSFAS qualifying students at universities will be supported at average full cost of study in the 2017 academic year’, what would be the maximum amount awarded per student?

Ms Mchunu commented that even though the students referred to were deemed to be adults, they still required a framework of support. What impact would the damaged infrastructure have on the 2017 academic programme? What percentage of the damaged infrastructure would be restored by January 2017? Furthermore, were there measures in place to ensure protection from further destruction? Having students complete Level 2 to Level 4 at FET colleges, after they had matriculated, showed a wrong government investment by the repetition of the three academic years. What mechanisms had been put in place at colleges to ensure that each college was able to collect student debt?

Mr N Khubisa (NFP) said it seemed that much more was still required by the various stakeholders, such as the students and university management, to reach an agreement before universities reopened for the 2017 academic year. The DHET may have to play an arbitrary role in ensuring that agreement was established among stakeholders. It would snowball back to the destruction of property during the year, if students were up in arms already at the beginning of the academic year, which was an unwanted situation. Therefore, both the DHET and the Council on Higher Education (CHE) had to intensify their strategies to ensure that there was order once the universities opened for 2017. It must be made clear that additional funds had been made available, and everyone understood the agreements proposed. Tranquillity should be established on university campuses now, before they reopened for 2017.

He said that when the Committee had undertaken an oversight visit in Gauteng, it had been highlighted that the system of academic admission was not immune to fraud and corruption, because students were involved in the academic processes of registration. Even though there was a standardized format to follow, what would the DHET do to ensure that the TVET colleges were not at risk of fraud in its registration system, and not compromised with other risks? The lack of technological resources also contributed to the possibility of fraud, which posed a concern. With reference to the statement that ‘12 colleges are slowly introducing Higher Certificates, offered in partnerships with UNISA and CPUT, however the offerings are not adequate due to funding constraints’-- what had these Higher Certificates entailed?  

Mr Siwela questioned whether the universities had taken into consideration prospective students who had not applied for admission before the closing dates due to the uncertainty of the student protests. Had the DHET devised statistical demarcation of the impact due to the lack of funding for the universities in the years to come? Also, what type of content comprised the Higher Certificates offered in partnerships with UNISA and CPUT at TVET colleges?

Mr Mbatha commented that as much as the ideal was to help all of the poor and working class students, to reorganise social change, the number of beneficiaries would ultimately have to decrease. The free full-cost of study raised by the majority of students was a concern. The students had explained why they required full sponsorship, based on their experiences. For instance, if the first year of study was partially funded, but the student still faced the challenge of outstanding funding for accommodation, food, books or transport, the ability to academically succeed was decreased. With the revision of the number of financial beneficiaries, the Department should explain to the Committee the proportionate allocations among universities, universities of technology and the TVET college sector, as it was presumed that the ratio of funds allocated favoured the universities above the TVET college sector. It should be emphasised that a proper and fair distribution within the PSET sector was paramount. The TVET college sector had been fortunate to have received additional money from National Treasury (NT), even though it was cited as insufficient. Yet the TVET sector had indicated an intention to launch an extended programme to attract a greater volume of student enrolment, even though only 57% of the required 80% of current students were fully funded. In spite of that, the Minister of Higher Education and Training had publicly claimed that TVET colleges had applied free higher education. There was a difference between free, as in absolutely, and 57% free, which was partial. The MPs did not want to be caught in the middle of a fight with students should they at a later stage protest, due to the academic inclusion of enrolment, but the systematic exclusion of finances. It was therefore advisable that the DHET should communicate in advance to students that some of them would eventually be casualties in the expansion of the PSET sector. This would prevent a misapprehension by students, especially in the TVET college sector, who anticipated a free-full cost of study upon academic admission, only to be disappointed. From the outset, the DHET had to explain to students that not all of them would be financed. He asked what the percentage of paying parents in the TVET college sector was.

Deputy Minister Manana said that the recent years had posed very serious financial constraints, which had meant that the implementation of the White Paper would prove costly. However, just because it would be expensive to execute did not mean that completely different plans had to be developed. An alternative would be to compartmentalize the White Paper, as many aspects of it had already been implemented. It was the resolve of the DHET to implement as much as possible of the White Paper, given the limited resources and the country’s economic situation. The DHET understood the complications that may retard its implementation, but ultimately the focus was on the successful outcomes of the students.

Regarding the “missing middle” report, the Department was mindful that the Presidential Commission could produce another outcome, but the approach was that the report should be devised beforehand so that it could be submitted to the Commission for consideration. Thus, many processes would have informed the official outcome. The Department had researched and would publish the findings of the “missing middle” for public comment in March 2017. However, the intention was not to incur contradictions, hence its actual implementation would be peripheral to the processes of the Commission.

On another matter, engagements with students and other stakeholders had been held until now, and would be continued. During 2016, successful sessions had been held with almost all university stakeholders. The DHET believed that through dialogue, an agreement could be reached. Therefore there was a call for all stakeholders to participate, and it would be appreciated if Parliament could assist with doing so too. It was imperative that university structures communicate with each other, irrespective if there was immediate agreement or not. By January it would be clear what the stance would be a result of discussions with the stakeholders to prohibit disturbances in the academic year.

He confessed that he had not known of a strategy that may be in place to absorb Matriculants who had not yet applied for the NSFAS scheme, due to the administrative processes that were already under way, but it was quite discouraging. He had attended a meeting with NSFAS last week, and had ascertained the reasons why students had not applied as expected. Currently, the DHET was making the call that if the target for NSFAS applications was not reached by 30 November, an alternative strategy would need to be devised. However, it was in the interests of the student to apply as early as possible, because the administrative processes were dealt with ahead of the academic year, and their timely completion would avoid delays in the upcoming year.

Mr Qonde said that one of the current issues that pertained to National Student Financial Aid Scheme Act which was under contention, was the question of the “missing middle.” The Minister had noted that he had to undertake the process to determine whether the current funds allocated under the NSFAS Act had suitably addressed the plight of the student, in order to give comprehensive support to any student who was supported by Government, as well as including the “missing middle.” Consequently, the DHET had reviewed the different kinds of aspects involved in order to give comprehensive support to any student who was supported by Government. Secondly, the DHET was working on an implementation plan for the White Paper. There were parts that fell under the Department, and others were for the National Treasury to devise a costing model, but collectively the plans for the contents of the White Paper were being implemented. One of the issues raised by the HEI with respect to the “missing middle,” was the outstanding balances of the preceding year that required a payment plan. However, all HEIs had agreed that they would not financially exclude any student by denying them readmission due to outstanding fees, but that a payment plan of monthly payments should be arranged instead.

Regarding damaged property, it was essential that all citizens understood that university property was an important public asset, which did not exclusively belong to anyone. They were national assets that were available to develop human resources, so anybody who destroyed them were actually denying thousands of South African youths access to the facilities that were available for their development. The children of the working class and the poor would have been previously denied admission at universities such as Wits and UCT, but they were registered students now. Yet if there were a continued protest action that destroyed property, the unintended consequence would be, in the medium to long term, that public academic institutions in the country would degrade, while the private institutions would gain muscle. The children of the middle and upper classes would then opt for private tuition, while those left in the public institutions would struggle without basic amenities. Therefore, the attacks and destruction of the public university facilities were a direct attack on the future of the youths from poor and working class families, because they would not have an alternative. Alternatives were available only for those who could afford it in the private sector. The risks of destruction were a message that needed to be clearly relayed. The destruction of academic institutions by burning libraries was a loss that was beyond monetary, because libraries had such a rich resource, with sources of information that dated back well in years and was irrecoverable. Demolition was a matter that required a firm address and the appeal for preservation should be made to everyone, irrespective of the individual conviction or point of view, because HEI offered goods and services to the country as a whole and was not at the disposal of a select few. The damage that had been caused had cost more than R1 billon so far, and that was before all figures had been confirmed, because some HEIs were yet to submit the costs of their damage to the DHET.

Regarding the college sector, there was no money from the baseline to cover the operational expenditure of the new TVET colleges. It was currently operated through money that was derived from the National Skills Fund and SETAs. The SETAs which contributed to operational expenses the most were the Services SETA and the Construction SETA. The maximum amount per student per annum awarded by NSFAS would be an average of R71 800. For 2017, NSFAS would have a module that would adjust fees and their Board would consider it on 28 November 2016. The matter was still under consideration, because it was no longer a matter of just awarding a NSFAS loan without funding the student fully. The Ministerial task team had highlighted the concern of the appropriate support necessary for a student who came from a poor background to compete successfully at university.

Dr Parker noted that the responsibilities of parents were important, and that parents should be involved in the discussion held by stakeholders. Their involvement might even affect the issue of historic debt, in the sense that parents who could afford to pay for their children’s tuition should pay. It was a difficult situation, because in the longer term, HEIs did require their institutions to be funded. The DHET had to take into consideration the enrolment numbers and possibly capping them in the Mid-Term Review. The DHET had not actually capped the universities’ growth, but with the review and negotiation with the HEIs, they had indicated that the expected growth enrolment have needed to decline from an average of 0.9% per annum, as opposed to the 1.1% per annum that had been the original plan. The issue became where the growth should be allocated-- whether it was meant to be general growth, or for specific parts of the system. For instance, funding had shown an increase in the segment of post-graduates, yet the real crunch for funding was found in the undergraduate programmes. In the long run, that would have negative consequences on the system, because there would be a need to provide spaces in higher education and the TVET college sector. This was therefore a matter that should be considered carefully from a national perspective in terms of how funding was allocated. The expenses of HEIs that had a large post-graduate enrolment, or research was conducted on their campuses, were higher than HEIs that had greater numbers of undergraduates. Universities of technology had a very low post-graduate enrolment, compared to the traditional theoretical universities that had a high post-graduate demand. If the review of funding made available looked at the PSET sector as a whole, the differences in need would be clear. Funding for the various programmes within universities had shown disparities as well, and the funding formulae worked that way, so that universities that had a focus on science would accommodate its funding accordingly. Universities of technology had the lowest student fees, and received the least funding from its industries.

Ms Futshane said that the Higher Certificates offered were at National Qualifying Framework (NQF) Level 5, which meant that it was higher than a matriculation certification. Only 22% of students were dong the National Certificate Vocational (NCV) and the rest were doing the National Accredited Technical Education Diploma (NATED) programmes, which were post-matric. The NATED programmes were being reviewed, because there was a challenge of many of them being outdated. The Higher Certificates were a university qualification, but were offered through the TVET colleges. There were Higher Certificates in accountancy, banking, management training and ICT. Two college campuses offered a Bachelor of Education for Early Childhood Development.

The meeting was adjourned.