DHET Annual Performance Plan: FFC & TVET Colleges Governors Council input; NSFAS Student Centred Model

Meeting report

Fiscal and Financial Commission (FFC): Presentation

Dr Thembi Ntshakala, Programme Manager: Intergovernmental Fiscal Relations, Fiscal and Financial Commission (FFC) said that formal education raised workers’ productivity, economic growth and development. However, entry into post-graduate education, which was responsible for the development of the knowledge economy, was low. She said it was not desirable at present to have free higher education, although free education prior to this was necessary.

Ms Poppie Ntaka, Researcher:  National Budget Analysis Unit, FFC, said the vote of the Department of Higher Education and Training (DHET) had grown by 4.1%. She said that R41.1 billion had been allocated to universities, which was the largest portion of the DHET’s vote. Government would be continuing with this trend as a result of the need to provide free education. There was no drive to focus on the Technical and Vocational Education and Training (TVET) college system. The DHET’s priority was focused on universities. Grants to universities were going to increase from R28 billion to R38 billion in the next financial year. This increase was a result of the no fee increase policy adopted.

Funding for TVET colleges was going to grow by less than 2%, and this did not align with the policy of increasing enrolment at these colleges. The funding for Community Education and Training (CET) institutions was also set to decline. She said it seemed that the National Student Financial Aid System (NSFAS) was making progress in recovering loans made out to students. There was a need for better coordination between universities and NSFAS with regard to the distribution of funds. The lack of funding for TVET colleges was concerning, as this inhibited the provision and development of necessary skills for the nation.

Discussion

Dr B Bozzoli (DA) said that the FFC was not correct to state that the funds that were being granted by NSFAS to students were being granted to the universities. This misrepresentation in the presentation caused a distortion of information and it needed to be addressed. It was important to clarify this position because the reality of the situation was that universities were significantly under-funded as well.

Mr M Khawula (IFP, KwaZulu-Natal) asked why the FFC was not assertive about the points it was making. The Commission seemed to be evasive. He also asked the FFC to explain the discrepancy between what the DHET set out to do and what the FFC had identified with regard to the funding for TVET colleges.

Mr A van der Westhuizen (DA) asked the FFC to give more information on what it identified as major issues facing the DHET. The fact that the TVETs were under-funded should result in changes to the allocation of funds to these institutions, in line with the discussions in Parliament.

Co-chairperson September said that the FFC was mandated to make recommendations to various departments. However, the presentation had not made any recommendations. She asked whether the current budget for higher education satisfied the government’s constitutional mandate to provide education. She also wondered whether the distribution of finances to TVET colleges was sufficient to develop these institutions.

Prof Daniel Plaatjies, FFC Commissioner, said the issue of costing and pricing across the different institutions could be dealt with after analysing the input costs of each institution. It was not possible to achieve equitable distribution between the institutions because each required a different amount of funding. The FFC had previously cautioned the DHET against under-funding TVET colleges.

Mr Sasha Peters, Program Manager: National Budget Analysis Unit, FFC, said that a number of the DHET’s plans and targets had not been achieved despite the fact that the Department had spent 100% of the vote allocated to it. This was an indictment of the DHET’s value for money goals. In addition, the FFC supported the view that the TVET colleges were under-funded.

Co-chairperson Zwane added that it ought to be acknowledged that all institutions were under-funded. She also asked the FFC to give a more detailed analysis of the DHET’s responsibility.

Ms September asked the FFC to send written answers to the Committee on questions that had not be answered. 

Mr Daniel Mabuyakhulu, Chairperson: Technical Vocational Education and Training Colleges Governing Council (TVETCGC), said that in September 2016 a meeting had been held with the DHET that had resulted in the inclusion of the TVET colleges in the medium term budget speech of the Minister of Finance. He said that TVET colleges were under-funded, and it was amazing that these colleges had not closed down due to gross under-funding. The funding situation was not aligned to the DHET’s policy. He disputed that the under-funding of the institutions was a result of over-enrolment at the institutions, as the DHET had claimed. It was not surprising that student protests were prevalent in these colleges.

He described the skewed funding method that distorted the amount of funds distributed on the basis of full-time students, to the detriment of part-time students and the required financial input for the colleges. He called for the equitable funding of post-school education by the Department, because that would address the historic under-funding of TVET colleges. He also called for a standing infrastructure grant in favour of TVET colleges.

He added that there was a severe information communication technology (ICT) crisis at TVET which resulted in a delay in the distribution of results to students. In addition, some colleges were unable to pay staff because of the length of time the DHET took to hire staff. Directly linked to that, the DHET had sent a portion of the vote that was supposed to finance staff at the colleges, back to National Treasury, to the prejudice of the TVET colleges.

Mr C Kekana (ANC) asked why the DHET would send money back to the Treasury, when they knew that the TVET colleges were under-funded.

Ms P Samka-Mququ (ANC, Eastern Cape) asked who was responsible for appointing the TVETCGC. She also said that the Council should participate in the budget process in order to avoid disputes regarding to the financing of the colleges.

Mr Khawula said the picture presented by the TVETCGC was a sad one. The DHET needed to explain whether the under-funding of TVET colleges was the result of no funds being sent to the DHET from National Treasury, or whether it was a result of no funds being sent to the colleges from the DHET, even though National Treasury would have sent the funds to the Department.

Mr Van der Westhuizen said that the country should be grateful for the fact that there had been few student protests at TVET colleges. He gave credit to the TVETCGC for quelling a potentially disastrous situation. He added that some TVET colleges neglected to insist on the fusion of the colleges with universities. The situation addressed in the presentation had also been brought about as a result of that.

Dr Bozzoli said the DHET had said at the beginning of the year that it was R10 billion short for meeting its target with regards to financing TVET colleges. She suggested that the Committee adjust the vote for the DHET in order to eradicate the skewed funding. She suggested that there may to be a shift of funds from the nuclear project, and those funds could be placed at the TVET colleges’ disposal.

Prof C Msimang (IFP) said he was worried because in the previous financial year, about R300 million had been returned to Treasury by the DHET. In addition, this financial year would see R200 million sent back to Treasury. This money could have been used to finance the TVET infrastructure issues. He also said that the migration of TVET colleges had taken place as recently as 2016, so the DHET may not be the organisation that was to blame.

Ms Samka-Mququ said she foresaw significant turmoil in the TVET sector, and urged the Committee to avert that. She also said there may have to be a shift of funds from the nuclear procurement programme, which could be placed in the DHET for use by the TVET colleges.

Ms September asked for clarification on what the full-time concept was and how it affected funding for TVET colleges. She asked how the TVET colleges used their savings to pay for salaries. The fact that they had savings illustrated that the colleges were not in financial turmoil. She said there could not be competition for funds between universities and TVET colleges, and called for an equitable distribution of funds. She also asked if there was any legislation that may have to be amended in order to solve the problems that existed.

Ms Zwane said that it was well within Parliament’s power to change the situation, because it passed the vote that funded the DHET. The idea was not to shift funds around in the DHET, but to get the correct amount for the DHET. She acknowledged that funding was just one of the many problems facing TVET colleges, and said that Parliament needed to assist the DHET in distributing funds in a satisfactory manner. She added that when agreements made in good faith were disregarded, a problem inevitably arose.

Mr Firoz Patel, Deputy Director General, TVET Colleges, said that it was correct that the DHET had taken over TVET colleges from 1 April 2015, and that there was an over-expenditure of R144 million by 25 colleges. The DHET may have to go to these colleges in the future and retrieve some of this money. It was also correct that the colleges were not to blame for the over-expenditure, as it had not been easy to incorporate 18 000 new employees into the DHET payroll. This addition of people to the payroll had broadened the Department’s expenses. It was correct that money that had been sent to the DHET for TVET human resources had been sent back to National Treasury. He attributed this to a difference of legal opinion between the two departments. In the 2016/17 financial year, a total of R1.4 million had been spent on the colleges, not for the purpose for which those funds had been allocated to the DHET, but for other peripheral issues. He was prepared to provide the TVETCGC with more information on this specific transaction.

He said that in the 2016/17 financial year, no money had been sent back to National Treasury. He claimed that the money was all sent to the TVET colleges. The DHET was not in a position to move funds that had been allocated for subsidies. He said that the budgeting process for TVET colleges was governed by the Continuing Education and Training (CET) Act. This Act provided for a distribution standard known as the National Norms and Standards system. The formula was used to determine how to distribute funds. He added that there was no equity between provinces. The Western Cape and Gauteng had allocated more funds to their TVET colleges, and this was not an opportune time to adjust these funds because this could lead to a loss of jobs.

Mr Mabuyakhulu responded by saying that the money stayed with the DHET until the end of the year, so the colleges had no funds for their purposes throughout the year. Indeed the TVETCGC did have some savings which had been achieved as a result of gains from depreciation. However, most of these savings had been depleted. He claimed the TVETCGC had had to compromise to make ends meet at the colleges. The lifespan of the colleges had been significantly reduced by the lack of funding.

He addressed the issue on the full-time equivalent by stating that, for economics and management sciences, the Department used a ratio of 2:1, which meant that two students equalled the level of one student for funding purposes. For engineering students, the ratio used was 3:1, which meant that for every three students, only one would be funded. It was up to the colleges to fund the rest. The DHET’s argument was that if a student did 12 subjects a year, it would provide funding for only three. A few proposals had been made to the Fees Commission. One of the proposals was that the TVET should get 65% of the vote, and the rest of the funding should go to industry for training and the development of students in industry. He said that there may be a need to introduce a levy or a tax on citizens of some sort which would fund the TVET sector.

Dr Zuma, Deputy Chairperson: TVETCGC, said the effects of the funding formula were found on page 5 in the presentation document. He said the councillors were appointed by the Minister in terms of the CET Act. However, the councillors felt they were not empowered to bring about major change. Their independence as councillors was what gave them the ability to enforce change, but the relationship as it existed did not have the capacity of bringing about the change that was immediately required.

Adv Xolile Xuma, National Secretary: TVET Colleges, asked that the CET Act be amended because the Act that gave the Minister power to appoint the principals and staff members of the colleges. The Act also disempowered the councillors from taking disciplinary steps against these members of staff. In addition, the TVETCGC could not enforce governance measures in the organisation. Recently, the Minster of Education had mentioned in the media the acquisition of R7 billion for education. Unfortunately, all that money had been earmarked for universities and nothing had been given to TVET colleges. The same ingenuity displayed in sourcing funds for universities should be used for TVET colleges as well. All stakeholders in the TVET colleges were fed up with the status quo. 

National Student Financial Aid Scheme (NSFAS)

Mr Size Nxasana, Chairperson of NSFAS, said that up to this year NSFAS had been running a pilot programme at a handful of institutions. He promised that this year would see the rolling out of the project. He also identified some of the problems they had had to deal with at the TVET colleges and universities that were located in rural areas. These institutions did not have the same technological capacity as those institutions located in the urban areas. NSFAS had tried to collaborate with various stakeholders, such as student representative councils (SRCs) and college management, on the implementation of its programmes.

The Department had allocated R11.23 billion for 2016/17, and unspent funding from the last academic year had been R645 million. R3.6 billion had been distributed to various institutions in order to allow for the commencement of the academic year. In the 2016 academic year, some 405 000 students had received funding. In the 2017 academic year, 463 470 students had been funded. He attributed this to the extra vote for budget by Parliament. 

Mr Nxasana said that students needed to sign documents before money was distributed to them. Once a student received funds, the motivation to sign the paperwork was reduced drastically. Sometimes the funds sent to the colleges did not get to the students on time.  About 22% of the all new applications for funding were made on paper forms, as a large number of students did not have access to the internet. Universities did not have the same level of sophistication in information technology (IT) in order to process applications. It was important for NSFAS to know that an applicant for funding had been registered and would be attending school. This slowed down the disbursements of funds.

NSFAS had undertaken quite a lot of training of the tertiary education institutions in order to get the funding rolling. The NSFAS used an IT programme called “Codis” to facilitate the transfer of information between the tertiary institutions and NSFAS. Training had been conducted in the institutions.

Discussion

Dr Bozzoli said NSFAS had issued a statement saying that 68 000 students had not been signing their loan agreement forms, and she wondered whether this was a systematic failure. She added that the call centre gave out inconsistent information, and students generally did not have an idea of when they would receive funding. She also identified the inconsistencies in the figures for funding -- R3.7 billion had been distributed and yet the NSFAS had a total of R11 billion instead. She wanted to know what had given rise to the discrepancy. There were about 42 000 students that had not been funded, which was contrary to the DHET’s promise that not a single student would go unfunded. She wanted to know where the extra money was going to come from.

Prof Msimanga said that the Committee needed to give NSFAS the required time to roll out the system effectively. He wanted to know whether it was true that roughly 53 000 student applications had been rejected. He was concerned about what was happening to funds that did not reach students.

Mr Khawula asked whether some students that had been approved before the system was centralised had eventually been rejected. This would help in ascertaining whether there had been some fraudulent activity in the system. When he had gone to the University of Limpopo, the university had shut down because of protests about NSFAS funding. He said the protests had to do with funds from the 2016 academic year.

Ms Zwane said that there was a dire need for NSFAS funding. The delay in communication of financial ability meant that universities could not distribute the funds to students. People from the University of Venda (UniVen) had had to travel to Cape Town to meet with NSFAS in order to avert a possible strike.

Mr Kekana said he had been told that the SRC at UniVen and the North West University helped students to apply for NSFAS funding electronically. Students were beginning to think that unless there was a tyre burning at the university gates, NSFAS would not distribute funds. He added that it was a commendable step that NSFAS had taken by distributing these funds.

Ms September said she was disappointed that there was nothing in the presentation that gave an indication of how NSFAS was assisting disabled students.

Ms Zwane asked whether the staff that were used by the NSFAS to process applications from the universities and colleges were dedicated exclusively to NSFAS work. If not, had the staff received additional compensation for taking on extra work? She also wanted to know how reliable the system of verification used by the NSFAS was.

NSFAS response

Mr Nxasana responded to the questions by saying that the Department sent one-time pins (OTPs) to students, but some students had multiple sim cards or may have lost or changed their numbers. As a result, such students who had not received their funds were a mixture of lapsed loans and those the NSFAS simply could not contact. As a result, the NSFAS had decided to use the institutions to reach out to students. He added that the NSFAS had a call centre that could take only 150 calls at a time. An additional investment had been made in order to expand the capacity. The applications had to be entered into the system manually and at times the call centre would not have the student’s information. He added that there was going to be a workshop on 31 May 2017 that was going to address IT issues within the system.

He said there was a bit of a disconnection between the academic year and the financial year that had resulted in a discrepancy between what had been allocated to the NSFAS and what it could distribute at the beginning of the year. The NSFAS had underestimated the number of paper-based applications that it would receive. Unisa students were among the students that NSFAS funded. As a matter of fact, Unisa students were those that had signed the necessary agreements. A total of 94 607 applications from students nationwide had been declined. This was because they had not qualified for funding.

Institutions did provide a reconciliation account of who had been funded. NSFAS had an integrated system with the Department of Home Affairs, amongst others, and verified the details of applicants. Some universities had integrated systems that allowed for quick verification.

The Mpumalanga University issue was a result of registered unfunded and under-funded students. Some money had been found later in the year to provide funds for them The NSFAS had seen it necessary to request supporting documents for these students. However, these issues had been addressed.

The online application process had been identified as the way to go, but the NSFAS had to consider students who did not have access to the internet. UniVen had been part of the pilot programme. When NSFAS had introduced the one time pin, both students and administration had got a little confused. NSFAS had thought that this would have been a simple solution, but it had nevertheless caused problems.

NSFAS did have an allocation for disabled students, but institutions did not have policy or units for the disabled. As a result, not all the money would have been utilised completely. However, NSFAS was working to upgrade and install disability units.

The verification systems had started to work a lot better. The students that had been awarded funding had gone through a verification process and NSFAS was happy with their authenticity

The meeting was adjourned.