Department of Basic Education on Quarter 4 performance: with the Deputy Minister

Standing Committee on Appropriations

23 August 2017
Chairperson: Ms Y Phosa (ANC)
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Meeting Summary

The Department of Basic Education (DBE) briefed the Standing Committee on Appropriations on their fourth quarter performance.

The Deputy Minister said the Department depended largely on the ability of the provinces to implement tasks and they have worked closely with them to execute these tasks. Urbanisation has created unevenness in terms of the availability of professionals to execute the tasks. In addition, he added that the Department has been meticulous in intervening when trying to learn from past experiences which have helped the Department to improve. The Department currently feeds more than 9 million children every school day and 100% of the books are delivered to schools on time in the Eastern Cape. The eradication of mud schools in all provinces besides the Eastern Cape is another example of what the Department has achieved.

The Deputy Minister stated that one of the challenges the Department was facing was with regards to infrastructure and in particular the Accelerated School Infrastructure Initiative Development Initiative (ASIDI) was the replacement of mud schools and unsafe schools. There are now state of the art schools in communities which are recipients of this programme.

He mentioned that in the previous two financial years, the Department delivered a state of the art school per week. Last year only 17 were delivered due to some schools not being viable because of low learner enrolment. The comprehensive HIV/AIDS policy has been adopted and accepted by all provinces.

According to the Department, there are 14 new indicators compared to the previous year. Some of the indicators were failing in the system and this accounted for the underperformance. The Department hoped to perform better in this financial year. Public entities such as UMALUSI and the South African Council for Educators (SACE) are back on track and doing well.

In addressing the findings of the AGSA, DBE said the Department has strengthened the management of performance information through mechanisms such as early warning, consequence management and strengthening the monitoring systems. The ASIDI commitments improved from the previous year. A lot still needed to be done through monthly reconciliation. The Department has implemented changes to the expired MOAs through punitive measures. The process of non-compliance with supply chain management is still a work in progress. The frequency of implementing agents asking for concurrency for proceeding with projects has improved. Information is being gathered on a quarterly basis in order to address the challenge of accruals. The target of the Department going forward is to get a clean audit opinion. The audit committee has been strengthened through the appointment of a new chairperson and new members with new techniques.

The Department will continue to work with National Treasury to deal with the employment of relevant contractors. The challenges of scholar transport included ensuring efficiency in services and funding as demand for learner transport exceeded supply. Progress on ASIDI in relation to infrastructure involved 647 schools being addressed as a result of mergers. 

Members of the Committee asked why there was a discrepancy between targets and outputs as a lot of money was being spent on achieving very little. In addition, it was asked why the numbers of indicators have increased considering many of them failed to be achieved. Questions were also raised in relation to if the Department having a fraud prevention strategy, consequence management within all levels of the Department and corrective measures on wasteful and irregular expenditure. Members expressed great concern over the challenge of electricity, water, sanitation and in particular toilets in schools and stated that it must be prioritised in order to ensure a conducive learning environment. The Committee suggested that the Department review their plans, reprioritise their budgets and develop an acceleration plan. 

Meeting report

Mr N Gcwabaza (ANC) stated that he was chairing on behalf of the Chairperson, Ms Y Phosa (ANC) who was going to be late to the meeting.  

Apologies were read for Ms S Shope-Sithole (ANC), Ms M Manana (ANC), Mr B Topham (DA) and Mr A Shaik Emam (NFP).

The Deputy Minister, Mr Enver Surty apologised on behalf of the Minister as she could not attend.

Department of Basic Education (DBE): Fourth Quarter Expenditure Patterns

The Deputy Minister said that he would be touching on the challenges identified and the steps taken to mitigate them. In terms of the Constitution, education was a concurrent competence. The Department depended largely on the ability of the provinces to implement tasks and they have worked closely with them to execute these tasks. Another element is the reality that South Africa has embarked on an infrastructure programme which has resulted in an extraordinary demand for engineers, quality surveyors, architects, etc. Urbanisation has created unevenness in terms of the availability of professionals to execute the tasks.

In addition, he added that the Department has been meticulous in intervening when trying to learn from past experiences which have helped the Department to improve. The Department currently feeds more than 9 million children every school day and 100% of the books are delivered to schools on time in the Eastern Cape. The eradication of mud schools in all provinces besides the Eastern Cape is another example of what the Department has achieved.

The Deputy Minister stated that one of the challenges the Department was facing was with regards to infrastructure and in particular the Accelerated School Infrastructure Initiative Development Initiative (ASIDI) was the replacement of mud schools and unsafe schools. There are no mud schools in any of the eight provinces other than the Eastern Cape. There are now state of the art schools in communities which are recipients of this programme.

He mentioned that in the previous two financial years, the Department delivered a state of the art school per week. Last year only 17 were delivered due to some schools not being viable because of low learner enrolment. The Department took a political decision which resulted in the delay of the establishment of schools that were originally on the list. He said that another reason why the schools were not delivered was the challenge of the implementing agents which carry out tasks on behalf of the Department. Some of these agents such as the Independent Development Trust (IDT), an extension of the Department of Public Works (DPW), do not have the capacity to carry out tasks. The Department intervened and decided to appoint other implementing agents, resulting in the delay of 15 to 20 schools. Every two weeks the infrastructure team has to report to the Minister or Deputy Minister. In terms of progress, 30 schools are under construction and will be completed by the end of the financial year and there is a great likely hood that 152 new schools will be built to compensate for the gap.

The Deputy Minister said the Kha Ri Gude project has achieved in making more than R4.3 million adults functionally literate. The Minister discovered that more than 100 000 of the learners were being recycled by the service providers. This led to under expenditure in this area. DBE completed the forensic tasks of payments and engaged with DPW on two important projects of ICT and reading.

The comprehensive HIV/AIDS policy was adopted and accepted by all provinces. Educators have been successfully trained in all provinces, except Limpopo. Trainers would choose more exciting provinces and they were not trained in time – leading to under expenditure.

The Second Chance programme for those who had failed matric to be given a second opportunity led to low expenditure as not all provinces were able to use the resources allocated. He added that next year more was going to be done in terms of support.

The Acting Chairperson asked about the issue of mathematics being taken away in schools which has been in the media. There were concerns after meeting with the Department of Planning, Monitoring and Evaluation (DPME) on the curriculum of Technical and Vocational Education and Training (TVET) colleges.

The Deputy Minister responded that context is important when discussing issues. Mathematics has been made compulsory and there is no intention to ban it. What occurred was a misalignment between the requirements for the senior phase of high school and the requirements for grade 8 and 9. This has resulted in learners failing as it is a compulsory subject. The Department decided to align the pass requirements. He added that there was a reality that learners cannot repeat a phase more than once and not everyone wants to go into the academic stream. This resulted in the introduction of three streams in the schools. The vocational stream has been introduced and next year the occupational stream will be introduced.

Mr Hubert Mweli, Director General, DBE, said the briefing will cover areas of under/over expenditure, performance information, progress in addressing Auditor General of South Africa (AGSA) challenges, scholar transport, infrastructure and recommendations.

He expanded on the point by the Deputy Minister by stating that there had been under expenditure in the ASIDI programme due processes. The contracts of contractors who do not comply are terminated and some might take the Department to the courts to nullify this. This contributed to the delays and under expenditure. He added that the rationalisation process in particularly the Eastern Cape led to under-expenditure.

In terms of performance information, Mr Mweli explained that there are 14 new indicators compared to the previous year. Some of the indicators were failing in the system and this accounted for the underperformance. The Department hoped to perform better in this financial year. Public entities such as UMALUSI and the South African Council for Educators (SACE) are back on track and doing well.

In addressing the findings of the AGSA, he explained that the Department has strengthened the management of performance information through mechanisms such as early warning, consequence management and strengthening the monitoring systems. The ASIDI commitments improved from the previous year. A lot still needed to be done through monthly reconciliation. The Department has implemented changes to the expired MOAs through punitive measures. The process of non-compliance with supply chain management is still a work in progress. The frequency of implementing agents asking for concurrency for proceeding with projects has improved. Information is being gathered on a quarterly basis in order to address the challenge of accruals. The target of the Department going forward is to get a clean audit opinion. The audit committee has been strengthened through the appointment of a new chairperson and new members with new techniques.

Mr Mweli stated that the responses to the recommendations included working with DPME. He added that the Department has developed an Annual Performance Plan to ensure there is alignment with planned targets. The Department will continue to work with National Treasury to deal with the employment of relevant contractors.

The challenges of scholar transport included ensuring efficiency in services and funding as demand for learner transport exceeded supply. Progress on ASIDI in relation to infrastructure involved 647 schools being addressed as a result of mergers. 

Discussion

Mr A McLoughlin (DA) referred to slide 5 and the expenditure per programme. He asked which programme the expenditure for the ASIDI programme would fall under. He noted that the Planning, Information and Assessment programme had the most expenditure. He asked why this was the case when the core function of DBE was education and the expenditure on programmes such as Educational Enrichment Services amounted to a little more than half of what was spent on Planning, Information and Assessment. On slide 6 which showed transfers and subsidies as the biggest portion of expenditure, Mr McLoughlin asked how much of this was used on salaries and wages.

He referred to slide 9 and the termination of underperforming contractors, and asked how many of these contractors had been terminated. Following this, he inquired about slide 11 and asked for clarity on the meaning of the rationalisation of ASIDI schools.

Moving on to slide 15 with regards to the targets and outputs, he referred to clause 5.5 in relation to amounts budgeted and expenditure. He noted that a huge amount of money was being spent on achieving very little. He asked for an explanation on why there was such a huge discrepancy between the targets and the outputs. Referring to remedial actions, he asked what the cost of this would be as it contributed to the financial burden.

On the ASIDI commitments, Mr McLoughlin asked what was meant by ‘commitments were updated’ when contracts stipulate the obligations of each party. His next concern was on slide 31 and the responses to recommendations. Although he was happy that there was a policy for the provision of maintenance, he wanted to know how often maintenance will occur if 20% of the value of the contracts goes towards this. He was also concerned on where the money for the maintenance for the schools would be held in the meantime as schools only needed maintenance after a number of years

Ms D Senokoanyane (ANC) asked how poor performance by contractors was defined in relation to the ASIDI programme. Referring to slide 13 and the annual status bar for indicators, she asked why the number of indicators increased considering many of them had not been achieved. She also asked if there were financial implications to this as failing to achieve targets was a challenge.

Next, she referred to slide 18 addressing the AGSA challenges. She asked the Department to share examples of sanctions applied in terms of consequence management. She also asked what the response by the senior management was with regards to the challenge of performance agreements and assessments. Finally, Ms Senokoanyane asked what the extent of accruals on the ASIDI programme was and what impact they had on the budget.

The Chairperson began by thanking the Deputy Minister for the overview report and the accounting officer for full insight on the presentation. She noted that fraud detection was not the role of the Ministry and in terms of the internal control measures, the accounting officer was supposed to be aware of this. One of the functions of the accounting officer was to create a fraud prevention strategy. She asked if the Department had a fraud prevention strategy in place. Following this, she asked if the Department had a monitoring and evaluation unit which was essential when working with the internal auditor.

She then asked the accounting officer if he was ensuring the service providers are paid within 30 days following the radical economic transformation by the government. If government failed to pay within 30 days, it could impact negatively on service providers and they would not be able to assist. She asked if there was a success story with regards to this, and if not why, and what was going to be done. She asked if there was consequence management when people in the Department failed to do things. It did not only apply to the junior staff, but to the accounting officer as well.

One of the roles of the accounting officers was the prevention of fruitless, wasteful and unauthorised expenditure. She referred to the report on the 2015/16 financial year as she did not have the latest report. During this period there was wasteful expenditure of R24.3 million and irregular expenditure of R404.9 million. She asked the accounting officer what the corrective measures were as it iwa his role in addition to early detection.

With regards to audit outcomes, she referred to the 2014/2015 and 2015/2016 financial years which stated the Department achieved an unqualified audit for this period, but there was no real upward movement. It was the responsibility of the accounting officer to ensure this occurred and she asked why it had not. Considering they had a clean audit for 3 years, it reflected their capacity to rise to one. Government wanted to use this to instil confidence in the people.

Referring to the same report, the Chairperson said the AG was concerned about deficiencies in leadership oversight in the infrastructure programme implementation. She asked if the Department had a contract management strategy in relation to the contacts between the Department and the service providers. This was to ensure that those who are meant to benefit from the programme do so. The reasons for mentioning this was that there was a problem of children not having toilets in schools and having to walk long distances to find one. When they go out to the toilets classes continue and they miss out. She asked why fences and toilets had not been prioritised as it was a human rights issue and necessary to have a conducive environment for learning. Every year this issue was not being addressed. Maintenance was important and government has not asked for state of the art schools that used a lot of money, but rather for schools that have toilets, water and electricity. Government was interested in quality of life and quality education which cannot be achieved with dilapidated schools.

She raised the concern by the AG on the compliance issues when it came to supply chain regulations. It was the responsibility of the accounting officer to ensure there was a balance between performance and compliance. She also asked if there was compliance management when people bend the law as failing to address this leads to a continuation.

Mr I Ollis (DA) stated that he considered how some schools could not be built due to rationalisation process and he supported it. His concern was in relation to the infrastructure budgets. Majority of the spending was up 96% and 100% in some cases. However, the reports on the infrastructure completed showed 50% and 60%, showing a big discrepancy between money spent and projects completed such as toilets. He asked where the money went and if it went towards costs such as administration costs and cancellation fees. He apologised that he had to leave early and would not be able to hear the response.

The Deputy Minister responded to the issue raised about water and sanitation in schools by agreeing that it was a human rights issue. The Department has argued that at the core of the conducive environment a learner should receive are the fundamentals of water, sanitations and electricity. He explained that although the Department has intervened through providing contracts to eliminate this phenomenon, there has been non-compliance which has led to the elimination of a large number of contracts. The report received in recent months did however indicate progress.

With regards to the state of the art schools, the Deputy Minister said context was important when looking at norms and standards and these prescribed the sizes of classes and facilities. He explained that the state of the art schools are not provided for in the affluent areas but in historically coloured and black areas. He agreed that one fundamental and basic right cannot be argued for at the expense of another. This was why it was important to look at education holistically. He explained that water supply for example was relied on by a point of supply provided by local government which was why government must work collaboratively to ensure these realities are dealt with.

Mr Mweli responded by stating that ASIDI falls under planning, information and assessment which also consisted of the Education Infrastructure Grant (EIG) which are transfers to provinces. R11 billion of the R12.5 billion was allocated to transfers. In relation to the core function of basic education, he said that it was not programme 3 but programme 2.

Transfers paid for salaries and wages goes towards infrastructure roll out. He responded to the issue of the number of contracts terminated by saying they did not have that information off hand but 20 projects had to be taken from IDT to DBE meaning the contracts had to be terminated. A full list would be sent through within a week. 

With regards to rationalisation, he stated that it meant measure and closure of schools that are not viable. Close to half of the schools in the Eastern Cape was not meeting the numbers of learner requirements leading to impact by rationalisation processes. On this same point the lowest expenditure was on economic classification and over 90% goes towards the Eastern Cape.

Mr Mweli said the remedial action employed so far has not led to any cost. On the point of the 20%, he said that itwais done annually in the infrastructure budgets for schools that are not part of the list of schools that have been built, but those that have been neglected. Infrastructure delivery was a concurrent function as it was the responsibility of both provinces and national government to contribute. Ever since ASIDI and EIG, provinces are no longer contributing a significant amount of money towards this.

In response to Ms Senokoanyane, Mr Mweli said poor performance of contractors included failure to keep to timelines of delivering the projects as and it led to increased costs. The increase of indicators was due to suggestions by DPME and Members of the Portfolio Committee for Basic Education. He agreed that these indicators did have financial implications as it puts pressure on other areas. On sanctions for consequence management, he said that for Kha Ri Gude the Department decided not to renew the contracts of managers as they failed to control the environment.

In response to the extent of the accruals, Mr Mweli said that they are usually identified with implementing agents when contracts take longer than expected in order to plan on a year to year basis.

On internal control measures, he said that risk analysis in the Department was carried out. He added that one of the major weaknesses of the Department was the internal audit function but this has been strengthened. He agreed with the observation that it was the duty of the accounting officer to strengthen the internal environment. The Department has a fraud and prevention strategy; however the conception of the project has created loopholes in terms of the internal environment. The Department has learnt from the weaknesses of Kha Ri Gude as failing to anchor the internal environment leads to an environment conducive for fraud. Monitoring and evaluation was present within the five branches and there was requisite capacity and they are working on strengthening the internal audit.

With regards to the 30 days’ policy, he said the Department was in good standing and will not feature in the departments that failed to comply. Failure to meet this policy would be due to rare technical glitches with the system. The design of the Kha Ri Gude programme is affected by fruitless expenditure and an investigation unit created the ability to detect it further. In terms of irregular expenditure, he stated that the 2016/17 Annual Report will provide evidence that it has been drastically reduced and this showed that a clean audit may be achieved because the systems have been checked.

He agreed with the observation that there are deficiencies in oversight leadership infrastructure. Contract management was a part of it, however it extended to day to day workings, month to month reconciliation of records and supervision at all levels. Provinces are not allocating enough for maintenance and there is consequence management through action such as issuing letters till final written warnings and termination of services.

In response to the observation made by Mr Ollis about discrepancies between money spent and projects completed, Mr Mweli stated that higher expenditure happened in EIG compared to ASIDI, which underperformed. The money spent tallied with the projects completed.

The Chairperson said that accruals meant you spent money you did not have and that would impact negatively on the budget for the next financial year. The Department should not have accruals in terms of monitoring. This must be managed, which is why there is deficiency oversight on infrastructure implementation. The report on the over expenditure and under expenditure trend from 2012/13-2016/17 showed a decline in the programme performance and targets. The money must be used for the purpose it was budgeted for and the impact must be visible. This must be corrected and proper monitoring would have avoided under expenditure and over expenditure. It is an offence and the committee did not want to be pushed to the level of taking the Department to court.

On ASIDI, she said that the spending has been low since 2011. The reasons provided have been the same since this year. The accounting officer was appointed not to give reasons, but to carry out duties to the best of his abilities. In relation to withholding of grants in Limpopo, she asked if the Department have not found creative ways of unlocking the problems so the people benefited in terms of the grant. The Department should come up with an accelerated turnaround plan.

Mr Gcwabaza referred to slides 45, 46 and 47 on learner transport. There was significant under spending in some provinces but overspending in five provinces. Provinces have over committed themselves in terms of the percentage of learners to be transported. He asked why there was no correlation between the under spending and the large percentages of learners being transported. He suggested that provinces had underestimated the number of learners and became overwhelmed later on. A number of recommendations on scholar transport had been made. He asked what the take of the Department was on the options presented. On internal audit, he asked what the current status of the internal control is and how effective they have been. In addition, he asked the audit committee chairperson to speak to the overall risk management within the Department and the government systems around it.

Mr McLoughlin stated that he visited schools in his constituency and noticed that water was flowing. He asked who must be contacted and was responsible for maintenance of schools. The ASIDI programme was for a certain period yet only half of what should have been achieved was carried out. He asked for an estimation of when it can be expected to see the end of mud schools and the provision of water, sanitation and electricity in schools.

Ms Senokoanyane referred to slide 6 on under expenditure and asked why there was such low expenditure on the payment for capital assets.

Ms N Tarabella-Marchesi (DA) referred to the recommendation made on a grant being provided for scholar transport. She asked how far the process of the commitment by the Ministry towards this was.

Mr Mweli in response stated that that there was a review, however Treasury was not keen to entertain too many conditional grants. The Department did not like accruals; however there are instances where they come across accruals such as with ASIDI. On the question of low expenditure raised by Ms Senokoanyane, he said that this was in relation to ASIDI.

He asked Mr McLoughlin for details on the concerns about water spilling in schools and he would take it up with the provincial head of department. He continued, by explaining that ASIDI was for a specific period but the intention was to combine it with the EIG and 182 out of 510 schools have been completed.

In response to Mr Gcwabaza, he stated that the decline in the overall performance was attributed to ASIDI. He added that there was an increase in irregular expenditure and that improvement of performance must be kept within the law. On the question on provinces and learner numbers, he said they had targets and went beyond those targets which accounted for over expenditure.

Mr Mweli said the Department would like to desist from withholding grants; however those are the punitive measures if provinces did not comply. The Department was creating transversal tenders which will assist in challenges around supply chain management. Finally, he said that in relation to impact the Department has improved from 63% to 85%.

Ms Senokoanyane said that the concerns of overcrowding in schools related to the problem of toilets and there must be ablution blocks at schools.

The Audit Committee Chairperson responded to the question of risk management and the control of environment. He said that risk management systems were not functional for a certain period and a new committee has been established. An external person was allocated to this committee to improve this. He added that a new fraud prevention plan was in the process of being updated.

The Deputy Minister said that the issue of consequence management was essential as they must take responsibility. Legislation will be provided in terms of the responsibilities and competencies of principles to manage and innovation was essential. The benefits are seen through the learner tracking systems. When the Department goes live with this, the Ministry can check into any particular school. The National Education and Information Management System gives information and visuals of a school which provided for better planning. The Department has been able to reduce the number of ghost learners in the system, leading to the Department saving more than R500 million. The efficiency of the Department depended largely on the cooperation from the provinces which made it difficult. Lastly, he thanked the Committee and said that the Department must be attentive to the concerns raised.

The Chairperson emphasised on the improvement of withholding of conditional grants. These are granted after submitting a plan and they are not released if this does not occur. National Treasury has been asked to come up with a programme to train people. There is serious under expenditure on personnel and she asked if there is an approved organogram in order to identify critical posts which should be filled.

In relation to expenditure, she suggested that since there are 18 months left, the Department must review their plans, reprioritise their budgets and develop an acceleration plan with issues such as the mud schools. She asked how the broadband programme impacted on school programmes. A lot of money gets wasted on implementing agents, with a small chunk of the budget going towards service delivery. The Director-General has to rise to the challenge and a plan must be forwarded. There was no justification for the Department not having an implementing plan.

The Chairperson concluded by touching on the key issues such as the provision of water and sanitation in schools. She said that she feels strongly on the effectiveness of financial management, procurement management, contract management, leadership across all levels, infrastructure, and transport and systems of government. The Committee wanted to see the education sector succeed.

The meeting was adjourned.

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