The Select Committee met to receive a briefing from the National Student Finacial Aid Scheme (NSFAS) and the Department of Higher Education and Training (DHET) on their adjustment budget allocations, and what impact the cuts would have on their programmes.
DHET said they had put forward reasons to National Treasury as to why its budget should not be cut by up to 20%, which would have amounted to R19.5 billion, and only R9.8 billion had been taken from its budget. This had mainly affected items such as travel, accommodation, venues and related services. All universities and technical and vocational education of training (TVET) colleges had submitted plans for multi-modal teaching, learning and assessments, to enable them to complete the 2020 academic year, considering the additional costs as a result of COVID-19.
NSFAS had raised an objection regarding the suspension and re-allocation of funds for student devices. The matter was currently with National Treasury. NSFAS had been functioning throughout the lockdown and had had to shift to “virtual” operations. It reported that there were some challenges with the payment of private accommodation for students, and in some instances institutions did not pay students on time, which increased the hardships they faced.
Due to time constraints, and with many Committee Members experiencing both load shedding and network connection problems, the Chairperson decided that most questions should be submitted in writing. Questions were mainly raised around budget cuts in the infrastructure programmes of instititions, and what the implications of this would be. The Committee also asked both the DHET and NSFAS to provide it with their plans as to how they would recover the funds lost due to the budget cuts.
The Chairperson said he had been experiencing connection problems, and was also currently experiencing load-shedding. He asked the Minister to make remarks, which would be followed by the presentation of the Department of Higher Education and Training (DHET), and the National Student Financial Aid Scheme (NSFAS) would present thereafter.
The Committee’s acting secretary said the Minister had submitted his apologies, and the Director-General, Mr Gwebinkundla Qonde, would lead the presentation on behalf of the Department. Dr Randall Carollissen would represent NSFAS.
The Chairperson said the Committee was very interested in the submission NSFAS would make, but since the DHET was experiencing connection problems, he suggested that the Department present first, and then NSFAS would follow.
DHET: Budget Adjustment for 2020-21 financial year
Mr Qonde, Director-General (DG): DHET, said the adjustments to the original tabled estimates of National Treasury were required due to the impact of the COVID-19 pandemic on government revenue and expenditure, as well as the economy as a whole. During the interrogation process of the possible adjustments to the budget of the Department, National Treasury had indicated that each department must declare a cut of 20%. In the case of the DHET, this would amount to R19.5 billion.
However, the Department had put up an argument which was accompanied by information on the implications of such a cut on the Post-School Education and Training (PSET) system, as well as the level of reprioritisation and expenditure at the institutional level, including the support to students. The above exercise had resulted in the final reduction of the Department’s baseline being much less than the indicative cut of R19.5 billion. The final special adjustments budget cut for the Department for 2020/21 had amounted to R9.857 billion.
The total suspension of funds amounted to R6.734 billion, of which R4.999 billion had been re-allocated for reprioritising expenditure towards COVID-19 activities. The net suspension amounted to R1.734 billion for normal voted funds. The adjustments budget also provided for the reduced collection of skills levies amounting to R8.122 billion.
The Department’s original allocation for 2020/21 had been reduced from R116.857 billion to R107 billion, which represented a reduction of 8%. The biggest single reduction was on the declined estimates for the skills levy collections, from R19.413 billion to R11.291 billion (42%).The purpose of the re-allocation of funds was to cater for reprioritised expenditure towards addressing COVID-19 related activities, including student support. In addition, the budget provided for the shifting of R1.51 million within the Department’s operational expenditure for COVID-19 expenditure.
The key impact of the adjustments were as follows:
The operational budget of the Department was limited. The restrictions on operations over the period from April to June had provided an opportunity to effect cuts where expenditure had slowed down. Cuts were mainly affected on items such as travel, accommodation, venues and related services. The Department was in the process of amending the 2020/21 annual performance plan (APP), as well as the strategic plan for 2020/25, to accommodate the impact of the adjustments.
There was a substantial impact on the university sector due to the COVID-19 pandemic in relation to protecting lives and saving the academic year. The reallocation of a portion of the suspended funds was supporting key initiatives in the sector. The following areas were highlighted:
- Teaching, Learning and assessments
All universities had submitted multimodal teaching, learning and assessment plans to enable them to complete the 2020 academic year, considering the additional costs as a result of COVID-19. Funds were reprioritised by institutions from their block grants, and grants had been earmarked to develop teaching and learning platforms to accommodate new ways of teaching and learning remotely. Universities would be stalling some current approved projects due to the reprioritisation and cuts. An estimated cost of R3.851 billion was applicable.
- Campus readiness
All universities had developed campus readiness plans to ensure all the regulations for health and safety were in place when students and staff returned. The proposed costs were substantial, and had to be accommodated within existing resources. An estimated cost of R1.879 billion was applicable.
- Infrastructure Grant
The cut in the infrastructure and efficiency grant would result in thepostponement of certain projects and a general slowing down of the infrastructure programme, including the student housing infrastructure programme in the future.
Technical and Vocational Education and Training (TVET) Sector
- Teaching and Learning
The impact of the subsidy cut on the 2020 student enrolment was calculated at approximately 6 200 fewer headcount enrolments, but due to the extensive impact of the lockdown, these students would not have been able to register during this period, thus making the impact on the TVET system minimal. The main impact of the cut would be on the 2021 new student intake for the Centres of Specialisation, as the funding that was due in January 2021 had been reprioritised for COVID19-related expenditure.
- New Campus Operations
The net cut was based on unallocated resources to colleges due to delays in the finalisation of projects, and would therefore not have a negative impact on operations.
- Infrastructure Grant
There was sufficient infrastructure funding at the college level to continue with existing projects, and the cuts would not affect the system immediately.
The operational cost cuts on public entities were linked to the information declared by entities for funded vacancies that could not yet be filled. The cuts on the entities should therefore not have a substantial impact on the operations of the entities. Other operational factors could have a negative impact on entities -- for example, slowed down operations that could generate revenue for the entities.
South African Qualification Authority ( SAQA)
The Covid-19 lockdown had severely affected SAQA’s ability to generate revenue from its income generating services, including the evaluation of foreign qualifications, and the verification of national qualifications to professional bodies, which constituted 56% of its projected annual income. SAQA experienced difficulties in balancing its budget, and the reduction escalated these challenges. The Department was in the process of assisting it to manage its financial challenges.
SAQA was also unable to implement its plans for automation. While no changes had been made to the five-year targets in its strategic plan for 2020/25, it had adjusted some of its quarterly targets and moved some of the APP targets for 2020/21 to the following performance cycle.
It had earmarked R1.2 million to deal with COVID-19.
Council of Higher Education (CHE)
The CHE’s reconfigured ways of working involved greater productivity, reach, and cost-effectiveness through remote working modalities. Investment in the necessary information communication technology (ICT) architecture was therefore essential through budget reprioritisation so the impetus could be maintained. A further reprioritisation of the budget was to equip all staff with computer and data devices, as well as airtime, in order to be equipped to work remotely and seamlessly. All COVID-19 protocols were being adhered to and costs were being offset against savings realised from no site visits, and no travel and accommodation costs that had been budgeted for. Savings from meeting costs of governance committees had been redirected to advice research and advice functions.
A reprioritisation of the budget was under way to optimise staffing and to initiate new research projects related to assessment, teaching and learning, and quality assurance under the remote emergency teaching and learning mode. Capacity had also been increased in under-provided areas such as national standards and reviews, as well as institutional audits. A review was under way to balance core and non-core functions to achieve an appropriate ratio, with a bias towards core functions. Programme deliverables, outcomes and targets were being reassessed and revised in the light of the COVID-19 crisis, to tweak and refine the SP and APP so that performance targets were met.
National Student Financial Aid Scheme (NSFAS)
NSFAS had raised an objection regarding the suspension and re-allocation of funds for student devices. The matter was currently with National Treasury. The reduced administration grant had been incorporated in the compensation of employees (CoE). NSFAS expected a decrease in the collection of recoveries due to the impact of COVID-19 on the economy. All key performance indicators (KPIs) were currently being reviewed for COVID-19 impact, and details would be provided when available. The administration budget had been reprioritised, and an amount of R4.9 million had been earmarked to address the impact of COVID-19. NSFAS would require additional funding for the extension of the 2020 academic year. This would be addressed by the Department during the adjusted estimates process.
Quality Council for Trades and Occupations (QCTO)
The QCTO would be able to absorb the cut with a minimal impact on operations, as it was mainly the administration budget that had been affected, such as the funded vacant posts linked to a phased-in implementation of the QCTO organogram to provide additional resources. The QCTO had considered its APP targets, and six of them would require a downward adjustment where envisaged numbers or turnaround times would be affected by COVID-19 and the resultant slow down. The adjustments would not negatively impact on quality assurance activities.
The QCTO had earmarked R2.68 million for COVID-19 requirements, such as personal protective equipment (PPE), laptops and data. All QCTO staff had been enabled to work remotely, and the QCTO calendar had not been affected by the lockdown, as the entity had moved swiftly to its on-line platform.
SETAs: Impact of Skills Levy four-months “holiday”
The Sector Education and Training Authorities’ (SETAs’) four months exemption in the skills development levy from May to August, in response to the Covid-19 tax relief measures, would negatively impact on various learning programmes, such as apprenticeships, learnerships, work integrated learning and internships. Learnerships and apprenticeships, in particular, had a high level of absorption in the labour market, whilst work-integrated learning ensured that learners were afforded an opportunity to complete their qualifications timeously, where work-integrated learning was embedded in the curriculum. This would also impact on the SETAs’ administration budget. In terms of section 14(3)(b), as read with sections 14(3A)(a) and 14(3B) of the Skills Development Act, a SETA may not use more than 10.5% of the total levies paid by the employer as allocated in the Act received in any year to pay for its administration costs in respect of that financial year.
The Chairperson asked if the Deputy Minister was in the meeting.
DG Qonde said that unfortunately the Deputy Minister was affected by load-shedding, and would join when he got the opportunity.
The Chairperson said he would allow NSFAS to continue, and Members would ask all their questions after it had presented. NSFAS had to bear in mind the connection problems, and he as the Chairperson was also experiencing load shedding and his devices did not have enough power as he had attended another meeting an hour ago. He asked NSFAS to be as brief as possible.
NSFAS: Budget Adjustment for 2020/21 financial year
Dr Randall Carollissen, NSFAS Administrator, said he would be brief as the DHET had already presented on the budget aspects of NSFAS. This report was very detailed and beyond what had been requested for this Committee meeting, but he wanted the Committee to be informed of what was currently happening at NSFAS.
NSFAS had been functioning throughout the lockdown, and had had to shift to “virtual” operations. Its offices had had to be shut down due the proximity of people within the offices. It had had to set aside funds to make this possible, and for COVID related activities such as sterilisation of the office, and had had to equip call centre agents with devices that would enable them to work from home. This had cost R5 million, and had been reprioritised from the travel budget.
NSFAS had also been able to continually disperse funds to students without interruption during the lockdown. It had also removed all commercial interest from the disbursement chain, and had removed all vouchers. However, it was still reliant on institutions to pay students on behalf of NSFAS, and this created additional blockages and delays in payments. There were instances where NSFAS paid students directly, and had initially started with three colleges which had indicated that they did not have the capacity to pay students. Over the lockdown period, this figure had increased to 38 colleges, so at the moment NSFAS was paying 38 of the 51 colleges through the wallet system, and all the universities were still paying on NSFAS behalf.
Going forward, the plan was to deposit money directly into students’ bank accounts. This would cut out all the intermediaries, and hopefully all the challenges that NSFAS faced regarding getting money to students. NSFAS had been ready to go out to tender on 1 June regarding this matter, but the Portfolio Committee had disagreed, so this had been pushed back. NSFAS had received approval from National Treasury, and the process was under way to go out to tender again, so at the start of the 2021 academic year all college students would be paid directly through their own bank accounts. This would form part of the NSFAS outreach campaign as they started recruitment for 2021, and in 2022 all university students would be paid directly. COVID-19 had put pressure on NSFAS allocations for 2020, with the possibility that the academic year may be extended
Challenges in university sector
Private accommodation providers were not receiving due payments where students paid directly to the landlords. The Private Landlord Association had escalated the non-payment by students to NSFAS and the DHET for consideration. The DHET had consulted all stakeholders in developing a draft framework, and the proposals were:
- The cost for university-leased accommodation would remain at the same level for the 2020 academic year;
- For periods of non-occupation, a payment of 50% of the monthly fee could be applicable, with the remainder of the full fee spread out over the extended academic year once the student took up occupation again;
- Institutions had to assist students in negotiating arrangements with the landlords.
NSFAS was faced with a challenge of students who applied to register at several institutions. This created a problem if institutions submitted a registration claim for a single student. The solution was to make the Higher Education Management Information System (HEMIS) system centralised at the DHET. This would cut across both universities and TVET colleges. Some students failed to provide NSFAS with registration, historic debt and appeal data against agreed datelines, and this had been the case even before COVID-19 and the lockdown. There was also a challenge with some institutions which consistently did not pay students prior to the end of the month, and this increased the hardships for students.
Challenges in TVET sector
Discrepancies between the results received from the Department and the institutions impacted negatively on the funding of returning students. The proposed solution was for NSFAS to receive the results for TVET students directly from the institutions. There had also been a delay in payments to students from some TVET colleges.
Regarding the NSFAS Wallet, some students were not receiving allowances because of blocked accounts or cell phone and identity document (ID) mismatch. This could be due to suspected fraud. The reports of failures were sent to institutions after each disbursement run, and there were internal processes to respond to each category of student that had queries.
NSFAS would provide a once-off grant for digital devices for TVET students, with a reallocation of book line items contemplated for future sustainability.
Revised 2020-21 allocation letter
The revised allocation letter dated 3 July 2020 had contained an onerous condition that NSFAS could not comply with, without disastrous consequences. The R2.5 billion suspension of student grant funds and the earmarking of that for student devices could not be implemented. The full original student grant funds were required for the normal 2020 academic year disbursements.
NSFAS recommended that student devices be funded as follows.
- R2.1 billion of recovered funds be utilised for university students;
- R1.5 billion of accumulated TVET Funds be used for TVET students;
The DHET was engaging the National Treasury on the onerous condition.
Digital devices for NSFAS beneficiaries
On 30 April, the Minister had announced that NSFAS-funded students in universities and TVET colleges would be provided with a digital device to augment learning in 2020 during the COVID-19 lockdown. This programme would continue into the future, as the devices would become an essential part of student empowerment and capacitation. Students would own the devices outright, and it was contemplated that their learning experience would be enhanced through access to learning material beyond the classroom. The acquisition of digital devices, with the requisite software and data, for university students was already accommodated for in the NSFAS learning material allowances. Several universities had already channelled these funds towards procurement and access to digital devices, with NSFAS assisting with cash flow where required. A survey undertaken by the DHET at the beginning of the lockdown showed that over 65% of universities were in different stages -- commenced or completed -- of the procurement processes for the devices. Many students at these universities had already received their digital devices, while some were awaiting delivery.
Dr Carollisen said that in the interests of time, this was where NSFAS would stop, but the Committee was welcome to engage on the report as a whole.
The Chairperson thanked both NSFAS and DHET for their presentations. He reminded Members that they had had these presentations for quite some time now, and that had given the Committee enough time to properly study them, and had helped with its oversight duties. He asked NSFAS to give further Information on what it had said about the processes of a normal structure, and on the appointments that NSFAS had made. He also pleaded with NSFAS and the DHET to look into the sustainable development goals, particularly the one which referred to the empowerment of women, the promotion of women’s leadership, and access to education. As part of making this goal a reality, NSFAS and the DHET should give young women a preference in terms of learnerships.
Ms D Christians (DA, Northern Cape) asked the DHET about the R1 billion that had been taken from university and TVET infrastructure and efficiency grant, which had originally been allocated to new universities and TVET college sites. What were the future plans to recover these funds so that the projects could be completed? She asked about Precious Ramabulana, who was murdered last year, while renting private accommodation. Accommodation was a huge issue for students. She was particularly concerned that the infrastructure budget had been cut, and would like to know what plans were in place for the DHET to recover this in the coming years.
She asked about the target of 93 000 artisans at TVET colleges -- how did the Department intend to achieve that target during the lockdown, especially with the one trimester that had been cancelled this year? Another concern was the certification backlog at TVET colleges. Certification had been a serious problem for a number of years now, and the Department had indicated in previous APPs that the Department was working towards day zero, when there would be no certification backlog -- what impact had COVID-19 had on this target? Would the Department still achieve this target and be able to process certification backlogs in the coming few months?
She also asked about the loss of curriculum development at TVET colleges -- N4, N5 and N6 were largely outdated courses, and the Department had previously alluded to these courses being updated. What impact would this have on curriculum development? Lastly, would the Department be revising their strategic and annual performance plan, and if so, when would they present these revised plans to the Departmen?
She referred to the tender process that was currently under way at NSFAS, and asked that the NSFAS Administrator keep the Committee in the loop of what was happening with this process, because NSFAS had a history of making terrible decisions. She also asked if the new tender system had been approved. Would NSFAS still make use of the wallet system and if not, why was the wallet system not adquate? She was very happy that NSFAS was taking hold of their human resources (HR) issues, and that something was being done about them.
Ms S Luthuli (EFF, KZN) apologised for joining the meeting late, and referred to NSFAS’s objection to the suspension of the re-allocation of funds for student devices. The matter was currently with National Treasury, and she wanted to know what the status of this matter was. She also asked about the adjusted budget amount of R38.5 billion, which in essence indicated an increase of R100 million, although according to the adjustment appropriations bill on page 7, it indicated a budget cut of R5.5 million. She asked for clarity on this, and the increase of the R100 million.
The Chairperson said because of connection problems, if Members had more questions to ask, they would have to do so in writing so the DHET and NSFAS could respond.
He said social distancing was becoming ingrained in societiy, and he wanted to know what infrastructure the Department was planning to put in place that would make long distance learning better. Regarding the discussions the Department had had with the Council for Scientifice and Industrial Research (CSIR) around network problems, what kind of interventions had it suggested and was this information being shared with other ministers and departments to help them with their network problems.
Dr Diane Parker, Deputy Director-General: University Education, DHET, referred to the infrastructure programme, and said the budget suspension within the university sector was a total of R750 million, and R250 million had been returned for utilisation and COVID-19 responsiveness. R750 million was a large amount -- it was from the 2020/21 financial year, and had already been allocated to several infrastructure projects across the system. The effect was that infrastructure projects that had not yet started would not start this year, and the Department would have to move them to later years. It would start a new infrastructure cycle in 2021/22, which would last for three years. Some of the funding that would be made available during this cycle would be used to ensure universities could implement infrastructure plans and projects that were already approved, but had been stopped by the pandemic.
COVID-19 had forced institutions to consider alternative teaching and learning methodologies. All institutions had put in place remote multi-model teaching and learning plans, and it was not just online learning, but a blend of different kinds of opportunities for studying and learning. Online learning had its own challenges, and the Department would have to explore and understand how this worked into the future. All institutions had to improve their learning management systems and IT systems, and these would be strengthened going into the future. One of the important issues the Department would have to look at was how to improve connectivity. It had experienced a lot of challenges with the quality of its network and connectivity.
The gazette that the Minister had put out for the return of students, would ensure that universities would not have classes as large they had had before, and this meant that there had to be a rethinking about the ways teaching and learning happened. COVID-19 had really given the Department an opportunity to look at all the aspects of how to improve learning and teaching with different methodologies.
Ms Aruna Singh, Acting Deputy Director-General: TVET Colleges, DHET, said the infrastructure grant that was cut for TVET colleges had been for repairs and maintenance, and not for new projects. The cut would have an effect, but it would not be an immediate effect. TVET colleges had already had R2 billion transferred to themselves, so there was enough money in the system for them to do the work they had projected to do, both for this year and next year. The Department was hoping that the funds that had been cut would be reimbursed but if not, only the tail end of the list of repairs and maintenance would be affected, and colleges would be asked to reprioritise the plans they had submitted for repairs and maintenance.
The concern around student accommodation was being dealt separately in what the Department called the student housing infrastructure programme. The Minister had established a team to work exclusively with student accommodation at both universities and TVET colleges. This was a very future-focused exercise, where the Department would be able to deliver student accommodation on a much greater scale.
With regard to the certification backlog, a lot of work had been done. What the Department had done was to prioritise the certification backlog in recent years, and a lot of progress had been made. The backlog numbers might seem high, but many of them went way back because a lot of reconciliation had been required, and students who were not in the system any more presented a whole host of issues. SETA had been asked to report on this matter to the Portfolio Committee on a month to month basis, and they tracked the progress.
The reviews of the curriculum development were finished, and the curricula were ready and were currently with the QCTO for them to review it. The intention was to implement many of the courses next year. The curricula were ready to be implemented next year, and the only problem that would prevent this from happening was the whether the Department would be able to do sufficient training of lecturers. It would be a huge risk to introduce updated curricula if lecturers were not properly trained on them. The Department might not be able to implement everything because of this.
Dr Carollissen said NSFAS had a learnership programme where they took 30 students who would get trained by NSFAS, and had also developed mentorship programmes to grow internal staff, because what it had found was that it had a lot of low level staff with very high qualifications. It had therefore provided a career path for them within NSFAS.
The tender process which NSFAS was currently following was designed for transparency. The person who was in charge of this process was Mr Prakash Mangrey, Chief Financial Oficer at SARS, who was used to working with such large contracts and would ensure NSFAS stuck to the Public Finance Management Act (PFMA) requirements. For further oversight, NSFAS had asked the chief procurement officer at National Treasury to be part of bid evaluation oversight, as well as an official from DHET. NSFAS had also asked the Auditor-General to provide oversight. NSFAS would inform the committee of all the progress it makes as the process unfolds.
The Wallet system had been designed to be an interim measure, and was intended to assist three colleges which had indicated they did not have the capacity to transfer funds on to the students. The system worked well, but there were challenges. The best solution was to pay funds directly into students’ accounts, as this provided an additional layer of security and limited fraud.
The HR function was being rebuilt and the payroll was being outsourced. All employees had also been moved to the Government Employees Pension Fund.
On the objections by NSFAS, NSFAS was working together with the DHET and National Treasury and believed this issue would be resolved very soon. What appeared on the slide to be a budget increase of a R100 million, was actually a net change of R38.4 million. This change was made up of the three items that had been described earlier.
The Chairperson thanked DHET and NSFAS for their briefings on the adjustments. The Chairperson said these adjustments were fit for purpose, and would help the DHET and NSFAS to go weather this storm called COVID-19.
The meeting as adjourned.
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