In a virtual meeting, the Select Committee was briefed by the Department of Basic Education (DBE) on its 2020/21 annual report and annual financial statements. The Deputy Minister was in attendance.
The Deputy Minister addressed an issue regarding the arrest of an administrator from the Department, in the North West. She indicated that the ongoing examination period is going well despite some breaches and irregularities, but she believes the Department is managing it well. This year has the highest number of matric candidates ever recorded, with a total of 735 677 candidates, and the number of part-time candidates in 2021 has also increased from the 117 000 candidates in 2020. The matric pass rate also declined by 5.1% from the previous year. The Department also managed to increase the number of young teachers from the previous year.
The Department outlined the following reasons, amongst others, for deviations on its budget allocation. On Curriculum Policy, Support and Monitoring, the Department reported that physical monitoring of provinces could not take place as planned on a number of internal projects, due to COVID-19 restrictions; this resulted in underspending. On Administration, the reasons for underspending was due to delays in filling vacant positions due to the moratorium that was placed on the filling of posts, as well as less payments for the audit fees.
The Department incurred irregular expenditure of R3.209 billion. About R2.797 billion of this amount relates to irregular expenditure identified in the current year relating to prior years.
The Committee gathered to assess the Department’s performance in the last financial year. The Chairperson expressed to the Deputy Minister that he is impressed by the Department’s performance and was glad to see a clean audit review from the Auditor-General.
Members also asked questions on how the Department is implementing recommendations made by the Auditor-General; underspending on school infrastructure backlog; underspending due to filling vacant positions; how the Department plans to curb irregular expenditure; progress on investigations into the fruitless and wasteful expenditure; as well as school safety and bullying at schools, among other questions.
The Chairperson welcomed the Deputy Minister, Members of the Committee and the team from the Department of Education. He noted apologies for the absence of the Minister and the Director-General, who are abroad representing the SA in Paris, France. He also apologised for poor connectivity issues, which prevented him from connecting to the video stream.
He congratulated everyone on their performances during the Local Government Elections. He said that Local Government Elections are very important to the Department of Education, as they lay the foundation for teaching and learning through ensuring that all schools are equipped with the proper infrastructure, so that there are no hindrances to teaching and learning.
The Committee is gathering to assess the performance of the Department in the last financial year. He expressed to the Deputy Minister that he is impressed by the Department’s performance due to a very good audit review from the Auditor-General and doing well in meeting their set targets. Two recurring issues are worrying, and if they happen in the following years, they will become a challenge to deal with. One is irregular expenditure, as the Auditor-General’s report stated – that the Department is not following the relevant legislation such as section 14(1) (a) of the Public Finance Management Act (PFMA), when drafting reports and financial statements. The Department must vastly improve its expenditure management to deal with that. The other worrying issue is consequence management: issues like procurement of contracts and internal control deficiencies were highlighted by the Auditor-General. However, all things considered, the Department’s performance was very good, but there must be a clean audit on the next annual report.
Overview by the Deputy Minister
Deputy Minister of Basic Education, Dr Reginah Mhaule, thanked the Chairperson and greeted everyone present. She appreciated the opportunity for the Department to present the Annual Report to the Committee. She indicated an unfortunate situation that happened the previous day, about which there was not a lot of information. It was a concerning issue about an administrator from the Department of Education in the North West, who was allegedly arrested. She said that the Select Committee will be briefed when all the necessary information is gathered. The Minister will consider replacing the administrator, as the Department aims to leave the North West in a better state than it was before they started there.
The ongoing examination period is going well despite some breaches and irregularities, but she believes the Department is managing it well. This year has the highest number of matric candidates ever recorded, with a total of 735 677 candidates, as compared to 2020 that had 128 000 fewer candidates, and 2019 where there were only 624 733 full-time candidates and 176 110 part-time candidates. The number of part-time candidates in 2021 has also increased from the 117 000 candidates in 2020.
Responding to questions on the drop-out rate from the previous day, she said that more than 70% of learners who enter school at grade one are leaving at grade twelve. The DBE has five main programmes: Administration; Curriculum Policy, Support and Monitoring; Teachers, Education Human Resources and Institutional Development; Planning, Information, and Assessment; Educational Enrichment Services. The report will be based on these five programmes.
The Chairperson thanked the Deputy Minister, the DG and the Department for a well-presented report, and said it was easy to follow.
Department of Basic Education 2020/21 Annual Report
Dr Granville Whittle, Acting Director-General, DBE, said that the presentation on the Annual Report essentially focused on the year struck by Covid-19. The report was presented in two parts: the first part dealt with the Department’s performance in meeting their pre-determined objectives, and the second part dealt with the expenditure for the year under review.
Part one: By Ms Carol Nuga-Deliwe (Chief Director: Planning, Research and Coordination, Department of Education)
- 624 733 full-time and 176 110 part-time candidates wrote the National Senior Certificate (NSC) examinations;
-The overall pass rate for 2019 was 81.3%, an improvement of 3.1% from 2018;
-60 108 295 Grades R-9 Volume 1 and 2 workbooks were printed and delivered to 23 298 public schools;
-81% of Funza Lushaka graduates eligible for placement were placed in schools against the annual target of 85%;
-17 766 young (30yrs and below) and qualified educators were appointed.
-Monitoring School Feeding: 146 schools were monitored against the 2019/20 Annual Performance Plan (APP) target of monitoring and supporting 110 schools.
-12 954 Funza Lushaka bursaries were awarded to students for initial teacher education by 31 March 2020.
- 607 226 full-time and 117 808 part-time candidates wrote the NSC.
-The overall pass rate for 2020 is 76.2%, a decline of 5.1% from 2019.
-61 027 095 Grades R-9 Volume 1 and 2 workbooks were printed and delivered to 23 094 public schools
-82% of Funza Lushaka graduates eligible for placement were placed in schools against the annual target of 85%
-18 635 young (30yrs and below) and qualified educators were appointed.
-Monitoring School Feeding: 117 schools were monitored against the 2020/21 APP target of monitoring and supporting 115 schools.
-13 085 Funza Lushaka bursaries were awarded to students for initial teacher education by 31 March 2021. This is an overachievement of 585.
The DBE hosted its Sixth Annual Basic Education Sector Lekgotla from 25-27 February 2021. The Lekgotla was held under the theme: “Equipping Learners with Knowledge and Skills for a Changing World”. For the past five years, the DBE has hosted the Basic Education Sector Lekgotla as a means of engaging the sector on key deliverables and strategies towards improving the quality of basic education. The Lekgotla discussed and reflected on progress that the sector has made in relation to its commitments to the Sustainable Development Goals (SGD4), the National Development Plan (NDP), and recommendations made at the previous Lekgotla. The deliberations also reflected on challenges experienced and refocused efforts towards emerging priorities and interventions in the field of education, such as the improvement of learning outcomes; the role of Information and Communications Technology (ICT) in a changing world; health and safety in schools amid the COVID-10 pandemic; as well as curriculum, teacher development and learning.
The DG visited (120) Saturday and (103) Spring Classes to monitor and support the class of 2020. The DG visited 184 Marking Centres from 05 December 2020 to 21 January 2021, to monitor and support marking for the 2020 class National Senior Certificate. The DG conducted pre-standardisation meetings with Chief Markers and Internal Moderators of nine provinces to prepare for the standardisation meeting with Umalusi. The DG monitored 164 SAFE Projects in EC, KZN and LP to accelerate the eradication of inappropriate and unsafe Sanitation facilities from 23 February-25 March 2021.
Part two: Mr Patrick Khunou (Chief Financial Officer, Department of Basic Education)
Reasons for Deviation
-Administration: The reasons for underspending was due to delays in filling vacant positions due to the moratorium that was placed on the filling of posts whilst the organisational structure was being finalised, as well as less payments for the audit fees, due to a lesser number of auditors sent to the Department because of COVID-19 restrictions.
-Curriculum Policy, Support and Monitoring: Due to COVID-19 restrictions, physical monitoring of provinces could not take place as planned on a number of internal projects; this resulted in underspending. The Department withheld the last transfer payment for Learners with Profound Disability Grant to KwaZulu-Natal province due to non-compliance regarding reporting on the expenditure and progress.
-Teachers, Education Human Resources and Institutional Development: underspending results from UNESCO foreign transfer due to lower exchange rate on the date of transaction.
-Planning, Information and Assessment: underspending was due to school infrastructure backlog as construction had stalled since the built industry was closed during hard lockdown Alert Levels five and four of COVID-19.
-Educational Enrichment Services: Under-expenditure was due to compensation of employees as well as internal projects such as events like SASCE that could not take place as gatherings were not allowed for the events to continue. The interprovincial monitoring in support of provinces could not take place as well due to the hard lockdown
Reasons for Economic Classifications for March 2021
-Compensation of Employees: the underspending is due to moratorium that was put in place due to structure change.
-Goods and Services: The overspending is on School Infrastructure on operational budget due to rental and hiring on mobile toilets for schools as a result of COVID-19.
-Transfers and Subsidies: due to non-compliance by the Learners with Profound Disability Grant in the KwaZulu-Natal province, the final transfer payment was withheld by the Department.
-Payments for Capital Assets: underspending was due to School Infrastructure Backlog as well as SAFE projects, as construction companies were not into operation due to COVID-19 restrictions.
-Payments for Financial Assets: the expenditure was due to theft and losses on write offs, no shows and accidents where officials were not found liable.
Report on the Audit of the Financial Statements
Audit outcome: Unqualified Audit Opinion
-As disclosed in note 26.1 to the financial statements, the Department incurred Irregular expenditure of R3.209 billion. About R2.797 billion of this amount relates to irregular expenditure identified in the current year relating to prior years.
The Chairperson thanked the Department for a well-presented report, and said that it is evident that the workshops by the Auditor-General were very helpful, as he was able to follow (the entire presentation with understanding of the subject matter).
Ms S Luthuli (EFF, KZN) noted that Department reported on implementing the Auditor-General’s recommendations, and asked why the material findings reflect the same information from previous years. Is there a room for improvement? How is this reflected in the report?
Ms D Christians (DA, Northern Cape) on Programme five, said that it seems as if there are serious challenges regarding bullying in schools and school safety. Is there an update on the programme? There is an obvious need for an effective system to ensure the safety of teachers and learners at schools. In the Northern Cape, there is a lack of adequate fencing around schools, for example. Also, in light of recent stabbings and deaths taking place at schools across the country, it is concerning that bullying is still a challenge to the Department.
On Programme one, it was reported that there was an underspending due to the filling of vacant positions. This may be understandable because of the moratorium placed on it due to Covid-19 restrictions. Is there an update on whether the Department has filled the vacancies, and are there plans in place to do so in the coming months with regard to provinces?
On Programme four, there was an underspending on school infrastructure backlog. Again, this is understandable because of Covid-19 restrictions. It is still cause for concern as most schools have serious problems with infrastructure which raises, once again, raises safety concerns. Country-wide, schools have broken windows and classrooms are very cold in winter. What steps are being taken to address the backlog and ensure it is caught up with?
Programme four also reports on huge amounts of irregular expenditure ringing to the sound of R3.209 billion. The majority of the irregular expenditure disclosed in the financial statements is caused by non-compliance to procurement contract management prescripts and also the appointment of implementing agents for school infrastructure projects. What steps are the Department taking to prevent this from happening again? She emphasised that R3.209 billion is a massive amount of money to be lost to irregular expenditure.
Programme four reports on fruitless and wasteful expenditure amounting to R17 million. Payments are not being made within 30 days. Why is this the case and what steps are being taken to ensure that payments are made on time to prevent interest from accruing to that large an amount?
The financial statements provide that the Auditor-General was unable to obtain sufficient appropriate audit evidence and that disciplinary steps were taken against officials for irregular expenditure as required by the Public Finance Management Act (PFMA). Can the Department provide an update on that situation? What steps were taken and what were the outcomes of the disciplinary processes?
The Department also failed to settle its invoices to professional service providers within 30 days; this resulted in huge amounts having to be paid, with one case amounting to R6.9 million, which was charged to a professional service provider. Are there any updates on the investigation? Who was the accounting officer?
More questions will be submitted in written format.
The Chairperson’s input was inaudible (from 1:37:23 – 1:38:25).
Mr Patrick Khunou, Chief Financial Officer, DBE, on the repetition of material findings from previous years how improvements are reflected in the current year, said that slide 14 on the presentation from the Auditor-General to the Portfolio Committee on Education on the previous day showed precisely how the Department has improved using the Auditor-General’s findings. In 2018/19 there were five items of qualification: irregular expenditure; accruals and pay-hours not recognised; commitments; immovable, tangible capital assets; as well as contingent liabilities. In 2019/20, this improved to only two issue: irregular expenditure and commitments. In the year under review, there are two issues but these are not issues of qualification. The issues of previous years were issues of qualification; this year the Auditor-General has given the Department an unqualified audit. In previous years, the Auditor-General said that reliance cannot be placed on the irregular expenditure and the amount involved. With the latest report, the information on the irregular expenditure is reliable and the only concern is the amount. There was, therefore, a big improvement from previous years.
On the restatement of figures, this is an issue that the Auditor-General (AG) regularly raises, but it is never a qualification issue even in the years where the Department fairs poorly. The Auditory Report itself, thus, reflects an improvement over the last four years.
On the moratorium, he said that Strategic Planning can speak to how it will be dealt with within the provinces, but within the Department, the process of filling the vacant positions mentioned in the report started in the last eight months. The Chief Director, Director and other vacancies have been filled, so there a great improvement was made. It is to be noted that, because of Covid-19 in 2020, Treasury cut the Department’s budget twice; contrary to other years, they cut the budget for employees’ compensation. Even if there were plans to fill all the vacancies, those budget cuts will start affecting the next financial year, which may lead to the Department struggling to fund the existing budget and may result in all of the vacancies not being filled as time passes.
On irregular expenditure, the bulk of it is spent on implementing agents. Implementing agents are taking steps on their own, such as the Development Bank of Southern Africa (DBSA) writing to Treasury asking them to condone some of the irregular expenditure. This happens in cases where the AG finds irregular expenditure but implementing agents have acted according to legislation when acting. They are also taking consequence management steps, and the Director-General has written to them regarding this, as there might be a reported R3.209 billion in irregular expenditure. However, there is still R2.7 billion that is unreported. Another Department official will speak more to this, and to the fruitful and wasteful expenditure.
Mr David van der Westhuijzen, Deputy Director-General: Infrastructure, DBE, on infrastructure referred to slide 85 of the presentation, on inappropriate structures, said that the Department exceeded targets and built more schools than was planned despite difficult circumstances. This, unfortunately, was only true for bigger contracts for the replacement of schools. The Covid-19 restrictions had a serious impact on smaller contracts, such as those for water supply and sanitation. The smaller contractors for these projects suffered heavily. The months in lockdown ruined their cash flow. Payments had to be made to their staff, and a lot of their labour went back to their homes. Travel restrictions meant that they could not complete projects. There was also a cash flow shortage, and there was not enough money to actually buy the building materials. The Covid-19 restrictions also impacted materials supplies country-wide, as projects ran out of cement and roof-sheeting. The Water Programme managed to be completed in the last week of March, and the target of 100 was met by the Department completing 101. The Sanitation Programme suffered and was only half-complete.
Over and above those challenges, the COVID-19 water supply and sanitation was inherited by the Department and required it to provide water tanks to schools and engage municipalities to fill the tanks. At one point, the Department bought every water tank in the country, leaving no surplus water tanks anywhere. The Department also rented every mobile toilet in the country for these projects. Towards the end of October, these projects were handed back to the provinces, and the Department managed to get schools back open, and a relatively normal school year was had.
In 2020/21, there are 21 inappropriate structures in schools, which are all on track on to be replaced this year (2021/22) and 100 projects have been earmarked for water supply in this financial year. On the sanitation project, he said that there is a goal of 1 000 schools, which must be served with appropriate sanitation; the Department is on track to meet this target.
On the maintenance of schools, he indicated that the day-to-day maintenance of schools is handled by the schools themselves, and they have funds available called ‘Norms and Standards School Fund’, which are allocated to individual schools, to implement the maintenance. Bigger cases such as vandalism and unrest are provincial problems, the National Department is not involved in any of these discussions.
On irregular expenditure, he said that a lot of work was done. In order to clean up their act when it comes to an audit, a large effort was put into unpacking historic supply chain processes and comparing that to National Treasury’s Regulations for supply chain processes. During this clean-up, some discrepancies were found. For example, it was discovered that the Mvula Trust is used as an implementing agent; it is not a state entity, but an NGO with its own procurement policies and regulations, which they complied with. However, the Auditor-General argued that, because state funds are being used, they must be measured against government procurement regulations. That process has resulted in some discrepancies being found. Some of these discrepancies related to the tender advertisements having to run for 21 days, which did not align with their internal policies and regulations. These discrepancies were disclosed as irregular.
On local content, Treasury regulations specifically referring to structural sting put an obligation on contractors to use local content and not import the sting from China, India or other countries. When doing water supply or sanitation projects, there is no structural sting. There were incidents, for example, where the DBSA as an implementing agent did not specifically include the requirement of local content in the intending documents, as it was irrelevant. Issues like this were also flagged by the Auditor-General for not complying with government regulations. This created a level of trust with the Auditor-General that the Department is transparent and has nothing to hide.
Specialists are being appointed to assist the Department with all the procurement processes and the goal is to have it concluded by December. The scope of the appointment of contractors will be expanded to assess the procurement processes of professional service providers to run an absolutely clean system. There is a good relationship with the Auditor-General, and the Department is following up on the issues of material irregularity; these things will be unpacked in due time.
In another case involving a discrepancy with a payment to an implementing agent amounting to a R16 million difference between the value paid and the value of the work completed, a letter of demand was issued; all the money was eventually recovered. Any incidents where there is fruitless and wasteful expenditure will be pursued in this fashion and some of the issues have been referred to the Investigations Committee.
Ms Emily Mmola, Director, DBE, on irregular expenditure and consequence management, said that the irregular expenditure from 2019/20 was 100% investigated, and consequence management steps for irregular expenditure incurred as a result of non-compliance and progressive disciplinary measures were taken by the accounting officer, where officials were either warned or issued cautionary letters. On 2020/21 cases that were investigated, at the time of the audit, 67% were completed and the remaining investigations are still being finalised. On the percentage of completed investigations, labour relations processes were still in progress with regard to progressive discipline in terms of writing audit letters to the officials involved, as the labour relations process requires a response from the affected officials. Some investigations are still in progress at this point, but updates will be provided once they are completed.
On the R5.8 billion in irregular expenditure, she said that 100% of it was investigated, which amounted to R2.6 billion for the cases before the R3.2 billion. Out of the R3.2billion, investigations have already started on the 13 million cases that involve the Department; the record is at the final stage for the Director-General to consider action. About R571 million from the R3.2 billion is what DBSA has requested condonation for from Treasury. The communication and responses in that regard has been reviewed, and the Department is ready to engage Treasury to finalise their books, as they relate to local content. The DBSA clarified their position.
On holding implementing agents accountable, The Director-General’s process includes not allocating them any more projects, as well as writing to them asking them to account for their consequence management process. It is a work in progress, and in some cases, there have been responses regarding their actions in terms of improving their document management, as in some of the irregular expenditure investigations it was found that there is no documentation for the tender process or some of the documents are incomplete. In other cases, there is just non-compliance with Treasury regulations. DBSA has responded and the Department is waiting on the other implementing agents to respond as well.
Dr Rufus Poliah, Chief Director: National Assessment and Public Examinations, DBE, on Kha Ri Gude, said that this is an audit finding from 2017 when the project was terminated. The way the project was organised: 61 coordinators were appointed by the Department and the contractual arrangement with them was for them to recruit learners who qualify for the programme based on specific criteria, which was provided to them. The coordinators defrauded the system by admitting learners who did not qualify for the programme, and some of the learners were fictitious learners. The Department picked this up and reported it to the Hawks; the matter is still under investigation. Importantly, the Department recovered R6 million in costs relating to material, which was wrongly allocated to participants who did not qualify. This was recovered by withholding the stipend that would have been paid to the coordinators on the basis that learners or adults would be provided with the materials, even though they did not qualify. The project is now closed but the matter is still under investigation by the Hawks and the Department hopes that it will be concluded.
Dr Granville Whittle, Acting Director-General, DBE, on bullying in schools, said that the Department takes it very seriously and, towards the end of last year, as part of a process initiated by UNESCO, the Minister signed the Department to an international campaign with a specific focus on cyber-bullying. One of the consequences of a large migration to online learning as a result of Covid-19 was a massive increase in cyber-bullying. The campaign allows the Department to meet with a range of social media partners such as Facebook, Twitter and TikTok. The Department has also partnered with Google to develop a manual on cyber-bullying for hotspot schools; it is currently being rolled out. The Deputy Minister also convened the Deputy Ministers from other Departments such as Justice, Police, Communications and Social Development; together, they lead a public campaign that was launched in Soweto at the end of 2020, focusing specifically on addressing issues of bullying in school.
On school safety, it remains an issue for concern in schools. The Department works through the National School Safety Framework, which all the provinces are implementing. During Covid-19, in partnership with the University of the Witwatersrand, all training programmes were moved online and the Department continues to train school safety committees with a specific focus on hotspot schools to ensure deputy principals lead these safety committees so that they can deal with safety issues in school.
On the fencing issue, where schools indicate that fences were removed, he said that it is often the case that communities remove them. In these cases, the Department meets with the infrastructure unit in the provinces and schools to replace the fences as soon as possible.
Mr M Bara (DA, Gauteng) first raised a question to the Deputy Minister. He asked about the administrator who was taken in by the Hawks for an issue involving VBS bank. Will this have an impact on learners taking their final matric exams in the North West, especially given the fact that the arrested administrator was an official from the Department of Education?
The Chairperson intervened to say that the Deputy Minister already dealt with this issue in her opening remarks, but that someone from the Department will answer the question after all the information is made available.
The Deputy Minister, on the arrested administrator, said that the latest information is that the administrator and two others are out on bail of R50 000 each but that does not necessarily mean that the administrator will return to his duties. As was said earlier, the Minister will assign another official to replace him. There will be no vacuum left by the administrator’s absence, and the Director-General will be responsible, as the administrator reported directly to him. In the North West, the MEC and the Superintendent-General are still in office, so the running of the examination will not be compromised by the administrator’s arrest at all. The examination period is almost complete; all the contents of the final report are on paper already, and the process will not be disturbed by the arrest at all.
On school safety, she said that it is, indeed, a challenge. Newly built schools come complete with all the necessary infrastructure; the challenge is renovating the old schools to provide them with the necessary infrastructure. In the 2016 Norms and Standards, all provinces were told that basic services must be provided, which include: fencing, electricity, water. These functions are dependent on the functionality of the other governmental departments and municipalities. Where the entire community does not have water, it makes providing education to learners difficult. Where this is the case, the boreholes are installed at schools, to give water to the schools in such communities; the problem that this creates is that the entire community will rely on the school for this reason, which strains the school’s amenities even more. The same goes for other infrastructural improvements to older schools.
On lack of fencing at schools, she said that it makes entry possible anywhere on the grounds, which makes it easy for gangsters and other dangers to enter. There is cooperation with other Deputy Ministers and Departments to address this issue and other issues regarding general safety at schools. The Department is working hard to make sure learners and teachers remain safe at schools.
The Chairperson thanked the Deputy Minister for inviting them to attend the School Safety Launch in Limpopo, and remarked that positive responses to new initiatives are noticeable. The Department was thanked for the presentation and released from the meeting.
The Committee considered and adopted the minutes from the Select Committee meeting on 01 September 2021. The Committee also adopted the minutes from the Select Committee meeting from 10 November 2021.
The meeting was adjourned.
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