Welfare Financing Policy: discussion

Social Development

18 April 2000
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Meeting report

WELFARE FINANCING POLICY: DISCUSSION

WELFARE PORTFOLIO COMMITTEE
19 April 2000
WELFARE FINANCING POLICY: DISCUSSION

Documents handed out
Slide Presentation on Welfare Financing Policy
Presentation by Ms Ned, Deputy DG: Policy, strategy and regulation (Appendix 1)
Strategic funding model :The concept (Appendix 2)

Present from Department: Njantja Ned (Deputy DG of Welfare), Ashley Theron (Chief Director Developmental Social Welfare Services), Dorothy Snyman (Director Financial Management), Jocelyn Liebenberg (Consultant on the project)

SUMMARY
The Deputy Director General discussed issues raised by the Committee in a previous meeting. The funding model for Welfare is referred to as the Welstrat model. It will be phased-in over the next few years and will provide services which are delivered in accordance with the new welfare approach. Thus, Welstrat is a support tool that is designed and developed to support strategic planning. The model aims to ensure appropriate service delivery and ensure the quality of services.

The process starts with the assessment of the type, number, location and needs of the Welfare target groups. It ends with a definition of the services that should be provided per provincial area, plus the number of target groups per service and the type of intensity of outputs provided per area.

There are a number of pilot projects countrywide to test the shifts and new paradigm principles in service delivery. These pilot projects will inform appropriate funding options, and affordable and sustainable services.

MINUTES
Ms Ned made a presentation to the committee in terms of which she answered questions which had been put to the Department by the committee on a previous occasion [see meeting of
11 November 1999; as well as 27 October 1999 and 20 October 1999].

The process of the financing policy development
In November 1995 the Welfare Reprioritisation Committee (WRC) was established to propose guidelines for the reprioritisation of welfare in the short-term (in accordance with Chapter 6 of the White Paper for Social Welfare).
At the end of 1996, a work group was formed to develop a financing policy which was guided by the recommendations of the WRC. After extensive consultation, a draft financing policy was finalised (this was referred to as the Yellow Book). This policy however did not adequately address the transformation of services and the shifting of resources to the areas of most need (as it focused on the administrative elements of a financing policy).

Inputs from the earlier consultation during the White Paper process, and comments on the Yellow Book informed the final policy proposal. The policy was approved by Cabinet and subsequently gazetted.

Consultation with the welfare sector
The following stakeholders were involved from the inception of the process in November 1995: The National Department of Welfare and all provinces; faith-based organisations; National Council for Child and Family Welfare; National Council for the Aged; SANGOCO; Welfare Forum; Department of State Expenditure and consultants.

Costing of the financing policy
The National Department of Welfare commissioned Deloite Consulting to develop a funding model for Welfare. This model was refined with the involvement of Gauteng departmental staff and is now referred to as the Welstrat model. The refined Welstrat model will be used in a phased in manner to provide services which are delivered in the new approach; it is a support tool that is designed and developed to support strategic planning.

The process starts with the assessment of the type, number, location and needs of the Welfare target groups. It ends with a definition of the services that should be provided per provincial area, plus the number of target groups per service and the type of intensity of outputs provided per area.

Impact of the policy on welfare beneficiaries
- Welfare offices will be situated in places where the majority of poor people do not have direct access to services.
- Recipients of social assistance grants are to be integrated into other service delivery mechanisms to maximise the benefits of the grants.
- The policy will strengthen partnerships between the Department, the NGO sector and communities.
- Services will be aligned and this will reduce costs, since the sharing of facilities and expertise is encouraged.
- Capacity building, research and advocacy services are to be financed for the following reasons:
- to support new organisations,
- to support the transformation of existing organisations,
- to ensure more effective service delivery, and
- the documentation of best practices to promote replication.

Status of the policy
The policy aims to ensure appropriate services delivery, ensure the quality of services, and to build the requisite capacity of both service providers and service recipients.

The Minister's policy speech on 18 April 2000 states that the policy will be refined and be phased in over the next 5 years.

Human and Financial implications for welfare
Human implications include the alignment of needs and services, and the fact that there will be staff reorientation and training.

The allocated budget remains the main source for policy implementation, this amounts to R1.5 billion from the total welfare budget. The Poverty and Infrastructure Development funds also provide a major resource that allows for expansion of services.

Pilot projects
There are a number of pilot projects countrywide to test the shifts and new paradigm principles in service delivery. These pilot projects are nationally and provincially initiated, while some are of a national scope initiated by NGOs. These projects encompass all focus areas and special development areas, such as: women, disability, children and older persons. The pilot projects will inform appropriate funding options, and affordable and sustainable services.

Conclusion
Ms Ned noted that it should be taken into account that the bulk of the welfare budget goes to the statutory obligation of the payment of social grants.

Ms Snyman and Mr Theron both made a powerpoint presentation to the committee (see appendix).

Discussion
[Owing to time constraints, the committee decided that the Department provide a written response to their questions. In the time left, Ms Ned listened to committee's comments and questions and gave a brief response.]

The Chairperson said that he recognised the need to move toward a policy that would impact upon society in a more significant way. He noted however, that the new policy clearly suggests a fundamental shift for financing in welfare, yet the Welfare Department had only made one previous presentation to the committee on the issue. If ''the normal course of events'' was followed, then civil society would have been invited to present their views on the matter and there would have been hearings on the implications of the policy shift. The fact that this had not happened was displeasing but he said that he did not want to dwell on that as that stage had already been passed. He commented that the number of roleplayers (outside of government) who had been consulted on the policy shift was insufficient.

Ms Ned responded to these criticisms saying that the committee must simply tell them what else they must do. She referred to the Chairperson's suggestion (in a previous meeting) that a two day workshop would be a good idea, and said that the committee must give them instructions on this.

Ms Tsheole (ANC) asked how the funds in terms of the new financing policy would be distributed and where the IDT fitted in. She asked this question in the light of the briefing that the IDT had made to the committee recently as well as the past problems experienced by the Department of Welfare with spending.

Ms Ned replied that the new financial policy does not prescribe one way of funding. The IDT and poverty relief is only one welfare program and have nothing to do with this particular policy. Ms Ned said that the IDT ''is not here at all''. The bulk of their partners in terms of this policy are traditional community-based organisations and they are active in terms of initiating projects, they do not just disburse funds.

Ms Tsheole suggested that they must look at the budget so that more money goes to the provinces. She then asked how the DQA (Delivery Quality Assessment) related to the assessment of projects.

Ms Ned replied that they must know the capacity of an agency to deliver. This was a clear need as it would ''show strengths and weaknesses'', and it would enable them to monitor the ''pace at which things are happening''. Ms Ned added that if it was used appropriately, they would be in a position to ''anticipate a lot of things''.

Ms Gandhi asked if the skills audit was only done on a national level or whether it was done for the provinces too.

Ms Ned replied that the provinces also had to do a skills audit. Thus, it took place at all spheres of government. She added that they also did a pilot analysis of projects, and this included the adoption of some provincial projects by national. National adopts projects to ''move faster'' and to ''replicate them'' (if they are good projects). The provincial departments then participate at an executing level. Thus, there is a joint effort between the provincial and the national departments. Further, the national department gets updated reports on those projects which have been earmarked.

Ms Gandhi asked how they were going to phase out the current funding policy and replace it with the new policy. She also queried if the staff were skilled at the level required to make the shift in policy successful.

Ms Ned replied that they would decide ''what they wanted to phase in and where''.

Mr Masutha (ANC) commented that the new welfare framework was more in favour of community services. He asked if the policy took account of the implications it would have in respect of existing legislation. He said that it was not just a shift of resources, but a whole new policy and asked if they have considered the legislative implications of the change in policy. He asked if they have reviewed the legislation underpinning the policy that informs the legislation.

Ms Ned (misunderstanding his question) replied that there is a challenge around the issue of legislation. She said that they have commissioned the development of child care legislation, and are involved in the Youth Justice Bill (which was commissioned by the Justice Department). These relate to children up until the age of eighteen years and deals with all the needs of children, from child care right up to problems with the police.

Mr Masutha clarified his question by commenting that ''the policy has no legal status''. It must not be in conflict with the law because if there is an inconsistency then the policy is trumped. The old policy is entrenched in legislation, and they must remove this through legislation. They cannot simply ignore the legislation and do something contradictory.

The Chairperson said that the idea of the workshop was a good one and that the committee would get back to them on it. He said that Ms Ned should formulate written answers to the questions and elaborate on them.

Appendix 1:
NATIONAL DEPARTMENT OF WELFARE
PRESENTATION TO THE WELFARE PORTFOLIO COMMITTEE
19 APRIL 2000

1.THE PROCESS OF THE FINANCING POLICY DEVELOPMENT

The White Paper for Social Welfare states in chapter Six that guidelines will be developed on the financing of social welfare programmes. The White Paper states that a Financing Policy must give impetus to and enable the implementation of developmental strategies by organisations of civil society. In November 1995 the Welfare Reprioritisation Committee (WRC) was established as an interim structure to propose guidelines for the reprioritisation of welfare services in the short-term whilst awaiting new long-term policies. Their scope being limited, the WRC focussed on existing financing and in particular on residential facilities.

At the end of 1996 a work group, consisting of representatives from the National Department and the nine provinces, was formed to develop a Financing Policy guided by the recommendations from the WRC. After extensive consultation of more than two years, a draft Financing Policy was finalised. This document, popularly referred to as the Yellow Book, focused on the administrative elements of a financing policy. The strategic vision for the transformation of services and the shifting of resources to areas of most need was not adequately addressed.
The gap between the time when the White Paper was developed and the finalization of a Financing Policy added to the increasing pressure from service providers and communities for an appropriate Policy. Inputs from the extensive consultation during the White Paper process and comments on the Yellow Book informed the final Policy proposal. The Policy was approved by Cabinet and subsequently gazetted.

2.RATIONALE FOR THE GIVEN TIME-FRAMES
The Minister instructed officials to develop a policy within a time frame that made no provision for further stakeholder consultation. However, the Policy provides for continued involvement in the implementation process through the inter-sectoral task group.

3.INVOLVEMENT OF THE WELFARE PORTFOLIO COMITTEE
On 5 May 1998 the Department made a presentation to the Portfolio Committee on a draft financing policy. (See Annexure A -minute of the meeting).
Following the presentation, a letter was sent to the Chairperson of the Portfolio Committee The Minister. (See Annexure B- copy of the letter)

4.APPARENT LACK OF CONSULTATIONT WITH THE WELFARE SECTOR
The following stakeholders were involved from the inception of the process in November 1995:
National Department of Welfare and all Provinces;
NACOS
Faith Based Organisations;
National Council for Child and Family Welfare;
National Council for the Aged;
SAN GOCO;
Welfare Forum;
Department of State Expenditure;
Consultants

5.COSTING OF THE FINANCING POLICY
The National Department of welfare commissioned Deloite Consulting to develop a funding model for Welfare. This model has subsequently been refined with the involvement of Gauteng departmental staff and the refined Welstrat model will be used, in a phased-in manner, to cost services which are delivered in the new approach. The projects included in the Pilot process (refer to section on piloting below) will inform the costing process.
The refined Welstrat Model is ready for use at provincial level for the implementation of the Financing Policy and the Public Financial Management Act. It is a computerised decision support tool that is designed and developed to support strategic planning.
The process starts with the assessment of the type, number, location and needs of the Welfare target groups. It ends with a definition of the services that should be provided per provincial area, plus the number of target groups per service and the type and intensity of outputs provided per area.

6.LIKELY IMPACT OF THE FINANCING POLICY ON THE WELFARE BENEFICIARIES
The Policy will have the following impact on beneficiaries:
Poverty maps indicate that welfare offices of both Departmental and of NGOs, are situated in places where the majority of poor people do not have direct access to services. A migration plan will make services more accessible, in line with the Minister's ten-point plan.
· It will bring more non-funded organisations into the fold through the financing options, especially seed financing, project financing and network of services options.
· Recipients of Social Assistance Grants are to be integrated into other service delivery mechanisms to maximise the benefits of the grants. This is also in line with the ten-point plan.
· Services are to be integrated from specialist urban-based to generic rural-based with the specialist component provided as and when needed.
· Capacity building, research and advocacy services are to be financed to support new organisations, the transformation of existing ones and ensure more effective service delivery and documentation of best practices to promote replication.
· Participation of recipient individuals, groups and communities is encouraged from the planning to the implementation stages, as indicated by the Principles, which are to be ensured through the DQA, which replaces the previous "inspection" continu.
· The policy will strengthen partnerships between the Department, the NGO sector and communities.
· Services will be aligned and reduce costs since sharing of facilities and expertise is encouraged.
· Effective implementation will result in shifting of resources and adjustment of levels of service deliver (from residential community based).

7.STATUS OF THE POLICY
The phased-in implementation of the new Financing Policy is a tool essential for the strengthening existing strategic Partnerships as well as for the development of new partnerships specifically in rural areas and those communities that still do not have access to services. The Policy aims to ensure appropriate services delivery, ensure quality of service and build requisite capacity of both service providers and service recipients.
Through the Financing Policy we have been able to finance community-based programmes like Bokamoso in Winterveldt, This programme focuses on Youth Development and deals with youth involved in serious criminal offences. It reintegrates young people back into the community, skills them and provide them with opportunities they would otherwise have missed since they are outside of the formal schooling system.
The first year, 1999\2000, of the phasing-in of the Policy, have resulted in the development of the tools necessary for a systematic implementation. These tools include a costing model for a basic welfare service. While the Policy should be fully implemented by 2003\2004 most provinces are on schedule with the phasing-in of the Policy within their allocated budgets. This will ensure compliance with the new Public Finance Management Act.
The Ministers' Policy Speech on 18 April 2000 states that..," The Policy will be refined and be phased in over the next five years'.

8.HUMAN AND FINANCIAL IMPLICATIONS FOR WELFARE
The Policy is about efficient utilisation of available resources. The process includes:
1.Alignment of needs and services;
2.Staff reorientation and training;
3.Acquisition and use of information tools and systems (maps) to inform planning structure; and
4.Develop administration tools for standardisation.

FINANCIAL IMPLICATIONS
The allocated budgets (Programme 3 - 5) remain the main source for policy implementation.
This amounts to P1 .5 billion of the total welfare budget.
The Poverty and Infrastructure Development funds also provide a major resource that allows for expansion of services.
Pilot will inform appropriate funding options, affordable and sustainable services. The lessons from these and other programmes like Flagship and TCYCS will inform and facilitate the planning within the MIEF cycle.

9.NUMBER OF APPLICATIONS
There are a number of pilot projects countrywide to test the shifts and new paradigm principles in services delivery. These pilot projects are nationally and provincially initiated, while some are of national scope initiated by NGOs. They are at various levels as indicated in the framework for policy and service delivery, and encompass all focus and special development areas i.e. women, disability, children, youth and older persons.
The provinces are not all at the same level of implementing the pilot projects. Some are still in the planning stage, others are already implementing.

Below is a list of the number and location of pilot projects:

PROVINCE

NUMBER

NATIONAL PER PROVINCE

GAUTENG

25

13

FREE STATE

17

12

MPUMALANGA

NONE YET

 

KWAZULU NATAL

NONE YET

14

NORTHERN CAPE

NONE YET

7

NORTHERN PROVINCE

16

9

WESTERN CAPE

9

6

EASTERN CAPE

3 TO BE LAUNCHED

18

NORTH WEST

NONE YET

12

NATIONAL

 

1

TOTALS

67

107

GRAND TOTAL

 

174


10 CONCLUSION
It should also be taken into account that welfare services has been under-funded as the bulk of the welfare budget, in some provinces up to 96%, goes to the statutory obligation of the payment of social grants. One of the strategies to address this issue was approved by MINMEC three years ago to implement to the 80%: 20% principle namely 80% of budget for the payment of social grants and 20% for other welfare services. Another issue relates to the 85%: 15% principle where the budget for Social services - Education Health and Welfare should be 85% and other services 15% of the Provincial budgets should also be looked at as another reason for the under-funding of welfare services. The recommendation of the FFC to use costed norms for the funding of welfare services should also be taken into the evaluation.

11 RECOMMENDATION
That the Welfare Port Folio Committee:
· Take note of the process towards finalisation of the Financing Policy
· Support the process.

Appendix 2:
DEPARTMENT OF WELFARE
Strategic Funding Model
The Concept

Agenda
·
Purpose of WELSTRAT
· Concept building blocks
· Welfare Strategic Management process
· Welfare sector performance

Purpose of WELSTRAT
·
Strategic planning Decision support tool
· Plan performance over medium term period
· Supports a Welfare Strategic Management process
· Resulting in a confirmed strategic direction
· Operationalisation recommendations

Excludes:
·
Selection and funding of projects
· Performance evaluations and DQA
· Budgeting
· Service Level Agreements

Concept building blocks
·
White Paper on Social Welfare services
· Social Welfare Action Plan
· MTEF requirements from DSE and DoF
· Public Financial Management Act, 1999
· Welfare Financing Policy, 1999
· Best practice Public Strategic Management processes
· Zero-based and ABC methodologies
· Performance management methodologies
· Business Process methodologies
· Concept building blocks

White Paper and SWAP
·
Strategies for Developmental social welfare services
· Inter-departmental and inter-sectoral collaboration
· Focus on the poorest of the poor
· Transformation towards an effective and Integrated Social Welfare system

Public Financial Management Act
·
Medium-term expenditure planning
· Performance objectives and measures
· Monthly Performance reporting (financial & operational)
· Management performance responsibilities (SLAs)
· Concept building blocks

Welfare Funding Policy
·
Assessment of transformation w.r.t service levels
· Objective priorities
· Assessment of appropriateness of services to target groups
· Norms & Standards customised for provinces
· Assessment of outputs (Type and level of empowerment; Family development; Community development; Protection and promotion of rights; Number of families preserved; Build & maintain relationships within family & community; Individual development)
· Assess degree to which strategies are supported (Recipients involved in services; Recipients held accountable; Continuum of care and development; Integrated programmes; Promote participation & development)
· Recommended activities per service category
· SLA's with partners, specifying performance expectations

Welfare Strategic Management Process

Set:
· 'Demand' or 'market'
· Objectives and Priorities
· Desired outcomes & outputs
· Services to fund
· Expenditure & funding predictions
· Strategic partners

Align business to achieve strategic targets:
·
Structural planning
· HR development planning
· Procurement planning
· Budgeting & cash flow planning
· Location planning
· Select projects to fund

Target groups:
·
Individuals
· Families & households
· Communities
· Organisations or institutions

Service Providers:
·
National Department
· Provincial Department
· NGO's
· CBO's
· Other

Performance Measurement & Reporting
· Access operational and financial performance
· Measure against set targets
· Report on progress and corrective actions

Benefits and Challenges
Benefits
· Financial & operational merge
· Predictions over medium term
· Faster strategic planning cycle
· Project funding support
· Budgeting support
· Concentrate on service design
· Operationalisation support

Challenges
· Staff capacity
· Change management
· Information management
· Skills transfer

Strategic Funding Model: Input Reports
TARGET GROUP STATISTICS
Report 2.10

Dimension ValueMpumalanga Province

North West Province

Individuals

Causes of needs

Abandonment

0.0000%

0.0000%

0.0000%

0.0000%

0.0000%

0.0000%

Chronic illness

0.2022%

0.0358%

0.2522%

0.3460%

0.0411%

0.5044%

Commercial exploitation

0.0000%

0.0000%

0.0000%

0.0000%

0.0000%

0.0000%

Conflict with the law

0.0000%

0.0000%

0.0000%

0.0000%

0.0000%

0.0000%

Disaster

0.0000%

0.0000%

0.0000%

0.0000%

0.0000%

0.0000%

Divorcing/ Divorced parents

0.0000%

0.0000%

0.0000%

0.0000%

0.0000%

0.0000%

Drug/alcohol dependency

0.2365%

0.0418%

0.3016%

0.4044%

0.0480%

0.0634%

Emotional/Mental abuse

0.0000%

0.0000%

0.0000%

0.0000%

0.0000%

0.0000%

Foster Child

0.0000%

0.0000%

0.0000%

0.0000%

0.0000%

0.0000%

Frailty

0.0000%

0.0000%

0.0000%

0.0000%

0.0000%

0.0000%

HIV/AIDS

0.2702%

0.0475%

0.3493%

0.4616%

0.0546%

0.0721%

Imprisonment

0.0000%

0.0000%

0.0000%

0.0000%

0.0000%

0.0000%

Lack of basic needs

0.0020%

0.1307%

0.5783%

0.1161%

0.0523%

0.0505%

Lack of appropriate food

0.0000%

0.0000%

0.0000%

0.0000%

0.0000%

0.0000%

Lack of appropriate shelter

0.0000%

0.0000%

0.0000%

0.0000%

0.0000%

0.0000%

Lack of employment opportunities

0.2189%

0.0655%

0.6312%

0.4128%

0.0682%

0.0658%


Children's Homes:

 

Number of Recipients

Audited Number

Equity As-is

Equity To-be

Eastern Cape Province

1,451

2,101

145%

775

53%

Free State Province

1,127

885

79%

326

29%

Gauteng Province

4,000

2,569

64%

947

24%

Kwazulu-Natal Province

2,542

2,749

108%

1,013

40%

Mpumalanga Province

171

948

554%

349

204%

North West Province

510

1,090

214%

402

79%

Northern Cape Province

493

267

54%

99

20%

Northern Province

295

1,479

501%

545

185%

Western Cape Province

2,614

1,475

56%

544

21%

 

13, 203

13,565

103%

5,000

38%


Strategic Funding Model: Output Reports
EXPENDITURE PER WELFARE PARTNER (DETAIL)
Report 7.25

Welfare Partner

Year 0

Year 0+1

Year 0+2

Year 0+3

Community Committee

R 918,305,072

R 871,257,106

R 697,074,588

R 522,442,299

Home for frail aged

R 958,305,072

R 871,257,106

R 697,074,588

R 522,442,299

Department of Agriculture

-R 10,765,728

-R11,960,784

-R 23,906,402

-R 35,852,019

Flagship programme

-R 10,765,728

-R11,960,784

-R 23,906,402

-R 35,852,019

Department of Health

R 7,409,496

R 7,774,693

R 8,893,169

R 10,115,081

Community based rehabilitation

R 0

     

Community care: Ageing

R 6,860,257

R 7,241,624

R 8,146,581

R 9,048,215

Outpatient treatment for drug departments

R 299,238

R 283,068

R 498,587

R 816,866

Service design: AIDS orphans

R 250,000

R 250,000

R 250,000

R 250,000

Department of Labour

-R 10,765,728

-R 11,960,784

-R 23,906,402

-R 35,852,019

Flagship programme

-R 10,765,728

-R 11,960,784

-R 23,906,402

-R 35,852,019

Department of State Expenditure

R 32,996,000

R 33,194,011

R 33,194,011

R 33,194,011

Budget Capacity Building

-R 4,000

R 194,011

R 194,011

R 194,011

Secure care for young people awaiting trail

R 33,000,000

R 33,000,000

R 33,000,000

R 33,000,000



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