Education Provincial Conditional Grants: 3rd Quarter Spending 2007/08

Meeting report

Provincial Expenditure: National Treasury Briefing
Mr Chris Adams, Director, National Treasury, said that four provinces were projecting to overspend on the education budgets.  Spending of conditional grants against budgets was lower than the total provincial spending average. Even though the rate of spending was encouraging and reflected an improvement on previous financial years, overall conditional grant spending was still below the total provincial spending.

Mpumalanga Provincial Department of Education (PDOE) Briefing
Dr Tsakane Ngumane, Director, Mpumalanga PDOE, noted that the Department spent 35% of the total conditional grant allocation during the third quarter. This was as a result of a lack of capacity in the Further Education and Training (FET) recapitalisation, and on the infrastructure projects. The Department admitted that the expenditure for the current financial year was way below target, and it was largely attributed to projects that were still in the planning stages.

Discussion
The Chairperson said that this Department faced serious challenges, which ranged from lack of accountability to poor planning and ineffective communication with public works.  The National Department should comment on what it was intending to do about the dire situation in Mpumalanga.

Mr Philip Benade, Chief Financial Officer, National Department of Education replied that Mpumalanga had been struggling for a number of years with infrastructure. They had trouble with the Department of Public Works (DPW) and were looking for another implementing agency. The Department had noted the personnel challenges that were faced, and was assisting in finding workable solution to the challenges.

The Chairperson acknowledged that he understood the service delivery challenges and the need for a new delivery agent. However, the issue of looking for an implementation agency was a big problem, as DPW was tasked with building in-house capacity. The Committee was planning to go to Mpumalanga and meet with various municipalities. The Committee would also want to meet with the provincial Departments of Public Works, Education and Provincial Treasury.

Mr E Sogoni (ANC, Gauteng) said that he had a serious problem with the fact that the struggling provincial Department had sent somebody with no accountability to address the Committee.  These challenges were not new challenges, and funds were continually being allocated to Mpumalanga. If provinces were not in a position to spend, then funds should be withheld.

The Chairperson said that part of the discussion that needed to be dealt with when the Committee met with the Mpumalanga PDOE would be issues of financial misconduct. Another area that the Committee would focus on would be that of non-compliance by the accounting authorities, and irregular expenditure. There was a need to hold managers accountable and the Committee would ensure that the necessary steps were taken.

Mr M Robertsen (ANC, Eastern Cape) proposed that the necessary steps be taken immediately, and suggested that the Chairperson should not be too lenient on the province.

Ms D Robinson (DA, Western Cape) added that officials needed to be held accountable and people on the ground should not be allowed to suffer as a result of the dereliction of duty by public officials.

The Chairperson said that the Committee would raise the issues sharply at the meeting in Mpumalanga, and that strict deadlines would be set. 

Gauteng Provincial Department of Education briefing
Mr Mallele Petje, HOD, Gauteng PDOE, noted that the Department had managed to spend 80% of the conditional grant and expenditure appeared to be on track.  The Department faced a number of vital challenges. These included the rapid increase in the number of learners in schools in the Gauteng province. 
Due to the large volume of learners, there were challenges in receiving monthly reports, from the various districts, on the National Schools Nutrition Programme (NSNP). This negatively impacted on the reporting. The FET colleges also faced a challenge in finding suitable service providers, and continuous rain was hampering the construction process. The Department, however, had begun to implement corrective measures in order to address some of the challenges. These include the advanced procurement of building materials, and co-operation with district managers to ensure adequate reporting.

Discussion
Mr Sogoni said that there were many teachers leaving the profession as a result of poor salaries. There needed to be a resolution with National Treasury on the rolling over of teachers’ salaries, as the teachers on the ground were heavily affected.  The Committee appreciated the fact that expenditure on HIV/Aids had improved. However there was no correlation between the programme of the PDOE and that of the Provincial Department of Health and Social Development. Many schools also did not have adequate infrastructure to deal with the issues.  Issues pertaining to Capital Expenditure (CAPEX) needed to be looked into and addressed promptly.

The Chairperson said that in most provinces, transfers did not equal expenditure. The Committee needed to know whether the reports, especially pertaining to the FET, reflected actual spending. The Committee also needed to look into the savings that were realised during the teachers’ strike in 2007. There also needed to be an indication whether the NSNP grant was achieving its intended objectives.

Mr Petje replied that on HIV/Aids, all programmes were integrated, and there was a central committee comprised of all departments. The Education Department was responsible for the programmatic delivery within the curriculum. The issue surrounding personnel was a general problem, and Gauteng had the allocation from Treasury ring-fenced for conditions of service and incentives.  There were still discussions on this matter taking place, and an agreement would be reached soon. In regard to CAPEX, the Department was working hard in addressing the challenges, and it was not an issue of non delivery but an issue relating to the way in which the amounts were reflected. There were also various challenges involving contractors that related to CAPEX, and the Department was very aware of the issues. In respect of the transfers, the Department had implemented monitoring mechanisms that would monitor the expenditure of the FET colleges and roll-overs in order to ensure that funds did not remain unspent. The Department was confident that most of the colleges would actually be able to spend. In respect of the NSNP, there were no savings. Since there was no agreement with the unions, feeding took place in schools where learners were present. There was also a situation where some learners were turned away from schools. Since the service providers had already been procured, the food was redirected to centres that cared for children in areas where there would not otherwise be feeding.  The Department had records on the centres where the feeding had taken place.  The Department believed that the objectives of the school feeding schemes had been achieved; but there were issues such as the quality of the food that still needed to be addressed.

The Chairperson noted that the Gauteng innovation on the school feeding schemes was very original and he was not sure whether other provinces had done the same. The Committee needed to look into this matter with other provinces.

Mr Adams said that when it came to service providers one needed to be careful what the functions of the funds should be. In regard to CAPEX, it was important for one to separate the issue of maintenance from the CAPEX, as it would otherwise distort the budget.

Dr Sandra Sooklal, Director: Intergovernmental Relations Division, National Treasury, noted that it was important to look into how the policies of the school feeding schemes were affected during the 2007 teacher strike.  The issues of maintenance were very important, because in some instances an amount would be allocated but there was insufficient clarity on what it was used for. In respect of HIV/AIDS there needed to be an investigation as to whether the grant should be phased into the life skills programme.

Mr Benade added that the HIV/AIDS programme would fit well into the life skills programme, and the Department was looking into including it as part of the equitable share. On the feeding schemes it was true that there were service providers. However, some schools had community gardens and it was very difficult to make any savings from the gardens.  The Department would try to obtain a report from various provinces in order to determine how the challenges were addressed.

Mr Sogoni stressed that more needed to be done for the students that had failed matriculation examinations, since they were unable to be fitted into the new curriculum.

The Chairperson said that he found Mr Benade’s comment difficult to accept. It was true that nothing could be done with the money that was paid out, however there needed to be clarity into the innovations.  The matter needed to be looked into and a huge audit needed to be done.

Northern Cape Provincial Department of Education Briefing
Mr Henry Esau, Acting HOD, Northern Cape PDOE, said that the Department managed four conditional grants. Spending on the NSNP Conditional Grant for the third quarter of 2007/08 improved to 75%. There was spending of 78% on the Life Skills, 87% on the Infrastructure and 71% on the FET grant.  In respect of monitoring and capacity mandatory quarterly meetings were held with all districts to monitor and scrutinise progress. Bi-monthly meetings were also held with districts to monitor progress and address challenges. The Department also submitted certified business plans for the 2007/08 financial year to National Treasury as per the Division of Revenue Act (DORA) for Food Nutrition; Infrastructure; Life Skills and FET.

Discussion
The Chairperson said that service delivery was too slow and that Health, Agriculture and Public Works were problem areas. He wanted to know the number of secondary schools that were given food and whether it resulted in any improvements in the Northern Cape. A review of the results was needed. 

Mr Robertsen addressed an issue that concerned the delivery aspect of Public Works.  He wanted to know if it was on schedule. A report about the benefits of the Nutritional Feeding programme to children was requested.

Mr Z Kolweni (ANC, North West) raised the issue of life skills training for educators. He queried whether that resource was being used. There were many that had not had a life skills training programme.

Mr B Mkhalipi (ANC, Mpumalanga) commented that the presenter had stated that there was improvement in monitoring capacity, but he noticed that plans were yet to be implemented. Also, the employment of additional staff into the system did not necessarily mean that there would be improvement in efficiency. He was confused about the actual situation, and asked for clarification. 

Mr Sogoni focused on expenditure. He queried the nature of a few of the items of expenditure shown on the report, asking if they were once-off payments and if they were for quality goods and services. 

The Chairperson commented that the report showed estimates for past expenditure. This was troubling as first, second and third quarter budgets should already have been spent and therefore could not be shown as estimates. 

Mr Sogoni asked for clarification on the amount shown for personnel expenditure. He wanted to know the basis for the over-expenditure estimated in the report.

The Chairperson wanted to know the reasons behind some of the spending on schools, and why there was a huge drop on expenditure.

Dr Sooklal stated that there was no connection between the financial expenditure and the non-financial indicators that should have been included in the business plan. At the next meeting, the Department was to present a report to the Finance Committee that indicated plans for achieving their targets. They would also need to show the alignment of the planning, budget and indicators so that the Committee could understand the root causes of the problems and solutions to challenges. 

The Chairperson worried that there was a problem with under spending on infrastructure even though the report showed an improvement from the previous year.

Mr Sogoni noted that the problem with expenditure in the Northern Cape had not been resolved. 

Dr Sooklal stated that problems could have arisen as a result of the demarcation process, specifically with regard to education. She suggested that Members focus on the division of grants so that more realistic figures could be estimated. Roll overs, and how they should be included in the Report, were discussed. 

The Chairperson informed Dr Sooklal that the National Department would deal with the demarcation issue. This was a major issue that needed to be resolved as soon as possible. 

Mr Esau responded to the question on the delivery aspects of Public Works.  The strategy to address the problem had improved the situation, but Mr Esau admitted that there were major capacity issues with the Provincial Department of Public Works. Outsourcing would be viewed as an option, but this was not likely to happen as delivery was improving.  In regard to infrastructure, there was a slight improvement when compared to the previous financial year. The improvement was due to programmes that were implemented by Public Works, which centred on delivery of infrastructure. In general, the employment of additional staff did not necessarily lead to improvement, but in the Northern Cape’s case extra staff were needed, as some entities were under-staffed. The amount spent on schools included costs for maintenance as well as the introduction of mobile schools.  Mobile schools were useful when additional space was needed.

Mr Sogoni said that he did not understand the issue of mobile classrooms and why so much funding was being given to this. The Chairperson agreed, saying that the amount of mobile classrooms should have been decreasing.  

Mr Esau assured the Chairperson that the amounts included in the report were actual expenditure and not estimates.  He explained that there was a contradiction in terms of the expected under expenditure of the conditional grant, however he assured the Committee that the matter would be resolved, as the PDOE would not permit any over-or under-expenditure on grants.  It was true that there was an issue with the method that was used to record rollovers and he suggested that Dr Sooklal advise the Department on where to place the roll overs in the report.

Mr B Jacobs, Chief Financial Officer, PDOE, informed the Committee that 110 schools were being supplied with food. He explained that there were four cooked meals a week and bread was made available as an option. A menu was prescribed by the Department of Health. There was a problem with the service providers who transported the mobile schools. It was therefore difficult for the Department to deliver the mobile schools on time. 

The Chairperson said that they would need to have discussions with both the Eastern Cape and the Free State concerning various issues. One of the major problems was a result of migration issues, and the challenge lay in knowing how to compensate for inter province migration. This was important, as standards could have decreased and sustainability of projects could have been affected as a result of the inter-province migration. 

Mr Jacobs agreed and added that the Province would need new statistics on which to base its budget allocation. This would include changes caused by migration and would assure that the budget allocation was fully poverty-index related.

Free State Provincial Department of Education Briefing
Mr Mafu Rakometsi, HOD, Free State PDOE, said that the Department spent 75% of the allocated funds on various programmes, and 88% of the conditional grant, during the third quarter. On the HIV/Aids programme, the Department was faced with a number of challenges, which included the procurement of additional personnel needed to assist with the increasing volume of work. On the NSNP, 413 546 learners were fed during the second and third quarters and voluntary food handlers were given a stipend of R500 each per month.  Other achievements included 382 FET staff receiving training according to identified needs to ensure effective teaching and learning. In terms of the monitoring capacity, monthly Finance Committee meetings were held to discuss under spending and remedial actions.

Discussion
The Chairperson said that according to the Provincial Treasury, this Department projected to overspend their total conditional grant allocation by about R18 Million. This was very problematic as it was impossible to overspend a conditional grant. On the FET the Department projected to under spend by 1.8%, but a projected over expenditure was expected for food nutrition. He asked if the over spending on food nutrition was credible.

Mr Sogoni asked the Department to comment on the innovations that took place to supplement the funds received by National Treasury for the nutrition schemes. Clarity should be provided on the minor and major Expanded Public Works Programmes (EPWP). On the over expenditure, the Department should state whether they had any clear-cut business plans, and whether those plans were provided for in the adjustments. The Department had also failed to comment on the personnel and the implications of the migration of personnel. IN respect of the payments of teacher incentives, clarity should be provided on the progress that Free State had made on the matter.

Dr Sooklal said that from the presentation it appeared that this Department had included Early Childhood Development (ECD) on the food nutrition programmes, however the ECD was funded separately by National Treasury. The Department should comment on the matter, and indicate what was the cost of the voluntary food handlers who were employed. On the feeding schemes, the Department should comment whether there was an arrangement with the National Department to top up the grant. The planning and the funds available should be more closely aligned.

Mr Kolweni asked for clarity on how many food handlers there were e, and from which budget they were paid.

Mr Rakometsi replied that the Department stopped the feeding process completely during the strike. The high expenditure was due to the high growth of numbers of learners in schools.

Mr Sogoni asked whether the problem lay with the projection the Education Department had made at the beginning of the year.

Mr Rakometsi replied that the figures needed to be looked into. On the cost per meal, the Department was looking at the national menu, and applied the national menu to the needs in the Free State. FET colleges were now able to employ according to the need, and the turnaround time was much faster. The implication of this led to the FETs being able to have their own staff. In regard to local economic development, the Department had a representative sitting at the Executive Management level of DPW. What the Department was trying to do was trying to place conditions on Public Works that would capacitate members of the community to undertake huge projects. Minor CAPEX related to minor repairs and was done in house. The Department would in time differentiate their EPWP from the national EPWP, as they were trying to capacitate the communities. Funds were supplemented by money from the Department’s equitable share to accommodate the growing number of learners.

The Chairperson said that the conditional grant was supposed to be supplementary, yet according to the Free State it was the conditional grant itself that was being supplemented. The Department should therefore state whether or not it had credible business plans.

Mr Rakometsi replied that it was a weakness that the Department needed to look into closely. The ECD was not part of the nutrition programme. There was an increasing demand to feed learners in the ECD level, and the Department had not been able to do so as the conditional grant did not make any provision for the scheme. The food handlers were the mothers of learners, and the Department paid them R500 each. There were transfer payments to the schools and the principals were responsible for the transfers.

The Chairperson said that there seemed to be a misalignment of the ECD with National Treasury.

Dr Sooklal replied that in respect of the ECD grant, there was an allocation made to learners under the age of four years, and included in that was an amount that should be able to feed the learners. There were additional funds coming for the NSNP, and the misalignments needed to be addressed.

Mr Benade said that the ECD sites to deal with age 0 to 4 sites fell under Department of Social Development. They had to run the sites as ECD centres. The Department of Education’s responsibility was to ensure training programmes for the caregivers.

The Chairperson said that the discussion needed to be pursued with Department of Social Development (DSD). It seemed as if the DSD in other provinces seemed to be over and under spending. The Committee needed to know where the money was going.

Mr M Monane, CFO, PDOE, replied that the four FET colleges would not be able to overspend. However the Department had indicated that there were major infrastructure projects that the Department hoped to finish before the end of the financial year. The Department committed itself to supplement the conditional grant; however it was not correct that the Department would overspend on the conditional grant. This was due to the fact that it would take over projects from the equitable share.

The Chairperson said that something in the equitable share was compromised, and there was no reason to overspend unless planning was wrong.

Mr Monane said that about two years ago the Department had received an allocation of R2 million

The Chairperson stated that what the National Department of Education had done was wrong

Mr Benade replied that there were a number of provinces who said they were unable to meet the minimum requirements for the feeding schemes.  The Department then made a plea to National Treasury, who in turn provided additional funding.  When it became apparent that the additional funds were not going to be utilised before the end of the financial year, the Department issued a directive to use the funds for non-recurring expenditure, which could included the setting up of kitchens.

The Chairperson said that this did not respond to the credibility of planning.

Mr Monane replied that he did not have the actual number of the voluntary food handlers. The personnel expenditure indicated a slight pressure and there was a saving from the educators’ strike. The amount was used for education priorities.

Ms A Mchunu (IFP, KZN) said that on the ECDs the Department should have libraries for children aged 0-4 years.

The Chairperson replied that it would cost too much

Mr Adams added that there was a budget within the ECD for goods and services. There was an allocation for children aged 0-4 and the Department did not separate the various budgets. This resulted in over expenditure in many provincial Departments.

The Chairperson said that he would appreciate a presentation from National Treasury on the issues that had just been raised.

Mr Monane replied that he was unaware of an allocation for children between ages 0-4.

The Chairperson said that the issues would be resolved during a workshop on the Division of Revenue Bill on 27 February. 

Eastern Cape Provincial Department of Education Briefing
Mr Mthunywa Ngonzo, Deputy Director General, Eastern Cape PDOE, tendered apologies of the Head of Department and the MEC for Education.

Discussion
The Chairperson said that if an apology was being made for the MEC and the HOD, then there was a huge problem. He said that the Committee would accept the written report as tabled, and there were serious issues that needed to be addressed.

Mr Robertsen added that he had been in parliament for almost 13 years, and every year the Eastern Cape had failed to perform, with no improvements. 

Mr Sogoni said that he sympathised with the Eastern Cape delegates who had to sit in the meeting for the entire day. However it was unfair to hold the wrong people accountable for challenges that were faced by the Eastern Cape. The Committee needed answers, but the present delegates were unable to answer the questions.

The Chairperson said that there were widespread problems in many of the Eastern Cape’s provincial Departments. The Committee would take the same decision that it had taken for the Mpumalanga Education Department. The Eastern Cape issues had become a legacy, and a solution to the challenges needed to be found.

Mr Robertsen said he was unhappy with the attitude of the Eastern Cape officials, and there was a total lack of responsibility to those people on the ground who could not help themselves.

Mr Sogoni added that the Eastern Cape gave parliament a bad name, as their actions made people believe that parliament was weak. Officials needed to be held to account for public funds, and it was a pity that the MEC was not present.

Mr Robertsen proposed that the same decision taken against Mpumalanga be taken against the Eastern Cape.

The Chairperson said that it would be incorrect for the Committee to allocate funds to the province, knowing that the province did not have the capacity to spend. The Committee would not pass the Division of Revenue Bill unless the Committee was convinced that the Eastern Cape Education Department had the capacity to spend.

Mr Sogoni added that performance contracts should be in place, so that people had to work to earn their salaries.

Mr Benade noted that the National Department had carefully listened to the issues and would continue working on them. Some of the issues raised would be raised once more with the Minister of Education.

Mr Adams said that there needed to be a meeting at a later stage to see whether the funds allocated had reached their intended targets.

The meeting was adjourned.