Financial & Fiscal Commission Recommendations on Division of Revenue: Response by Education, DME, Health

NCOP Finance

10 June 2008
Chairperson: Mr T Ralane (ANC)
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Meeting Summary

In responding to the recommendations of the Financial Fiscal Commission, the Department of Education identified three key areas: re-ranking of schools, learner transport and performance management. Members insisted that the Department should provide timeframes for revisiting the quintile system and the provision of policy on learner transport. They felt that the issue of learner transport should be taken on board by the Department of Education, as there was currently uncertainty as to which department had the mandate to deal with this. Members felt that failing to effectively deal with learner transport infringed on the right of many children to education, since these children were unable to reach schools.

The Department of Minerals and Energy focused on the electrification programme but the Committee curtailed the presentation, saying that it was irrelevant to the topic as it in no way responded to the FFC recommendations.

The Department of Health presentation dealt with fiscal performance of community health clinics and infrastructure for primary healthcare and health outcomes. The Committee complained that the presentation did not adequately address the topic plus they wanted to hear about the provincialisation of primary health care. Also the representative lacked the authority to provide certain commitments. The Committee requested the Department to redo their submission and provide it to the Committee in writing.

Meeting report

Department of Education (DoE) response to the FFC Recommendations
Mr Theuns Tredoux (Chief Director: Finance: DoE) read through the presentation document. The following areas were addressed in the presentation:

Re-ranking of schools
The FFC found that:
-in poorer provinces, schools previously assigned to quintiles two and three were reassigned to quintiles one and two allowing them to get more funding
-in richer provinces, schools previously assigned to quintiles one and two were reassigned to quintile three resulting in them getting less funding. The Department of Education (DOE) agreed with this finding.

Mr Tredoux stated that schools should not be disadvantaged by reclassification. Pro-poor policy changes could have unintended consequences. Where identified, these were being corrected.

The FFC also found that the use of wards to rank schools did not reflect poverty distribution of the school or profile of the community. However, the DOE felt that the use of wards to rank schools was currently the best option unless a more efficient method could be recommended.

The FFC further found that national re-ranking did not deliver the same outcome as provincially driven ranking. The DOE agreed, saying that this must be the result, since the national ranking ensured that the equally poor were similarly classified in all provinces.

The FFC recommended a review of the method used to inform national quintile ranking of schools, taking into account socio-economic circumstances of learners.

The DOE’s comments on the recommendations were as follows:
- There was a need to review the method used to inform national quintile ranking of schools, taking into account socio-economic circumstances of learners.
- Currently policy provides for poor learners in higher quintile schools to be exempt from paying school fees
- Ranking of schools is based on data from StatsSA which could not be segregated into smaller units due to confidentiality of households
- DOE was reviewing the quintile system. The Minister could consider a revised policy before the end of 2008.

Learner Transport
The FFC found that there was no specific national policy dealing with this issue. There was no clear definition and division of responsibility between the Departments of Education and Transport. Policies and practices differed amongst the provinces.

The DOE agreed with these findings.

The FFC recommended:
- National norms and standards to deal with this issue
- Putting an interim measure in place. Provinces should implement statutory provisions that ensure learners get equal access to the right to education.

The DOE’s comments on the recommendations were as follows:
- There should be clear assignment of responsibility on learner transport. The DOE had undertaken a study on scholar transport. They were working with the Department of Transport (DOT) on these issues.
- There were ongoing initiatives with the DOT on a common approach going forward.
- Data on investment in this area was limited due to disparities between provinces. Expenditure figures were available in the draft Learner Transport report.
- A budget line item for learner transport was provided in the standard chart of accounts. Provinces were not adhering to it.

Performance Management
The FFC found that budget allocations to schools did not reflect across all provinces. They also found that it was difficult to extract information on no-fee schools due to economic classification. In addition there was no available data on learner transport.

The FFC recommended that:
-The DOE should make funding norms for fee and no-fee schools publicly available and accessible.
-Provincial departments should be enabled to report on budget and spending on learner transport.

The DOE’s comments on the recommendations were as follows:
- On the need to gazette the indicative allocation information per school, the Division of Revenue Act (DoRA) required that it be published by provincial treasuries. This was a new requirement and National Treasury was assisting provinces with this.
- The National Norms and Standards provided that provinces must gazette the resource target list, which should include information on the no-fee status of the school. Also, the Minister published a list of no fee schools annually.
- Compilation of budgets was an intergovernmental relations matter. Provincial treasuries had the final say on how statements were published.

Discussion
Mr E Sogoni (ANC) asked how long the DOE would take to revisit the policy on the quintile system.

Mr Duncan Hindle (Director General: DOE) replied that the entire school funding framework was based on the premise that schools could charge fees and offer exemptions to certain learners. The move to 60% of the schools becoming no-fee schools next year would render the funding framework redundant, since these schools would fall outside the funding framework. Among the options raised had been the introduction of fee-paying schools and non-fee paying schools. DOE would have to return to the Committee to discuss this issue. Already in the proposed allocations, there was no distinction between certain quintiles. Instead, certain allocations were made to no-fee paying schools. Thus the quintile system already seemed to be falling apart.

Mr Songoni asked if the DOE would give the timeframes for the policy on school transport. He referred to the development of transitional arrangements for learner transport. In developing these, DOE would be able to identify weaknesses and how these could be improved upon.

Mr Songoni referred to the issues raised at the 10 June meeting. They had discussed whether the issue of school transport should be the responsibility of the Department of Transport or Education. The Members had felt that the responsibility should be with the Department of Education. There should be no grey area regarding the responsibility of this matter. This area had been unresolved for a long time, especially in the rural areas. If this became the responsibility of the DOE, they would be able to set up norms and standards for transport.

The Chair agreed with Mr Songoni that the responsibility for learner transport should rest with the DOE. They should be held accountable for ensuring that these children actually got education. This would ensure that there would be no finger pointing.

Mr Hindle agreed that the matter of learner transport has been on the table for a long time. He however assured the Committee that they were close to a solution. The DOE accepted the responsibility and had therefore drafted a document, but at the same time DOT had done the same. They too believed that they had the legal mandate to deal with the issue. DOT saw learner transport as being part of the integrated public transport strategy. Some provinces gave the responsibility to the DOE while others felt it belonged with the DOT. There also needed to be decisions on which learners qualified for transport provided by government and on what basis this decision would be made. Mr Hindle assured the Committee that the policy would be completed within the next three months.

Mr D Botha (ANC) asked how the DOE would determine which provinces were poor and which were not. Each province had poor areas. Even rich provinces had poor areas. The total population of poor in Gauteng was as large as the poor in North West. He referred to the presentation which indicated the use of wards to rank schools. He gave the example of a ward in the Limpopo which consisted of two schools situated in the white communities, while the rest of the schools in that ward were rural-based. Thus the two schools consisted of learners who could afford to pay while the other schools had very poor learners.

The Chair agreed, saying that Alexandra and Sandton were divided by a street. Therefore in the same ward one might have affluence on the one hand and huge depression on the other.

Mr Hindle agreed. It was for this reason that DOE had requested Statistics SA to provide them with more detailed data on wards. The anomalies in the data had been worrying. They were trying to alert provincial departments to the fact that there were many schools which looked really good on the outside, but were accommodating very poor children. These schools were placed in quintile 5 and therefore got very little money. They also were unable to collect fee income. The DOE was therefore looking at a system of compensating these wealthier schools taking in poor learners.

Mr Bongani Khumalo (Deputy Chairperson: FFC) informed the Committee of the trend where learners were migrating from townships to attend schools in the suburbs. It was uncertain whether the Department would have to provide these children with transport to school as well. Perhaps a means test should be considered.

Mr Hindle said that it might be necessary to consider zoning where children would have to attend the schools nearest to their homes. Some provinces were introducing soft zoning, with schools giving preference to learners living in the area. The question was whether the DOE should have to pay to transport learners outside the areas in which they lived. DOE felt that they should pay to transport learners to schools which were nearest to their homes.

Mr Botha referred to the responsibility for learner transport. He asked for the timeframes for when this issue would be finalized. He asked if there were public hearings in rural areas to determine what was happening on these matters. In addition, if learners were provided with transport, it would be possible to have fewer and perhaps bigger schools. One could then have fewer school buildings but better transport.

Mr Songoni referred to zoning and the situation where parents wished to send their children to a school about ten kilometres away from home rather than to a school nearby. He asked what was meant by catchment area.

Mr Hindle said that all provinces had admission guidelines which communities needed to monitor. He described the situation where children arriving in a BMW were admitted to the school, while the child arriving by taxi would be informed that the school was full. Communities therefore needed to monitor the application of these guidelines.

Mr Songoni referred to the situation in the Northern Cape where there were often hundreds of kilometers between the schools. Schools were small, had few children and were therefore not economically viable. There were suggestions that DOE close these schools and open one big school.

Mr Hindle replied that the DOE had shifted their policy on housing children in hostels. Where small schools could be consolidated into one big school for the purposes of efficiency, it may become necessary for children to be housed in hostels if these schools were far away from their homes. They would receive three meals a day, a bed in which to sleep and supervised homework. They would go home every weekend. DOE had to do the costing by comparing the total cost of schooling and accommodation with that of having many small schools.

Mr Botha added that at the moment many people were sending their children to schools in the towns, since the rural areas lacked adequate facilities. Children stayed in shacks in people’s backyards. Hostels could therefore be the answer. It would ensure that children received discipline, good management and were exposed to various activities.

The Chair said that it was necessary to monitor this issue of learner transport, but proper data was needed. They would speak to Statistics SA. The non-adherence of the policies by provinces was problematic.

Mr B Mkhaliphi (ANC) said that the transitional arrangements for the issue of learner transport were important. He requested that DOE should provide the detail on these arrangements as it affected a learner’s constitutional right to schooling.

Mr Hindle said that if Members came across individual cases in provinces where this was a problem, it should be referred to his office. DOE would then look at the funding available to deal with the matter.

Mr Botha asked if DOE was looking at a special bus transporting only school children, or paying for children to travel by public transport. In the rural areas they would need a special school bus, because public transport did not travel into many of those areas due to the state of the roads.

The Chair said that, while he did not oppose learners being transported on public transport, one had to bear in mind the needs of learners. For example, they had to get home early to do their homework. There should perhaps be more focus on providing special school transport. If learners were transported by means of public transport, there would have to be clear guidelines how this could happen. It was important to remember that one was dealing with vulnerable people whose needs should not be compromised.

Mr Songani proposed that learner transport be funded by conditional grants (despite the fact that provinces do not like dealing with these). The item of learner transport should not simply receive its allocation in terms of an equitable share.

Mr Botha agreed that the matter be funded by a conditional grant. He referred to the situation where money was taken from the Education budget to deal with the overspending in another department.

Mr Hindle said that while it was not DOE’s place to comment on the way funding should occur, he was very happy with what Members were proposing.

Mr Kenneth Brown (Chief Director: Intergovernmental Policy Planning, National Treasury) said that there should be no discretion with regard to the provision of funding to the priority sectors of Education, Health and Social Development. Thus funding norms were developed and allocations made to these sectors.

Mr Songoni said that there were clear policies about children who could not pay for schooling. Principals were however too lazy to apply for the exemptions for children who qualified for them. Constitutionally children could not be denied an education, but ensuring this in practice was a problem.

The Chair invited Mr Phillip Benade, the Chief Financial Officer of the DOE, to a workshop being held in the Eastern Cape on 13 June. It was important that the matters raised in the FFC recommendations were resolved. He was pleased that the DOE had provided a commitment regarding the policy on learner transport.

Department of Minerals and Energy (DME) presentation
Mr Martin Masemola (Senior Manager: Electrification, DME) apologized that the Minister and Director General could not be present. He referred to pages 2 to 12 of the presentation document (dealing with: background to the electrification programme, situational analysis, backlog, backlog per province, the electricity value chain, electrification plan, electrification projected trend, challenges.

The Chair interrupted, saying that the presentation had nothing to do with topic being discussed. The DME were meant to provide their response to the FFC Recommendations on the Division of Revenue for the 2009/10 financial year. For the purposes of the present meeting, the Committee was not interested in the performance of the DME on current programmes.

Mr Masemola referred to pages 18 and 19 of the presentation document. DME was proposing a framework to allow for the funding of Demand Side Management (DSM) and Energy efficiency initiatives. Currently there were not many incentives for new entrants.

Mr Botha interrupted, saying that the presentation did not address the FFC recommendations.

Mr Songoni said he was aware that the DME had been busy with the budget debates in the National Assembly and National Council of Provinces. He asked if that was the reason they had not managed to prepare. They should have told the Committee that they had not had time to prepare for the presentation.

The Chair agreed, saying that the issues raised in the presentation involved programmes which were already taking place in the DME. Members were not interested in those issues for the purposes of the present meeting.

Department of Health (DOH) response to the FFC Recommendations
Mr Siyabonga Jikwana (Senior Manager: Health Financial Planning and Economics) apologized that the Minister and Director General were unable to attend the meeting.

The two main issues addressed were:
Fiscal performance of community health clinics
The DOH agreed with the key findings on Primary Health Care (PHC). The true average growth of financing PHC per provinces has varied over the years. There were difficulties in aggregating budget and expenditure in clinics. Provincial departmental budget votes did not publish allocations to clinics.

DOH informed the FFC of the Great Plains (accounting package) project aimed at developing cost centres throughout provinces. Its aim was to ensure that health facilities could manage their own budgets.

Infrastructure for primary healthcare and health outcomes
DOH had received complaints about the quality of PHC services. They would engage FFC on the options proposed. Mr Jikwana was unable to comment further on this process.

DOH was undertaking a Benefit Incidence Analysis (BIA) study. The study would explore treatment-seeking behaviour in detail. It was aimed at understanding public experiences and perceptions of the public sector health services, as well as how to promote equitable benefit incidence. It would also help to show the factors influencing the distribution of healthcare benefits and how to promote equitable benefit incidence.

DOH has discussed proposals for developing the National Health Insurance with National Treasury. They also realized that the Hospital Revitalisation program must include clinics which refer patients to the hospitals.

The infrastructure grant must be discussed with provincial treasuries as provincial health departments often have no say as to the amount to be allocated to them for clinic building and revitalization

The DOH would engage the FFC further on their recommendations.

Discussion
Mr Songoni said that presentations should be given by the most senior persons within a Department. It seemed as if the DOH was allowing just anyone to do their presentation for them.

Mr Songoni referred to the introduction, which highlighted the issues raised by the FFC. The issue of PHC was critical and if the DG had been there he would have been able to deal with issues of provincialisation. Experiences from the provinces have shown that PHC was dealt with more effectively by municipalities. Quality of PHC had declined since it became a provincial function. He had hoped that the DOH could respond to this issue. The submission fell short of what he was expecting regarding the FFC’s recommendations.

Mr Songoni referred to pages 5 and 6 of the presentation, titled “What has been done”. He said this was a wish list and provided no certainty. They had mentioned nothing about the involvement of the Department of Public Works.

Mr Botha agreed that the DOH should have sent more senior officials to make the presentation. He was not sure whether the director was authorized to make any commitments on behalf of the DOH. The departments must bear in mind that that Select Committee would be approving budgets for the Division of Revenue. Important FFC recommendations had not been addressed. He referred to the fact that there were clinics which had nothing inside them. There was no medication to give to patients or even to women in labour. He was not sure if the presenter could give commitments on this matter.

The Chair said that while the apologies from the Minister and DG had been noted, even the Chief Financial Officer and other senior officials were absent. The presentation was evasive and followed the “stealth approach”. Members were interested in hearing firm departmental responses to the FFC’s 2009-10 recommendations. Issues like the provincialisation of PHC had to be dealt with by more senior officials. Members had not been interested in hearing about the hospital revitalization programme at that meeting. The DOH had done shoddy work in the presentation, as they had been too diplomatic and had not addressed the issues. This was the DOH’s opportunity to talk to the FFC officially. The presentation had assisted neither the Committee nor the DOH. He said that Mr Jikwana should inform his principals about this. He requested that the DOH should provide their response in writing, as there would not be time to interact with them again.

The Chair said that Statistics South Africa was supposed to present next, but was later informed that they would not be able to attend the meeting.

The Chair adjourned the meeting.

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