Education Laws Amd Bill; General & Further Educ & Training Quality Assurance Bill: deliberations

EDUCATION PORTFOLIO COMMITTEE
16 October 2001
GENERAL AND FURTHER EDUCATION AND TRAINING QUALITY ASSURANCE BILL; EDUCATION LAWS AMENDMENT BILL: DELIBERATIONS

Chairperson: Prof Mayatula (ANC)

Documents handed out:
General and Further Education and Training Quality Assurance Bill [B 57B - 2001]
Education Laws Amendment Bill [B 55B - 2001]
Proposed Amendments: Education Laws Amendment Bill - Dr B Geldenhuys(NNP). (See Appendix)

SUMMARY
The Committee considered the two Bills which had been amended by the Select Committee on Education and Recreation in the National Council of Provinces. The Members held differing views on Clause 6 (7)(a) of the Education Laws Amendment Bill on whether money from a school fund of a public school may not be paid into a trust or be used to establish a trust. While some were of the view that money from a school fund should indeed not be paid into a trust account because of the historical abuse of trust accounts. Others argued that even if money is credited into a trust from external sources, such as a donation, there should be transparency surrounding the underlying circumstances or transactions that led to the advance of money into a trust.

MINUTES
General and Further Education and Training Quality Assurance Bill
Clauses 1-5
These clauses were all agreed to and no concerns were raised regarding its content.

Clause 6 Composition of Council
Dr Geldenhuys (NNP) remarked that the Independent Schools Association of South Africa distributed a circular, soon after the public hearings, raising concerns over Clause 6 (1)(a) and Clause 6 (3)(b). The organisation argued that, in connection with Clause 6 (3)(b)(i), provision should be made for representation by the private sector as well. It was proposed that subclause (i) should be redrafted to read “is broadly representative of public and private sectors of the general and further education and training sectors�. It was also proposed that membership of the council should be extended from fifteen to twenty members in order to make ample provision for private sector representation.

Prof Mayatula asked the Department for clarification.

Adv Boshoff (Department of Education) pointed out that that the language employed in subsection (i) was also meant to be inclusive of the private sector. It does not exclude any of the sectors. When the Minister makes an appointment he has to ensure that there is sufficient representation of the members from the private sector. The reason for the limitation of Council membership to fifteen members was that it was felt that there should be a smaller rather than a larger council. A small council is usually composed of fifteen members. If the total membership were to be increased to twenty such would mean a shift in the original decision that was taken to have a smaller council. If Council membership is increased to twenty it would amount to an institution of a medium sized council.

Mr Cwele (ANC) added that Dr Geldenhuys's concern has been adequately covered. If one looks at a careful reading of Clause 6 (3)(b)(i) it does make adequate provision for private sector representation.

The clause was finally agreed to.

Clauses 7-12
These clauses were all agreed to and no concerns were raised by Members.

Clause 13 Funds of the Council
Dr Geldenhuys also remarked that the Independent Schools Association of South Africa noted a concern with regard to Clause 13 (1)(c). The organisation contended that it is a service provider in the rural areas. Thus if it cannot afford to pay for the services rendered it may end up in a position where it would not be in a position to continue providing good education. It suggested that these fees should be determined in consultation with private providers.

Adv Boshoff replied that the authority given to the Council to receive money must be read with other provisions in the Bill and it must also be seen in the light of other measures in place such as the funding norms. Another safeguard that is in place is contained in Clause 13(3), namely that the Minister must approve the budget of the Council. Failing which he must require the Council to provide a revised budget within a specified period. Thus, the concerns that have been raised are fully covered.

Clause 13 was finally agreed to.

Clauses 14-22
These clauses were all agreed to.

Clause 23 Accreditation of Private Providers
Dr Geldenhuys recalled an earlier point that it would be difficult to credit every individual private provider. The argument was raised that this Bill should provide for block accreditation by private providers. A private provider must be registered by the Department and to be registered they must meet certain standards.

Adv Boshoff replied that in the public hearings one of the organisations had submitted that it was a preferred option to accredit all providers including the State. Private providers also need to register with the State and must also register for accreditation.

The clause was finally agreed to by all members.

Clauses 24-30
These clauses were all agreed to.

Education Laws Amendment Bill
Clauses 1-4
The clauses were all agreed to.

Clause 5
Doctor Geldenhuys remarked that his party objects to the fact that a school may not be allowed to enter into a loan or overdraft agreement so as to supplement the school fund. He said that they will move an amendment to make sure that the Member of the Executive Council who must approve a loan must do so within a time frame, for example where there is an urgent need for a loan or money due to a shortage. It is common cause that the MEC must approve a loan but he cannot be allowed to sit on an application for funding for an indefinite period.

Prof. Mayatula commented that the MEC's are not allowed or supposed to sit upon anything in any event. There are laws that exist which compel them to take adequate steps. If applications for funding are unnecessarily delayed, recourse can be had to the courts for an appropriate remedy.

Mr Kgwele remarked that Doctor Geldenhuys's remarks do not close the avenues that schools can follow in order to raise loans. The clause only regulated the provision of loans. He was of the opinion that there was no need to fix time frames within which an MEC has to have a loan approved. His view was that this matter can adequately be dealt with in the Regulations.

Adv. Boshoff was also of the opinion that there was nothing wrong with this clause and that the MEC is required to act promptly in the circumstances.

Dr Geldenhuys remarked that his party is not satisfied with the wording of Clause 1(2) of the Education Laws Amendment Bill that has been amended by the Select Committee on Education and Recreation in the National Council of Provinces and that the party prefers the original clause 1(2) of the Education Laws Amendment Bill that was introduced in the NCOP as a section 76 Bill. The National Minister should not determine  the functions of the learner's representative council as this function lay with the Member of the Executive Council.

Prof. Mayatula adopted a different view and remarked that the clause reads that it is the Member of the Executive Council who has this obligation.

Dr. Geldenhuys replied that his interpretation was that this clause is not the same as the one contained in the original Bill. The original Bill simply said that those functions should be determined by the Member of the Executive Council. Now there is the additional wording which makes the Member of the Executive Council's duties subject to policy made in terms of section 3 (4)(g) of the National Education Policy Act  - and this is made by the National Minister. These functions will be determined by the National Minister.

Adv. Boshoff replied that the function lies with the Member of the Executive Council. However, in performing that function he must adhere to the legal framework set by the Act and the policy framework in terms of the National Education Policy Act. The amended clause 1(b) alludes to this fact.

Dr Geldenhuys asked for an explanation or the reason why it was deleted in the original version of the Bill.

Adv. Boshoff replied that the original version did not specifically refer to the current provision.

Mr Randall (ANC) remarked that this was implied in the original version of the legislation.

Mr Kgwele remarked that this clause affirms that this duty shall be carried out by the Member of the Executive Council.

Dr Geldenhuys remarked that he was not convinced that the power lies with the Member of the Executive Council but that this was part of the centralization process in education and hence would not support the clause as it stands.

Clause 5 was ultimately agreed to.

Clause 6 - Amendment of section 37 of Act 84 of 1996
Mr Ntuli remarked that he appreciates the good intentions of this clause. He accepted that trust funds may easily be abused. However, this must be underpinned by the understanding of some of the Model C schools where due to the state funding norms such schools do not get enough money. The reality then is that they need to create trust funds. This clause may incapacitate some of these schools. If one looks at clause 6(7)(a) it reads that “money from a school fund of a public school may not be paid into a trust or be used to establish a trust�. School funds include all monies that come to a school. It would have been better if the clause read “money from school fees�. This would have made sense because these are direct contributions from parents. However, if a school benefits money from other sources, then such money may be credited to its trust account. He said that his party would appreciate that clause be changed to read “money from school fees� instead of “money from the school fund�. The wording “school fund� completely incapacitates schools from raising money.

Adv. Boshoff replied that it was important to know what a school fund was. A school fund is all the money paid to a school. A trust and trust funds are separate from school funds, although the school may be the beneficiary the school is not the holder of those funds. A school fund is an account to which all the school monies must be paid, e.g. compulsory and voluntary contributions and funds raised by means of utilization of school facilities. Different ledgers may be created in order to identify how the money is to be utilized. Whenever a school receives money from whatever source, the moment it becomes school money it is controlled by the school and may be used to perform school functions and for the benefit of all learners. This is the reason for the amendment into this Act.

A member (ANC) remarked that the reason behind the introduction of this clause was to bring a cessation of abuse that has occurred in the past. Trust and trust funds were continually been abused in the past. This is the main purpose of the amendment.

Mr M Kgwele remarked that money collected into a school fund cannot be transferred into a trust. A trust is only supposed to raise funds on behalf of a school and transfer money into a school fund.

Dr Geldenhuys remarked that his party is not against controlling trust funds and to try to root out abuse of school funds. Whenever a trust fund is abused that problem should be addressed. Misuse of trust funds is an exception to the general rule. The proposed amendment that the NNP puts forward is that departmental control should be strengthened over existing trust funds. The NNP also objects to retrospective legality as it is part of the clause. Furthermore, a trust fund is used for the benefit of all the learners at school but if it is misused this problem must be addressed. Trusts should be allowed to exist but stricter controls should be imposed over them by provincial departments and departmental heads in the provinces.

A member (ANC) remarked that trusts must be done away with because they have been operated adversely to the disadvantaged communities who do not benefit from these instruments.

A member (ANC) asked  for clarity on who controls trust funds, are trusts controlled by school governing bodies or are they controlled by persons outside the schools. She was of the opinion that if these instruments are controlled elsewhere other than by schools governing bodies then such may be a problem.

Prof. Mayatula echoed the above sentiment and said that it was even raised during the public hearings.

Adv. Boshoff replied that this amendment does not attempt to regulate trusts but attempts to regulate school funds. School funds are not paid out of a school fund into a trust.

Dr Geldenhuys asked what would be the position if a private individual were to donate R10 000 into a school. Would this amount to school funds? He asked if this may not be credited to a trust. Most members agreed that if a private individual donates an amount of R10 000 to a school that amount of money would be regarded as school funds.

Adv. Boshoff replied that the Act is clear that the moment money is given to a school it becomes a school fund. A school's governing body cannot be involved in setting up a trust. If an alumni donates money to his old school through an independent trust that established by him for that purpose, then section 37(4) of the Act is relevant. This section provides that “any money or goods donated or bequeathed to or received in trust by a public school must be applied in accordance with the conditions of such donations, bequest or trust�. It is therefore possible for private persons to donate money. However, the current amendment in the Bill says that school funds, that is the total of all school fees, donations and whatsoever, that money is school money and must not be paid into a trust.

Mr Kgwele remarked that the issue of trusts needs to be clarified to avoid the danger of the public being misled.

Dr Geldenhuys remarked that the implications of this clause in practice would be that the “old boys� will set up a trust and donate money into it. That trust will be far removed from the school's governing body. He said that he was aware of the fact that schools have already been instructed on how to circumvent this provision. The alternative was to allow the governing body to have a trust fund and it would be easier to execute stricter control over that trust.

Prof. Mayatula noted that the circumvention tactics have been born out of fear that schools will no longer derive benefits that they were getting out of trusts and that these benefits would be realized through circumvention tactics.

Mr Mpontshane (IFP) remarked that the circumvention tactics were also born out of protectionism.

A member (ANC) remarked that the establishment of trusts will have the effect of adding more problems to the Education Ministry because there have been instances where school principals have abused (misused) school funds.

Mr Ntuli posed a question to Advocate Boshoff and asked to what extent according to his (Boshoff's) experience as a bureaucrat has he experienced the abuse (misuse) of trust funds.

Prof. Mayatula replied that the money donated to a trust became trust funds.

Mr Ntuli opined that it was important that even if monies are donated into a trust there has to be transparency regarding the underlying circumstances surrounding the donation of money into a trust.

Prof. Mayatula said that it was important to note that the Bill does not prevent the forming of a trust by old alumni of a school whereby they can deposit money for the benefit of the school.

Adv. Boshoff stressed the importance of defining what school funds are, because the extra money donated to a trust would not become school funds.

Prof. Mayatula also reiterated that there is no law that prevents individuals from forming trusts in order that they may contribute money to it from their own pockets and trust money can be transferred from a trust to a school.

Dr Geldenhuys expanded on the point of retrospective illegality to which he had alluded to earlier on. This is contained in clause 6 (7)(b) which provides that if a trust was established from a school fund of a public school or if such money was paid into a trust prior to 1 January 2002, such trust or payment is invalid and the money must be paid back into the school fund. He said that this clause was bad law and was potentially unconstitutional.

Adv. Boshoff replied that the provision is correct If the trust does not have funds to repay to the school it would cease to exist as it would be liquidated and the school would suffer the loss.

Dr Geldenhuys stressed that he would move for the amendments listed in the document that he had submitted which is entitled: Proposed Amendments - Education Laws Amendment Bill (See Appendix)

Clauses 7 - 15
These clauses were all agreed to.         

The meeting was adjourned.

PROPOSED AMENDMENTS:
EDUCATION LAWS AMENDMENT BILL

PROPOSED AMENDMENTS:
Clause 1 (b) to be deleted and replaced by the following wording:
The substitution for subsection (2) of the following subsection:
"(2) A Member of the Executive Council [may] must, by notice in the Provincial Gazette, determine [guidelines] the functions and the procedures for the establishment [,]  and election

           
1          All trusts established from a school fund of the public school must be
administered in accordance with directions issued by the Head of
Department and which are not inconsistent with the provisions of this
Act (The South African Schools Act).

2          If the Member of the Executive Committee deems it necessary, he or She may request the Auditor-General to undertake an audit of the records and financial statements of a trust belonging to and administered by a public school.

3          A governing body must submit to the Head of Department within six months after the end of each financial year, a copy of the audited annual financial statements of a trust belonging to and administered by a public school

4          All monies generated by a trust which belongs to and is administered by a public school, must be used in terms of S37(6).