ATC130618: Report of the Select Committee on Appropriations on the Hearing on the Third and Fourth Quarter Expenditure on the Dinaledi Schools Grant in the  2012/13 Financial Year, dated 18 June 2013

REPORT OF THE SELECT COMMITTEE ON APPROPRIATIONS ON THE HEARING ON THE THIRD AND FOURTH QUARTER EXPENDITURE ON THE DINALEDI SCHOOLS GRANT IN THE 2012/13 FINANCIAL YEAR, DATED 18 JUNE 2013

1. Introduction

The hearings formed part of the Committee’s ongoing interaction with national departments and provinces to monitor their spending patterns on conditional grants allocated to them. The purpose of the Dinaledi Schools Grant is to promote mathematics and physical science teaching and learning. The strategic goal is to increase the number of learners taking mathematics and physical science, with a special focus on female learners. Key outputs of this Grant include mobile science laboratories, maths kits and textbooks for each learner in Dinaledi schools and training teachers on content knowledge.

1.1 Terms of reference

The Committee requested the provincial education departments of Limpopo , North West and the Western Cape to report on their third and fourth quarter spending on the Dinaledi Schools Grant. Limpopo was given permission to submit a written report, in light of the fact that they made a presentation to Members in Polokwane during an oversight visit shortly before the hearing took place. The Western Cape and North West , as well as the Department of Basic Education and National Treasury were invited to the hearing on 7 May 2013. The North West Education Department did not honour the invitation.

2. Presentation by National Treasury

National Treasury reported that the Dinaledi Schools Grant targets 500 schools nationwide. The distribution of Dinaledi schools in provinces is as follows:

Eastern Cape : 60;

Free State : 36;

Gauteng : 103;

KwaZulu-Natal : 88;

Limpopo : 51;

Mpumalanga : 46;

Northern Cape : 17;

North West : 51; and

Western Cape : 48.

During the 2011/12 financial year, the first year of the Grant’s implementation, a total of R70 million was allocated to provinces. Of the allocation about R61.5 million, or 88 per cent, was spent. National Treasury presented the provincial spending on the Grant for the 2012/13 financial year as follows:

Table: Dinaledi Schools Grant expenditure as at 31 March 2013

Province	Adjusted budget	Actual payments as at 31 March 2013	Actual payments as % of adjusted budget	Under- Spent	Year-on-year growth
Eastern Cape	11 964	11 656	97.4 %	308	38.8%
Free State	7 374	5 184	70.3%	2 190	7.6%
Gauteng	20 139	20 139	100.0%	-	42.4%
KwaZulu-Natal	17 547	17 078	97.3%	469	38.6%
Limpopo	14 390	5 732	39.8%	8 658	844.3%
Mpumalanga	9 802	9 787	99.8%	15	71.8%
Northern Cape	3 391	3 300	97.3%	91	38.7%
North West	11 287	8 777	77.8%	2 510	34.2%
Western Cape	9 571	4 615	48.2%	4 956	-31.0%
TOTAL	105 465	86 268	81.8%	19 197	40.1%

National Treasury reported that a dedicated Dinaledi Unit was created within the Department of Basic Education (DBE) in August 2012. The responsibilities of this unit include assisting provincial departments with implementation issues, and assisting and liaising with private partners who wish to adopt or support a Dinaledi school. National Treasury is expecting an annual evaluation of the programme from the DBE on 15 May 2013.

National Treasury further reported that, as a sector, Education still experiences challenges, including the following:

· Learner perceptions that maths and science are too difficult;

· Poor skills of teachers who have to teach maths and science;

· Certain provinces need a better management focus on the programme, in order to address avoidable implementation challenges.

The DBE has indicated that Dinaledi schools score only about 10 per cent higher than normal schools in maths and science, and that they are focused on at least doubling this figure. The DBE further indicated that its bursary schemes are a key vehicle to address the issue of poor teacher skills.

National Treasury reported that there are also challenges related to financial issues and that they, together with provincial treasuries, are working to address the challenges with the DBE and provincial education departments. These include the following:

· Failure to procure from service providers identified by the DBE, particularly by the Western Cape ;

· Poor Supply Chain Management skills, resulting in procurement delays and cancellations, particularly in Mpumalanga , Limpopo and the Free State ;

· Advance payments/transfers to service providers, with poor reporting on what the service providers have actually delivered with the funds, particularly by Gauteng and Mpumalanga .

National Treasury indicated that it has engaged with provincial treasuries and the DBE to enforce reporting requirements. Treasury further expressed the view that the above challenges are avoidable and solvable, as they essentially relate to a lack of internal management focus within provincial departments to drive the programme.

3. Presentation by Western Cape Education Department

The Western Cape Education Department (WCED) reported that it had managed to spend 99.5 per cent of its Dinaledi Schools Grant allocation during the 2011/12 financial year and that there has been continually improved performance in maths and science by learners in Grade 12. The WCED further explained the reason for its poor spending performance of only 48.2 per cent in the 2012/13 financial year as follows:

In June 2012 the management of the Grant was discussed with all Dinaledi schools. Schools were informed that funds would be transferred directly into their dedicated Dinaledi Grant accounts, in order for them to procure goods and services according to their needs.

However, in July 2012 the WCED management took a strategic decision to change to a more accountable procurement process, based on recommendations by the Auditor-General. Goods and services would now be centrally procured in order to minimise the risks identified by the Auditor-General and to improve the WCED’s ability to monitor and control expenditure on the Grant.

The above decision meant that the whole procurement process had to be started over again, including developing a Procurement Item List and holding information meetings in each district to discuss central procurement requirements. District coordinators had to collate schools’ needs and submit documents to head office for further processing. The late return of documentation by schools and districts caused further delays.

Special project plans for the installation of technology had to be developed, tenders prepared, advertised and awarded, and site meetings organised for potential service providers in the case of infrastructure projects.

In addition to the change in the manner of procurement, further delays were caused by differences between market prices obtained by schools earlier and much higher prices provided by procurement. This meant that schools had to reprioritise their needs. By the end of the third quarter, in December 2012, only 4 per cent of the allocated grant funds had been spent. At the end of the fourth quarter of the financial year, 48 per cent had been spent, with a further 34 per cent being committed. Approval has been requested from the Western Cape Provincial Treasury to roll-over these funds.

4. Report from Limpopo Department of Education

The Limpopo Department of Education (LDE) reported that it spent 39.8 per cent of its revised allocation of R14.39 million for the Dinaledi Schools Grant in the 2012/13 financial year. On 17 April 2013, a letter was received from the Department of Basic Education (DBE) informing the Administrator that the DBE intended to withhold the transfer of the last tranches of the Grant. The Administrator prepared a detailed response, and sent it to the Director-General of the DBE on 23 April 2013, requesting it to release all withheld funds, as an amount of R8.5 million had already been committed by the end of the financial year. Parallel to that, a formal roll-over request was submitted to the Limpopo Provincial Treasury. An amount of R140 252 had not been committed by the end of the 2012/13 financial year. The LDE reported that the following challenges resulted in the delayed procurement processes:

· A tender for science laboratory equipment and chemicals had been published, but the quoted prices were, in the LDE’s opinion, ridiculous;

· The capacitation of principals and teachers had to be scaled down because of the work-to-rule declared by the South African Democratic Teachers Union;

· SITA partners did not agree to lease arrangements for the number of computers required, necessitating that notebooks be purchased; and

· Internal human resource capacity for the programme itself is a constraint.

5. Comments by Department of Basic Education

The Department of Basic Education (DBE) reported that the difference between the national average maths and science results and those of the Dinaledi schools was nowhere near commensurate with the amount of money spent on the Grant. The DBE further reported that it has embarked on a four-pronged intervention strategy, focusing on curriculum, annual national assessments, workbooks and infrastructure. In addition, the DBE provides training for teachers and is working on a DVD to demonstrate practical science experiments.

However, the assessment of the effectiveness of the teacher training is a major deficiency. Very little has been done in terms of the baseline assessment of teachers, partly because of resistance from the teachers themselves. The DBE has found that the pre - and post-training testing of teachers by provinces is not adequate to ascertain whether there was value for the money spent on the training. The DBE is in the process of conducting a diagnostic exercise with each province.

6. Findings and observations

6.1 It is unclear whether the Dinaledi Schools Grant funds spent on teacher training is

achieving the desired result, as no effective pre- and post-assessment of teachers

takes place.

6.2 Dinaledi schools only score 10 per cent higher than other schools in maths and science.

6.3 Out of their R14.39 million adjusted budget for the 2012/13 financial year, Limpopo Province requested a roll-over of R8.5 million. This is more than the R5.7 million (or 39.8 per cent) that the province spent over the entire financial year.

6.4 The under-spending by Limpopo was due to a lack of capacity within its supply chain management.

6.5 The under-spending of 51.8 per cent by the Western Cape Province was due the non-compliance with the centralised procurement processes and poor management of its own internal supply chain management processes.

6.6 The under-spending of 22.2 per cent by the North West Province was due to a range of problems within the Provincial Treasury and Provincial Education Department.

6.7 The commitment of funds has two negative implications – delayed service delivery and a need for additional capacity to spend the additional funds.

6.8 The 99.8 and 100 per cent spending by Mpumalanga and Gauteng Provinces , respectively, is only an indication of the funds transferred and not the actual spending by implementing agencies.

7. Recommendations

7.1 The Department of Basic Education should provide the Committee with its evaluation

report after its release on 15 May 2013.

7.2 The Department of Basic Education should monitor capacity building of teachers for maths and science so that the grant achieves its desired outcomes.

7.3 The National Treasury together with the Department of Basic Education should monitor the situation in Limpopo to ensure that the province is able to spend the roll-overs as well as new allocations.

7.4 The National Treasury together with provincial treasuries should work with the Department of Basic Education to build capacity within provinces.

7.5 The National Treasury and the Department of Basic Education should provide support to the Western Cape to ensure that its procurement processes do not unnecessarily delay spending and service delivery.

7.6 The National Treasury and the Department of Basic Education should monitor the situation in the North West to ensure that there is effective and efficient spending.

7.7 Provinces should avoid roll-overs and March spike spending since this compromise service delivery.

7.8 The National Treasury and the Department of Basic Education should ensure that, where funds are transferred, the expenditure reports include the actual expenditure for the services rendered.

Report to be considered.