ATC151028: Budgetary Review and Recommendation Report (BRRR) of the Portfolio Committee on Higher Education and Training, dated 28 October 2015

Higher Education, Science and Innovation

BUDGETARY REVIEW AND RECOMMENDATION REPORT (BRRR) OF THE PORTFOLIO COMMITTEE ON HIGHER EDUCATION AND TRAINING, DATED 28 OCTOBER 2015

The Portfolio Committee on Higher Education and Training (hereinafter referred to as the Committee), having considered the performance the Department of Higher Education and Training (hereinafter referred to as the Department), National Student Financial Aid Scheme (NSFAS), South African Qualifications Authority (SAQA), Council on Higher Education (CHE) and Quality Council for Trades and Occupations (QCTO) reports as follows:

 

1. INTRODUCTION

Section 42(3) of the Constitution of the Republic of South Africa, Act No 108 of 1996, bestows oversight function over the executive to the National Assembly (NA). One of the functions of oversight listed in the Oversight and Accountability Model of Parliament of the Republic of South Africa is to ensure that policies announced by government and authorised by Parliament are actually implemented, Furthermore, the Money Bills Amendment Procedure and Related Matters Act, 2009 (Act No. 9 of 2009), section 5 requires that the National Assembly, through its committees, conducts annual assessment of the performance of each national department with regard to the medium term estimates of expenditure.

This report accounts for work done by the Committee during assessment on the performance of the Department and the entities it oversees. The report further makes budget review and recommendations for consideration by the Minister responsible for the Vote and the Minister of Finance.

1.1. Mandate of Committee

The Committee exercises oversight function over the Department of Higher Education and Training and conducts public hearings in law-making and other higher education and training matters.

1.2. Description of core mandate of the Department of Higher Education and Training

The following are the key functions of the Department:

• Increasing the rate at which the key skills necessary for economic growth and social development are delivered;
• Serving the growing number of young people and adults;
• Providing alternative entry points into and pathways through the learning system;
• Providing quality post-school learning irrespective of where learning takes place (i.e. college, university or workplace); and
• Providing easy pathways across the various learning sites.

 

           The Committee oversees the Department and its entities in their efforts to deliver on their mandates. To this end, the Committee should monitor the implementation of, and adherence to policies such as the White Papers for Post-School Education and Training; relevant legislation; principles of good governance; efficient spending, and service delivery in line with their mandates, strategic objectives, and government policies and priorities.

 

1.3. Purpose of the Budgetary Review and Recommendation Report (BRRR)

The Money Bills Amendment Procedure and Related Matters Act (No 9 of 2009) sets out the process that allows Parliament to make recommendations to the Minister of Finance to amend the budget of a national department. In October of each financial year, the Committee compiles a Budgetary Review and Recommendations Report (BRRR) that assesses service delivery performances given the available resources; evaluates the effective and efficient use and forward allocation of resources; and makes recommendations for consideration by the Minister of Higher Education and Training and the Minister of Finance.

1.4. Assessment Method

In preparation for the 2015 BRRR process, the Committee considered key policy documents that inform the work of the Department, including among others, the Medium Term Strategic Framework (MTSF) 2014 - 2019, and 2014/15 Annual Reports of the National Student Financial Aid Scheme (NSFAS), the South African Qualifications Authority (SAQA), the Council on Higher Education (CHE) and the Quality Council for Trades and Occupations (QCTO).

 

The Committee had a briefing session with the Auditor-General of South Africa (AGSA) on the 2014/15 audit outcomes of the Department and the post-school education and training institutions that included the Schedule 3A Public Entities of the Department, universities and 16 audited Technical and Vocational Education and Training (TVET) Colleges audited by AGSA. For an independent assessment and analysis of Department’s 2014/15 financial and non-financial performance, the Committee received a briefing from the Financial and Fiscal Commission (FFC).

 

 

2. OVERVIEW OF THE KEY RELEVANT POLICY FOCUS AREAS

2.1. Key Government policy documents that are relevant:

Observations are that the Department’s work is aligned with the policy goals of the National Development Plan (NDP). The NDP identifies decent work, education and the capacity of the state as particularly important priorities. For the post-school education and training sector, the NDP envisages that by 2030, South Africans should have access to education and training of the highest quality. The education, training and innovation system should cater for different needs and produce highly skilled individuals; and graduates of the post-school system should have adequate skills and knowledge to meet the current and future needs of the economy and society.

3. SUMMARY OF PREVIOUS KEY FINANCIAL AND PERFORMANCE RECOMMENDATIONS OF THE PORTFOLIO COMMITTEE

3.1. 2014 BRRR RECOMMENDATIONS

This section briefly summarises the 2014 recommendations and subsequent progress and challenges in the implementation.

3.1.1. Filling of vacancies

During the 2013/14 annual reporting, the Committee recommended that the Department should prioritises the filling of outstanding vacant posts, in particular, the Deputy Directors-General (DDGs) for University Education and DDG for Skills Development. These DDGs positions were filled.  

3.1.2. Verification of qualifications

It was recommended that verification of qualifications and security clearance process of all new employees of the Department should be implemented before their appointments. The Department has noted the recommendation and committed to work towards full compliance in the 2015/16 financial year. Currently, there are no appointment letters signed without a copy of SAQA report being attached. This recurring finding was raised by the AG in 2012/13, 2013/14 and has recurred in 2014/15 despite a detailed action plan developed by the Department to address it. The Committee advised on strengthening of monitoring by the Department’s leadership and to ensure that internal controls are in place.

3.1.3. TVET Colleges

The Committee also recommended for prioritisation on the procurement of services for construction of the new 12 TVET College campuses. The Department has successfully appointed three service providers who commenced with construction at Thabazimbi, Nkandla Town and Bhambanana.

 

3.1.4. NSFAS

The Committee also recommended on exploration of additional funding for NSFAS to meet the target of first time enrolments (FTEN) at universities. The Department is working in collaboration with NSFAS, and continues to lobby for additional funding from both the public and private sector to achieve this aim. Also to be noted through NSFAS, the Department provided R77 million for bursaries of postgraduate students studying towards Honours degree.

3.1.5. Outstanding certificates

The Committee further recommended that the release of outstanding National Certificate Vocational NC(V) certificates be treated as a matter of urgency. The Department, State Information Technology Agency (SITA) and Umalusi have responded by developing an accelerated plan to eradicate the certification backlog.

 

3.2. Responses by the Minister of Finance

On the 25 March 2015, the Committee considered the responses of the Minister of Finance to the 2014 BRRR recommendations as tabled to Parliament and referred by the Speaker of the National Assembly to the Committee.

On the recommendation, (i) notwithstanding the ring-fenced funding for Technical and Vocational Education and Training (TVET) function shift, the Minister of Finance should realistically increase the budget of the Department over the medium term to accommodate the expanded operations of the Department especially human resource needs and infrastructure expansion at both the universities and TVET Colleges. The Minister’s response was that the budget for the Department had increased relatively in real terms over the years. Due to constrained fiscus, the Department was advised to reprioritise existing resources. In terms of the MTEF budget allocation, the Department’s baseline for operations increased from R578 million in 2013/14 to R679 million in 2016/17 at an average annual increase of 5.5 percent over the 2014 MTEF period.

On the recommendation (ii) the Minister of Finance should ensure that the unspent conditional grants by provinces are transferred to TVET Colleges in terms of the FET Act and the National Norms and Standards for funding TVET Colleges. The Minister’s response was that the issue of unspent conditional grants by provinces will no longer be a challenge since the TVET function has moved from provincial to national competency as at 1 April 2015. The Minister further noted that the equitable share and conditional grants budgets have been shifted to the national Department of Higher Education and Training.

On the recommendation (iii) the Minister of Finance should consider making available bridging funds to the National Student Financial Aid Scheme (NSFAS) for allocations for tuition fees and other living expenses for students at the beginning of the year. The Minister’s response was that the allocations made at the beginning of the financial year were sufficient for the entire year. The Committee resolved to monitor that NSFAS has funds at the beginning of an academic year for upfront payments to all universities and TVET Colleges. NSFAS was urged to embark on fundraising to mobilise additional funding from both the private and public sector to augment the current allocations.

 

4. OVERVIEW AND ASSESSMENT OF FINANCIAL AND NON-FINANCIAL PERFORMANCE 2014/15

4.1. Financial Performance 2014/15

The Department had a total budget of R50.7 billion of which R13.8 billion (27.3 percent), was allocated to direct charge payments to the Sector Education and Training Authorities (SETAs), and the National Skills Fund (NSF). Exclusive of direct charges, the Department had an available appropriation of R36.9 billion which represents a nominal increase of R2.5 billion (7.4 percent), from 2013/14. Transfers and subsidies accounted for R36.2 billion of the available budget and of this amount the Department transferred R36.2 billion (100 percent), mainly to higher education institutions. Of the total transfers and subsidies, 66 percent was for higher education institutions (HEIs), 17.3 percent was transferred to Department Agencies and Accounts, 8.8 percent was for Non-Profit Institutions, and 7.3 percent was for Provinces and Municipalities.

 

The spending on economic classifications was as follows:

• Compensation of employees = 99.8 percent.
• Goods and services = 100 percent.
• Transfer payments = 100 percent.
• Capital expenditure = 100 percent.

 

The final outcome of the 2014/15 financial year is an unspent amount of R1.160 million due to funded posts on the staff establishment that became vacant during the year that could not be filled as projected and the concomitant savings as well as claims not received as projected for the Higher Education Management Information System and for the function shift.

4.1.2. Final total and programme expenditure

The Department spent R36.9 billion to the end of the 2014/15 financial year, which represented 99.99 percent. The surplus on the Vote for the financial year, excluding the direct charges, amounted to R1.160 million, measured against the allocation after virement; a decrease from R1.931 million in 2013/14. This slight under-spending did not impact negatively on the Department’s programmes and service delivery and was mainly due to savings realised on funds provided for post on the staff establishment of the Department that became vacant during the year and could not be filled as projected and concomitant savings that resulted from this: Higher Education Management Information System (HEMIS) for claims not received as projected and funds provided for the function shift, as well as cost containment measures put in place to ensure that the Department would not overspend on its budget.

 

a)  Programme 1 Administration: The total administration budget of the programme was R234 361 000 and R234 097 000 was used leaving a variance of 0.11 percent.

 

Sub-programmes	Final appropriation	Actual expenditure	Variance
	R’000	R’000	R’000
Ministry	32 416	32 408	8
Department Management	38 408	38 400	8
Corporate Services	80 467	80 230	237
Office of the Chief Financial Officer	40 488	40 483	5
Internal audit	6 051	6 051	5
Office accommodation	36 525	36 525	1
Total	234 361	234 097	264 (0.11%)

 

The purpose of this programme is to provide overall management and administration of the Department. Significant achievements include: most disciplinary cases were resolved within the required 90 days, successful transfer of TVET and Community Education and Training (CET) colleges sectors from a provincial to national competency and increased access for interns.

 

The programme had six budgeted sub-programmes with three targets and none of them were achieved. The targets not achieved included: implementation of one Information and Communication Technology (ICT) governance framework by 31 March 2015, failure to fill vacant posts within the stipulated time and procurement processes that extended beyond the planned timeframe.

 

b) Programme 2 Human Resource Development, Planning and Monitoring Coordination: The total budget of this programme was R46 511 000 and R45 683 000 was used leaving a variance of 1.78 percent.

Sub-programmes	Final appropriation	Actual expenditure	Variance
	R’000	R’000	R’000
Programme management	2 965	2 933	32
HRD	11 584	11 584	146
Planning, information, M&E	7 203	6 854	349
International Relations	10 822	10 775	47
Legal and Legislative Services	9 624	9 386	238
Social Inclusion in Education	4 167	4 151	16
Total	46 511	45 683	828

 

The purpose of the programme is to provide strategic direction in the development, implementation and monitoring of Department policies and the Human Resource Development Strategy for South Africa. Of the six sub-programmes there were three targets and two of those targets were achieved (66.7 percent).

The significant achievements included: Social Inclusion Policy Framework was finalised and approved by the Minister for public comment, and the list of occupations in high demand was gazetted.  The target not achieved relates to International Engagement Plans developed and implementation report compiled, and it was reported to have been achieved seven days after the end of the financial year.

c) Programme 3 University Education: The total budget of the programme was R30 443 974 000 and R30 443 955 000 was used or 100 percent of the budget.

 

Sub-programmes	Final appropriation	Actual expenditure	Variance
	R’000	R’000	R’000
Programme management	1 961	1 959	2
University-Academic Planning	6 249 120	6 249 117	3
University Financial Planning	7 560	7 556	4
University-Policy and Development	19 742	19 736	6
Teacher Education	10 498	10 494	4
University Subsidies	24 155 093	24 155 093	-
Total	30 443 974	30 443 955	19

 

The purpose of this programme is to develop and coordinate policy and regulatory framework for an effective and efficient university education system. Furthermore, it is to provide financial support to universities, the National Student Financial Aid Scheme (NSFAS) and the National Institute for Higher Education. 22 of the 26 targets were achieved. During the financial year under review, the Department has made significant achievements in most of the predetermined targets. It has exceeded its targets in the following areas: number of student enrolled in higher education studies at universities (by 11 698), number of African student enrolments at universities (by 13 503), number of female students at universities (by 9 689), total number of students in foundation provisioning programmes at universities (by 1 060), number of post-graduate graduates (by 2 673) and number of doctoral graduates (by 101), Sefako Makgatho University (SMU), Sol Plaatje University (SPU) and University of Mpumalanga (UMP) were established as juristic person and disbursed R2 billion to universities for the improvement of different projects. The key challenge is that Department was unable to achieve its target on first time enrolment (FTEN) students in universities.

 

d) Programme 4 Vocational and Continuing Education and Training: The total budget of the programme was R6 035 836 000 and 6 035 801 000 was used or 100 percent of the budget.

 

Sub-programmes	Final appropriation	Actual expenditure	Variance
	R’000	R’000	R’000
Programme Management: VCET	9 105	9 104	1
Planning and Institutional Support	5 832 634	5 832 631	3
Programmes and Qualifications	15 965	15 964	1
National Examination and Assessment	178 132	178 102	30
Total	6 035 836	6 035 801	35

 

The purpose of this programme is to plan, develop, evaluate, monitor and maintain national policy, programmes, assessment practices and systems for vocational and continuing education and training, including Technical and Vocational Education and Training (TVET) colleges and post-literacy Adult Education and Training (AET) centres. The programme had four sub-programmes. During the year under review, the programme had five planned targets out of which only one was achieved (20 percent achievement). The significant achievement of this programme was the establishment of Community Colleges in all the nine provinces aimed at providing out-of-school youth and adults with learning opportunities.

The targets that were not achieved included: non-achievement of the 800 000 headcount enrolment target owing to insufficient funding; and lack of infrastructure and overall performance in respect of certification rates in the Report 190/1 and NC(V) qualifications was below the targets.

The recommendation is to fast track the construction of the 12 new TVET College campuses to address the challenge of inadequate infrastructure.

e) Programme 5 Skills Development: The total budget of the programme was R105 999 000 and R105 985 000 was used leaving a variance of 0.01 percent.

 

Sub-programmes	Final appropriation	Actual expenditure	Variance
	R’000	R’000	R’000
Programme Management: Skills Development	1 414	1 413	1
SETA Coordination	75 053	75 044	9
National Skills Development Services	6 365	6 361	4
Quality Promotion	23 167	23 167	-
Total	105 999	105 985	14

 

The purpose of the programme is to promote and monitor the national skills development strategy; and develop skills development policy and regulatory framework for an efficient skills development system. The programme had four sub-programmes with 6 targets and they were all achieved (100 percent). The Department exceeded its targets on; number of artisan learners registered nationally (by 1 301), number of candidates found competent nationally by 31 March 2015 (by 1 389) and number of graduates and students receiving structured Work Place Learning (by 3 338). It is commendable that the Department achieved 100 per cent of its planned targets in this programme.

 

4.1.3. Programme spending analysis

 

2013/14			2014/15
Programmes	Under-expenditure	Percentage %	Under-expenditure	Percentage %
Administration	685	0.34	264	0.11
Human Resource Development, Planning and Monitoring Coordination	292	0.67	828	1.78
University Education	228	0.00	19	0.00
Vocational Education and Training	418	0.01	35	0.00
Skills Development	308	0.31	14	0.00
Totals	1 931	0.00	1 160	0.00

 

4.1.4. Key virements

The Department made virements amounting to R13.7 million. The virements were applied within the Department, as follows: R4 044 000 from Programme 2: Human Resource Development, Planning and Monitoring Co-ordination to Programme 1: Administration; R9 335 000 from 4: Vocational and Continuing Education and Training to Programme 1: Administration; R75 000 from Programme 5: Skills Development to Programme 1: Administration, and R226 000 from Programme 5: Skills Development to Programme 3: University Education. The virements were effected to address excess expenditure on costs for International Attaché, Communications, Personnel Administration, Audit Fees, Function shift activities and State Information Technology Agency accounts. The Department reported that funds were also shifted between programmes within compensation of employees in order to accommodate possible over-expenditure in the compensation of employees on some of the programmes. The virements were approved in accordance with the Public Finance Management Act (PFMA) and reported to National Treasury and the Minister.

 

4.2. Auditor-General’s Report

 

4.2.1. Financial Audit:

The Department received an unqualified audit opinion with matters of emphasis.

 

4.2.2. Audit on pre-determined objectives:

The AGSA performed procedures to obtain evidence about the usefulness and reliability of the reported performance for the following programmes: University Education, Vocational and Continuing Education and Training (VCET) and Skills Development. The AGSA did not raise any material findings on the usefulness and reliability of the reported performance information for Programme 3: University Education.

 

On Programme 4: VCET, AGSA was unable to obtain the information considered necessary and satisfactory for the reliability of the reported performance information. This was due to the absence of systems in place to verify the reporting of actual achievements against a significant planned objectives, indicators and targets. There is a lack of regulation in place that requires TVET Colleges to report on headcount enrolments. As a result, independent verification was not being performed on headcount enrolments for TVET Colleges, and the Department did not have the capacity to perform verification on the reported figures.

 

On Programme 5: Skills Development, a significantly target in relation to the Department’s overall mandate was not reliable, and AGSA was not able to obtain sufficient appropriate audit evidence. In addition, a significant target was not valid, accurate and complete when compared to the source of information or evidence provided owing to absence of adequate systems in place to verify the reporting of actual achievements against significant planned objectives, indicators and targets.

 

4.2.3. Compliance with laws and regulations:

a) Strategic planning and performance management

Effective, efficient and transparent systems of risk management and internal controls with respect to performance information and management were not in place as required by section 38(1)(a)(i) of the Public Finance Management Act. The Department did not have appropriate systems to collect, collate, verify and store performance information to ensure valid, accurate and complete reporting of actual achievements against planned objectives, indicators and targets as required by the Framework for managing programme performance information (FMPPI).

 

b) Annual financial statement

The financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework as required by section 40(1)(b) of the PFMA. Material misstatements of provisions, accruals, commitments and contingent liabilities identified by the auditors in the submitted financial statements were subsequently corrected, resulting in the financial statements receiving an unqualified audit opinion.

 

c) Procurement and contract management

Goods and services with a transaction value below R500 000 were procured without obtaining the required price quotations, as required by Treasury Regulation 16A6.1. Contracts were awarded to bidders on preference points that were not allocated and calculated in accordance with the requirements of the Preferential Procurement Policy Framework Act and its regulations. Construction contracts were awarded to contractors that did not qualify for the contract in accordance with section 18(1) of the Construction Industry Development Board (CIDB) Act regulations 17 and 25(7A).

 

 

d) Human resource management

Employees were appointed without following a proper process to verify the claims made in their applications prior to appointment in contravention of Public Service Regulation 1/V/II/D.8.

 

4.2.4. Internal control:

a) Leadership

Action plans to address previously reported internal control deficiencies were developed late during the financial year. Some actions were not sufficient to address the previous reported internal control deficiencies. Action plans were not implemented and monitored on a timely basis to ensure improvement in the internal control environment. This resulted in previously reported findings being identified once again during the audit.

 

The Director-General (DG) and Deputy Directors-General (DDGs) did not apply adequate consequence management where action plans were not implemented to address internal control deficiencies previously reported by external and internal audit. Sufficient internal controls, policies and procedures were not in place to ensure that the disclosure notes per financial statements were a fair representation of the financial affairs of the Department in accordance with the Modified Cash Standard.

 

The Department was unable to perform all of the required verification and monitoring functions over its entities due to funding and human resources capacity constraints. As a result, the reliability of the reported achievements by its entities and institutions that were considered into achievements reported by the Department was not adequately verified.

 

b) Financial and performance management

Record keeping was not adequate to support performance reports. The required validation checks to ensure the validity, accuracy and completeness of the reported achievements in the quarterly and annual performance reports were not sufficient to ensure reliability of the reported information. The Department did not implement sufficient internal controls and adequately monitor compliance with relevant laws and regulations, hence the recurrence of findings especially in the areas of human resources management and supply chain management

 

4.2.5. SETAs audit outcomes 2014/15

Of the 21 Sector Education and Training Authorities (SETAs), two (Wholesale and Retail and Public Service SETA) received qualified audits for 2014/15, seven received clean audits (Services SETA, Chemical Industries SETA, Banking SETA, Education, Training and Development Practices SETA, Health and Welfare SETA, Media Information and Communication Technologies SETA, Financial and Accounting Services SETA) and 12 received unqualified audits with findings.

 

4.2.6. TVET colleges audit outcomes 2014

The AGSA audited 16 TVET Colleges in the 2014/15 financial year and 34 colleges were not yet audited by AGSA. Only two (South West Gauteng and Mnambithi) of the 16 TVET Colleges audited by AGSA received an unqualified opinion. Lovedale, Maluti, Orbit, Esayidi, and Northern Cape Urban received qualified opinions on their financial statements. Other colleges did not do well during the 2014/15 financial year, four got an adverse opinion (Northlink, Ikhala, King Hintsa and Central Johannesburg), two had outstanding audits (East Cape Midlands and Tshwane North) and three received disclaimers (Letaba, Western College and Tshwane South),

 

4.2.7. Universities audit outcomes 2014:

Seventeen (68 percent) universities received an unqualified opinion with no findings, and one (4 percent) universities obtained an unqualified opinion with findings on compliance with laws and regulations, which is an improvement compared to six (24 percent) in the previous.  There is a regression caused by the University of Limpopo and University of South Africa (UNISA), together making up 8 percent of the universities, receiving qualified opinions after been unqualified in the previous year. The audit outcomes of the five universities, namely University of Fort Hare (UFH), Walter Sisulu University (WSU), University of KwaZulu-Natal (UKZN), Sol Plaatje University (SPU) and the University of Mpumalanga (UMP), together making up 20 percent of the universities, were not included. Due to delays in the submission of information by the universities, the audits of the UFH and WSU had not been finalised by 14 August 2015, which was the cut-off date for the inclusion of audit outcomes in the general report. As at the date of this report the AG had not received the audit outcomes of UKZN, SPU and UMP.

 

5. OVERVIEW AND ASSESSMENT OF PROGRAMME PERFORMANCE

5.1. Summary of performance for 2014/15

Total targets set	43
Targets achieved	31
Targets not achieved	12
Success rate	72 percent
Total Budget spent	99.9 percent

 

The achievement of 72 per cent is not consistent with the budget spent. The Department needs to improve on its planning and monitoring and also to set realistic targets. The Department runs a risk of overspending on its budget since it achieved 72 per cent of its targets while spending 99.9 per cent.

5.1.1 Other key reported achievements

a) Department of Higher Education and Training

During the financial year under review the Department had the successful start-up of the first two new universities since 1994: Sol Plaatje University (SPU) and the University of Mpumalanga (MPU); the establishment of their full councils, appointment of their Vice-Chancellors, executive management and human resources and the commencement of the first phase of major new infrastructure developments in line with the ten-year spatial development plans. The Department was able to promulgate the third new university since 1994: Sefako Makgatho Health Sciences University (SMU) in Gauteng, the first specialised comprehensive university in South Africa; and the successful incorporation of the Medunsa Campus of the University of Limpopo into the SMU on 1 January 2015. The Lowveld College of Agriculture was successfully incorporated into the MPU on 1 January 2015 and the two National Institutes for Higher Education in the Northern Cape and Mpumalanga were successfully disestablished on 31 March 2015.

Some other significant achievements included: the approval of a set of financial indicators that will be utilised in future to assess the financial health of the universities on an annual basis; the establishment of the Technical Task Team and Reference Group appointed to model the recommendation of the Ministerial Report on the funding of universities and develop a revised draft funding framework that will be published for public comment after Ministerial approval; the Task Team established to review the amended Higher Education Act 1997, finalised its work for the Minister’s approval and submission for the 2015 legislative programme.

The following policies were published for implementation: Regulations for Reporting by Public Higher Education Institutions, Policy for the Provision of Distance Education in South African Universities in the Context of an Integrated Post-School System, Research Outputs Policy and Policy on Programmes Leading to Qualifications for Education and Lecturers in Community and Adult Education and Training. Two draft policies: Draft Policy Framework on Differentiation in the South African Post-School System and Draft Amended Regulations of Private Higher Education Institutions were published for public comment.

With regard to the VCET Branch, the key achievements were as follows: the Department administered the establishment of nine new Community Education and Training (CET) Colleges aimed at providing out-of-school youth and adults with learning opportunities; facilitated, in collaboration with various function shift task teams, the shifting (in full) of the TVET and AET sectors from provincial to national competence; ensured compliance of TVET Colleges with DHET-TVET bursary disbursement guidelines and regulations; assisted with the establishment of a Ministerial Committee to review the funding frameworks for TVET Colleges and CET Colleges during June 2014; improved participation in vocational education and training for indigent students by increasing the number of student bursary recipients in TVET Colleges, and continued to improve financial management systems of the TVET Colleges through a partnership with the South African Institute of Chartered Accountants (SAICA) towards building capacity of college CFOs and the establishment of sound financial systems.

Key achievements in Skills Development were as follows: the “Decade of the Artisans” advocacy programme continued to be highly effective in raising awareness among young people regarding artisans and also focuses on employers opening up workplaces for more artisan learners, particularly apprenticeships. The first ever National Trade Test regulations were approved by the Minister for implementation with commencement from 1 April 2015. The regulation aimed to implement a single national artisan trade testing and certification system across all economic sectors, as regularly assured by the QCTO. 43 offices were opened by the SETAs in TVET Colleges.

b) Quality Council for Trades and Occupations

• Clean audit for 2014/15 with no material findings.
• 100 percent turn-around time for accreditation of skills development providers.
• Turn-around time for internal processing of applications established (10 days).
• Involvement in the issuing of certificates that are outstanding from SETAs.

 

c) Council on Higher Education

• Clean audit for 2014/15.
• Record numbers of new applications for accreditation were processed.
• Administrative, financial & governance systems continued on a sound footing.
• Increased activity in the international arena.
• A total of 427 new programmes were accredited.

 

 

 

d) South African Qualifications Authority

• 222 new qualifications registered.
• Achieved 18th unqualified audit opinion in 2014/15.
• 25 083 people reached during exhibitions and information sessions.

 

e) National Student Financial Aid Scheme

• Achieved fifth consecutive unqualified audit opinion in 2014/15.
• R9 billion disbursed in 2014 assisting 414 802 students in universities and TVET colleges.
• R1.3 billion disbursed through the student centred model assisting 67 277 students.
• R250 million disbursed through the sBUX voucher system.
• Loan funding allocation increased by R200 million.
• R116 million administration income for 2015.
• R1.1 billion for upfront payment of student fees.

 

5.1.2. Key reported challenges

The Department has a restricted operational budget for intensified monitoring and evaluation function. In particular, this had the effect of restricting site visits to institutions to qualitatively monitor the infrastructure development projects at universities, as well as the effective use of earmarked grants. Financial constraints will remain a major impediment to the work of the Branches going forward.

Funding also remains a major constraint with respect to the National Student Financial Aid Scheme. NSFAS aid supply does not match with the demand. While substantial additional funds have been allocated from 2010 to 2012, the increase in the quantum of annual funds available through the Department from the Vote has tapered off and is not keeping up with higher education inflation. The need to support full-cost funding for poor academically capable students is increasing and therefore fewer students can be supported. TVET College students are supported, while   the demand for free higher education for the poor is increasing.

Some SETAs still failed to fully spend funds by the end of the financial year with the result that not all targets were met. All surplus funds from SETAs have been channelled to the National Skills Funds in order for funds to be reallocated and utilised as deemed necessary in advancing the PSET system. The SETA sector approach to artisan development remained a challenge due to a lack of capacity in some SETAs and an inability to implement the approved national funding policy.

5.1.3. Non-financial Audit outcomes and steps taken to address adverse audit findings

The Department completed an audit action plan to address the control deficiencies based on the audit findings. This plan include all areas raised in the Audit Report as well as all other matters identified during the audit that resulted in audit queries. Progress on the action plan is being monitored on a bi-weekly basis and is reported by each Branch Head to the Director-General. Regular reports will be submitted to the Minister and Audit Committee. Due to key operational activities and insufficient staff capacity, delays are already experienced in progress with implementing some of the actions.

 

5.2. External stakeholder’s observations

This section presents a summary of the findings of the presentation by the Financial and Fiscal Commission (FFC) on the assessment and analysis of the Department’s financial and non-financial performance for 2014/15 financial year.

The FFC’s findings were that: 

The Commission commended the successful implementation of the Technical and Vocational Education and Training (TVET) and Adult Education and Training (AET) function shift from provincial to national competency. However, the function was perpetually underfunded while in the provinces and recommended that adequate funding be allocated to ensure that this historical underfunding is not perpetuated. The Department had a restricted budget for oversight function over its entities. It was also recommended that the Department should strengthen its oversight over the SETAs on funding utilisation.

The FFC concluded that the demand for NSFAS far outstrips the available funding and the slow loan recovery rate is a challenge for the sustainability of the entity.

 

6. COMMITTEE OBSERVATIONS

6.1. Technical issues

Four annual reports 2014/15 of the entities that appeared before the Portfolio Committee during were presented this reporting period. The Portfolio Committee noted that all them were presented in accordance with Treasury Guidelines and the level of information presented was user friendly and of good quality.

 

 

6.2. Service delivery performance

The following formed part of the Committee’s key observations:

 

6.2.1. Department of Higher Education and Training (DHET)

 

a) Programme 1: Administration

• None of the three targets set in Programme 1: Administration were achieved in the period under review.
• Over spending on compensation of employees was experienced owing to payment of claims for Examiners and Moderators for TVET College examination. The vacancy rate was 10.28 percent in 2014/15.
• Certain senior management (four) staff did not sign the performance agreement forms within the stipulated time.
• The migration process of Technical and Vocational Education and Training (TVET) and Adult Education and Training (AET) sectors was successfully completed.
•  Capacitation of employees should be prioritised.

 

b) Programme 2: Human Resource Development, Planning and Monitoring Coordination

• The programme achieved two of its three set targets for the period under review.
• The Department has limited monitoring and evaluation function over its entities (100) owing to inadequate human resource capacity. 
• The Department did not receive additional funding for the appointment of additional staff in 2014/15.

 

c) Programme 3: University Education

• The programme achieved 22 of the set 26 targets for the period under review.
• The DDG for this programme was appointed in the year under review.

 

d) Vocational and Continuing Education and Training

• This programme has underperformed for the period under review, and of the four targets set, only one target was achieved.
• The certification rates for Report 190/1 and NC(V) programmes were below the targets. This was attributed to the high failure rate of mathematics in TVET Colleges, and insufficient mathematics lecturers who are competent in pedagogy.
• The delay in the awarding of contractors has resulted in the delay in construction of the 12 new TVET College campuses. The programme had an acting Deputy Director-General (DDG).
• The financial performance and audit outcomes of TVET Colleges for 2014/15 have regressed.

 

e) Skills Development

• The programme managed to achieve all six targets for the period under review.

 

6.2.2. National Student Financial Aid Scheme (NSFAS)

• The Scheme was able to disburse R9 billion (R7 billion to university students and R2 billion to TVET College students) to 414 802 universities and TVET College students (186 150 university and 228 642 College students).
• The Student Centred Model was implemented during the year under review and 11 post-school education institutions (seven universities and four TVET Colleges) applied through the new model, and R1.3 billion was disbursed through the new model.
• The entity received an unqualified audit with matters of emphasis from AGSA.
• After the withdrawal of Nedbank from its partnership with NSFAS, the entity does not have any other private donors.
• The loan recovery for 2014/15 was low.
• The poor loan recovery strategy was a disincentive to possible private funders / donors for the scheme in the period under review.
• The entity achieved 21.4 percent, partially achieved 64.3 percent and did not achieve 14.3 percent of its targets.
• A forensic audit would be undertaken by a private law firm to investigate 6 universities and 4 TVET Colleges to verify documents of NSFAS beneficiaries.

 

6.2.3. Council on Higher Education (CHE)

·         The clean audit received by CHE was commended.

·         During the year under review (2014/15), the Council provided the Minister with advice and comment at his request on the following: Draft Policy on the Policy and Procedures for Measurement of Research Outputs of Public Higher Education Institutions and Draft Articulation Policy.

·         The CHE conducted a 20 year review of the State of Higher Education in South Africa.

• It is critical for CHE to complete all outstanding institutional audits as this forms part of its key mandate, and to restart the audit cycle in 2016.

6.2.4. Quality Council for Trades and Occupations (QCTO)

• The clean audit received by the entity was commended. However, not all targets set for 2014/15 were achieved.
• Lack of communication with partners contributed to the delays in the accreditation of providers and qualifications. 
• The entity had challenges in identifying illegal private education providers and it had not deregistered any illegal provider.

 

6.2.5. South African Qualifications Authority (SAQA)

• The achievement of targets by SAQA for the period under review was commendable.
• The entity had challenges in filling of vacant funded posts within three months.
• The entity regressed from a clean audit in 2013/14 to an unqualified audit opinion with findings in 2014/15.

 

7. RECOMMENDATIONS

The Portfolio Committee recommends as follows:

 

a) Programme 1 Administration

• Filling of vacant funded posts should be prioritised.
• The overall performance of this programme should be expedited given the additional functions of TVET and CET sectors; and
• Implementation of the skills audit and staff capacity building should be expedited.

 

b) Programme 2 Human Resource Development, Planning and Monitoring Coordination

• The Department should set achievable targets within the available budget;
• Audit outcome action plans should be submitted within a month after receipt of the AGSA report and implementation therefore to be closely monitored; and
• The Department should provide adequate support for all its entities.

 

c) Programme 3 University Education

• Universities should prioritise the development and rollout of the TVET College Lecturer Qualification;
• Proper procedures and processes should be followed to obtain additional funding to assist universities with the 0 per cent fee increment for 2016; and
• Universities financial performance should be closely monitored.

d) Programme 4 Vocational and Continuing Education and Training

• The Department should work closely with the Department of Basic Education (DBE) on the improvement of mathematics results. The training and development of TVET College lecturers in mathematics should also be prioritised;
• The overall performance of this branch should be improved;
• The Department in partnership with AGSA should conduct workshops with all TVET Colleges to train them on the accounting framework of AGSA for auditing of colleges in 2016;
• The appointment of Internal Audit Units and Audit Committees in all TVET Colleges should be prioritised;
• The Department should consider a special budget allocation to support students with disabilities; and
• The Department should prioritise the harmonisation of conditions of service of all Community Education and Training (CET) educators.

 

e) Programme 5 Skills Development

• Financial performance of SETAs should be closely monitored; and
• SETAs action plans to address AGSA findings should be developed and implemented timeously.

 

f) Funding

• Adequate funding for higher education and training will enable the Department to achieve on its: curriculum review for Report 190/1 programme; establishment of the South African Institute for Vocational and Continuing Education and Training (SAIVCET), increase subsidies to universities, expansion of the Higher Education AIDS programme to TVET Colleges, expanded access to TVET Colleges, implementation of the Department’s new organisational structure and strengthening of the monitoring and evaluation unit;
• Allocation of infrastructure grants to TVET Colleges will enable colleges to; maintain, expand and develop their infrastructure to alleviate the acute shortage of student housing in colleges; and
• Partnership between private sector, business and the Department is of utmost importance for adequate funding of higher education.

 

 

 

g) National Student Financial Aid Scheme

• The entity should find innovative ways of loan recollection and fast track the implementation of the fund raising strategy;
• Fast tracking of the forensic investigation should be prioritised;
• An action plan to address under-performance and previous audit findings should be developed, implemented and monitored; and
• Consequence management should be implemented to address under performance.

 

h) Council on Higher Education

• CHE should develop an improvement plan to address all the non-achieved targets and objectives for 2014/15 financial year; and
•  CHE should ensure that South African qualifications are internationally comparable and of requisite standard.

 

i) Quality Council for Trades and Occupations

• Turn-around time for the accreditation of qualifications should be improved; and
• The entity should develop proper systems for vetting of private providers.

 

j) South African Qualifications Authority

• Public awareness regarding unregistered private higher education and training providers should be expedited; and
• SAQA should prioritise the filling of funded vacant posts and the development of a staff retention strategy for continuity.

 

8. CONCLUSION

The Department reported on its fifth Annual Report since 2009 and received a fifth consecutive unqualified audit opinion from the AGSA. However, the AGSA raised matters of emphasis of which some were recurring findings. It is important to note that the primary objective of the Department is to expand access to and improve success within the post school education and training system. The Department is also responsible for Outcome 5 of the Government’s Performance Monitoring and Evaluation system “A skilled and capable workforce”.

The report presented by the Financial and Fiscal Commission (FFC) clearly states that government is operating on fiscal constraints owing to the slow growth of the economy and the economic climate characterised by regressing markets. This has serious implications on Treasury to allocate additional funding that is required by the Department to alleviate its funding pressures. Nevertheless, the Department was able to utilise its limited resources to execute its mandate. Improvement is required in internal controls to ensure that the limited resources available are used accordingly effectively.

The report presented by AGSA on the audit outcomes of the Department and entities showed improvements in the audit outcomes of the Department’s entities. However, the TVET College sector has not improved on its financial performance. The recurring audit findings in the Department and its entities can be attributed to slow implementation of the action plan. The Department should closely monitor and evaluate its entities which is an area that requires close attention.

The performance the Department for 2014/15 was welcomed by the Committee. However, the underperformance in certain programmes is an area of improvement.

The Committee thanks the Department of Higher Education and Training (DHET), National Student Financial Aid Scheme (NSFAS), Council on Higher Education (CHE), Quality Council for Trades and Occupations (QCTO) and South African Qualification Authority (SAQA) for their 2014/15 Annual Reports which were submitted on time. The Committee also thanks the Office of the Auditor-General South Africa (AGSA) for its 2014/15 audit outcomes of the Department and its entities report as well as the Financial and Fiscal Commission (FFC) for its analysis of DHET and NSFAS Annual Reports 2014/15.

 

Report to be considered.