ATC160419: Report of the Portfolio Committee on Higher Education and Training on Consideration of Budget Vote 15 Higher Education and Training, dated 19 April 2016

Higher Education, Science and Innovation

REPORT OF THE PORTFOLIO COMMITTEE ON HIGHER EDUCATION AND TRAINING ON CONSIDERATION OF BUDGET VOTE 15 HIGHER EDUCATION AND TRAINING, DATED 19 APRIL 2016

The Portfolio Committee on Higher Education and Training (hereinafter referred to as the Committee) having considered the Annual Performance Plan (APP) 2016/17 of 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 and mandate of the Committee

1.1 Introduction

The Constitution of the Republic of South Africa, Act 108 of 1996 Section 55(2) stipulates that the National Assembly (NA) must provide for mechanisms (a) to ensure that all executive organs of state in the national sphere of government are accountable to it; and (b) to maintain oversight of (i) the exercise of the national executive authority including the implementation of the legislation; and (ii) any organ of state. The Public Finance Management Act No 29 of 1999 (PFMA) Section 27 (1) states that the Minister must table the annual budget for a financial year in the National Assembly before the start of that financial year, it further provides in Section 27 (4) that when the annual budget is introduced in the National Assembly (NA) or at a provincial legislature, the accounting officer for each department must submit to Parliament or provincial legislature, as may be appropriate, measurable objectives for each main division within the department’s vote.

The Minister of Higher Education and Training tabled the Annual Performance Plan (APP) 2016/17 of the Department and its entities on 11 March 2016. On the same day, the Speaker of the National Assembly referred these documents to the Committee for consideration and report.

In executing its oversight mandate, the Committee scheduled briefing sessions with the Department, NSFAS, SAQA, CHE and QCTO so as to present the Annual Performance Plan 2016/17 and budget over the Medium Term Expenditure Framework (MTEF) period.

1.2 Purpose of the Report

The purpose of this report is to account for work done by the Portfolio Committee on Higher Education and Training during assessment of the Annual Performance Plan (APP) 2016/17 of the Department and the entities it oversees. The report further makes financial and non-financial recommendations for consideration by the Minister responsible for the Department and the Minister of Finance.

1.3 Method

In preparation for the review process the Committee considered key policy documents that inform the work of the Department, among others, the National Development Plan (NDP), the 2014-2019 Medium Term Strategic Framework (MTSF) and White Paper for Post-School Education and Training (WPPSET). The Committee held briefings with the Financial and Fiscal Commission (FFC) on the analysis of the Department’s budget 2016/17 and the report by the Auditor-General of South Africa (AGSA) on the audit outcomes of the APP 2016/17 of the Department and entities.

2. Overview and assessment of the Annual Performance Plan (APP) 2016/17 of the Department of Higher Education and Training entities in line with key government priorities relevant to the post-school education and training sector

2.1 Strategic overview and priorities

The Department’s plans for the 2016/17 are aligned with the 2014-2019 Medium-Term Strategic Framework (MTSF). This is the second year of the first five-year implementation of the National Development Plan. The 2014-2019 MTSF sets out measurable targets aligned with the NDP and national policy goals:

Increase university student enrolment from 950 000 in 2013 to 1.07 million in 2018;
Increase Technical and Vocational Education and Training (TVET) (formerly further education and training - FET) student enrolment from 670 455 in 2013 to 1.238 million in 2018;
Increase number of artisans produced from 18 110 in 2013 to 24 000 per annum by 2019;
Increase PhD graduates from 1870 in 2013 to 2400 per annum by 2019;
Increase the number of engineering and science graduates to 57 000 by 2019;
Increase the number of qualified TVET lecturers; and
Reduce student dropout rate at universities.

These targets have been included in the Annual Performance Plan of the Department.

The White Paper for Post-School Education and Training also provides for the establishment of community education and training colleges that will primarily target the youth and adults who did not complete school or never attended school. Community education and training colleges are thus an additional higher education institutional form alongside universities and technical and vocational education and training colleges. Since April 2015, 9 community education and training colleges were established in each province, with fully operational college councils. It is projected that enrolments at community education and training colleges will increase gradually from 300 000 learners in 2015/16 to 330 000 learners in 2018/19. In order to ensure a dedicated focus, the Department reconfigured the Vocational Education and Training Programme and split it into two delivery programmes, Technical and Vocational Education and Training and Community Education and Training.

The work of the Department also responds to the President’s December 2015 announcement on the recommendations of the Presidential Task Team established to look into the zero percent fee increment, and 2016 State of the Nation Address where he alluded that the government has responded to the Fees Must Fall Campaign. R2.3 billion was made available to address the shortfall. The government and the universities will make a contribution towards the shortfall.
Upfront fees and registration payments should be implemented across the system for those who can afford.
Students who meet the NSFAS means test should not be required to pay upfront payment.
NSFAS shortfall has been quantified at R4.582 billion. R2.543 billion of this amount must be made available from the fiscus, in the form of loans to provide short term debt relief to 71 753 students who were funded inadequately or were unable to access financial aid over the 2013 to 2015 academic years.
A further R2.039 billion was required in 2016/17 financial year to ensure that current unfunded continuing students are supported in the 2016 academic year. The amount was made available through reprioritisation from the fiscus.

The President also announced that he has established a Presidential Commission to look into the funding of the post-school education and training (PSET) system.

The following changes were made to the 2015/16 – 2019/20 Strategic Plan:

(i). Programme 2 previously known as Human Resource Development, Planning and Monitoring Coordination had been renamed Planning, Policy and Strategy. This was to avoid confusion that the Programme was responsible for Department’s internal Human Resources matters, while it provides strategic direction in the development, implementation and monitoring of Departmental policies and the Human Resource Development Council of South Africa (HRDCSA).

(ii). Sub-programme 1 of Programme 2: Programme Management: Human Resource Development, Planning and Monitoring Coordination has been renamed Programme Management: Planning, Policy and Strategy to align it with the new name of the Programme.

(iii). The Department has reconfigured the Vocational Education and Training Branch by splitting it into two to establish two delivery programmes, namely; Technical Vocational Education and Training and Community Education and Training as pronounced in the Minister Nzimande’s 2015 Vote 15: Budget speech. The Department has six budget Programmes as a result of the reconfiguration and the split of the Vocational Education and Training Branch.

(iv). Programme 4: Vocational and Continuing Education and Training has been renamed Technical and Vocational Education and Training, which is responsible for all matters related to Technical and Vocational Education and Training only. Furthermore, the Department renamed Sub-programme 1: Programme Management: Vocational Education and Continuing Education and Training to Programme Management: Technical and Vocational Education and Training to align it with the Programmes’ new name and added a fifth Sub-programme: Financial Planning has been introduced in Programme 4.

2.2 Programme 1: Administration

This Programme provides strategic leadership, management and support services to the Department. The Programme has maintained its six sub-programmes for 2016/17, namely; Ministry, Department Management, Office of the Chief Financial Officer, Internal Audit and Office Accommodation. The Programme has three Strategic Objectives (SO), namely: SO 1: to ensure effective human resource management within the Department by filling 90% of vacant funded positions and implementation of an effective performance management system; SO 2: to ensure effective financial management; ensuring effective financial management through application of good financial management systems, including management accounting, financial accounting and supply chain management in line with the requirements of the Public Finance Management Act (PMFA); and SO 3: to improve efficiency through the development of approved annual information communication technology (ICT) procurement plans for the implementation of the necessary information technology infrastructure and systems.

The targets for 2016/17 are: to fill 90 percent of approved funded positions; resolve 100 percent of disciplinary cases within ninety days, fill an advertised post within 180 days, pay creditors within thirty days and approve one Information and Communication Technology (ICT) procurement plan.

The Department noted a need to strengthen curriculum support at TVET Colleges and this will be done through the appointment of curriculum specialists and examination support in the regional offices. The Department is not able to implement its approved structure in full owing to financial constraints and there is currently a shortfall of 1000 posts. In addressing capacity challenges, automated business programmes will be implemented, which will include management of leave and performance management. There are two vacant posts of the Deputy Director-Generals of Policy, Planning and Strategy and Community Education and Training. During the 2015/16 financial year, the Department managed to reduce the historical backlog of cases, inherited from the Provincial Education Departments, through the assistance of the South African Institute of Chartered Accountants (SAICA).

2.3 Programme 2: Planning, Policy and Strategy

From 2009/10 – 2015/16 this Programme was Human Resource Development, Planning and Monitoring, and was renamed Planning, Policy and Strategy. Its purpose is to provide strategic direction in the development, implementation and monitoring of departmental policies and in the human resource development strategy for South Africa. The Programme has retained its six budget sub-programmes, namely; Programme Management: Planning, Policy and Strategy (previously known as Programme Management: Human Resource Development, Planning and Monitoring Coordination); Human Resource Development Strategic Planning and Coordination; Planning, Information, Monitoring and Evaluation Coordination; International Relations; Legal and Legislative Services and Social Inclusion in Education.

The Programme has four Strategic Objectives namely: SO 1: to develop two new Post-School Education and Training policies namely, the National Policy on Career Development Services across all spheres of Government and the Policy for Open Learning and Distance Education by 31 March 2017; SO 2: to develop a Sector Monitoring and Evaluation Framework for effective implementation of oversight of the PSET system and produce annual monitoring reports by 31 March 2017; SO 3: to develop and implement one teaching and learning support plan aimed at improving access to quality teaching and learning in the PSET system by 31 March 2017; and SO 4: to develop management information systems for colleges, SETAs and private post-school institutions by 31 March 2017.

The targets for 2016/17 are: to develop the National Policy on Career Development Services across all spheres of Government; to develop Policy for Open Learning and Distance Education and have it approved by the Deputy Director-General/Minister; to develop a Monitoring and Evaluation framework for the Post-School Education and Training system and have it approved by the Deputy Director-General; to develop an international relations monitoring report; to develop a Macro Indicator trend report on PSET; to develop materials for the identified two programmes to be piloted in 2017/18; to develop a report on the implementation of the strategy on open learning and distance education; to publish annual report on skills supply and demand by 31 March 2017; and to publish an annual statistics report on PSET.

2.4 Programme 3: University Education

The purpose of this programme is to develop and coordinate policy and regulatory frameworks for an effective and efficient university education system. It also provides financial support to universities, the National Student Financial Aid Scheme and the National Institutes for Higher Education. This Programme also retained its six budget sub-programmes, namely; University Education; University – Academic Planning and Management; University – Financial Planning and Information Systems; University – Policy and Development; Teacher Education, and University- Subsidies. There were no changes made to the Programme and Sub-programmes.

The Programme has seven Strategic Objectives for the financial year, namely: SO 1: to develop seven new and review two policies / regulations / pieces of legislation to ensure sound provision of university education by 31 March 2017; SO 2: to develop one integrated plan that will enable collaboration between university education and other PSET sectors by March 2017; SO 3: to Monitor and evaluate the higher education sector and produce twelve annual oversight reports; SO 4: to develop and implement a Teaching and Learning Development Capacity Improvement Programme (TLDCIP) covering five plans to improve the capacity of universities in terms of teaching and research by March 2017; SO 5: to develop and implement a student leadership capacity development strategy and Central Application Services to support access to Post-School institutions by 31 March 2020; SO 6: to publish an annual first-time entering undergraduate cohort analysis report; and SO 7: to facilitate stakeholder networks through the establishment of a BRICS Think Tank and participative academic forum and to report progress on partnerships annually.

This Programme has two types of targets planned for the year, namely; direct deliverables which constitute interventions by the Department envisaged for the system during the financial year, and indirect deliverables which are expected outcomes or performance of the system resulting from the intervention by the Department. There are forty four targets planned for 2016/17. These include, twenty nine targets in the direct deliverables and fifteen targets in the indirect deliverables. In the direct deliverables the Department planned; to develop seven policies and have them approved and revised and publish two policies; to have an integrated plan for offering National Qualifications Framework (NQF) Level 5 qualifications in the PSET system approved for implementation by 31 March 2017; to have twelve Monitoring and Evaluation Reports on higher education approved; four teaching and learning support plans for higher education approved; one implementation report on student support services in Higher Education Institutions approved; one cohort study report on higher education published per annum; and a report on the 2016 BRICS Academic Forum and Think Tank partnerships approved by the Minister by 31 March 2017; to have an annual report on the implementation of the Staffing South Africa’s Universities Framework (SSAUF) programme approved by the DG by 31 March 2017; to have a Teaching and Learning Development Capacity Improvement Programme (TLDCIP) project plan for Early Childhood Development (ECD) teachers education approved by the DG by September 2016; to have a report on student support services in Higher Education Institutions signed by DG by 31 March 2017; and to have an updated cohort study report including the 2015 audited data published on the Departmental website by 31 March 2017.

2.5 Programme 4: Technical and Vocational Education and Training

This programme was previously known as the Vocational and Continuing Education and Training (VCET). Its purpose is to plan, develop, implement, monitor, maintain and evaluate national policy, programmes, assessment practices and systems for Technical and Vocational Education and Training.

It previously had four budget sub-programmes, in this financial year there are five budget sub-programmes. The sub-programmes are: Programme Management: Technical and Vocational Education and Training; Technical and Vocational Education and Training System Planning and Institutional Support; Programmes and Qualifications; National Examination and Assessments and Financial Planning.

This Programme has six Strategic Objectives, namely: SO 1: to develop one and revise two legislative and guiding frameworks aimed at steering the Technical and Vocational Education and Training sector by 31 March 2017; SO 2: to standardise the level of governance across TVET institutions, monitor implementation and take appropriate actions when deficiencies are detected by 31 March 2017; SO 3: to develop and implement one teaching and learning support plan for TVET institutions by 31 March 2017; SO 4: to improve success in programmes offered in TVET institutions by developing and implementing one student support plan by 31 March 2017; SO 5: to ensure geographic spread of TVET institutions through the establishment of twelve additional sites of delivery, i.e. campuses, by 31 March 2020; and SO 6: to establish a coordinating structure for support and research in the TVET sector by 31 March 2017.

Like in Programme 3: University Education, targets in this Programme were set in terms of direct and indirect deliverables. The Programme has a total of twenty three targets for 2016/17, eleven direct deliverables and twelve indirect deliverables. In the direct deliverables, the Department plans to have: a national admission and promotion guidelines for National Certificate Vocational NC(V) approved by the Minister by 31 March 2017, to have a Monitoring and Evaluation report on TVET institutions approved by 30 September 2016, to revise the current costing model for TVET College programmes and have it approved by the DG by 31 March 2017, to have an implementation report on the student support services plan in TVET colleges approved by the DG by 31 March 2017, and to have a TVET colleges infrastructure maintenance report approved by the Director-General by 31 March 2017.

For the indirect deliverables / system performance targets, the Department planned to have 829 000 headcount enrolments in the TVET colleges, three months lead time to issue certificates to qualifying candidates, 100 percent of public TVET college examination centres conducting national examinations and assessments in compliance with national policy, 15 percent throughput rate, and 1000 additional beds for student accommodation in public TVET colleges.

2.6 Programme 5: Skills Development

The purpose of this Programme is to promote and monitor the national skills development strategy and to develop a skills development policy and regulatory framework for an effective skills development system.

The Programme has 3 Strategic Objectives, namely: SO 1: to steer and support skills development institutions to implement the National Skills Development Strategy (NSDS) through the development of a new steering mechanism (one regulation) and to revise two legislative frameworks (inclusive of strategies and policies) by 31 March 2017; SO 2: to standardise the level of governance across Sector Education and Training Authorities (SETAs) by 31 March 2020, and to monitor and compile annual quarterly reports and take appropriate actions where deficiencies are detected; and SO 3: to effectively manage artisan development assessment services inclusive of Recognition of Prior Learning (RPL) in order to produce 21 110 qualified artisans per annum by 31 March 2017.

It has direct deliverable and indirect deliverable targets. There are eleven targets in total, spread across the three Strategic Objectives for 2016/17; six in the direct deliverables and five in the indirect deliverables. For the financial year, the Department plans to have a workplace- based learning programme regulations approved by the Minister by 31 December 2016, to have the National Skills Development Strategy (NSDS IV) approved by the Minister by 31 March 2017, to have the SETA landscape to be approved by the Minister by 31 March 2017, to have 120 days average lead time from trade test application received until trade test conducted at the Institute for National Development of Learnership, Employment Skills and Labour Assessments (INDLELA), and to have a 52 percent rate of national artisan learners who pass trade test.

For the system performance targets, the targets are: 120 000 work based learning opportunities, 21 110 new artisans qualified per annum, 30 750 new artisan learners employed or self-employed and 100 percent of SETAs meeting standards of good governance.

2.7 Programme 6: Community Education and Training

The purpose of this Programme is to plan, develop, implement, monitor, maintain and evaluate national policy, programme assessment practices and systems for community education and training.

There are 4 Strategic Objectives namely; SO 1: to develop four guiding frameworks (policies and regulations) aimed at steering the CET system by 31 March 2017; SO 2: to develop and implement one teaching and learning support plan for CET colleges by 31 March 2017; SO 3: to ensure geographic spread and maintenance of 9 CET colleges by 31 March 2017; and SO 4: to forge links with strategic partners and stakeholders in the community education and training sector by developing and approving a strategy on strategic partnerships with key strategic partners by 31 March 2017

There are eleven targets for 2016/17, nine in direct deliverables and two system performance targets. For the year, the targets are: to have monitoring and evaluation policy for Community Colleges approved by 30 September 2016, to have regulations for the establishment of the satellite Community Learning Centres (CLCs) approved by 31 December 2016, to have an annual plan for education, training and development improvement plan for CET approved by 31 March 2017, and to have CET college infrastructure / facilities maintenance reports approved by 31 March 2017. For the system performance, the targets are to have: 310 000 headcount enrolment in CET colleges and 35 percent certification rates in the CET formal qualification.

3. Overview and assessment of the 2016/17 Medium-Term Expenditure Framework (MTEF) Budget

3.1 General overview and assessment

Table 1: 2016/17 DHET overall budget

Programme

Budget

Nominal Rand change

Real Rand change

Nominal % change

Real % change

R million

2015/16

2016/17

2017/18

2018/19

2015/16-2016/17

Administration

366.1

373.7

399.3

427.2

7.6

-15.5

2.08 %

-4.24 %

Human Resource Development

58.3

71.5

76.4

81.8

13.2

8.8

22.64 %

15.05 %

University Education

32 892.0

39 531.6

41 944.1

44 319.9

6 639.6

4 192.1

20.19 %

12.74 %

Vocational and Continuing Education and Training

6 843.0

6 917.2

7 414.2

7 865.7

74.2

- 354.1

1.08 %

-5.17 %

Skills Development

206.5

224.5

244.7

260.6

18.0

4.1

8.72 %

1.99 %

Community Education and Training

1 563.5

2 069.7

2 237.3

2 379.6

506.2

378.1

32.38 %

24.18 %

TOTAL

41 929.4

49 188.2

52 316.0

55 334.8

7 258.8

4 213.4

17.31 %

10.05 %

For the 2016/17 financial year, the Department received a total allocation of R49.2 billion, excluding the amount of R17.6 billion, which is a direct charge against the National Revenue Fund, R14 billion for the Sector Education and Training Authorities (SETAs) and R3 billion for the National Skills Fund. This is an increase of R7.3 billion from R42.0 billion allocated in 2015/16 financial year excluding direct charges. The Department received a total allocation of R66.8 billion for 2016/17. The budget, excluding the direct charges is allocated to the six Programmes of the Department, which are: Administration; Planning, Policy and Strategy; University Education, Technical and Vocational Education and Training; Skills Development and Community Education and Training. The bulk of the budget is spent on University Education, which is 80.4 percent of the total Departmental budget, followed by TVET at 14.06 percent and CET which takes 4.21 percent of the total budget. The budget of the Department is dominated by transfers and subsidies.

Compensation of employees amounts to R7. 8 billion for 2016/17, and the remaining funds for operations amounts to R383 million in 2016/17 which represents 0.8 percent of the total budget. The huge increase in the budget was as a result of an additional allocation of R24.1 billion over the MTEF period. The additional funds are to cater for the following: Compensation of employees: 2015 public service sector wage settlement (R840 million), the zero percent increase in university fees (R5.7 billion), NSFAS historic debt relief (R2.5 billion), NSFAS support to unfunded continuing and new students (R8 billion), function shift of the Public Service Sector Education and Training Authority (PSETA) from the Department of Public Service and Administration (DPSA) (R312 million), function shift of the Medical Students funding from the Department of Health (R75.3 million) and Direct charges SETA and NSF (R6.7 billion).

Despite these increases, the Department is still reporting funding challenges. The Department is unable to attain the growth requirements within the post-school education and training system in terms of enrolments, infrastructure development. It is also important to note that there is no funding allocated in the current MTEF to cater for zero percent fee increment in 2017 academic year going forward. The Department alluded that its current funding will not allow for reprioritisation to fund zero percent fee increase.

In the previous engagement with the Department, it was reported that government and Universities South Africa (USAf) have agreed to develop a regulatory framework to manage future university fee structures and increases across the higher education and training system for implementation in the 2017 academic year. The Council for Higher Education (CHE) has been requested to lead the consultative process of developing the framework and advise the Minister.

3.2 Overview and assessment of budget programmes

3.2.1 Programme 1: Administration

The programme received a total of R373.7 million for 2016/17 which accounts for 0.76 percent of the total Higher Education and Training budget, an increase from R359.5 million in 2015/16. The budget increased by R7.6 million which is a decrease of 4.24 per cent in real terms when considering inflation as compared to 2015/16 allocation. The programme allocation from the total Higher Education budget varied by 0.11 per cent compared to the 2015/16 financial year. The budget is shared among the six Sub-programmes, and the bulk of the budget goes to Sub-programme 3: Corporate Services at R150.9 million, followed by Sub-programme 4: Office of the Chief Financial Officer at R84.8 million, Sub-programme 6: Office accommodation at R53.4 million and Sub-programme 2: Departmental Management at R46.7 million.

The allocation for Sub-programme 2: Department Management budget decreased from R48.4 million in 2015/16 to R46.7 million in 2016/17. Though the other four budget Sub-programmes have received smaller increases in nominal terms, the budget allocations have actually decreased in real terms, except the budget for Corporate Services.

Of the R373.6 million, R368.4 million is allocated for current payments which consist of R203.4 million for compensation of employees. Compensation of employees has increased from R168.5 million in 2015/16 to R203.4 million in 2016/17. R165 million will be spent on goods and services. Of the budget for goods and services, R51.0 million goes to property payments, R35.5 million for computer services, R13.6 million for external audit, R17.4 million for travel and subsistence and R12.2 million for operating payments.

There are also cost-containment measures effected in this Programme, in administrative fees, advertising, minor assets, bursaries for employees, catering, outsourced services, rental and hiring, travel and subsistence.

3.2.2 Programme 2: Planning, Policy and Strategy

For the 2016/17 financial year, the Programme received an allocation of R71.5 million, which is 0.15 percent of the Higher Education and Training total budget. Of the R71.5 million, R68.0 million is for current payments which consist of R58.2 million for compensation of employees and R9.8 million for goods and services. An amount of R3.3 million of the programme allocation goes to the transfers and subsidies’ component to foreign governments and international organisations. The budget increased nominally by R13.2 million (22.6 per cent) which is an increase of 15.0 per cent in real terms when considering inflation that is projected at a rate of 6.6 per cent compared to 2015/16 budget. The Department has effected cost containment measures by reducing the budget allocation of catering: Departmental activities from R328 000 in 2015/16 to R59 000 in 2016/17. Cost containment measures were effected on the allocation for outsourced services and rental and hiring. All the Sub-programmes received an increased allocation.

3.2.3 Programme 3: University Education

The Programme has a total budget of R39.5 billion, from R32.9 billion in 2015/16 financial year. This represents 80.4 percent of the Higher Education and Training total budget. The budget allocation is expected to increase to R44.3 billion by 2018/19 financial. The budget increased by 20.19 percent in nominal terms or 12.7 per cent in real terms when considering inflation compared to 2015/16 financial year. The bulk of the budget (70.4 percent) of the Programme is spent on Sub-programme 6: University subsidies to the amount of R27.9 billion. The budget will be used for transfers to the universities and department entities, including the National Student Financial Aid Scheme (NSFAS), Council on Higher Education (CHE) and the South African Qualifications Authority (SAQA). Though the sub-programme received a 6.39 percent increase in nominal terms, it actually received -0.20 percent increase in real terms. The increase was to cater for inflation. Sub-programme 1: Programme Management: University Education budget increased by 84.13 percent from R2.4 million to R4.7 million; Sub-programme 2: University – Academic Planning and Management increased by 64.60 percent, from R6.6 billion to R11.5 billion; Sub-programme 3: University Financial Planning and Information System increased by 31.82 percent, from R9.1 million to R12.7 million. Sub-programme 4: University Policy and Development and Sub-programme 5: Teacher Education received a 15.81 percent and a 12.38 percent budget increase respectively.

R67.8 million of the total budget is allocated to current payment which consist of R61.0 million for compensation of employees, which increased from R46.1 million in 2015/16, R6.7 million for goods and services. R39.4 billion of the programme allocation goes to transfers and subsidies such as the agencies, higher education institutions, non-profit institutions and household. Cost-containment measures have been effected in Catering: Department activities, communication, computer services, rental and hiring and operating payments.

3.2.4 Programme 4: Technical and Vocational Education and Training

For the 2016/17 financial year, the Programme received an allocation of R6.9 billion, which accounts for 14.06 percent of the total Higher Education and Training budget. The programme budget has increased by 4.1 per cent in nominal terms and decreased by 2.3 per cent in real terms considering inflation. Sub-programme 1: Programme Management: Technical and Vocational Education and Training (TVET) received an increased allocation of R9.7 million from R5.1 million in 2015/16, an increase of 78.4 per cent in real terms. This Sub-programme is responsible for managing the delegated administrative and financial responsibilities, and coordinating all monitoring and evaluation functions.

The Programme budget is dominated by Sub-programme 2: Technical and Vocational Education and Training System Planning and Institutional Support, which accounts for R6.6 billion (94.6 percent) of the total budget. The Sub-programme is responsible for providing support to management and councils; monitors and evaluates the technical and vocational education and training system performance against set indicators; develops a regulatory framework for the system; manages and monitors procurement and distribution of learning and teaching support materials; provides leadership for the technical and vocational education and training colleges to enter into partnerships for utilisation of infrastructure and funding resources; and maps out the institutional landscape for the rollout of technical and vocational education and training college system.

Sub-programme 3: Programmes and Qualifications received an allocation of R11.7 million. This Sub-programme is responsible for managing and coordinating curriculum development processes; ensures the development of quality learning and teaching materials; monitors and supports the implementation of curriculum statement and assessment regulations; monitors and supports the development of lecturers; and provides leadership for the technical and vocational education and training colleges to diversify their programmes, qualifications and curriculum.

Sub-programme 4: National Examinations and Assessment received an allocation of R276 million. The Department has previously reported a funding shortfall in the examination and assessment services. An indication is that there will still be severe budget pressures within this Sub-programme. Sub-programme 5: Financial planning received an allocation of R4.9 million.

R 5.6 billion is allocated for current payments. Compensation of employee’s accounts for R5.5 billion and R118.2 million is for goods and services.

The Department reported that the NSFAS funding for TVET Colleges’ bursaries has been increasing in line with the consumer price index (CPI). On 10 February 2016, the Department informed the Portfolio Committee that the TVET sector bursaries estimated shortfall for 2016 is R2.3 billion, which will grow to R12.3 billion in 2019 if the current MTEF funding allocation is maintained. The subsidies have also not increased to match the growing student numbers. The targets planned for the year of having 829 000 and 1000 additional beds for student accommodation in the public TVET colleges will be reduced, if no additional funding is allocated. It was also noted that there is no dedicated infrastructure development funding for TVET colleges, and funding from the National Skills Fund (NSF) for infrastructure development for the sector had been inconsistent, and there is a need for new money from the voted funds. The Department committed that the three new TVET college campuses in Thabazimbi, Nkandla and Bambanani will be completed by the end of 2016. Furthermore, the review of the TVET colleges funding norms was also underway.

3.2.5 Programme 5: Skills Development

For the 2016/17 financial year, the Programme received an allocation of R224.5 million, which represents 0.46 percent of the Department’s total budget. The budget has increased by R18.0 million or 8.72 per cent in nominal terms. However, when inflation is considered, the budget has increased by 1.99 per cent. Sub-programme 2: SETA Coordination accounts for the biggest portion of the total allocation which is R190.8 million (84.9 per cent), followed by Sub-programme 4: Quality Development and Promotion that accounts for second largest amounting to 10.2 per cent of the total programme budget.

R102.2 million is allocated for current payments. Compensation for employee’s accounts for R90.3 million and R11.9 million is for goods and services.

3.2.6 Programme 6: Community Education and Training

The Programme was allocated R2 billion for 2016/17, which represents 4.0 per cent of the Department’s total budget. The budget will increase to R2.4 billion in 2018/19. The budget has increased by 4.39 percent in real terms. The budget is shared among the four Sub-programmes, and the bulk of the budget R1.8 billion goes to Sub-programme 2: Community Education and Training Colleges System, which is responsible for supporting management and councils; monitors and evaluates the community education and training system performance against set indicators; develops regulatory framework for the system; manages and monitors the procurement and distribution of learning and teaching support materials; provide leadership for the community education and training colleges to enter into partnership for the use of infrastructure for college site hosting centres and funding these partnerships; maps out an institutional landscape for the roll out of the community education and training system; and is responsible for community education and training infrastructure planning and development. R166.3 million of the budget was allocated to sub-programme 3: Financial Planning and R17 million to the Education and Training Development Support sub-programme.

Sub-programme 3: Financial Planning has increased by 62.78 percent in real percent increase, from R95.8 million in 2015/16 to R166.3 million in 2016/17 and Sub-programme 4: Education and Training Development Support budget increased by 71.48 percent from R9.3 million in 2015/16 to R17.0 million in 2016/17. R1.9 billion is allocated for current payments, of which R1.9 billion is for compensation of employees and R63.6 million is for goods and services.

3.2.7 Financial and Fiscal Commission (FFC)’s assessment of the Department of Higher Education and Training 2016/17 MTEF budget

The Financial and Fiscal Commission (FFC) noted that the government agreed to the zero percent fee increase in university fees and the long term consideration revolve around the provision of free education at tertiary institutions which will require a significant amount of additional funding. A Presidential Commission has been established to look into the matter. The FFC further noted that the limited state funding should go further than just universities. There is a need to adequately fund colleges (Technical and Vocational Education and Training and Community Education and Training) which have also been historically underfunded.

The Departmental budget has increased in the 2016/17, in particular, University Education from R32.9 billion in 2015/16 to R39.5 billion in 2016/17, in part to address the no fee increase. The increase from R9 billion in 2015/16 to R14.9 billion in 2016/17 in the allocation of NSFAS was to support more beneficiaries and to cater for student historic debt. The Community Education and Training (CET) programme also received a budget increase of 3.1 percent in 2016/17 from 0.7 percent in 2015/16. Over the MTEF period, the share of University Education and Technical and Vocational Education and Training (TVET) is marginally declining by 1.4 percent (59.6 percent to 58.2 percent) and from 11.9 percent to 10.3 percent respectively. The Department was able to spend its allocated funds, and the spending performance for NSFAS is continuously improving.

3.2.8 Evaluation of the response by the Minister of Finance on 2015 Budgetary Review and Recommendations Report (BRRR)

On the 24 February 2016, the Minister of Finance tabled to Parliament the responses to the 2015 BRR recommendations reports of the Standing Committee on Appropriations on the Medium Term Budget Policy Statement (MTBPS), the Select Committee on Appropriations on the proposed Division of Revenue and conditional grant allocations to provincial and local spheres of government (as contained in the 2015 MTBPS), and Standing Committee on Finance on the 2015 Revised Fiscal Framework. There were no responses to the 2015 recommendations of the Portfolio Committee on Higher Education and Training, however, responses to the mentioned Committees are relevant to post-school education and training. The Minister of Finance responded to the following recommendations as made by the three Committees:

The Minister of Finance and the Minister of Higher Education and Training (DHET) should ensure that the National Treasury and the DHET consider various options for the funding of higher education and training.

The National Treasury and the DHET are working together closely to consider options for the funding of higher education and training. An interdepartmental task team led by the National Treasury is investigating options to finance the White Paper for Post-School Education and Training. Other task team members include the DHET, the Financial and Fiscal Commission, and the Department of Monitoring and Evaluation (DPME). Options considered to date include reprioritising funds from existing government programmes, instituting efficiency measures in post-school education and training institutions, reforming the National Student Financial Aid Scheme (NSFAS), and mobilising new sources of funding through the tax system. The task team will submit a report to the Medium-Term Expenditure Committee and Cabinet at the beginning of 2016/17.

The National Treasury is also providing support to the DHET’s initiative to help historically disadvantaged higher education institutions reprioritise funds and contain costs. It will work with the DHET to support the review of the NSFAS’s operational capacity to ensure it is ready to manage the additional resources to be mobilised.

The National Treasury together with the DHET and relevant stakeholders, including the leveraging of expertise from Auditor-General of South Africa and other stakeholders, should support higher education institutions most affected by the reprioritisation exercise, especially historically disadvantaged institutions.

When determining government’s contribution to funding the shortfall in the budgets of higher education institutions, created by the agreement to scrap the fee increases proposed for 2016, the National Treasury and the DHET considered the capacity each institution had to reprioritise budgets and effect cost-containment measures. The National Treasury will continue to work with the DHET to support higher education institutions most affected by the reprioritisation exercise.

Funding for zero per cent fee increase for higher education institutions.

The National Treasury and the DHET should, as soon as possible, provide Parliament with details of how and where the required funds will be sourced and what the implications of this process will be on the operational needs of the DHET. Over the medium term, R5.7 billion has been allocated to the DHET for university subsidies to fund the zero percent fee increase and R10.7 billion to the NSFAS for short-term debt relief for 71753 students. These students were underfunded between the 2013 and 2015 academic years, or are currently unfunded in 2016. The funds were sourced from a Cabinet-approved reprioritisation of budget baselines across national, provincial and local government. The reprioritisation is not expected to have adverse effects on the operational needs of the DHET because the funds were transferred directly to universities and the NSFAS

The Committee recommends that the MTEF should reflect progress on the funding for higher education. In this regard, the Committee suggests that government looks into the possibility of the budget of the DHET being reprioritised to find some of the funding for “no-fee increases”. Consideration needs to also be given to allocating unused funds from the National Skills Fund and the sector education and training authorities (SETAS), while ensuring that skills training needs are not unduly undermined. The Committee also recommends that government, through engagement with all the relevant stakeholders, consider providing free tertiary education to the needy reasonably soon.

The DHET will investigate how funds from the SETAs and National Skills Fund can be used to support universities and the NSFAS. The National Treasury will support the Department in this exercise. In January 2016, the President appointed a commission of inquiry into higher education funding and other issues. The commission will consider the feasibility of providing fee-free higher education in South Africa. The commission will submit a final report to the President within 10 months of its appointment.

The Committee recommends that the National Treasury, within the norms and protocols of interdepartmental exchanges, engages with the DHET and the DPME on the need for universities to produce graduates who are more likely to be employed and meet the developmental needs of the country.

The National Treasury will work with the DHET and the DPME to implement recommendations in the White Paper for Post-School Education and Training to strengthen the relationship between universities and employers. Encouraging employers to expand workplace training opportunities, especially in areas where qualifications or professional registration depends on practical workplace experience, will be a particular area of focus. The DHET, in consultation with the National Treasury, the Department of Labour and the Department of Public Service and Administration (DPSA), is also considering the feasibility of introducing a community service scheme for graduates. Such a programme will provide unemployed graduates with skills and experience that could help them find work.

The Portfolio Committee welcomes additional funding allocated to cover the zero percent fee increase for tuition and residence fees which was contributed by both the universities and the Department through reprioritisation. The Committee also welcomes the additional funds allocated towards NSFAS debt relief and for funding continuing NSFAS beneficiaries. The establishment of an interdepartmental task team (DHET, Financial and Fiscal Commission and the Department of Monitoring and Evaluation) led by the National Treasury to investigate options to finance the White Paper for Post-School Education and Training. The task team will submit a report to the Medium-Term Expenditure Committee and Cabinet at the beginning of 2016/17. The Committee will monitor progress of the task team in finding sustainable solutions for the PSET sector. The task team should also submit and present the report to the Committee.

3.2.9. Concluding remarks on the 2016/17 MTEF budget of the Department

There is a progressive growth in funding of the post-school education and training. The MTEF budget of the Department excluding the direct charges is set to grow at an annual average of 9.8 percent from R42.0 billion to R55.3 billion in 2018/19. The Department received R49.2 billion for 2016/17 excluding the direct charges against NSF and SETAs. Of importance to note is that though the budget of the Department increases over the MTEF period, it still does not match its expanded mandate. Programme 3: University Education, Sub-programme 6: University Subsidies budget has not increased in real terms. This Sub-programme is critical to expand access to higher education as envisaged in the NDP. The allocation does not take into consideration the higher education inflation.

The Committee, while welcoming the additional budget allocation to support the no fee increases for the 2016 academic year, expressed its concern that it could have a knock-on effect in outer years since no provision is made for similar relief.

Programme 4: Technical and Vocational Education and Training is adversely affected by funding shortfall in terms of programme funding / subsidies and NSFAS allocation for TVET College Bursaries. Due to the insufficient funding allocation to NSFAS, the Department cannot increase the number of students eligible for NSFAS bursaries in the TVET colleges.

It is important to note that the bulk of the budget in delivery programmes 3, 4, 5 and 6 are transfers to institutions that are responsible for implementation.

4. OVERVIEW AND ASSESSMENT OF THE ENTITIES’ ANNUAL PERFORMANCE PLAN (APP) 2016/17

4.1 National Student Financial Aid Scheme

4.1.1 Mandate

The NSFAS was established in terms of the National Student Financial Aid Scheme Act, No 56 of 1999. Its main mandate is to provide loans and bursaries to eligible students, developing criteria and conditions for the granting of loans and bursaries to eligible students in consultation with the Minister of Higher Education and Training, raising funds, recovering loans, maintaining and analysing a database, undertaking research for the better utilisation of financial resources, and advising the Minister on matters relating to financial aid for students.

4.1.2 Programme 1: Student-Centred Financial Aid

The aim of this programme is to improve the provision of financial aid to an increasing number of eligible students by designing and implementing a new student centred operating model and enhancing the financial aid environment with policy recommendations for new financial aid programmes. The Programme has the following service units: Loans and bursaries administration: responsible for comprehensive loans and bursaries; sBux: responsible for electronic disbursement of allowances; Contact Centre: responsible for student relationship management and Communications: responsible for stakeholder and student communications and marketing.

Programme 1 has four strategic objectives under two perspectives, namely; financial and stakeholder perspective. Strategic objective 1: To increase funding (Rand value) raised for financial aid for qualifying students. The indicators for this strategic objective is the amount of funds raised from new funders and from current funders, which is expected to be R10 million in 2016/17.

Strategic objective 2: to increase the amount of money recovered (Rand value) from NSFAS debtors. The indicator is the amount of money recovered from NSFAS debtors.

Strategic objective 3: to increase the percentage of students on the student centred model. In 2016/17, 80 percent of students will be on the student centred model. Strategic objective 4: to improve the efficiency of payments of tuition, residence fees and allowances to NSFAS students and institutions. The indicators are to have 98 percent of institutions in the student centred model paid their tuition and residence within 30 days, and 98 percent of students in the student centred model paid allowances within seven days.

4.1.3 Programme 2: Administration

The aim of this programme is to conduct the overall management, administration and governance of the entity and to provide efficient and effective support services to sustain the new student centred operating model. The Programme has the following service units: Executive Office: responsible for strategy, organisational performance and stakeholder relations; Finance: responsible for all financial accounting and related processes, collections and debtor management and crisis management; Corporate Services: responsible for all people related matters and Information and Communications Technology: responsible for all systems related enablers.

Programme 2 (Administration) has three strategic objectives under two perspectives, namely; internal processes and learning and growth perspective. Strategic objective 5: to improve financial, performance management and IT governance audit outcomes. This strategic objective will be achieved by having an unqualified audit with zero material misstatements and by maintaining Corporate Governance Information Communications Technology Assessment Standards at level 3. Strategic objective 6: to strive for an improved organisational culture of high performance and high productivity by improving employee engagement. The entity plans to have an employee engagement index of 60 percent. Strategic objective 7: to undertake research for the better utilisation of financial resources. The entity plans to produce four research reports per year.

4.1.4 Budget overview

Table 2: 2016/17 NSFAS MTEF budget

Programme	Revised appropriation	Medium-term expenditure estimate
R’000	2015/16	2016/17	2017/18	2018/19

Administration	128 826	121 121	127 177	143 553
Student centred-model	8 829 238	14 839 173	13 761 921	14 407 242

Total	8 958 064	14 960 294	13 889 098	14 550 795

The total allocation for 2016/17 is R14.9 billion. Compensation of employees is R107 million, administration budget is R117 million, goods and services is R57 million, capital is R12 million and the rest of the budget is for loans and bursaries at a cost of R14.7 billion. The budget increase came as a result of the Presidential intervention to address the NSFAS funding shortfall, which often leads to annual student protests during registration periods. The shortfall was R4.6 billion (R2.543 billion for NSFAS loans to 71 753 NSFAS qualifying students or underfunded over 2013 to 2015 academic years to pay their university debts. R2.039 billion for loans to support unfunded continuing students in the 2016 academic year). R2.5 billion historic debt relief was a once-off allocation for 2016/17.

4.2 South African Qualifications Authority

4.2.1 Mandate

The objectives of the National Qualifications Framework (NQF) and SAQA are to; create a single integrated framework for learning achievements, to facilitate access, mobility and progression within education, training and career paths, to enhance equality of education and training, accelerate redress of past unfair discrimination in education, training and employment opportunities, and to contribute to the full personal development of each learner and the social and economic development of the nation at large.

4.2.2 Programme 1: Administration and Support

This programme covers the activities of the Executive Office and the following Directorates: Human Resources, Information Technology Finance and Administration, Advocacy, Communication and Support and International Liaison.

The following are the targets in this programme for 2016/17: to receive a clean audit report; achieve 100 percent compliance with the National Treasury requirements; 100 percent of staff contracts approved and they are assessed; 100 percent staff who qualify are recognised and rewarded; 650 000 people using SAQA / NQF digital (including social media) platforms and process 100 percent of qualifications and part qualifications recommended by the Quality Council (QC) annually.

4.2.3 Programme 2: Registration and recognition

This programme is responsible for registering high quality, nationally relevant and internationally comparable qualifications and part-qualifications that meet national criteria and articulate across sub-frameworks, and recognising professional bodies and registering professional designations on the NQF.

The following are targets in this programme for 2016/17: to process 100 percent of qualifications and part-time qualifications recommended by the Quality Councils (QCs) annually; to process percent applications for the recognition of Professional bodies and registration of their professional designations annually; to monitor learner uptake for all qualifications registered from 2009 and de-register qualifications with no learner uptake after 2 years of registration.

4.2.4 Programme 3: National Learner’s Records Database (NLRD)

The programme is responsible for maintaining and further developing the National Learner’s Records Database (NLRD) as the key national source of information for human resource and skills development in policy, infrastructure and planning.

The following are the targets for 2016/17: to load 100 percent of all data received from QCs that meet the criteria twice per year; to load 100 percent of all data received from Professional Bodies that meet the criteria twice per year and to produce reports on learner achievements added to NLRD every quarter and to produce quarterly progress reports.

4.2.5 Programme 4: Foreign Qualifications Evaluation and Advisory Services

This programme is responsible to maintain and develop SAQA’s role as the national source of advice on foreign and domestic learning and qualifications.

The following are the targets in this programme for 2016/17: to produce a monitoring report on the implementation of the approved policy framework; to process 100 percent of all applications and to produce annual trends on misrepresented foreign qualifications.

4.2.6 Programme 5: Research

This programme is responsible for conducting evidence-based research to evaluate the impact of the NQF and track the development and implementation of the NQF.

The following are the targets in this programme for 2016/17: to produce a report giving details of research partnerships facilitated, progress with existing partnerships and partnerships concluded; to disseminate the 2015 NQF Impact Study summary report and to complete and approve research report on SAQA’s role in the ombudsman function.

4.2.7 Programme 6: International Liaison

This programme is responsible for liaising with international partners on matters concerning qualifications frameworks and sharing best practices with the NQF family.

The following are the targets in this programme for 2016/17: to produce two documents on international best practice; to produce one benchmarking reports and to develop one (set of) guidelines (of good practice for learning that does not lead to a qualification or a part-time qualification registered on the NQF).

4.2.8 Budget overview

Table 3: 2016/17 SAQA MTEF budget

Programme	Budget		Nominal Increase / Decrease in 2016/17	Real Increase / Decrease in 2016/17	Nominal Percent change in 2016/17	Real Percent change in 2016/17
R Thousands	2015/16	2016/17	Nominal Increase / Decrease in 2016/17	Real Increase / Decrease in 2016/17	Nominal Percent change in 2016/17	Real Percent change in 2016/17

Administration and Support	51 749.0	50 458.0	- 1 291.0	-4 415.0	-2.49%	-8.53%
Recognition and Registration	9 088.0	9 662.0	574.0	-24.2	6.32%	-0.27%
National Learners Records Database	13 701.0	14 963.0	1 262.0	335.6	9.21%	2.45%
Foreign Qualifications Evaluations and Advisory Services	24 623.0	28 612.0	3 989.0	2 217.5	16.20%	9.01%
Research	5 511.0	5 105.0	- 406.0	-722.1	-7.37%	-13.10%
International Liaison	2 135.0	2 396.0	261.0	112.7	12.22%	5.28%

TOTAL	106 807.0	111 196.0	4 389.0	-2 495.6	4.1%	-2.34%

The allocation for 2016/17 is R112 million. Compensation of employees is R77.1 million (70 percent of the budget) goods and services is R31.8 million. The entity reported that it was well positioned to achieve all its strategic objectives for the 2016/17 based on its budget.

4.3 Council on Higher Education (CHE)

4.3.1 Mandate

The Council on Higher Education (CHE) is an independent statutory body established in terms of the Higher Education Act No. 101 of 1997, as amended. The mandate of the CHE as the Quality Council for Higher Education is to advise the Minister of Higher Education and Training on all higher education issues, and is responsible for quality assurance and promotion through the Higher Education Quality Committee (HEQC).

4.3.2 Strategic Goal 1

This goal provides for the role that the Council plays in informing and influencing the public debate on the policy framework for transformation of the higher education system. This is achievable by advising the Minister on request or by the Councils own initiative. The programme has two strategic objectives, namely: SO 1: to advice the Minister on all higher education matters on request and on the CHE own initiative ; SO 2: to monitor the state of higher education, including publishing information and convening conferences, seminars and workshops on development in higher education.

The following are targets for 2016/17: to respond to 100 percent request for advice within the timeframe requested; two pieces of advice on own initiative on issues identified as relevant flowing from the activities of the CHE, ongoing projects published to assess the state of higher education system; four research projects in progress; projects initiated and number of research findings disseminated.

4.3.3 Strategic Goal 2

This goal seeks to contribute to the development of qualifications standards to ensure the relevance, comparability and currency of qualifications. The four Strategic Objectives for the financial year, include: SO1: to develop and manage HEQSF, including the articulation of qualifications between the three sub-frameworks, namely HEQSF, the general and further Education and Training; SO2: to develop and implement policy, criteria and standards for higher education qualifications to inform and guide the development, registration and publication of qualifications; SO3: to maintain a database of learner achievements in higher education and to submit the data to the National Learners Records database (NLRD), which is maintained by SAQA. Qualifications Sub-Framework and the Trades and Occupations qualifications sub-frameworks

The following are targets for 2016/17: 100 per cent submissions made on the CHE perspective on articulation as per Ministerial guidelines, develop at least four qualifications standards within the development cycle and achieve 80 percent of private higher education providers (PHEIs) submitting a learner record.

4.3.4 Strategic Goal 3

The purpose of this goal is to promote quality and conduct quality assurance in higher education, including enhancing the quality of higher education.

The 4 Strategic Objectives for the financial year, include: SO 1: to audit quality assurance mechanisms of higher education institutions; SO 2: to accredit new programmes by public and private higher education institutions and to re-accredit existing programmes offered by higher education institutions; SO 3: to undertake national reviews of existing programmes in specific field qualification level by public and private higher education institutions and SO 4: to promote quality and to develop capacity and understanding of the role of quality assurance in improving quality provision in higher education at both the systemic and institutional level.

The following are the targets for 2016/17: first cycle audit (monitoring of progress reports linked to institutional improvement plans); undertake institutional feedback visits; four training workshops to be conducted; 100 percent of the Bachelor of Social Work (BSW) degrees reports received and processed, phases 1 and 2 of the Bachelor of Law (LLB) national review process completed within the review cycle-time (24 – 26 months), to convene three quality assurance forums for public and private institutions and professional bodies, produce and distribute 2 newsletter to stakeholders

4.3.5 Strategic Goal 4

This goal ensures the efficient and effective provisioning of corporate services- administrative, financial, technical and professional, to support the discharge of the core mandate of the CHE. Strategic Goal 4 has 3 Strategic Objectives, namely: SO 1: to ensure the development of human resource management environment that enables staff to develop their full potential; SO 2: to ensure that financial, administration and supply chain management is compliant with the requirements of the Public Finance Management Act (PMFA), relevant Treasury regulations and laws; SO 3: to ensure effective governance and compliance of ICT with statutory requirements.

The following are the targets for 2016/17: training and development of 70 percent of staff, to have 80 percent of vacancies filled, to have eight finance and supply chain policies reviewed and developed, to have suppliers and third parties paid within thirty days, and to have eight ICT policies, frameworks, guidelines, procedures and processes reviewed and developed.

4.3.6 Budget overview

The budget allocation of 2016/17 is R46.4 million. The DHET Grant for 2016/17 is R40.9 million. It decreased by R4.7 million from the original allocation of R45.6 million. Compensation of employees amounts to R31 million (66 percent of the total budget). The baseline reduction by 10 percent resulted in a budget shortfall of R14.9 million for the 2016/17 financial year.

Owing to the budget cuts for this financial year, the Council projects that the objectives of the following programmes will be impacted:

Programme: Administration - will be unable to deliver on its critical mandate that seeks to advice the Minister, hold strategic meetings, and to implement and monitor good governance.

Programme: Monitoring and Evaluation – Research on the factors that contribute to the ongoing governance and management challenges in higher education; the state of academic professions in South Africa; the impact of student funding on throughput and graduation rate; role of ICT; Vital stats; African languages, student governance and etc. The listed strategic objectives are critical in achieving the targets set in the NDP.

Programme: Institutional Audits- site visits, quality enhancement meetings and etc. Programme: Accreditation: The number of programmes to be accredited and those that need to be re-accredited and capacity development. The inability of the Council to deliver on this programme will also affect the cost recovery means as it is also another form of its funding. Programme: National Standards and Reviews- with specific reference to Social work, LLB, nursing, sports coaching, Bachelor of Commerce (B.Com) and Library and Theology.

4.4 Quality Council for Trades and Occupations

4.4.1 Mandate

The main functions of the QCTO are to; develop and quality assure qualifications, manage the Occupational Qualifications Sub-Framework (OQSF) and to certify successful learners. The QCTO develops occupational qualifications, which include the trades.

4.4.2 Programme 1: Administration

The purpose of the Programme is to enable QCTO performance through strategic leadership and reliable delivery of management support services. This programme falls under the Strategic Outcome Oriented Goal 1: Create a sustained organisation.

The Programme had one indicator in 2015/16. For 2016/17, there are two indicators, namely an ICT Master System Plan (MSP) implementation plan approved annually and Marketing and Communication Strategy implemented annually, which is a new indicator. There are two quarterly targets under this programme, namely: ICT implementation plan for 2016/17 approved by the steering committee and annual Marketing and Communication Plan approved by the Management Committee.

4.4.3 Programme 2: Occupational Qualifications

The purpose of the programme is to ensure that occupational qualifications registered on the Occupation Qualifications Sub-Framework are available and Skills Development Providers (SDPs) that offer occupational qualifications are accredited within a reasonable period and ensure credibility of providers. This programme falls under the Strategic Outcome Oriented Goal 1: Competent people in priority trades and occupations. This Programme is fundamental in delivering on the mandate of the organisations as stipulated in the Skills Development Act.

The Programme has seven indicators and seven annual targets which are divided into quarterly targets. For 2016/17, the Council plans to have thirty prioritised occupational qualifications recommended to South African Qualifications Authority (SAQA) for registration on the Occupational Qualifications Sub-Framework (OQSF); 100 percent prioritised registered occupational qualifications with enrolment (based on new Occupational Qualifications Development Model) monitored; ninety days average turnaround time from date of receipt of duly completed accreditation application to date of issuance of accreditation letter to skills development providers offering newly registered occupational qualifications; ninety days aaverage turnaround time from date of receipt of duly completed accreditation letter to skills development providers offering NATED Report 190/1 part qualifications; forty days aaverage turnaround time from date of receipt of duly completed accreditation application to date of issuance of accreditation letter to skills development providers offering Trades qualification; forty Learner Qualifications Development Facilitators enrolled on training programme to facilitate the development of occupational qualifications; and four reports on reconstruction N4-N6 part qualifications submitted for consideration to the Occupational Qualifications Committee.

4.4.4 Programme 3: Quality Assurance

The purpose of this Programme is to establish and maintain standards for Quality Assurance of Assessments and Certification for Occupational Qualifications on the Occupational Qualifications Sub-Framework. The programme also falls under Strategic Outcome Oriented Goal 1: Competent people in priority trades and occupations. There are two strategic objectives under this programme which are: to ensure that the Quality Assurance System for the implementation of registered occupational qualifications is functional, effective and efficient; and Certification: Learner achievements of qualifications on the OQSF quality assured and certified as prescribed in QCTO policies.

This programme has 9 indicators and 9 targets for the year. Targets planned for 2016/17 are to have: 100 percent of Assessment Centre Accreditations processed within the turnaround time (30 working days); 100 percent of Assessment Quality Partner (AQP) delegation approvals processed; 100 percent of Quality Assurance Partners (QAPs) that have been monitored against QCTO compliance standards; 100 percent of Assessment Quality Partners (AQPs) that have been monitored against QCTO compliance standards; 8 of 8 quality assurance functions delegated to QAPs (SETAs and SAQA accredited Professional Bodies) taken up by the QCTO; N4-N6 part qualifications quality assured against QCTO standards; 100 percent Certificates issued within the turnaround time (21 working days); 100 percent of learner achievement data submitted to NLRD in accordance with NLRD specifications; and 100 percent of verifications requests for certificates issued by the QCTO verified within turnaround time (5 working days). The targets will be reported quarterly and annually.

4.4.5 Budget overview

The DHET Grant for 2016/17 is R23.1 million and the SETA Grant is R60 million, which makes a total budget of R83.8 million for the 2016/17 financial year. Compensation of employees amounts to R44.6 million, goods and services R35.5 million and capital expenditure R3.6 million. The entity is heavily reliant on Sector Education and Training Authority (SETA) grants for its budget, and it has to apply for this grant annually. The grants for 2017/18 – 2018/19 have not yet been approved by the Minister.

5. Observations

5.1 Department of Higher Education and Training

5.1.1 Programme 1: Administration and Programme 2: Planning, Policy and Strategy

The performance indicators and targets in the DHET’s APP 2016/17 met Treasury specific, measurable, attainable, relevant and time-bound (SMART) criteria / principles as reviewed by the Auditor-General South Africa (AGSA).
Programme 2: Planning, Policy and Strategy and Programme 6: Community Education and Training (CET) do not have permanent Deputy Director-Generals (DDG). The DDG for Planning, Policy and Strategy programme was transferred to Programme: 4 Technical and Vocational Education and Training (TVET) and he is still acting in programme 2.

The management of the function shift of the TVET and CET sectors was commended by the Committee.
Additional staff will be appointed to support the curriculum review of the TVET and CET sectors.

5.1.2 Programme 3: University Education

The Department is in contact with the historically disadvantaged institutions (HDIs) that are experiencing financial constraints. This intervention is aimed at bringing stability in these institutions to mitigate eventualities that might negatively impact the academic programme.
The Department’s policy on differentiation assists in determining resource allocation based on the institutions’ areas of specialisation.
The increase in university subsidies over the MTEF period is R16.2 billion, and this is insufficient to meet the growing demand for higher education.
The cohort study of students awarded NSFAS loans in the first five years of 2000 – 2004 undertaken by the Stellenbosch University (SU) showed that this group of students performed at 7 percent better than non-NSFAS beneficiaries in higher education institutions (HEIs).
The newly established universities in Mpumalanga and the Northern Cape are growing at a faster rate than projected, and this might impact on the resource capacity of these institutions.

5.1.3 Programme 4: Technical and Vocational Education and Training

The Department expressed concerns that the investment made is insufficient for the student numbers enrolled and the projected NDP targets may not be reached unless there is a huge injection of funds for the sector. The TVET sector is underfunded and had R3 billion shortfall based on the 2015 figures and this will impact on its expansion as envisaged in the White paper on Post-School Education and Training (WPSET).
The TVET colleges do not have dedicated infrastructure grants, however, the review of the funding norms for this sector was underway which will also cater for infrastructure development.
The DHET committed that the 3 new TVET college campuses in Thabazimbi, Bambanani and Nkandla will be completed before the end of 2016.
Low certification rates of students, particularly in the National Certificate Vocational NC(V) programme impacts negatively on the TVET college sector’s throughput rate which is less than 15 percent.

5.1.4 Programme 5 Skills Development

The Minister has appointed the SETA Review Panel, which will assist the Department in reviewing the Annual Performance Plan (APP) and Sector Skills Plans (SSPs) of the SETAs.
The Department has over-achieved on artisan training exceeding its target of 45 000 by 8 000 more trained artisans. However, the slow economic growth of 0.7 percent as predicted by the International Monetary Fund (IMF) affects the placement of artisan candidates in workplaces.
The Public Service SETA has migrated from the Department of Public Service and Administration (DPSA) to be under the jurisdiction of the Department of Higher Education and Training.
The Minister has approved the extension of the SETA landscape to 31 March 2017 including the NSDS III.

5.1.5 Programme 6: Community Education and Training

This is a new programme which the Committee will closely monitor in the 2016/17 financial year.

5.1.6 Budget

The Committee welcomes additional funding allocated to cover the zero percent fee increase for tuition and residence fees for 2016, which was contributed by both the universities and the Department through reprioritisation. The Committee also welcomed the additional funds allocated towards the NSFAS historic debt relief and for funding continuing unfunded NSFAS beneficiaries. Also welcomed was the establishment of the Presidential Commission to consider the feasibility of providing fee-free higher education in South Africa and the Inter-departmental task team to investigate options to finance the White Paper for Post-School Education and Training objectives.
The Department’s budget for 2016/17 excluding direct charges is R49.2 billion, which is an increase of R7.3 billion from the previous financial year. The Committee observed that the Department and some its entities continue to be underfunded. The current funding of the Department does not match its expanded mandate of producing a “skilled and capable workforce to support an inclusive growth path”. Of significance to note is that the Department currently oversees more than 100 entities (26 universities, National Institute for Humanities, 50 TVET Colleges, 9 Community Education and Training Colleges with 3 150 Public Adult Learning Centres, 21 Sector Education and Training Authorities (SETAs), three Quality Councils, National Student Financial Aid Scheme (NSFAS). In addition to the public institutions, the Department oversees the 297 Private TVET Colleges and 127 Private Higher Education Institutions. With the R382.975 million (0.8%) budget remaining for operations after transfers and compensation costs, the Department will not be able to effectively and efficiently support and monitor this ever growing sector. This is a high risk area as these institutions are responsible for delivering on the NDP priorities and the bulk of the Department’s budget is allocated to these entities excluding the private institutions.
The National Artisan Moderation Body (NAMB) was established in 2010 in terms of the section 26A (1)(a) of the Skills Development Act, 97 of 1998 to coordinate artisan development in the country, and it has not received voted funds since its inception. The Unit has since relied on the National Skills Fund (NSF). To ensure that institutions such as SETAs and TVET Colleges provide high quality artisan training, NAMB has to be adequately funded from the Vote to execute its statutory functions effectively and efficiently.
The Financial and Fiscal Commission (FFC) has noted that the share of government spending in higher education subsidies has been declining, while the number of poor students accessing higher education and training as well as the costs of running the universities have increased. The FFC recommended that there is a need to adequately fund TVET and CET sectors, which have been historically underfunded. Government subsidy programme funding for the TVET colleges for 2016/17 is R6.6 billion, which is insufficient for the student numbers enrolled. There is over R4 billion programme budget shortfall expected in 2016, and this amount increases year on year and projected at R12.5 billion in 2019.
It is also important to note that there is no funding allocated in the current MTEF to cater for zero percent fee increment in 2017 academic year going forward. The Department alluded that its current funding will not allow for reprioritisation to fund zero percent fee increase. This matter should be attended to urgently so that universities can be informed in time to make accurate budget decisions for 2017.
NSFAS funding for TVET colleges bursaries had been increasing on consumer price index (CPI). The Department targeted to cover at least 80 percent of college students with NSFAS bursaries, however, the investment of R2.4 billion for 2016/17 is insufficient, taking into account the NDP and White Paper targets. The 2016 bursary shortfall is estimated at R2.3 billion, which is projected to grow to R5.6 billion if the current level of funding is maintained.
The three Quality Councils; SAQA, CHE and QCTO received budget cuts. While SAQA and QCTO noted that they will be able to implement their 2016/17 fully, by cutting down on other expenditures, CHE will not be able to implement its APP as planned if there is no additional funding. CHE experienced budget cuts from 2014/15 (R42.6 million) to 2016/17 (R40.9 million). The 2016/17 baseline reduction by 10 percent resulted in a budget shortfall of R14.9 million, while personnel costs have to increase as a result of the salary increases in the public service. The share percentage of personnel budget is higher than goods and services.

5.2 National Student Financial Aid Scheme

Fraudulent activities in the administration of loans and bursaries still exist in the system, and the entity does not have adequate capacity to monitor these activities at institutions.
The late payment of allowances to students by institutions contributes to student failure and drop-out, and the deficiencies in the sBux system needs to be rectified.
The entity still utilise the services of consultants, particularly for its traveling, internal audit function and valuing of its loan book.
The increase in the NSFAS allocation from R9 billion in 2015/16 to R14.9 billion in 2016/17 is necessary to expand access of poor students in post-school education and training institutions.
The loan recovery target for 2016/17 is 25 percent growth on the 2015/16 actual performance, and this is not sufficient owing to the growing demand for financial aid.
The secondment of 3 employees from corporate banks to assist with the work of the entity is commendable. These representatives will be paid by their respective banks while offering their services to the entity.
The partnership between the NSFAS and Vodacom and the South African Broadcasting Corporation (SABC) foundations to raise funding for the scheme is a good initiative and highly commended.
NSFAS is working with the Department of Trade and Industry (DTI) and the National Credit Regulator to consent issues imposed by the National Credit Act, and how it applies to NSFAS. This will assist the entity to improve its loan recovery rate from permanently employed former beneficiaries.

5.3 South African Qualifications Authority

Insufficient budget for the entity will impact on its ability to fulfil its mandate adequately.
The personnel expenditures amount to 70 percent of the entity’s budget, and it has less funds for other key functions such as goods and services.
The entity received funding from the DHET for the digitisation of the pre-1992 learner records.
The cost saving measures implemented by the entity are commendable.
The entity will investigate the decolonisation of the curriculum based on the request by the Minister and advise him accordingly. The request of the Minister came as a result of a resolution of the National Higher Education Summit held in Durban in 2015 which called for curriculum reforms in higher education.
The entity will be hosting the African Qualifications Verification Network and the Groningen Declaration Network events aimed at facilitating the movement of learners and academics on the African continent and worldwide on the 17 May 2016 in Cape Town.

5.4 Council on Higher Education

The entity is facing a budget shortfall of R14.9 million for 2016/17 as a result of the allocation cut by the National Treasury, and this will impact on its ability to deliver on its mandate effectively. However, there is a 14 percent increase in its budget projected for 2017/18.
Some of the key targets in the 2016/17 APP will not be achieved if there is no additional funding, and new projects such as, academic profession and information and communication technology (ICT) in higher education will be put on hold.
66 percent of the entity’s budget for 2016/17 is for compensation of employees (COEs), and owing to insufficient budget, the entity is unable to pay bonuses to eligible employees for 2016.
A moratorium on six vacant funded posts worth (R3 million) has been placed until business processes are finalised by the entity.
The Department committed to engage with the entity to discuss the possibility of additional funding to cover the shortfall for 2016/17.
Cost-containment measures effected by the entity such as cutting off international trips and conferences were commended.
The entity received a request from the Minister to investigate the cost drivers for fee increases in higher education. This is an important project which will assist broader society and stakeholders in higher education to understand the uneven costs of higher education as well its inflation which is above the consumer price index (CPIX).

5.5 Quality Council for Trades and Occupations

The entity has an outdated organogram which was approved in 2010, and the review of the organogram will be completed during the course of 2016. This may potentially result in additional posts in the entity’s establishment.
Of the total staff complement of 90 employees, 48 employees are on contract and only 42 are permanent. The entity is unable to appoint majority of its staff permanently owing to uncertainty about its budget allocation.
The entity is heavily reliant on Sector Education and Training Authority (SETA) Grants for its budget, and it has to apply for this grant annually. The grants for 2017/18 – 2018/19 have not yet been approved by the Minister.
There was an overall improvement in the setting of performance indicators and targets for the 2016/17 APP.

6. Summary

The Committee commended the Department for having an Annual Performance Plan (APP) 2016/17 which met the Treasury specific, measurable, attainable, relevant and time-bound (SMART) principles as reviewed by the Auditor-General South Africa (AGSA). Nonetheless, the Committee was concerned that out of the twenty one Sector Education and Training Authorities (SETAs) assessed by the AGSA, five had significant findings on their performance indicators and targets although this is an improvement from the previous year when eight SETAs did not comply. The SETAs affected include; Chemical Industries Education and Training Authority (CHIETA), Energy and Water SETA, Local Government SETA, Safety and Security SETA and Services SETA. The Committee was further concerned that the SASSETA and LGSETA had significant findings on their performance indicators and targets for two consecutive years.

The Committee raised its concerns with the decline in government grants to key entities such as the CHE and SAQA owing to the National Treasury budget cuts to all government departments and entities. The implications of the reduced allocations will impact negatively on the ability of the entities to deliver on their mandates effectively. The Committee urged the entities to reprioritise and implement cost containment measures to meet the funding shortfall so that the key projects can be implemented.

7. Recommendations

The Committee recommends that the Minister of Higher Education and Training and Minister of Finance consider the following:

7.1 Department of Higher Education and Training

7.1.1 Programme 1: Administration and Programme 2: Planning, Policy and Strategy

The filling of the vacant Deputy Director-General (DDG) posts for Programme 2: Planning, Policy and Strategy and Programme 6: Community Education and Training (CET) should be prioritised;
The filling of critical posts within the stipulated six-months period should be adhered to; and
Outstanding historic disciplinary cases should be finalised within six months

7.1.2 Programme 3: University Education

Monitoring and evaluation over public higher education institutions (PHEIs) should be expedited to ensure that public funds are spent effectively;
Feedback on the ongoing forensic investigation into NSFAS administration at post-school education and training institutions should be provided to the Committee;
Dedicated interventions should be implemented to support the historically disadvantaged institutions, particularly on financial management;
The expansion of the public university system should be supported by requisite funding to eliminate future protests which impact on the academic offering; and
Feedback should be provided to universities, particularly on their annual financial statements which are submitted to the Department for consideration.

7.1.4 Programme 4: Technical and Vocational Education and Training

The completion of the 12 new TVET college campuses should be prioritised to increase access and opportunities for occupational and mid-level skills required for economic growth;
Teaching and learning and student support services should be enhanced to improve the poor certification and throughput rates in the NC(V) and Report 191 programmes;
The review of the funding norms for TVET colleges should be prioritised to assist with infrastructure development and the need for increased subsidies in the sector; and
The completion of the review process of the Report 191 programme should be prioritised.

Budget

The Committee welcomes the additional funding allocated to cater for the zero percent fee increase and for NSFAS debt relief and funding for continuing students. While awaiting the finalisation of the work of the Presidential Commission and the Inter-departmental task team, consideration should be given to funding current shortfalls to implement the 2016/17 annual performance plans of the Department and entities.
Additional budget allocations should be made to the Department to support the requirements within the post-school education, and training to meet the objectives of the White Paper for Post-School Education and Training (WPSET);
The disparities in the overall budget of the Department should be reviewed to promote equitable resource allocation in its entities and PSET institutions;
To ensure that institutions such as SETAs and TVET colleges provide high quality artisan training which is comparable across the providers, the National Artisan moderation body (NAMB) should be adequately funded from the Vote 15 to execute its statutory functions effectively and efficiently;
Additional funding should be allocated to the Department to implement its approved structure so as to increase capacity and to conduct monitoring and evaluation of institutions;
Additional funding should be allocated to increase the TVET college programme subsidies as well as the NSFAS allocation for TVET college bursaries so as to fund the targeted 80 percent of students, and to achieve enrolment numbers as projected in the 2014-2019 MTSF;
Additional funding should be allocated to the CHE so that it can fulfil its mandate of protecting the public against poor quality higher education effectively, and
Furthermore, there is an urgent need to address the zero percent fee increase for 2017 academic year.

7.2 National Student Financial Aid Scheme

The entity should build its internal capacity to reduce the spending on consultants and limit outsourcing;
The entity should investigate the alleged fraudulent activities in the administration of loans and bursaries at the University of Fort Hare (UFH) and Motheo TVET college;
The entity should undertake workshops with the relevant stakeholders in higher education, particularly on the proposed expansion of the new student-centred model to mitigate eventualities against the roll-out of this model;
The Task Team on the Missing Middle should fast track the development of a funding model to assist the students whose parents are earning above the NSFAS threshold, and are unable to secure bank loans to fund education for their children;
The deficiencies in the sBux system should be rectified before the new student centred model is expanded to 80 percent of the students in 2016/17; and
The entity should increase its loan recovery target given the growing demand for post-school education and training.

7.3 South African Qualifications Authority

Additional funding should be allocated to the entity so that it can fulfil its mandate effectively and address its top risks for 2016/17.

7.4 Council on Higher Education

The entity’s projects that are aimed at supporting transformation in higher education should be prioritised given its limited resources;
The review of the entity’s business process should be prioritised so that it can determine the number of staff personnel required in executing its mandate effectively; and
Engagement between the entity and the Department on the possibilities for additional funding to mitigate the budget shortfall should be prioritised. Furthermore, and the entity should develop a list of all the projects that will be affected as a result of the budget shortfall.

7.5 Quality Council for Trades and Occupations

Completion of an updated Organogram should be prioritised by the entity so that it can determine its full staff complement to have realistic projections on compensation of employees;
There is a need for a long term permanent arrangement for the SETA grant allocation for the entity to avert the issue of applying annually. This will further assist the entity in appointing staff on a permanent basis when it has a stable budget; and
The entity should build its internal capacity to perform its functions that were delegated to its partners.

Report to be considered.

Documents

No related documents

ATC160419: Report of the Portfolio Committee on Higher Education and Training on Consideration of Budget Vote 15 Higher Education and Training, dated 19 April 2016

Higher Education, Science and Innovation

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