ATC161018: Budgetary Review and Recommendation Report (BRRR) of the Portfolio Committee on Basic Education on the performance of the Department of Basic Education for the 2015/16 financial year, dated 18 October 2016

Basic Education

The Budgetary Review and Recommendation Report (BRRR) of the Portfolio Committee on Basic Education on the performance of the Department of Basic Education for the 2015/16 financial year, dated 18 October 2016

The Portfolio Committee on Basic Education, having considered the performance of the Department of Basic Education, reports as follows:

1. Introduction

Purpose of the BRRR

Section 5 of the Money Bills Procedures and Related Matters Amendment Act 9 of 2009 sets out the procedure that allows the National Assembly, through its Committees, to make recommendations to the Minister of Finance to amend the budget of a national department. Through this procedure, committees are required to annually compile Budgetary Review and Recommendation Reports that assess the service delivery performance of departments, given available resources. Committees are also expected to provide an assessment of the effectiveness and efficiency of the Department’s use of available resources, and may include recommendations on the forward use of resources. The BRRR is also a source document for the Committee on Appropriations when making recommendations to the House on the Medium-Term. The annual reviews of expenditure and performance for 2015/16 forms part of this process.

1.2 The role and mandate of the Portfolio Committee

The Portfolio Committee on Basic Education is mandated by sections 55 and 92 of the Constitution of the Republic of South Africa (Act 108 of 1996) to oversee the activities and performance of the Department of Basic Education and its two statutory bodies, namely, the Council for Quality Assurance in General and Further Education and Training (Umalusi) and the South African Council for Educators (SACE). In this context, the Portfolio Committee on Basic Education focuses its work within the five constitutional mandates of Parliament, which are to process and approve legislation, conduct oversight, ensure public participation, process international agreements and facilitate co-operative governance. In addition to performing these constitutional mandates, the Committee engages in various activities and programmes focussing on the development and delivery of quality public education to all South Africans. The Committee also deals with matters referred to it by the Speaker or the National Assembly.

1.3 Core functions of the Department of Basic Education

The Department of Basic Education (DBE) derives its mandate firstly from the Constitution of the Republic of South Africa (1996), which requires education to be transformed and democratised in accordance with the values of human dignity, equality, human rights and freedom, non-racism and non-sexism. The Constitution guarantees access to basic education for all, including adult basic education. Secondly, the National Education Policy Act, 1996 Act 27 of 1996 (NEPA), inscribes into law the policies for the national system of education, the legislative and monitoring responsibilities of the Minister of Education, as well as the formal relations between national and provincial authorities. In terms of the NEPA, the DBE’s statutory role is to formulate national policy, norms and standards as well as to monitor and evaluate policy implementation and impact.

In line with its mandate, the Department has a vision of a South Africa in which all people will have access to lifelong learning, education and training opportunities, which will, in turn, contribute towards improving the quality of life and building a peaceful, prosperous and democratic South Africa.

In fulfilling its mandate over the next five years, the Department is guided by the Medium Term Strategic Framework (MTSF) designed to reflect the actions outlined in the National Development Plan (NDP).

1.4 Processes followed by the Portfolio Committee in arriving at this report

In compiling this BRRR, the Portfolio Committee assessed the performance of the Department of Basic Education with reference to the following:

The strategic priorities and measurable objectives as set out in the 2015/16 and 2016/17 Annual Performance Plans.
Expenditure trends drawn from the reports of the National Treasury;
The 2015 and 2016 State of the Nation Address priorities; the reports of the Auditor-General of South Africa and the reports on the 2016 Budget Vote.
The priorities of the Basic Education sector as set out in the 2014 – 2019 MTSF and the NDP
The financial statements and annual report briefings, in terms of Section 65 of the Public Finance Management Act No. 1 of 1999, which requires the Ministers to table the Annual Reports and financial statements for the Department and public entities before Parliament.
Findings of the Portfolio Committee’s oversight visits, including quarterly briefings.
External sources assessing the performance of the Department.

The briefings on the annual performance and financial statements of the Department and its statutory bodies took place on 11 and 12 October 2016 in Parliament. The Portfolio Committee also met with the Auditor General on the audit outcomes on 12 October 2016.

2. Overview of the key relevant policy focus areas

2.1 Strategic Priorities of the Department

Since 2009, the focus of the education sector is on “improved quality of Basic Education” – Outcome 1. The strategic outcome oriented goals of the Department of Basic Education (DBE) in the 2015/16 and 2016/17 financial years are anchored on the 2014 – 2019 Medium Term Strategic Framework (MSTF) and the sector plan, Action Plan to 2019 - Towards the realization of schooling 2030. The overarching goal of the education sector remains to improve learner performance across all grades.

The MTSF outputs for the sector and the Department’s plans are aligned to and guided by the National Development Plan. The Department’s strategic outcome oriented goals per programme are aligned to the following six MTSF sub-outcomes:

Improved quality teaching and learning, through the development, supply and effective utilisation of teachers;
Improved quality teaching and learning, through the provision of adequate, quality infrastructure and learning and teaching support materials;
Improving assessment for learning to ensure quality and efficiency in academic achievement;
Expanded access to Early Childhood Development and the improvement of the quality of Grade R, with support for pre-Grade R provision;
Strengthening accountability and improving management at the school, community and district levels;
Partnerships for education reform and improved quality.

There are specific “non-negotiables” forming part of the key deliverables finding expression in the DBE’s plans and in provincial plans to fast-track some of the key imperatives of government in the basic education sector. All the non-negotiables are directly linked to the MTSF priorities for the sector. They include the provision of high quality LTSM and infrastructure; the monitoring, support and improvement of Districts; teacher development and placement; accelerating the provision of ICT through Operation Phakisa (Big Fast Results); the provision of Library Services; Rural Schools (Multi-grade, Farm and non-viable schools); the Curriculum with the focus being on MST, Reading and Inclusive Education); and, Social Mobilisation, partnerships, learner well-being and safety.

2.2 Overview of the service delivery environment and context for 2015/16 and 2016/17

The service delivery environment in the education sector comprises the Department of Basic Education (DBE) and the nine Provincial Education Departments (PEDs), including district offices and schools, working collaboratively to achieve Outcome 1 of government’s Programme of Action. For 2015/16, based on the 2015 School Realities which reflects the 10th school day statistics, the education sector (ordinary public and independent schools) comprised 12 814 473 learners, 416 093 educators and 25 691 schools.

The delivery environment in both 2015/16 and 2016/17 requires a model of provision which requires the National Department of Basic Education to focus on technical leadership, oversight, and the setting and maintenance of norms and standards in the basic education concurrent function.

For 2016/17, the DBE remains focused on the provision of quality basic education, particularly the six outputs covered in the Medium Term Strategic Framework and the non-negotiables.

The Department of Basic Education’s Revised Strategic Plan for 2015/16 – 2019/20, tabled in March 2016, was revised with a view to reflect more explicitly the Department’s core functions of policy development, monitoring the implementation of policy and the oversight role over provinces, as expressed in the National Education Policy Act (Act No. 27 of 1996). In so doing the Department set out to leave the sector functions of implementation to be covered in the different Provincial Education Departments’ plans and programmes.

A Summary of previous key Performance Recommendations of the Portfolio Committee

Budgetary Review and Recommendation Report 2015

2.3.1.1 Responses from the Department of Basic Education

In the 2015 Budgetary Review and Recommendation Report (BRRR), the Portfolio Committee recommended that the Department address audit shortcomings which were highlighted by the Auditor General in order to avoid their recurrence in the future. These shortcomings include the following:

Accruals and payables exceeding 30 days deemed unauthorised expenditure;
The recurring challenge of the restatement of corresponding figures;
Material non-compliance with legislation in respect of expenditure management (irregular and unauthorised expenditure), annual financial statements, procurement and contract management; and;
Internal control deficiencies, including leadership oversight, systems to monitor financial and performance management and capacity of the internal audit.

Further key service delivery recommendations of the Portfolio Committee related to the following:

Ensuring that officials who do not comply with legislation or are under-performing are held accountable;
Intensifying the monitoring of the implementation of the textbook retrieval system;
Ensuring that the Limpopo Province improves its performance, including its audit outcomes and spending in respect of the HIV and AIDS conditional grant;
Considering an alternate, cost effective way of incentivising dedicated teachers and quality schools (other than the expensive Annual Teacher Awards Ceremony);
Intensifying interventions in respect of the implementation of Inclusive Education, including the effective implementation of SIAS;
Finalising the matter of learners who had been implicated in irregularities during the 2014 NSC Examination;
Fast-tracking the completion of teacher profiling to enable effective reporting in future Quarterly and Annual Reports on important sectoral data that capture factors such as subjects they teach, school phases and geographical areas, which would further enable Parliament to monitor performance more effectively; and
Collaborating with relevant role-players, to intensify support to Provincial Education Departments to ensure that they improve their expenditure in infrastructure budgets.

Progress report on the implementation of the Action Plan to address the A-G’s 2014/15 audit findings

Accruals and payables exceeding 30 days deemed unauthorised expenditure

Action Plan	Progress made
Accruals: All infrastructure invoices must be paid within 30 days of receipt. The cash flow forecast to be developed to avoid over commitment during the financial year.	A consolidated cash flow projection has been developed and the expenditure of all projects are reconciled to the monthly cash flow forecast to ensure that they are in line with the projected expenditure. *[It would appear that there was a slow response by management in addressing this challenge since it recurred in 2015/16]***
: A letter to be written to Implementing Agents (IAs) who transferred funds to the Department’s ASIDI accounts. Regular meeting must be held with IAs. The accruals and payable should be one of the standing items.	A letter was written to the affected IAs indicating that they should refrain from transferring funds into the ASIDI account since it is in contravention with the PFMA. In meetings with the IAs, the matter has been re-emphasised to all IAs.

The recurring challenge of the restatement of corresponding figures

Action Plan	Progress made
All units must conduct monthly reconciliation and submit to the Chief Financial Officer (CFO)'s office for verification.	The Department noted that the main cause of restatement was incorrect information from the IAs. Letters were written to the IAs to request them to submit signed reconciliations as well as any other information requested.

Internal control deficiencies, including leadership oversight, systems to monitor financial and performance management and capacity of the internal audit

Action Plan

Progress made

All Branches were informed that they must ensure that their Internal Controls are strengthened, reviewed and to monitor the implementation thereof.

It was reported that most Directorates are implementing Internal Controls.

In the revised organisational structure of the Department, a sub-directorate was created to perform the internal control functions. It is envisaged that this will minimise internal control deficiencies.

Material non-compliance with legislation in respect of expenditure management (irregular and unauthorised expenditure), annual financial statements, procurement and contract management: No response was received from the Department regarding progress in addressing this matter.

Service delivery issues

Progress in ensuring that the Limpopo Education Department improves its performance, including its audit outcomes and spending in respect of the HIV and Aids conditional grant: The Department of Basic Education (DBE) reported that the Limpopo Department of Education (LDoE) would develop its Audit Action Plan with deadlines. Each official in the Department would be held accountable for their areas for their areas of responsibility. Given that the LDoE was now under Section 18, the Section 18 Team would lead the Auditor General (AG) interaction and audit monitoring. The S18 Team, together with the LDoE officials, would focus on the following:
- Complete monthly employee verification;
- Pay all outstanding/backlog teachers’ salaries;
- Pay all outstanding/backlog pensions;
- Conduct policy formulation;
- Sort out the infrastructure valuation in time for the 2016/17 YE (already started);
- Hold Implementing Agents (IAs) accountable;
- Improve Supply Chain Management (SCM), financial management and records management ( both specifically with effect from 1 April 2016);
- Improve all Human Resource Management (HRM) issues; and
- Improve Risk and Security Management and Internal Control;

The DBE noted the key timeframes of resolving issues to include:

80% by 2016/17 Financial year;
Outstanding issues during the 2017/18 financial year;
The PED would hold regular audit improvement plan meetings to:
- review progress on previous findings;
- hold accountability meetings; and
- Improve record keeping.

The PED would conduct investigations of irregular expenditure and take appropriate action.

Support from the Department of Basic Education (DBE)

The DBE and LDoE have agreed to work together with the aim of improving the audit outcome of Limpopo;
The DBE team will evaluate and analyse the Audit Action Plan of Limpopo with the aim of assessing and identifying the root cause and the proposed relevant intervention measures, including creating realistic timeframes;
The DBE will engage the LDoE and the S18 Team on an on-going basis with the aim of evaluating and reviewing the progress of the Audit Action Plan.

From the response of the Department as covered above, it is unclear as to the progress made in the 2015/16 financial year towards improving Limpopo’s audit outcomes, and whether anyone was held accountable.

In respect of improving spending with respect to HIV and Aids grant, the DBE reported that the Limpopo Department of Education (LDoE) indicated that it has submitted all the procurement plans and needs to the Supply Chain Management (SCM) for all the grants, including HIV and Aids. This is the procurement plan that is in line with the approved business plan. This process will ensure that the LDoE realise all its planned activities and also improve spending in the current financial year. Notably, for 2015/16, the LDoE improved its spending on the HIV and AIDS grant to more than 95 per cent of its allocated budget.

Ensuring that officials who do not comply with legislation or perform poorly are held accountable: The DBE reported that, through the Performance Management and Development System (PDMS), the Department is able to identify under-performers. Letters are written to DDGs signed by the DG requesting that Managers prepare a development plan to assist poor performers to improve their performance by identifying relevant courses and providing the necessary mentorship. This is being monitored on a quarterly basis. Normal disciplinary processes are instituted where officials lack compliance with legislation.

Intensifying the monitoring of the implementation of the textbook retrieval system: The DBE reported that they have commenced with the process of developing a national policy to guide the provision and management of Learning and Teaching Support Material (LTSM). The Minister has approved the draft LTSM policy for public comments. The Department received the comments and is currently finalising the process. LTSM retention and retrieval form part of the key elements of LTSM provision and management addressed in the policy.

In the present term, the Department has developed an annual Sector Plan to guide and set timelines for provinces to procure and deliver LTSM for the new school calendar year. Subsequent to the release of the Sector Plan by the DBE, provinces then align their Management Plans to that of the DBE.

With regards to retention and retrieval, the Department issued a circular (S12 of 2013) to reiterate the Department’s commitment regarding the provision of a textbook for every subject to each learner in the schooling system. The circular further communicates that the procurement of the required LTSM and its efficient retention are both essential components of LTSM provision as they will ensure greater access to LTSM for learners.

The SA-SAMS programme is currently providing for schools to track retrieval. In addition, the Department is in the process of rolling out an electronic procurement, delivery and retrieval programme aimed to interface with the SA-SAMS programme.

Intensifying interventions in respect of the implementation of Inclusive Education, including the effective implementation of SIAS: The Department is entrenching and deepening a multi-disciplinary approach in the implementation of Inclusive Education across Branches and Directorates from the DBE cascading to Provinces and Districts as in the following examples:
- Curriculum Differentiation and SIAS Policy Implementation require the involvement of the following critical Directorates through the following levels:

Teacher Development
Curriculum Management and Subject Advisory Services
Education Management and Governance Development
District and Circuit Management
Inclusive Education
- The implementation of CAPS for SASL is primarily a Curriculum responsibility and requires the involvement of the following Directorates across the levels:
  - Teacher Development
  - Curriculum Management and Subject advisory Services
  - Education management and Governance Development
  - Inclusive Education
  - Human Resource Planning

The Department noted that, for effective collaboration, the start should be integrated planning, monitoring and support rather each entity working in isolation and should include the sharing of resources for each area of implementation to maximise gains whilst ensuring effective use of resources.

The Department further noted that, key to effective and successful implementation is the availability of resources in particular with regards to funding. For instance, SIAS implementation requires that the DBE prints and distributes the policy documents; and CAPS documents for SASL.

Other key areas requiring attention are to ensure the establishment and fully-functioning of district- based support teams (DBSTs) and school-based support teams (SBSTs) in every district and every school respectively in addition to finalising and implementing enabling systems such as the Norms and Standards for the Distribution of Resources (Funding and HR) for an Inclusive System.

Finalising the matter of learners who had been implicated in irregularities during the 2014 NSC Examination: The DBE together with PEDs made some progress in resolving the irregularities by providing opportunities for the learners to present themselves at irregularity hearings. However, hearings could not be concluded in seven schools in the Eastern Cape and eleven schools in the Kwa-Zulu Natal province due to the following reasons:

Learners had engaged the services of lawyers, who raised various reasons for not allowing the learners to present themselves at scheduled hearings.
Learners could not be traced given that they had relocated and school principals were not aware of their whereabouts.

On the basis of the above and given the repeated attempts to convene these hearings,

The 2014 implicated results of these learners were nullified and candidates allowed to write the 2016 NSC examination. This action was taken based on the notion that learners had already served their sanction period and therefore the results could be released.
In cases where candidates wrote either the 2015 Supplementary or the 2015 November examination, as allowed by the Ministerial concession, these results were released.
The above action was accepted by Umalusi and results were in the process of being released and candidates would be allowed to write the 2016 NSC examination, if they so desire.

Fast-tracking the completion of the teacher profiling to enable the reporting in future Quarterly and Annual Reports on important sectoral data that capture factors such as subjects they teach, school phases and geographical areas, which would further enable Parliament to monitor performance more effectively: The process of teacher profiling has been slower than expected due to various challenges faced by PEDs. These include lack of personnel capacity in the district offices; shortage of equipment such as computers to allow more officials to work on capturing; and missing documentation in educator files which requires that educators resubmit.

The Department continues to monitor the implementation of the teacher profiling process in the provinces. PERSAL data as at 30 November 2015 was analysed and a comprehensive report was developed and presented to Senior Management and HEDCOM. As part of ongoing monitoring, the DBE compiles exception reports detailing identified gaps in capturing. The exception reports are sent to PEDs on a quarterly basis to effect corrections.

Collaborating with relevant role-players, to intensify support to Provincial Education Departments to ensure that they improve their expenditure on infrastructure budgets: The DBE reported that they have strengthened their monitoring and oversight role as well as early warning mechanisms. To this effect, the following are being implemented in the current financial year:

Strengthening project site visits to assess progress, to view problems, to gather information etc.;
Facilitating meetings between project partners where issues have to be dealt with and decisions taken;
Providing advice where possible and sharing the experiences/good practises; and
Providing specialist advice about contract and construction management issues.

Monitoring deals with both programme and project matters. Programme matters being monitored include the pattern of overall expenditure being achieved; comparisons of expenditure to projected cash flows; and progress being made with key groups of projects [e.g. Water, sanitation, libraries, laboratories, Grade R].

At the Project level the Department reported the progress being made as including that PSP appointments are being made timeously; planning and design processes are adhered to; the tender processes for the appointment of contractors are progressing in relation to the planned milestones; construction is progressing satisfactorily, [(.e. on programme, on budget, at acceptable quality); and projects are being handed over and closed out. It should be noted that during the oversight visit to Limpopo Province in September 2016, Members of the Portfolio Committee raised concern that some projects were not handed over timeously. It would be important that the Department ensure that this matter be addressed adequately.

3. Overview and Assessment of Financial Performance

3.1 Allocation versus Expenditure per Programme for 2015/16

Table 1: Allocation versus Expenditure per Programme for the 2015/16 Financial Year

Programmes	2015/16			Expenditure as % of Appropriation
	Appropriation	Actual Expenditure	Variance
	R’000	R’000	R’000
Administration	386 645	386 475	170	100.0%
Curriculum Policy, Support and Monitoring	1 837 965	1 797 740	40 225	97.8%
Teachers, Education Human Resources Development and Institutional Development	1 164 017	1 163 548	469	100.0%
Planning, Information and Assessment	11 959 764	11 511 906	447 858	96.3%
Educational Enrichment Services	5 938 035	5 936 456	1 579	100.0%
Total	21 286 426	20 796 125	490 301	97.7%

The budget allocation of the Department of Basic Education in 2015/16 was R21.3 billion, which represented a nominal increase of R1.6 billion, or 8.1 per cent from 2014/15. The majority of the (R16.8 million) consisted of transfers and subsidies, mainly to provinces and municipalities. This means the Department had an available budget of R4.5 billion for operations.

Actual expenditure in 2015/16 was R20.8 billion or 97.7 per cent of the allocated budget compared to 99.2 per cent in 2014/15. The unspent balance of R490.3 million at the end of 2015/16 is more than in 2014/15, when R161 million was unspent. Table 1 shows that the main contributors to the under-spending in 2015/16 were Programme 2 that had spent 97.8 per cent and Programme 4, which spent 96.3 per cent.

3.1.1 Reasons for Deviations in the above Programmes

Programme One: Administration (Underspent: R170 000) - There were no material variances in this programme.
Programme Two: Curriculum Policy, Support and Monitoring (Underspent: R40.2 million) - The under-spending on this programme was mainly on the Expanded Public Works Programme (EPWP) Grant due to issues of administrative delays in capturing the required data into the EPWP electronic system. The major problem was that EPWP changed the reporting system, capturing in the new electronic system was a challenge as this system was not included in the original plan and the agreement signed by both the Director-General of the DBE and Public Works.
Programme Three: Teachers, Education Human Resources Development and Institutional Development (Underspent: R469 000) - There were no material variances on this programme.
Programme Four: Planning, Information and Assessment (Underspent: R447.9 Million) - The under-spending on this programme was mainly on the ASIDI programme. The process of consultation on rationalisation of schools took longer than anticipated and it impacted on the spending trends for the ASIDI project.
Programme Five: Educational Enrichment Services (Underspent: R1.6 Million) - There were no material variances in this programme.

3.2 Allocation against Actual Expenditure for the 2015/16 Financial Year

Economic Classifications	2015/16			Expenditure as % of Appropriation
	Appropriation	Actual Expenditure	Variance
	R’000	R’000	R’000
CURRENT PAYMENTS
Compensation of Employees	439 640	439 472	168	100.0%
Goods and Services	2 037 526	2 102 316	(64 790)	103.2%
Interest on rent and land	47 524	47 524	0	100.0%
TRANSFERS AND SUBSIDIES	16 813 584	16 818 562	(4 978)	100.0%
Provinces and Municipalities	15 631 771	15 631 771	0	100.0%
Departmental agencies and accounts	1 103 789	1 104 391	(417)	100.0%
Foreign government and international organisations	16 478	20 998	(4 520)	127.4%
Non-profit institutions	60 055	60 055	0	100.00%
Households	1 306	1 347	(41)	103.1%
PAYMENTS FOR CAPITAL ASSETS	1 947 645	1 387 737	559 908	71.3%
Building and other fixed structures	1 932 786	1 374 762	558 024	71.1%
Machinery and Equipment	14 779	12 795	1 804	87.8%
Software and other tangible assets	80	0	80	0%
PAYMENTS FOR FINANCIAL ASSETS	507	514	(7)	101.4%
Total	21 286 426	20 796 125	490 301	97.7%

3.2.1 Deviations and Mitigation Measures

Goods and Services - The over-spending on this item was due to the procurement and provision of school furniture for non ASIDI schools that was not budgeted for under the ASIDI allocation. The Department aimed to ensure that during the adjustment, budget funds are shifted from the capital budget to cover the remaining commitments on this item.

Transfers and subsidies - The over-expenditure on this item was due to the transfers to foreign/international organisations which are made in Dollars and EUROs. At the time of the transfer the exchange rate was higher than projected. The Department would in future estimate the exchange rate based on the value of the Rand at the time of receipt of these invoices and request National Treasury approval to increase the amounts to be transferred to these organisations.

Payments for Capital Assets: The under-spending on this item was mainly in respect of the ASIDI project and was due to the rationalisation of schools. The process of consultation for the mergers of schools took longer than anticipated. The consultation on the rationalisation of schools had been completed in some areas.

3.2.2 Report of the Auditor-General’s on the Department’s audit outcomes

The Department received an unqualified audit opinion for 2015/16 as in previous years. The emphasis of matters raised by the Auditor-General include the following:

National textbooks cataloguing process: The audit revealed deficiencies in the process of establishing national catalogues of text books to be procured by Provincial Education Departments for distribution to schools. The Department did not comply with certain aspects of the supply chain requirements as prescribed by the National Treasury in the Treasury Regulations. This was due to the lack of tracking and monitoring of compliance with Treasury Regulations during this process.

Predetermined objectives: The reported performance information was unreliable when compared to the source information, in Programme 2 (Curriculum Policy Support and Monitoring), Programme 3 (Teachers, Education Human Resources and Institutional Development) and Programme 4 (Planning, Information and Assessment). Notably, there were no material findings in respect of the reliability of information in Programme 5 which had findings in 2014/15.

3.2.3 Additional matters raised included:

Expenditure management:

The accounting officer did not take effective steps to prevent irregular expenditure amounting to R599 million, in contravention of section 38(1) (c) (ii) of the PFMA and treasury regulation 9.1.1.
The accounting officer did not take effective steps to prevent unauthorised expenditure amounting to R153 million, in contravention of section 38(1) (c) (ii) of the PFMA and treasury regulation 9.1.1.
The accounting officer did not take effective steps to prevent fruitless and wasteful expenditure amounting to R44 million, in contravention of section 38(1) (c) (ii) of the PFMA and treasury regulation 9.1.1.

Consequence management: Effective and appropriate disciplinary steps were not taken against officials who made and permitted irregular and unauthorised expenditure at the time, as required by section 38(1)(h)(iii) of the PFMA and treasury regulation 9.1.3, since it was not investigated during the year under review.

Procurement and contract management:

Fourteen contracts were awarded to bidders where preferential points were not allocated and/or calculated according to the requirements of the Preferential Procurement Policy Framework Act and its regulations.
Memorandums of agreements with implementing agents were not amended or extended through approval by a delegated official, in contravention of the department’s delegation of authority issued in terms of section 44 of the PFMA. The total value of the payments made in the current financial year to the implementing agents after expiry of their memorandums of agreements amounted to R 219.8 million and it has been disclosed as irregular expenditure.

Annual Financial Statement - Material misstatements of immovable tangible capital assets, accruals and commitments identified by the auditors in the submitted financial statements were subsequently corrected and the supporting records provided, resulting in the financial statements receiving an unqualified audit opinion.

Internal control: Deficiencies in the control environment mainly in the area of oversight by leadership and, particularly in respect of the infrastructure programme and performance reporting over the past three financial years, were not adequately addressed. In addition, the performance of the internal audit unit against the annual internal audit plan was not satisfactory due to challenges in the capacity of the unit.

3.2.4 Steps Taken to Prevent Recurrence

The Department reported the steps it took to prevent a recurrence of the AGSA findings, as follows:

National textbooks cataloguing process: The Department wrote to National Treasury requesting approval to deviate from the normal procurement process since cataloguing cannot be done through the normal Supply Chain Management (SCM) process.

Irregular Expenditure, Fruitless and Wasteful Expenditure, Unauthorised Expenditure and Consequence management:

Meetings were held with all Implementing Agencies (IAs) to inform them of Government Supply Chain Management (SCM) processes to be followed.
In the case of any Implementing Agency found not to have followed the SCM processes, the Department has the right to terminate the Memorandum of Understanding with the IA.
Where fruitless and wasteful expenditure could be confirmed, deductions have already been made from the volunteers. Other cases are still under investigation to ascertain that they are indeed fruitless and wasteful expenditure. Once confirmed, deductions will be effected immediately.

Annual Financial Statements:

During the training of volunteer supervisors and coordinators, a presentation was made on the matter. Should any volunteer be found to be affected by the matter, their contract will be terminated with immediate effect.
Officials affected by any form of irregularity, have been issued with warning letters.
Immovable tangible capital assets: The capital asset table is updated quarterly.
Accruals: The implementing agents will submit accruals on their official letterhead confirming completeness and correctness.
Commitments: Copies of contracts are being collected from the implementing agents to verify the commitment amounts.

4. Financial Performance for the First Quarter 2016/17, DBE

4.1 Allocation against Actual Expenditure per Programme

Table 4.1: Allocation against Actual Expenditure per Programme

PROGRAMMES	2016/17			Expenditure as % of Appropriation
	APROPRIATION	ACTUAL EXPENDITURE	VARIANCE
	R’000	R’000	R’000
Administration	377 893	99 991	277 902	26.46%
Curriculum Policy, Support and Monitoring	1 936 100	264 818	1 671 282	13.68%
Teachers, Education Human Resources Development and Institutional Development	1 163 742	753 487	410 255	64.75%
Planning, Information and Assessment	12 500 176	3 889 932	8 610 244	31.12%
Educational Enrichment Services	6 291 684	2 056 296	4 235 388	32.68%
Total	22 269 595	7 064 524	15 205 071	31.72%

The total Final Appropriation budget of the Department for the 2016/17 financial year amounts to R22.3 billion. The actual expenditure for the First Quarter amounted to R7.1 Billion or 31.8 per cent of the available budget, compared to the spending of 33 per cent in 2015/16. The 2016/17 First Quarter spending was lower compared with the Department’s projections to spend R7.9 billion. The variance was mainly in Programmes 2 and 4 under goods and services and payments for capital assets respectively.

As in previous years, the lower than projected spending in Programme 2 was influenced by the late start of the Kha Ri Gude classes as well as the printing and distribution of workbooks. Expenditure was expected to improve in the Second and Third Quarters following the commencement of the delivery of workbooks in September 2016. The start of the Kha Ri Gude classes in the second quarter would also influence the spending.

In terms of Programme 4, the Department had projected to spend R4.7 billion but were able to spend R3.9 billion. The deviation was mainly due to implementation delays in the School Infrastructure Backlogs grant (ASIDI), where the projected expenditure for the quarter was R929 million and only R176 million was spent. The slow spending was due to delays in the process of the merging and rationalisation of schools which had an impact on the spending needs for the ASIDI project. The Department also experienced slow spending in the ASIDI project in the 2015/16 financial year owing to the delays in the rationalisation process.

The high spending in Programme 3 was due to the transfer of the Funza Lushaka Bursaries funds to the National Student Financial Aid Scheme (NSFAS), which were transferred in April 2016.

4.2 Transfers and subsidies, (predominantly comprising conditional grants)

The transfers for the first quarter were made as scheduled. Spending in respect of the National School Nutrition Programme and the Education Infrastructure grants was largely on track whilst that of the HIV and AIDS (Life Skills Education) and the Mathematics, Science and Technology (MST) grants was lagging behind at 10 per cent each. Notably, in 2015/16 spending on the HIV and AIDS and the MST grants improved to 99.7 per cent and 96.0 per cent respectively by the end of the financial year, following a slow start in the First Quarter.

4.3 Overview and Assessment of Service Delivery Performance

4.3.1 Service delivery performance for 2015/16

The Annual Performance Plan summarises the priorities of the DBE as aligned to the Delivery Agreement of OUTCOME 1: Improving the quality of Basic Education and the Action Plan to 2019: Towards the Realisation of Schooling 2030. The activities of the Department remain structured into five programmes as elaborated in the Annual Performance Plan

For 2015/16, the total number of indicators for all DBE programmes was 31, compared with 26 in 2014/15. The Department shows steady progress in meeting its set targets, from 84.6 per cent being fully met in 2014/15 to 87.1 per cent in 2015/16.

4.3.1.1 Programme One: Administration - The Administration Programme is responsible for the management of the Department and the provision of strategic and administrative support services.

Within this programme, targets were achieved or exceeded in all four performance indicators, as was the case in 2014/15, as follows:

The number of staff development opportunities offered to officials of the Department – The target set was 15 and the Department recorded 24 staff development opportunities.
The Number of internships implemented in the Department – The target stood at 65 and the Department implemented a total of 66 internships.
Signed Financial Disclosure forms for the DBE SMS members submitted by the due date every year – The target was for all SMS members to sign financial disclosure forms. All SMS members had submitted by the due date as per the target set.
Signed Performance Agreements by the DBE SMS members submitted by the due date every year – The target was for all SMS members to have submitted by the due date – and this target was reached.

Programme Two: Curriculum Policy, Support and Monitoring - The purpose of Programme Two is to develop the curriculum and assessment policies and to monitor, evaluate and support their implementation.

Programme Two: Targeted Outputs versus Actual Output for 2014/15

Within this programme, the Department fully achieved or exceeded eight of the nine set targets, as follows:

The percentage of qualifying public schools with workbooks for Grade R learners – The target was set at 97 – 100 per cent. The Department was able to reach its target of 100 per cent in this respect.
The percentage of Grade R practitioners with NQF level 6 – The target percentage was set at 20 per cent and the Department only reached 19 per cent.
The percentage of Grade R practitioners with NQF level 4 and 5 – The targeted percentage was set at 50 per cent and the Department exceeded this target and reached 79 per cent.
The percentage of public schools with Home language workbooks for learners in Grades 1 - 6 - The target was set at 97 – 100 per cent. The Department was able to reach its target of 100 per cent in this respect.
The percentage of public schools with Mathematics workbooks for learners in Grades 1-9 - The target was set at 97 – 100 per cent. The Department was able to reach its target of 100 per cent in this respect.
The number of learners completing the Kha Ri Gude programme - The target was set at 430 441 learners and the Department only reached 298 317 learners.
The percentage of learners who obtain a National Senior Certificate - The targeted percentage was set at 76 per cent but the Department only reached a target of 72.1 per cent.
The number of teachers trained in multi-grade teaching – The Department set a target of 500 teachers and exceeded this by reaching 1 108 teachers.
The percentage of public schools with Mathematics workbooks for learners in Grades 1-9 - The target was set at 97 – 100 per cent. The Department reached its target of 100 per cent in this respect.

4.3.1.3 Programme Three: Teacher and Education Human Resources Development and Institutional Development - The purpose of Programme Three is to promote quality teaching and institutional performance through the effective supply, development and utilisation of human resources.

Programme Three - Outputs

Within this programme, the Department fully achieved or exceeded four of the seven set targets,

whilst one was partially achieved and two were not achieved, as follows:

The number of Funza Lushaka bursaries awarded to students enrolled for initial teacher education – The target was set at 13 000 and the Department was able to reach a total of 13 980 students.
The percentage of Funza Lushaka bursary holders placed within six months of their graduation – The Department had set a target of 85 per cent placement and was able to reach 87 per cent in this regard.
The number of qualified teachers aged 30 and below, entering the public service as teachers during the financial year – The target was set at 8 600 but the Department exceeded this target and reached 12 976 teachers entering the public service.
The percentage of principals appointed based on competency assessment processes – The target was set at 75 per cent of advertised posts but the Department only appointed seven per cent.
The number of teachers who have written the Self-Diagnostic Assessments for English First Additional Language (EFAL) and Mathematics – The targets were as follows for EFAL 20 000 and Mathematics 20 000 respectively. The target reached was EFAL 487 and Mathematics 653 respectively.
The percentage of School Governing Bodies (SGBs) that meet minimum criteria in terms of effectiveness (in sampled schools) – The Department set a target of 70 per cent of sampled SGBs. The Department sampled 84 per cent of SGBs.
The number of public schools supported by external moderators to monitor the utilisation of findings of school profiles to improve learner performance – The target was 6 000 public schools supported – but the Department only reached a target of 5 517.

4.3.1.4 Programme Four: Planning, Information and Assessment - The purpose of Programme Four is to promote quality and effective service delivery in the basic education system through planning, implementation and assessment.

Programme Four: Outputs

Within this programme, targets were fully achieved in eight of the nine set targets, as follows:

Valid and reliable data on learner results of performance in ANA – The Department set a target of producing three reports (National ANA report, Diagnostic report and Annual ANA district report). This target was not measured since ANA was not administered due to the impasse between the Department and the unions.
Valid and reliable data on learner results of performance in NSC – The Department set a target to produce four National exam reports on learner performance in Grade 12 and this target was achieved.
Percentage of schools provided with sanitation facilities – The target was 99 per cent of schools and the Department was able to reach this target successfully.
Percentage of schools provided with water - The target was 98 per cent of schools and the Department was able to provide water to 99 per cent of schools.
Percentage of schools provided with electricity - The target was 96 per cent of schools and the Department was able to reach this target successfully.
Percentage of public schools that use the schools administration and management systems to electronically provide data to the national learner tracking system - The target was 60 per cent of schools and the Department was able to achieve 88 per cent successfully.
Number of officials from districts that achieved less than 65% in the NSC participating in mentoring programme - The target set by the Department was 24 officials and the Department was able achieve a target of 36 officials.
Percentage of principals rating the support of district offices as satisfactory – The Department had set a target of 60 per cent and was able to reach 69.3 per cent.
Percentage of district managers assessed against development criteria – The target was 65 per cent and the Department achieved 78 per cent in this regard.

4.3.1.5 Programme Five: Educational Enrichment Services - The purpose of Programme Five is to develop policies and programmes to improve the quality of learning in schools.

Programme Five: Outputs

The Department exceeded the two targets set for this programme, as follows:

Number of schools that provide learners with nutritious meals – The target was 19 800 and the Department achieved an average of 20 029 per quarter.
Number of educators, officials and learners participating in the DBE’s organised activities on social cohesion, nation building, citizenship, rights and responsibilities, and constitutional values – The target was set at 5000 and the Department exceeded the target by reaching 5 843.

The achievement of the planned targets as outlined above should be considered in the context of the material findings on the reliability of the reported performance information highlighted in the A-G’s report.

4.3.2 Service Delivery performance, 2016/17

Several Performance Indicators in the 2016/17 Annual Performance Plan are new, particularly in Programmes 1 and 2. In general, most indicators introduced show an improved alignment with the Department’s policy development and monitoring role and are anchored in the MSTF and the NDP.

The Department declared most (87 per cent) of its targets to be Annual Targets, particularly in Programmes 2 to 5. This poses a risk on how the progress of these targets can be tracked on a quarterly basis.

The Department’s performance for the First Quarter as per 2015/16 Annual Performance Plan, was as follows:

Programme One Outputs: The Department fully achieved the set targets in two of the three Performance Indicators. These relate to the payment of Service providers within 30 days and resolving received misconduct cases within 90 days. The Department partially met the set target in respect of the percentage of received grievance cases being resolved within 30 days. The actual output was 66.67% being resolved versus the target of 70 per cent.

Programme Two: Within this Programme, 15 of the Performance Indicators are Annual Indicators while one is a Bi-Annual Indicator. The Department was only able to achieve targets in two of the Performance Indicators (13 per cent) since most of its targets are set to be achieved annually. The targets achieved related to the number of off-line digital content packaged and distributed to provinces and that of learners obtaining a NSC through the Second Chance Programme.

Programme Three: Within this Programme, six of the Performance Indicators are Annual Indicators while only two are Quarterly Indicators. The Programme was only able to fully meet the target on the number of schools per PEDs monitored on the implementation of IQMS and partially meet the target on the number of PEDs monitored on the implementation of PMDS.

Programme Four: Of the 13 targets set in this Programme, only two are Quarterly targets, whilst 11 are Annual targets. The Programme was only able to fully meet the target on the number of officials from districts that achieved below the national benchmark in the NSC participating in a mentoring programme. The Programme could also partially meet the target on the number of question papers set annually for NSC and SC. The target on the percentage of learners from public schools that are successfully uploaded on to LURITS was not met.

Programme: Five: Of the four targets set in this Programme, three targets are Annual whilst only one is Quarterly. The Quarterly target of 150 schools monitored for the provision of nutritious meals was not met. The Department reported that Provincial activities did not facilitate monitoring visits in good time. These would be completed in the Second Quarter.

5. Consideration of other service delivery performance findings

Progress report on the implementation of the Medium-Term Strategic Framework (MTSF) 2014-19 by the Department of Planning, Monitoring and Evaluation (DPME)

The DPME in its presentation to the Standing Committee on Appropriations, regarding the implementation of the MTSF, noted several areas where the DBE is making progress. These include improvement in meeting its set targets, the placement of Fundza Lushaka bursary recipients, targeted learner access to broadband and the satisfactory progress on provincial expenditure on infrastructure with the exception of one province. Key challenges noted as requiring attention include the slow progress made in effective tracking of teachers’ absenteeism, the impasse between government and SADTU which prevents an agreement on principals signing Performance Agreements and a lack of a system to measure school readiness for Grade 1 entrants who have attended Grade R. These findings are similar to the observations made by the Portfolio Committee regarding the DBE’s performance.

6. Statutory Bodies

6.1 South African Council for Educators (SACE)

The South African Council for Educators is established under the SACE Act (Act No. 31 of 2000). The core mandate of the South African Council for Educators is the following:

Compulsory registration of all educators;
Management of the Continuing Professional Teacher Development (CPTD) system and promoting and developing the teaching profession; and
Reviewing and maintaining ethical standards.

6.1.1 Financial Report

Statement of Financial Position

Assets	2016	2015
Current Assets
Deposit	60 978 738	-
Receivables from exchange transactions	1 604 320	8 066 640
Cash and cash equivalents	35 484 465	81 415 716
	98 067 523	89 482 356
Non-Current Assets
Property, plant and equipment	3 238 493	1 947 387
Intangible assets	710 822	601 749
	3 949 315	2 549 136

Total Assets	102 016 838	92 031 492

Liabilities
Current Liabilities
Payables from exchange transactions	1 381 661	1 535 392
Deferred income	2 346 893	2 657 363
Provisions	3 044 470	2 436 065
	6 773 024	6 628 820
Total Liabilities	6 773 024	6 628 820
Net Assets	95 243 814	85 402 672

Reserves
Building reserve fund	63 702 019	63 702 019
Accumulated surplus	31 541 795	21 700 653

Total Net Assets	95 243 814	85 402 672

6.1.2 Analysis of Financial Position – SACE’s total assets increased by 10.7 per cent while the cash equivalent decreased by 56 per cent. The purchase price was settled on registration of the building on 21 July 2016 after completion of sectional title requirements. Included in current liabilities was R2.3 million deferred government subsidy, to be budgeted in the following financial year. SACE enjoyed a positive financial position.

Statement of Financial Position

Revenue	2016	2015
Revenue from exchange transactions
Revenue	59 624 290	58 108 346
Other income	300 680	258 548
Interest received	1 586 354	4 336 499
Total revenue from exchange transactions	61 511 324	62 703 393

Revenue from non-exchange transactions
Transfer revenue
Government grants	9 210 470	10 530 846
Total Revenue	70 721 794	73 234 239

Expenditure
Employee benefit costs	(31 932 095)	(27 968 727)
Depreciation and amortisation	(1 331 406)	(1 462 856)
Lease rentals on operating lease	(2 010 285)	(7 516 063)
Debt impairment	(13 840)	(260 294)
Operational expenses	(25 525 498)	(24 225 079)
Total expenditure	(60 813 124)	(61 433 019)

Loss of disposal of assets	(67 529)	-
Surplus for the year	9 841 141	11 801 220

6.1.3 Analysis of Financial Position – Revenue decreased by 1.9 per cent due to the reduction of interest received. The interest of the building trust fund was waived against an 18 month occupational rent. A total of R9.2 million of R11.5 million CPTD grant was spent on CPTD. Unspent funds of R2.3 million was deferred to the following year. SACE had a planned surplus of R 9.8 million towards the establishment of further provincial offices. SACE used the two establishments as pilot to inform the discussion regarding the remaining six provinces.

Cash Flow Statement

Cash Flows from Operating Activities	2016	2015
Receipts
Membership, registration, reprints, and other receipts	59 624 290	57 516 791
Grants	9 210 470	-
Interest income	1 586 354	4 336 499

Payments
Employee costs	(31 243 952)	(25 903 664)
Payment suppliers and others	(21 690 316)	(25 128 228)
Net Cash Flows from Operating Activities	17 846 602	10 821 398

Cash Flow from Investing Activities
Purchase of property, plant and equipment	(2 446 468)	(440 139)
Proceeds from sale of property, plant and equipment	(28)	69 737
Purchase of other intangible assets	(352 626)	(128 506)
Proceeds from sale of other intangible assets	9	-
Deposits held in trust	(60 978 738)	-
Net Cash Flows from Investment Activities	(63 777 851)	(498 908)

Net increase (decrease) in cash and cash equivalents	(45 931 249)	10 322 490
Cash and cash equivalents at the beginning of the year	81 415 716	71 093 226

Cash and cash equivalents at the end of the year	35 484 467	81 415 716

6.1.4 Finance and Administration Notes: The Net cash operations decreased by 64.9 per cent. The deposit in the trust account was from the building reserve fund. The total cash at the yearend was R35.4 million (56.4 per cent reduction due to cash outflow/deposit into the trust account).

6.1.5 Programme Performance (Core Mandate)

6.1.5.1 Registration

Within this programme, SACE exceeded the targets in two of the three performance indicators, as follows:

The Number of educators registered – The target set by SACE was 20 000 educators and SACE achieved 35 262 educators.

The Number of registration documents updated – SACE set a target of 30 000 and reached 48 140.

Vetting and Verification – The target was set at 50 000 for the financial year and SACE internally and partially vetted and verified documents of 64 243 due to lack of resources. Proper processes to conduct this new mandate are not yet in place.

Vetting and verification was a new target for SACE for the financial year. A sample of the new applicants were being vetted with those found wanting to be subjected to a fit-to-teach hearing where all their qualifications would be verified. Registration Statistics were as follows:

Full registration – 552 263
Provisional registration – 103 706 (21 473 Foreign Educators)
Incomplete registration – 32 944
Total on Data Base- 688 913

6.1.5.2 Ethics

The number of concluded cases as measured against the number of cases received – SACE set a target of an expected number of cases to be finalised including the 222 carried over from 2014 at 922. SACE finalised a total of 550 cases.

Educators and stakeholders to be workshopped on the code of professional ethics – SACE set a target of an expected number of educators and stakeholders workshopped at 15 000. SACE reached the following targets (Physical interaction – 5351, Individual codes distributed – 26 000 and Charts related to codes – 1300).

SACE indicated that much advocacy was conducted during outreach in Limpopo, Mpumalanga and the Northern Cape Provinces. SACE was targeting a further three provinces for the 2016/17 Financial Year. Further hearings occurred during the course of the year, and those that were outstanding were being finalized in the 2016/17 Financial Year. SACE also continued with advanced training for panellists, investigators, prosecutors and presiding officers.

6.1.5.3 Professional Development (PD)

Within this programme, targets were not met in four of the five performance indicators, as follows:

The number of educators orientated and signed-up for participation in the CPTD system – The target was 110 000 PL1 secondary and combined school educators - and SACE was only able to reach 56 679.

The number of student teachers orientated and signed-up for participation in the CPTD system – The target was set at 7000 final year student teachers. A total of 2 263 student teachers were oriented and signed-up.

The number of signed-up principals, deputy principals and HODs undertaking PD activities / programmes – SACE had a target of 36 415 of signed-up principals, deputies and HODS and only reached 13 844

The number of Professional Development Providers evaluated and approved – The target was set at 200 applications and SACE reached 113 new providers approved.

Number of professional development activities endorsed – The target was 500 applicants and SACE reached a total of 1 091 applicants.

6.1.5.4 Professional Standards

Set and implement professional standards – SACE set a target of an approved Research Report on the professional standards and implementation plan. This was achieved and the Report was available.

The number of newly qualified educators being awarded professional designation status - SACE set a target of an approved Research Report on teacher professional designations and implementation plans. This was partly achieved and the draft designations Reports were available.

The Professional Standards National Advisory Committee and Steering Committee met regularly and worked on the Theory of Change for the professional standards development process. A Professional Standards Theory of Change workshop was held on 21 July 2016 and further consultative and bilateral sessions with the stakeholders. The Council was also learning from other professional councils. SACE also held high level collaboration meetings with the Department of Basic Education, the Department of Higher Education and Training and EDF. The Council aimed to launch the professional standards process on 1st December 2016 and the Standards Writing Process in January 2017.

6.1.5.5 Policy and Research

Within this programme, SACE achieved its set target in only one of the three performance indicators, as follows:

The number of research projects undertaken in line with SACE research agenda – The target was set at six research projects and SACE was only able to attain five.

The number of Policy advice and briefs produced per annum – SACE set a target of two policy advice and briefs produced. SACE only produced one.

Number of Professional Magazine produced and disseminated - SACE set a target of four professional magazines produced – and only produced two.

Professional research projects included the following:

HOD Needs Analysis Project;
Post Level 1 Teacher Needs Analysis Project;
Deputy Principals CPTD Sign-up Data Analysis;
HODs CPTD Sign-up Data Analysis;
Comparative study on national professional councils and international teaching regulatory authority;
Five Year Analysis of the educator misconduct cases referred to SACE; and the
Teacher Professionalism Report.

6.1.6 Portfolio Committee Observations

Members raised a concern that some of the targets set by SACE did not seem realistic. Members were interested to know what informed the setting of targets
Members queried the notion that SACE was being dominated by and linked to SADTU. Members queried whether a recommendation in the Ministerial report calling for a reconceptualised SACE, to free it from Union manipulation, was fair.
Members queried whether SACE was able to submit their report on “Jobs-for-Cash” to the Minister –and whether that report was available to the Portfolio Committee.
Members queried the remuneration packages of senior staff and the implementation of a performance management system at the Council.
Members queried whether SACE had considered including educators of Special Schools in the CPTD programme and plans.
Members raised concerns that SACE had not been able to achieve much of the targets set for CPTD.
Members queried the time-limits for the underqualified educators to be qualified.
Members raised the issues around SACE’s efforts in respect of corporal punishment – and the number of educator’s workshopped on the code of ethics in respect of corporal punishment.
Members raised concerns around the challenges with Bidders and Service Providers who failed to do the necessary disclosures.
Members raised concerns with respect of the increasing number of fraudulent qualifications from certain Universities.

6.1.7 Responses from SACE

SACE noted that they were unable to reach all their targets mainly due to their revenue base not being optimum. The work performed by SACE was difficult to predict since many targets were subjective and there was a need to consider a more scientific approach to the targets where possible. SACE was also of the view that the reconceptualization of SACE was a sound idea for the renewal of the Council. SACE was of the opinion that the majority of educators belonged to SADTU and it was therefore logical that teachers represented in Council were members of SADTU.

Regarding the Ministerial Report on the Selling-of-Posts, SACE mentioned that their work was not completed. The final report, once completed, would be submitted to the Minister when it is requested. SACE indicated that they could make the interim report available to the Portfolio Committee once completed around 15 November 2016.

The Council had been engaged with the matter of bidders and procurers who failed to disclose and SACE had the necessary measures to deal with the matter.

6.1.8 Portfolio Committee Recommendations

Based on the above observations, the Portfolio Committee recommends the following:

The “Jobs-for-Cash” Interim-Report by SACE be made available to the Portfolio Committee after endorsement by the Council by 15 November 2016.

An engagement be scheduled with the Department of Higher Education and Training on issues pertaining to fraudulent qualifications from certain Universities.

SACE moved with speed to ensure the establishment of SACE offices in all provinces as a matter of urgency.

SACE focus on eradicating and completing the backlog of unresolved cases currently with the Council.

6.2 Council for Quality Assurance in General and Further Education and Training (Umalusi)

The Umalusi 2015/16 annual report was based on a revised Strategic Plan 2015/16-2019/20 and an Annual Performance Plan (APP) 2015/16. Umalusi started to report according to this revised APP in Quarter Two of 2015/16.

6.2.1 Programme Performance

6.2.1.1 Programme One – Administration: Programme One covers the following sub-programmes:

Governance and Office of the Chief Executive Officer (GOCEO);
Public Relations and Communications (PR and Comms.);
Information and Communication Technology (ICT);
Finance and Supply Chain Management (F&SCM); and
Human Resource Management and Development (HRM&D).

The Council was able to achieve on the following indicators:

Stakeholders receiving information;
ICT systems implemented;
Alignment of financial information in the Annual Report;
Audit status: Unqualified;
The performance of staff above level 3; and
Monitoring, evaluation and reporting.

The Council was unable to achieve on the following indicators:

Compliance to legal and regulatory requirements timeously;
Alignment with ICT governance roadmap;
Addressing of audit findings;
Payment of service providers within 30 days; and
The percentage of APP targets achieved.

Further to the above, Umalusi was able to tabulate its future strategies in respect of the areas of underperformance for the various indicators.

6.2.1.2 Programme Two – Qualifications and Research: Programme Two covered the following sub- programmes:

Qualifications, Curriculum and Certification; and
Statistical Information and Research.

The Council was able to achieve on the following indicators:

Registration of new qualifications;
Review of existing qualifications;
Certification of learner records; and
Verification of learner achievement.

The Council was unable to achieve the target on the Publication of Research Reports. For one of the research projects, the lead researcher was hospitalised which caused delays in visitations to the selected adult learning centres to collect data. In the second project on the moderation instrument, the targeted group of moderators and examiners were not trained on the tool. The Council alluded to some of its future strategies to mitigate these challenges.

6.2.1.3 Programme Three – Quality Assurance and Monitoring: Programme Three covered the following sub- programmes:

Quality Assurance and Assessment; and
Evaluation and Accreditation.

The Council was able to achieve on the following indicators:

Compliance by assessment bodies;
Institutions that met accreditation requirements; and
Assessment bodies that met the accreditation requirements.

The Council was unable to achieve on the indicator of Examination question papers meeting the quality assurance requirements. Umalusi would ensure that all assessment bodies submit a complete list of question papers intended for moderation by November each year for inclusion in the second draft annual performance plan of the ensuing year. Internally, controls would be strengthened where all approved question papers would be classified according to qualification per assessment body and stored appropriately on a quarterly basis.

Umalusi had strengthened its capacity on the management of performance information and had approved a policy on performance information. Any changes in indicators would be reported accordingly. Planning and reporting was conducted using National Treasury and DPME templates with performance outputs being verified on a quarterly basis. All indicators had technical indicator descriptions. Umalusi indicated that standard operating procedures were in place and an audit tracking register had been developed for findings raised by internal and external auditors.

On Human Resources, Umalusi indicated that for the Financial Year, the employment and vacancies were as follows:

Approved posts – 144
Number. of Employees – 110
Vacancies – 34

6.2.2 Financial Matters

Statement of Financial Position

	2016 (R)	*2015 Restated (R)**
Assets
Current Assets
Cash and cash equivalents	56,040,887	50,832,675
Receivables from exchange transactions	5,700,417	7,716,370
	61,741,304	58,549,045

Non-Current Assets
Property, plant and equipment	35,475,312	37,313,877
Intangible assets	43,117	87,817
Operating lease asset	98,821	30,173
	35,617,250	37,431,867
Total Assets	97,358,554	95,980,912

	2016 (R)	*2015 Restated (R)**
Liabilities
Current Liabilities
Payables from exchange transactions	12 894 012	16 538 054
Total Liabilities	12 894 012	16 538 054
Net Assets	84 464 542	79 442 858

Reserves
Revaluation reserves	8 484 261	8 196 622
Accumulated surplus	75 980 281	71 246 236
Total Net Assets	84 464 542	79 442 858

	2016 (R)	*2015 Restated (R)**

Revenue	140 199 305	132 452 948
Revenue from exchange transactions	27 494 305	25 098 948
Revenue from non-exchange transactions	112 705 000	107 354 000

Other income	2 072 145	2 066 382
Investment income	3 764 206	3 411 036
Net Revenue	146 035 656	137 930 366

	2016 (R)	*2015 Restated (R)**
Expenditure
Operating expenditure	83 866 144	79 215 233
Depreciation and amortisation	3 487 175	3 012 171
Personnel costs	53 948 292	49 949 940
Net Revenue	141 301 611	132 177 344

In respect of accumulated surplus, the Department of Basis Education assisted with the request to retain surpluses and this had been granted by National Treasury. A revised budget for 2016/17 was submitted to the Department.

Regarding irregular expenditure, for the current year there was non-compliance with Supply Chain Management (SCM) regulations of R 81,709. The Council did the necessary investigations and found that there were no officials liable in terms of the law for the irregular expenditure. Condonation would proceed as per the National Treasury Guidelines on Irregular Expenditure issued in April 2015. The Council would look at the SCM improvements plans.

It was noted that the accounting authority did not ensure that adequately skilled and dedicated resources were in place to manage performance reporting and related internal controls. With the appointment of the senior manager: strategic planning and reporting, significant progress had been made in this area, and more would be done in the months to come.

The external auditors raised the following findings, amongst others, in the management report:

Assets with a netbook value of zero and subsequently updated asset register;
Accreditation incomes recognition;
Supply chain management policy issues; and
Internal controls regarding the management of performance reporting

6.2.3 Portfolio Committee Observations

Members, although very proud of the work of the Council, queried reasons for underperformance in certain areas as well as irregular expenditure that emerged.
Members queried the role Umalusi was playing in the prevention of examination leaks and cheating during the Matriculation Examinations – and how educators and learners were dealt with if found guilty.
Members queried as to why the cognitive level of examinations could not be determined prior to the actual examinations – and not after the examinations had been written and what adjustments needed to be made.
Members queried as to how Umalusi was involved in the three-stream model to be introduced.
Members queried as to how Umalusi ensured that staff receive adequate and proper training.
Members also raised a concern regarding the issue of Language compensation and how Umalusi was dealing with the matter.

6.2.4 Responses from Umalusi

It was indicated that the Council engaged in a state-of-readiness for exam exercise and produced a report on its findings. Further to this the Council also corresponded individually with various provinces where there were discrepancies and areas lacking. Umalusi would ensure these areas were improved on through further visits to affected province.

Umalusi was concerned about the impact of the “Fees-must-Fall” campaign on the final exams and cautioned that proactive measures be considered for the sector.

. Portfolio Committee Observations

7.1. Department of Basic Education

7.1.1 Technical issues, overall performance and reporting

The Portfolio Committee welcomes the quality and depth of information reported in the 2015/16 Annual Report, acknowledging the considerable work the Department covered during the year under review and the effort that has been expended in the reporting.

The Portfolio Committee also welcomes the steady improvement in the achievement of targets from 84.6 per cent in 2014/15 to 87.1 per cent in 2015/16. The Committee is further pleased to note the Auditor-General’s assessment that the quality of the annual performance plans of the Department and its entities has improved.

As noted in the 2015 BRRR, in terms of the reporting in the 2015/16 financial year, the Portfolio Committee noted during the consideration of the First Quarterly Report that the Department was not reporting on some key performance indicators quarterly to show progression with respect to Annual Targets. These include:

the percentage of Grade R practitioners with NQF levels 4, 5 and 6; and
the percentage of teachers absent from school on an average day.

The Portfolio Committee requests the Department to report on these performance indicators as well as in respect of the key priority of Inclusive Education (IE) and quality indicators of learner performance in the NSC examinations, particularly since they are linked to the objectives of the National Development Plan.

7.1.2 Audit Outcomes

Whilst the Portfolio Committee appreciates that the Department continues to receive an unqualified audit opinion, the Committee is concerned with the recurring findings of non-compliance with specific matters in key legislation as alluded to by the A-G, which have a negative impact on the performance of the Department. These include irregular, unauthorised and fruitless and wasteful expenditure; inadequate management of procurement and contracts; misstatements in submitted annual financial statements and inadequate consequence management.

The Committee is further concerned regarding the recurring findings of unreliability of the reported performance information when compared to the source information in the Department’s programmes 2, 3 and 4, as identified by the A-G. In addition, the Committee has noted with concern that the performance of the internal audit unit against the annual internal audit plan was not satisfactory due to challenges in the capacity of the unit. The Committee is encouraged that steps are being taken to prevent a recurrence of the identified negative audit findings and would expect progress updates on the implementation of the Department’s remedial actions.

7.1.3 Financial issues

The Portfolio Committee is concerned regarding underspending in Programmes 2 and 4 mainly on the EPWP grant and the ASIDI programme respectively. The Committee urges the Department to implement the necessary measures to ensure that underspending does not recur.

The Portfolio Committee acknowledges the need for fiscal prudence in public spending and appreciates the directive for departments to reprioritise their spending within the existing expenditure ceiling. However, the Committee notes the unforeseen additional teaching and learning support and infrastructure required due to learning disruptions in the area of Vuwani. The Committee thus supports the Department’s request for additional funding in this regard from National Treasury.

7.1.4 Performance per Programme

a) Programme 2: Curriculum Policy, Support and Monitoring

The Portfolio Committee welcomes progress being made in improving inclusive education, including work done to address the Portfolio Committee’s recommendations in respect of Setotolwane Special School. The Committee urges the Department to intensify the implementation of inclusive education to reach all learners with special education needs, including ensuring that all full service schools are well resourced and adequately adapted for learners with special needs and that educators are adequately trained and developed.

Members queried whether the training in multi-grade teaching reached all affected teachers in the system timeously and whether there was value for money in the training.

b) Programme 3: Teacher and Education Human Resources Development and Institutional Development

The Portfolio Committee is concerned regarding the two targets in this programme where the Department underperformed, particularly in relation to the percentage of principals appointed on the basis of a competency assessment, since this is vital to the success of the school and is linked to the objectives of the NDP. The Committee is concerned that only seven per cent was achieved versus a target of 75 per cent of advertised posts. The Committee urges the Department to speedily finalise engagements in the ELRC to facilitate the effective implementation of competency assessments in all the Provincial Education Departments.

The Portfolio Committee further noted with concern the large variance between the indicator target and the departmental achievement in relation to the number of teachers who have written the Self-Diagnostic Assessments for English First Additional Language (EFAL) and Mathematics. This suggests a lack of proper criteria for setting this target, including the proper costing of the target.

The Portfolio Committee welcomes the improvement in the placement of Fundza Lushaka bursary recipients (teachers) within six months of their graduation, which reflects good returns on investment. The 2015/16 target has been exceeded by 613 graduates. The Department reports that the overall placement rate of these graduates is 87 per cent across all provinces compared to the set target of 85 per cent, which is a variance of two per cent. The Committee urges the Department to strengthen systems for placement to ensure that the set targets of 90 per cent and 100 per cent for 2016/17 and 2017/18 financial years respectively are met.

Members are concerned over the seemingly uneven quality of teacher training and development within the system and the steps by the Department to improve the quality of teacher training. The Department noted that they had ongoing engagements and collaboration with the Department of Higher Education in addressing the needs in the sector. The Department was also in constant contact with Universities in respect of Curriculum content and areas that require improvement. They were also developing a uniform programme of training with four main thrusts to strengthen University capacity.

Members are concerned regarding the slow progress in the effective tracking of teachers’ absenteeism. Members queried how the Department was assisting provinces and districts with effective and adequate monitoring of absenteeism at school level.

c) Programme 4: Planning, Information and Assessment

The Portfolio Committee welcomes the achievements of the set targets in relation to the provision of basic infrastructure services (water, sanitation and electricity) and the good progress being made towards the completion of schools built to replace inappropriate structures. However, the Committee remains concerned that based on the available evidence at the time of compiling the BRRR, not all Provincial Education Departments would meet the targets for the minimum Norms and Standards for water, sanitation, electrification and appropriate structures by the due date of the end of November 2016.

d) Programme 5: Educational Enrichment Services

The Portfolio Committee is pleased that the Department has exceeded its target of providing nutritious meals to 19 800 schools, benefiting an average 9.6 million learners in 2015/16. The Committee is however concerned regarding underspending in this Programme.

Members raised a concern over the sporting codes at school which seem not to be receiving adequate attention. Members queried the effectiveness of the Department's collaboration with the Department of Sport in this regard. Members queried whether the relevant Departments were receiving value for money in respect of sporting codes at schools.

Members were concerned that many schools lacked the basic infrastructure for proper food-handling, storage and preparation of meals. They lacked kitchens, storage facilities and utensils.

8. Portfolio Committee Recommendations

Based on the observations made above, the Portfolio Committee requests that the Minister ensure that the Department consider the following recommendations:

8.1 The Department of Basic Education

Provide Parliament with a comprehensive Action Plan with timeframes to address the 2015/16 A-G’s audit findings, within three weeks of the adoption of the BRRR report by the National Assembly. The Department is also requested to report quarterly on progress made in addressing the deliverables of the Action Plan, beginning with the Second and Third Quarterly reports. Updates should include the following:

A report on the outcome of the request to National Treasury to deviate from the normal procurement process in respect of the national catalogues of textbooks
A report on the outcome of the investigation on the allegation that volunteers for the Kha Ri Gude Programme were paid stipends without learners in class and steps taken in respect of consequence management
An implementation progress report on the remedial actions resulting from the above investigation
An update on the request for approval by Treasury regarding unauthorised expenditure in respect of the National Teaching Awards.
An update on progress made in strengthening the internal audit unit to ensure that it effectively carries out its functions.

Report on future Quarterly Reports on the following key priorities or performance indicators:

Inclusive Education;
the percentage of Grade R practitioners with NQF levels 4, 5 and 6; and
teacher absenteeism.

The Department is further urged to ensure that there is an effective tracking of teacher absenteeism.

Intensify the implementation of interventions in respect of inclusive education, including increasing the number of adequately well-resourced full service schools; providing effective training and development of educators and addressing infrastructure challenges.

Take urgent steps to resolve the impasse with unions in respect of the appointment of principals on the basis of a competency assessment and the signing of Performance Agreements since these issues are prioritised in the NDP.

Take the necessary steps to ensure timeous monitoring of set targets in order to identify targets that may not be met and ensuring remedial steps are in place to mitigate these challenges.

Ensure that Provincial Education Departments complete the profiling of educators as a matter of urgency, in order to enable proper planning and effective oversight.

Consistently monitor and report compliance with new infrastructure Norms and Standards per province, considering that all schools must be compliant by November 2016.

Together with relevant stakeholders, intensify the implementation of measures to improve the quality of teacher training and development throughout the system and ensure that there is value for money in all the programmes offered.
Ensure that Provincial Education Departments take appropriate measures to spend the conditional grants consistently throughout the year, including the HIV and AIDS (Life Skills Education) and the Mathematics, Science and Technology grants which experience slow spending in the First Quarter of the financial year.
Together with Provincial Education Departments, take the necessary steps to fast-track the finalisation of the rationalisation of small and unviable schools, which impacts negatively on the performance and spending needs of infrastructure programmes, including ASIDI.
Together with Provincial Education Departments, ensure that there are sufficient teachers to effectively implement the Incremental Introduction of African Languages in all the affected schools in line with the implementation targets.

8.2 Minister of Finance

The Portfolio Committee recommends that the Minister of Finance consider allocating additional funding to the Department of Basic Education over the medium term for the prioritisation of learning needs and infrastructure as they arise.

Report to be considered.

Documents

No related documents

ATC161018: Budgetary Review and Recommendation Report (BRRR) of the Portfolio Committee on Basic Education on the performance of the Department of Basic Education for the 2015/16 financial year, dated 18 October 2016

Basic Education

Documents

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