ATC181017: Budgetary Review and Recommendation Report (BRRR) of the Portfolio Committee on Basic Education on the performance of the Department of Basic Education for the 2017/18 financial year, dated 17 October 2018

Basic Education

logoBudgetary Review and Recommendation Report (BRRR) of the Portfolio Committee on Basic Education on the performance of the Department of Basic Education for the 2017/18 financial year, dated 17 October 2018.

 

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

 

1. Introduction

 

  1. Purpose of the BRRR

 

In terms of Section 5 of the Money Bills Amendment Procedures and Related Matters Act, No. 9 of 2009 the National Assembly, through its Committees, must annually compile the Budgetary Review and Recommendation Reports (BRRR) 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. In this regard, the BRRR is a source document for the Committees on Appropriations when considering and making recommendations on the Medium Term.

 

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 2014-2019 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 the report

 

In compiling its BRRR, the Portfolio Committee on Basic Education 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 2017/18 strategic plan.
  • Expenditure trends drawn from the reports of the National Treasury;
  • The 2017 and 2018 State of the Nation Address priorities;
  • The reports of the Auditor-General of South Africa and the reports on the 2016/17 Budget Vote;
  • 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 09 and 10 October 2018 in Parliament. The Portfolio Committee also met with the Auditor General on the audit outcomes of the Department, the Financial and Fiscal Commission (FFC) and the Audit Committee of the Department of Basic Education on 09 October 2018.

 

2. Overview of the key relevant policy focus areas

 

2.1 The National Development Plan (NDP), Vision 2030

 

The NDP’s vision for 2030 is that South Africans should have access to education and training of the highest quality, characterised by significantly improved learning outcomes. The NDP sets out, inter alia, priorities, targets and actions to improve the quality of basic education. Key targets for 2030 include improved retention of learners and improved learning outcomes. Quality targets cover areas such as literacy, numeracy and the number of learners passing Grade 12 at Bachelor level.

 

2.2 The Medium Term Strategic Framework

 

The strategic goals of the Department of Basic Education (DBE) in 2017/18 and 2018/19 are anchored on the 2014 – 2019 Medium Term Strategic Framework (MTSF) and the sector plan, Action Plan to 2019 - Towards the realization of schooling 2030. In terms of the MTSF, the DBE is responsible for Outcome 1 (Quality Basic Education) and collaborates with other Departments on Outcome 7 in respect of Infrastructure and the National School Nutrition Programme (NSNP), Outcome 13 with regard to Early Childhood Development (ECD) and Outcome 14 in respect of Fostering Constitutional Values and Promoting Social Cohesion. The overarching goal of the education sector remains to improve learner performance across all grades. The Action Plan outlined 27 goals which the Department aims to accomplish.

 

The MTSF outputs for the sector and the Department’s plans are aligned to and guided by the National Development Plan. The sector also has non-negotiables to focus on other areas inadequately covered in the MTSF.

 

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 ECD 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.

 

Given that basic education is a concurrent function requiring a cooperative and more integrated approach, a significant part of the Department’s work is the alignment of the work of the Provincial Education Departments (PEDs)’ Strategic and Annual Performance Plans with the sectoral mandate articulated in the NDP and the MTSF.

 

2.3 2017 State of the Nation Address (SONA)

 

      The 2017 SONA outlined three policy objectives pertaining to Basic Education, as follows:    

 

  • The continuation of the priority to build modern schools replacing mud structures and other inappropriate buildings through the Accelerated Schools Infrastructure Delivery Initiative (ASIDI), to give learners dignity;
  • The extension of basic services such as water, sanitation and electricity, and
  • Increased focus on Mathematics and Science.

 

In line with SONA’s pronouncement, spending on infrastructure took up most of the Department’s budget over the medium term. A total of R2.6 billion was allocated to the School Infrastructure Backlogs Grant (SIBG), also known as the Accelerated Schools Infrastructure Delivery Initiative (ASIDI), in 2017/18 to complete the remaining projects. The total allocation for the Education Infrastructure Grant (EIG) was R10.046 billion in 2017/18. This budget was to be transferred to the PEDs.

 

The SONA further noted that the results in the Trends in International Mathematics and Science Study (TIMMS) and the Southern and East African Consortium for Monitoring Educational Quality (SACMEQ) IV showed that the performance of South African learners was improving. Amongst the participating countries, South Africa had shown the largest improvement of 87 points in Mathematics and 90 points in Science.

 

2.4 Strategic Goals of the Department of Basic Education for 2017/18 and 2018/19 financial years

 

Key priorities of the Department for 2017/18 included improving school infrastructure as per the minimum norms and standards for public school infrastructure; improving curriculum delivery through high quality learning and support materials (LTSM) and provision of support and resources to improve skills in critical subjects such as Mathematics, Science and Technology; increasing the number of learners completing Grade 12; providing support to learners with severe to profound intellectual disabilities through a newly introduced conditional grant; ensuring the adequate supply of quality teachers; assessing the quality of teaching and learning; strengthening learning and teaching in the early grades; improved accountability across all levels of the basic education system; continuing to provide meals to learners; and, improving access to and the use of ICT in basic education.

 

The priorities for 2018/19 remain largely unchanged, with notable additions being to increase priorities to focus on Rural Education through improving literacy, numeracy and reading skills as well as striking a balance in curriculum, books and curricular activities to improve learner performance. The Department also aims to focus on the monitoring of the implementation of lesson plans by teachers.

 

3. A summary of key Performance Recommendations of the Portfolio Committee in the 2017 Budgetary Review and Recommendation Report 2017

 

3.1 Audit findings and responses of the Department of Basic Education

 

In the 2017 Budgetary Review and Recommendation Report (BRRR), the Portfolio Committee recommended that the Department provide Parliament with a comprehensive Action Plan with timeframes to address the 2016/17 Auditor General of South Africa (AGSA)’s audit findings. The Portfolio Committee noted in particular the following recurring challenges:

 

  • The underspending of the ASIDI programme;
  • Irregular expenditure, and fruitless and wasteful expenditure;
  • The reliability of the reported information, including the LURITS database in Programme 4;
  • Material misstatements on the reported performance information of Programmes 2 and 4;
  • Non-compliance issues around annual financial statements;
  • Internal control deficiencies, including leadership oversight; and,
  • Inadequate consequence management.

 

  1. Progress report on the implementation of the Action Plan to address the AGSA’s 2016/17 audit findings

 

Areas addressed in the Action Plan

Progress made

The underspending of the ASIDI programme to the amount of R875.2 million

The Department reduced its underspending on ASIDI to an immaterial amount, with an overall spending of 99.7 percent of the budget. The increased spending of this programme is attributed to improved budget monitoring in 2017/18. It must be noted though that the budget for ASIDI was reduced during the year under review as per the adjusted budget.

Irregular expenditure incurred as a result of supply chain management processes not being followed (replacement of contractors without following the Supply Chain Management Processes (SCM) processes and written quotations for Kha Ri Gude not obtained when procuring goods and services).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fruitless and wasteful expenditure of R11.2 million on the Kha Ri Gude programme incurred in 2016/17.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restatement of corresponding figures:

 

 

 

Usefulness and reliability of the reported performance information: In 2016/17, the Auditor-General raised material findings on the reliability of the reported performance information relating to the indicator on the percentage of learners that are successfully uploaded on to LURITS.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annual financial statements

 

 

                                                          

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Internal control deficiencies, including leadership oversight: deficiencies in the control environment mainly in the area of oversight by leadership and particularly in respect of the infrastructure programme and performance reporting were not adequately addressed

 

 

 

Inadequate consequence management

 

 

As in 2016/17, the Department incurred irregular expenditure in the current financial year as a result of supply chain management processes not being followed. Effective and appropriate steps were not taken to prevent irregular expenditure.

 

On the positive side, the irregular expenditure was reduced from R621 million in 2016/17 to R154 million in 2017/18, due to the improvement of controls within SCM processes brought about by the increased involvement of the Internal Audit.

The Department expects to realise further improvements with the filling of key posts, including Deputy Director General (DDG) for Infrastructure in the third quarter of 2018/19.

 

The irregular expenditure under investigation was also reduced from R352 million in 2016/17 to R34 million in 2017/18.

 

The Department again incurred fruitless and wasteful expenditure but this has been reduced significantly from R11.2 million in 2016/17 to R495 000 in the current financial year. The Department attributes the improvement to the increased involvement of the Internal Audit Unit. Fruitful and wasteful expenditure for 2017/18 was due to the expansion of contract of a service provider to provide legal opinion without following supply chain processes.

 

It is concerning however that there is an increase in the fruitless and wasteful expenditure amount under investigation from R50 million in 2016/17 to R84 million in 2017/18 due to poor planning. This relates to projects that were discontinued/cancelled where schools were closed or the preliminary assessment indicated that there was no need to proceed with these projects. Some expenditure had already been completed.

 

The AGSA identified the recurrence of misstatements in the financial statements in 2017/18.

To strengthen monitoring control to ensure the Learner Unit Record Information and Tracking System (LURITS) information is complete and accurate, the DBE reported the following measures that have been put in place:

  • data is uploaded on quarterly basis from confirmed databases of provinces. The DBE is also currently conducting an audit to verify data in Provinces and schools.
  • the DBE has strengthened or built validation controls (rules) to identify exceptions from the South African School Administration and Management System (SA-SAMS) to LURITS; exceptions identified were communicated to Provincial Educations Departments; Provincial Education Departments report quarterly on the quality of data.
  • the DBE is collaborating with Home Affairs for verification of learners’ ID numbers. An automated link with national Population register is active.
  • Verified ID numbers of learners sent to PEDs and corrected on the source system.

 

 Despite these efforts, the AGSA once again raised material findings in respect of the reliability of performance information relating to the indicator on the percentage of learners that are successfully uploaded on to LURITS (Programme 4). The AGSA was unable to obtain sufficient appropriate audit evidence for the learner numbers that form the basis of the calculation of the performance reported, due to significant weaknesses in the internal controls relating to the recording of learner numbers resulting in the data not being reliable.

 

Commendably, there were no material findings on the usefulness and reliability of the reported performance information for Programmes 2 and 3 in 2017/18.  

 

The AGSA once again identified material misstatements on the reported performance information of Programmes 2, 3and 4. These were subsequently corrected in Programmes 2 and 3 and not Programme 4.

 

As in previous years, the financial statements submitted for auditing were not prepared in all instances in accordance with the prescribed financial reporting framework and supported by full and proper records, as required by section 40(1)(a) and (b) of the Public Finance Management Act (PFMA). Material misstatements of immovable tangible capital assets, accruals and payables not recognised 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 a qualified audit opinion.

 

Although management during the year under review put measures to improve the control environment in ASIDI, the AGSA still identified significant control deficiencies in the control environment relating to oversight, particularly in the infrastructure programme. There was also ineffective oversight over performance reporting in the annual performance report.  

 

 The AGSA noted that there were still inadequate consequences for poor performance and transgressions during 2017/18. To address this challenge, the Department reported to the Portfolio Committee on 2 May 2018 that the agreements with implementing agents on the ASIDI programme had been amended to include consequent management clauses to address instances of underperformance. 

 

 

  1. Responses to recommendations pertaining to Planning and Reporting  

 

  1. continue to engage the PEDs on their respective APPs to strengthen the quality of their plans as well as their alignment to the MTSF and the NDP:

 

The DBE made progress during the period under review in aligning indicators in its APP with the MTSF. Together with the PEDs, the DBE developed (PPMs) for inclusion in the Provincial Annual Performance Plans. The DBE further included some new indicators in its 2018/19 APP. New indicators that were added to the DBE’s 2018/19 APP to ensure greater alignment with the MTSF are as follows:

  • Complete and consistent post provisioning policy and regulation in place and proceed with implementation and monitoring;
  • Percentage of school principals rating the support service being satisfactory (Also crafted as a PPM);
  •  Percentage of district managers whose competency has been assessed against criteria; and
  • Percentage of school principal rating the support service being satisfactory

 

The following indicators were developed as MTSF aligned Customised Programme Performance Measures (PPMs) for inclusion in PEDs APPs:

  • Percentage of learners who completed the whole curriculum;
  • Percentage of learners in schools that are funded at a minimum level;
  • Percentage of schools with full set financial management responsibility on the basis of assessment; and
  • Percentage of schools visited at least twice a year by District officials (including subject advisors) for monitoring and support purposes

 

As in 2016/17, there was minimal progress made in respect of the following two indicators linked to the MTSF:

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Proportion of principals who have signed performance agreements

  • An agreement was not finalised by the Education Labour Relations Council (ELRC).
  • Job descriptions were currently used for reporting purposes. 
  • DBE provided PEDs with a template for recording principals who have signed job descriptions.

Proportion of principals appointed based on competency assessment processes

There was no progress made in the discussions aroundimplementation in the ELRC

 

  1. Responses to key recommendations pertaining to service delivery issues

 

  1. Fast track the implementation of interventions designed to improve performance in respect of targets set for school infrastructure: The Department reported that it had instituted the following measures to ensure that the ASIDI programme meets its targets and expenditure:

 

  • Monthly meetings are held with implementing agents, chaired by the Director General, where all implementing agents provide reports on performance progress and expenditure are addressed;
  • Bi weekly meetings are held by the DBE and the Programme Support Unit with implementing agents, to address performance and expenditure;
  • Projects have been reallocated from poor performing implementing agents and reallocated to better performing implementing agents;
  • Contracts allocated to poor performing contractors have been terminated;
  • The DBE is using its Programme Support Unit to implement some of the projects that were reallocated from poor performing implementing agents and contractors;
  • Social facilitation has been intensified in communities that are prone to disruptions;

 

Despite these measures,

 

  1. Given due consideration to the monitoring and implementation of maintenance norms for school infrastructure as long term cost to the fiscus and the economy of delaying maintenance are high: The Department noted that, as stated in the 2018/19 MTEF conditions for the Education Infrastructure Grant, Provincial Education Departments (PEDs) must provide school governing bodies with maintenance guidelines to conduct minor maintenance. This should be in accordance with the sector maintenance strategy that the Department is currently developing.

 

PEDs should allocate no less than 20 percent of the EIG allocation to address preventative and corrective maintenance at schools. Included in the baseline for the 2018/19 MTEF is an amount of R1.5 billion earmarked for maintenance of schools (R300 million in 2018/19, R350 million in 2019/20 and R800 million in 2020/21 financial year). In schools without section 21 responsibilities, PEDs should put in place the necessary measures to ensure that planned maintenance at these schools occurs as per the scheduled maintenance plan for such schools.

 

 

4.         Overview and Assessment of Financial Performance

 

4.1 Allocation versus Expenditure per Programme for 2017/18

 

 

 

Table 1: Allocation versus Expenditure per Programme for the 2017/18 Financial Year

Programmes

2017/18

Expenditure as % of Appropriation

Appropriation

Actual Expenditure

Variance

R’000

R’000

R’000

Administration

 

435 072

435 072

0

100.0%

Curriculum Policy, Support and Monitoring

1 766 338

1 731 097

35 241

98.0%

Teachers, Education Human Resources Development and Institutional Development

1 250 688

1 243 823

6 865

99.5%

Planning, Information and Assessment

12 800 957

12 785 811

15 146

99.9%

Educational Enrichment Services

6 740 565

6 736 153

4 412

99.9%

Total

22 993 620

22 931 956

61 664

99.7%

 

The budget allocation of the Department of Basic Education in 2017/18 was R22.99 billion, which represented a nominal increase of R580.2 million, or 3.4 percent from 2016/17. The majority of the budget (82% amounting to R18.9 billion) consisted of transfers and subsidies, mainly to provinces and municipalities. This means that the Department had an available budget of R4 billion for compensation of employees, earmarked funds, office accommodation, departmental operations and other projects.

 

Actual expenditure in 2017/18 was R22.93 billion or 99.7 percent of the allocated budget compared to 95.82 percent in 2016/17. The unspent balance of R61.7 million or 0.3 percent at the end of 2017/18 was less than in 2016/17, when R937.4 million or 4.18 percent was unspent. The main contributor to the under-spending in 2017/18 was Programme 2 that had spent 98 percent. Programme 3 spent 99.5 percent and Programmes 4 and 5 spent 99.9 percent each. Notably, spending on ASIDI improved from 60.3 percent in 2016/17 to 101.6 percent in 2017/18.

 

4.1.1     Reasons for Deviations in the above Programmes

 

  • Programme One: Administration (Underspent: R0.00) - There were no variances in this programme.
  • Programme Two: Curriculum Policy, Support and Monitoring (Underspent: R35.241 million or 2 percent) – The remaining budget allocation in this programme was due to the Kha Ri Gude Mass Literacy project. After investigations were conducted on eligible learners in the campaign, payments for stipends for volunteers reduced drastically and savings were realised. Funds were withheld from the Learners with Severe to Profound Intellectual Disability (LSPID) conditional grant to the Eastern Cape, Free State, Limpopo and Northern Cape provinces due to low spending. The Second Chance Matric Programme realised savings on payment of educators, due to lower turnout of learners attending face-to-face classes.
  • Programme Three: Teachers, Education Human Resources Development and Institutional Development (Underspent: R6.865 million or 0.5 percent) - There were no material variances in this programme.
  • Programme Four: Planning, Information and Assessment (Underspent: R15.641 Million or 0.1 percent) – There were no material variances in this programme in 2017/18. The remaining budget in the programme is due to the National Assessment. Due to the change in the modality of the Annual National Assessment, the National Assessment was not conducted in the 2017/18 financial year. The revised National Assessment is scheduled to be implemented in the 2018/19 financial year. In previous years, the under-spending on this programme was in the ASIDI programme mainly under payment of capital assets.
  • Programme Five: Educational Enrichment Services (Underspent: R4.412 Million 0r 0.1 percent) – There were no material variances in this programme in 2017/18.

 

Table 2: Allocation against Actual Expenditure for the 2017/18 Financial Year

 

Economic Classifications

2017/18

Expenditure as % of Appropriation

Appropriation

Actual Expenditure

Variance

R’000

R’000

R’000

CURRENT PAYMENTS

2 378 113

2 303 888

74 225

96.9%

Compensation of Employees

472 643

472 510

133

100.0%

 Goods and Services

1 859 972

1 785 880

74 092

96.0%

 Interest and rent on land

45 498

45 498

-

100.0%

TRANSFERS AND SUBSIDIES

18 936 622

18 930 384

6 238

100.0%

Provinces and Municipalities

17 576 042

17 570 065

5 977                                              

100.0%

Departmental agencies and accounts

134 760

134 760

-                                                  

100.0%

Foreign government and international organizations

18 472

18 212

260

98.6%

Non-profit institutions

106 020

106 020

-

100.0%

Households

1 101 328

1 101 327

1

100.0%

PAYMENTS FOR CAPITAL ASSETS

1 616 564

1 635 371

(18 807)

101.2%

Building and other fixed structures

1 607 748

1 625 756

(18 008)

101.1%

Machinery and Equipment

5 709

5 179

530

90.7%

Software and other tangible assets

3 107

4 436

(1 329)

142.8%

PAYMENTS FOR FINANCIAL ASSETS

62 321

62 313

8

100.0%

Total

      22 993 620

       22 931 956

       61 664

99.7%

 

 

Table 3: Financial Performance for the past three Financial Years

Expenditure vs Allocation

2015/16

R’000

2016/17

R’000

2017/18

R’000

Allocation on the Vote

21 286 426

22 413 461

22 993 620

Total Expenditure

20 796 125

21 476 064

22 931 956

% spent on allocation

97.7

95.8

99.7

 

 

 

 

Expenditure on Earmarked Funds

 

 

 

Workbooks (allocation)

950 340

1 003 816

1 045 077

Total Expenditure

948 162

993 421

1 045 861

% spent on allocation

99.8

99.0

100.1

 

 

4.1.2     Deviations and Mitigating Measures

  • Compensation of Employees: There were no material variances on this item.
  • Goods and Services (Under Expenditure):
  • Kha Ri Gude programme: After investigations of fruitless and wasteful expenditure were conducted on eligible learners in the campaign, payments for the stipends for volunteers reduced drastically and savings were realised.
  • Second Chance Matric Programme (SCPM): The Department increased the number of centres for face-to-face classes from 50 to 74. The target number of learners increased from 25 000 to 45 000. Other mitigating measures included conducting advocacy campaigns to inform learners and the public about the SCMP; and, printing additional LTSM to accommodate the expected increase in the number of learners.
  • National Assessment: The Department consulted with key stakeholders on the appropriate design for a National Assessment. These consultations resulted in agreements which took effect in 2018. The spending for 2018/19 will cover activities of the National Assessment.

 

  • Transfers and Subsidies (underspending due to the Learners with Severe to Profound Intellectual Disability Conditional Grant) – The scarcity of therapists and the contractual nature of appointments reportedly contributed to the delay in appointments. This delay and slow procurement processes contributed to under-spending. The DBE engaged National Treasury for the conversion of contract appointment of therapists to permanent. The DBE also reported that they strengthened monitoring and support mechanisms in order to ensure early identification of risks and timeous intervention.

 

  • Payments for Capital Assets (Over Expenditure): The over-expenditure on buildings and other fixed structures was in respect of ASIDI projects.  The Department noted that the budget cuts on the backlog grant as well as the additional transfers to KwaZulu-Natal and Limpopo provinces contributed to the over expenditure on payment of capital assets. All invoices received for the grant were paid within the financial year.

 

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

 

The Department received a qualified audit opinion for 2017/18, which is a regression from the unqualified audit opinions received in previous years. The Auditor-General noted that the Department did not have an adequate system of ensuring that infrastructure assets from the ASIDI programme are properly accounted for, which resulted in an understatement of these assets.

 

The emphasis of matters raised by the Auditor-General include the following:

 

  • Restatement of corresponding figures: As in the previous financial year, the corresponding figures for 31 March 2017 were restated as a result of an error in the financial statements of the Department at, and for the year ended 31 March 2018.
  • Irregular expenditure: The Department incurred irregular expenditure to the amount of R154.5 million in 2017/18, as a result of supply chain processes not being followed in the appointment of Implementing Agents, Professional Service Providers and Contractors. As noted earlier in this report, the irregular expenditure was reduced from R621 million in 2016/17, due to the improvement of controls within SCM processes brought about by the increased involvement of the Internal Audit.

Irregular expenditure to the amount of R33.5 million was still under investigation. 

  • Fruitless and Wasteful Expenditure: As disclosed in the financial statements, fruitless and wasteful expenditure to the amount of R495 000 was incurred in the current year, which was due to the expansion of a contract of a service provider to provide legal opinion without following supply chain processes. Fruitless and wasteful expenditure was reduced significantly from R11.2 million in 2016/17. The A-G further reported that ffruitless and wasteful expenditure to the amount of R83.8 million was still under investigation.                   

5.1        Other matters raised included:

  • Usefulness and reliability of the reported performance information in Programme 4:
  • As in the previous year, the A-G raised findings in respect of the reliability of performance information relating to the indicator on the percentage of learners that are successfully uploaded on to LURITS. The AGSA was unable to obtain sufficient appropriate audit evidence for the learner numbers that form the basis of the calculation of the performance reported, due to significant weaknesses in the internal controls relating to the recording of learner numbers resulting in the data not being reliable. The DBE reported to the Portfolio Committee that, to address performance information relating to LURITS, data was uploaded on a quarterly basis from confirmed databases of the PEDs. The DBE was also currently conducting an audit to verify data in Provinces and schools.
  • The A-G was also unable to obtain sufficient appropriate audit evidence that clearly defined the predetermined method of collection to be used when measuring the actual achievement for the indicator on the percentage of district managers assessed against developed criteria in Programme 4.
    • Adjustments of material misstatements: As in previous years, there were material misstatements in the annual performance report submitted for auditing. These material misstatements were on the reported performance information of Programme 2: Curriculum policy, Support and Monitoring; Programme 3: Teacher, Education, Human Resource and Institutional Development; and Programme 4: Planning, Information and Assessment. Management subsequently corrected only some of the misstatements. As indicated above, the Auditor-General raised material findings on the reliability of the reported performance information relating to the two indicators relating to LURITS and district managers in Programme 4. 
  • Annual Financial Statements: As in previous years, the financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework and supported by full and proper records, as required by section 40(1)(a) and (b) of the PFMA. Material misstatements of immovable tangible capital assets, accruals and payables not recognised 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 a qualified audit opinion.  
  • Internal control deficiencies, including leadership: Although management during the year under review put measures to improve the control environment in ASIDI, as in the prior year, there were still areas of weakness identified. The Auditor-General identified significant control deficiencies in the control environment relating to oversight, particularly in the infrastructure programme. There was also ineffective oversight over performance reporting in the annual performance report. 

 

5.2 AGSA Recommendations

 

During the interaction with the Portfolio Committee, AGSA recommended the following to improve the audit outcomes:

  • Responsive action plans should be implemented and monitored regularly to ensure improved internal environment, the oversight over financial and performance reporting should be strengthened.
  • Daily management disciplines –Getting the daily disciplines of management right is critical for an improved audit outcome.
  • Effective coordination between the various implementing agent and the department is also critical for an improvement of the audit outcome.
  • Monitoring and evaluation processes –The monitoring and evaluation of all information received internally and externally must be thoroughly reviewed, monitored and evaluated to ensure it is credible and reliable.

6. Financial Performance for the First Quarter (Q1) 2018/19, DBE

 

6.1        Allocation against Actual Expenditure per Programme Q1 2018/19

 

Table 3: Allocation against Actual Expenditure per Programme

 

  •  
  1.  
  1.  

Q1 ACTUAL

EXPENDITURE

Expenditure as % of

  •  

Q1 Projected expenditure

Variance from projected expenditure

  1.  
  1.  
  1.  
  1.  
  1.  
  •  

450 476

104 394

  1.  
  1.  

10.8 (9.4%)

Curriculum Policy, Support and Monitoring

1 905 011

97 826

  1.  
  1.  

68.1 (41.0%

Teachers, Education Human Resources Development and Institutional Development

1 290 4980

1 182 520

  1.  
  1.  

6.8 (0.6)

Planning, Information and Assessment

11 971 342

4 077 830

  1.  
  1.  

192.4 (4.5%)

Educational Enrichment Services

7 105 128

2 323 286

  1.  
  1.  

5.1 (0.2%)

  •  
  •  
  •  
  1.  
  1.  
  1.  

 

 

The total Final Appropriation budget of the Department for the 2018/19 financial year amounts to R22.7 billion. The actual expenditure for the First Quarter amounted to R7.8 billion or 34.3 percent of the available budget, compared to the spending of 31.5 percent in 2017/18. The 2018/19 First Quarter spending was lower compared with the Department’s projections to spend R8.1 billion. The variance was mainly attributed to Programmes 2 and 4 under goods and services and payments for capital assets.

 

6.1.1 Expenditure analysis per programme

 

Programme 1: The lower than projected spending of R10.8 million or 9.4 percent in this programme was mainly due to delays in receiving invoices for travel and subsistence for provincial visits by the Ministry personnel, including those in support of the section 100 intervention in the North West Education department, and from the State Information Technology Agency (SITA) for information technology service.

 

Programme 2: Expenditure under this programme was lower by R68.1 million or 41 percent compared to the projections to spend. This low spending was mainly due to delays in receiving invoices for the matric second chance programme and for workbooks, reflecting the slow spending under goods and services.

 

Programme 3: The Department had projected to spend R1.19 billion but were able to spend R1.18 billion. The deviation of R6.8 or 0.6 percent was attributed to delays in receiving invoices for oversight visits to underperforming schools and from SITA for the Funza Lushaka modernisation project to enhance the bursary application process.

 

Programme 4: Expenditure under this programme was lower than projected by R192.4 million or 4.5 percent, mainly due to delays in receiving invoices from implementing agents for the School Infrastructure Backlogs grant (ASIDI) and the stringent verification process that is undertaken by the department when invoices are received, but before payment is made. The projected expenditure for the grant for this quarter was R400.2 million and R210.2 million was spent. This is also responsible for the low spending reflected under total payments for capital assets.

 

Notably, whilst the slow spending at this point in the two previous financial years was attributed mainly to poor performance by implementing agents, difficulty in replacing underperformers, and delays in finalising the merging and rationalisation of schools in the Eastern Cape Province, it is a step in the right direction that in 2018/19 slow spending is only limited to delays in receiving invoices from implementing agents and the stringent verification process of the Department.

 

In terms of Programme 5, the Department had projected to spend R2.33 billion and were able to spend R2.32 billion. The marginal deviation of R5.1 million or 0.2 percent of the available budget was mainly attributed to delays in receiving invoices for oversight visits for the HIV and AIDS (Lifeskills education) grant, the South African schools choral eisteddfod and workshops on social cohesion on Africa and Youth day.

 

6.1.2 Expenditure on Personnel

 

The DBE spent lower than the projected amount on compensation of employees by R11.1 million mainly in Programmes 1, 2 and 3. The Department’s headcount has been reduced by 37, mainly in Programme 3. This reduction is responsible for the lower than projected spending on compensation of employees. However, the Department is still reportedly 18 above their headcount target for the year. The variance of 18 from the headcount target for the year is mainly due to the appointment of officials to assist with the section 100 1 (b) intervention in the North-West Provincial Education Department and the continued appointment of Cuban maths and science experts whose expected move to provinces at the beginning of 2018/19 had been delayed.

 

6.2        Transfers and subsidies, (predominantly comprising conditional grants)

 

            The transfers of the conditional grants for the 2018/19 first quarter were made as scheduled, with no funds withheld as in the previous year.  

 

Spending in respect of the Learners with Profound Intellectual Disability (LPID) and the National School Nutrition Programme (NSNP) conditional grants was largely on track whilst that of the HIV and AIDS (Life Skills Education) and the Mathematics, Science and Technology (MST) grants was, as in the previous year, lagging behind at 10 percent and 5.0 percent respectively. The Education Infrastructure Grant overspent at the end of the First Quarter at 37 percent.  

 

7. Overview and Assessment of Service Delivery Performance

 

7.1 Service Delivery Performance for 2017/18

 

As in 2016/17, the total number of indicators for all DBE programmes for 2017/18 was 44. The Department improved its overall performance towards the achievement of its set targets from fully achieving 70 percent, partially achieving 14 percent and not achieving 16 percent in 2016/17 to fully meeting 73 percent, partially achieving 16 percent and not achieving 11 percent in 2017/18.

 

7.1.1     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, the Department maintained its previous year’s record of achieving or exceeding its targets set in all three performance indicators, as follows:

  • The percentage of Service providers within the procurement unit paid within 30 days – The target was set at 100 percent per quarter and the Department was able to reach 99.91 percent. The marginal variance of 0.09 percent was due to the “date received” on invoices captured incorrectly on the system. There were also reportedly delays of the Central Supplier Database in verifying bank accounts of suppliers. 
  • The percentage of received misconduct cases resolved within 90 days – The target was set at 80 percent and the Department achieved this target with no deviation.
  • The percentage of received grievances cases resolved within 30 days – The target was set at 75 percent and the Department over-achieved this target with 80 percent actual output, which was a positive deviation of 5 percent.

 

            7.1.2     Programme Two: Curriculum Policy, Support and Monitoring - The purpose of this programme is to develop the curriculum and assessment policies and to monitor, evaluate and support their implementation. Within this programme, of the 15 performance indicators, the Department reportedly fully achieved 14 targets and partially achieved one (1) target. The following 13 targets were achieved with no deviation:

           

Performance Indicator

Target achieved

The number of off-line digital content packaged and distributed to provinces

12

The number of schools per province monitored for utilisation of ICT resources

27

The number of off-line digital content resources developed annually

6

The percentage of public schools with Home Language workbooks for learners in Grades 1-6

100% Volume 1 and Volume 2 workbooks delivered to 100% schools

The percentage of public schools with Mathematics workbooks for learners in Grades 1-9

100% Volume 1 and Volume 2 workbooks delivered to 100% schools

The percentage of public schools with workbooks for Grade R

100% workbooks delivered to 100% schools

The number of underperforming schools monitored on the implementation of the Early Grade Reading Assessment (EGRA)

50: 25 school visits monitored and 25 desktop monitored

The number of underperforming schools monitored on the implementation of the reading norms

20: 10 school visits monitored and 10 schools desktop monitored

The number of schools monitored on the implementation of the Incremental Introduction to African languages (IIAL) nationally

20: 10 school visits monitored and 10 schools desktop monitored

Mathematics, Science and Technology lesson plans developed for the Senior and Further Education Training (FET) Phases

Lesson plans developed for these critical subjects as planned

Mathematics, Science and Technology teacher guides developed for the Senior and FET Phases

Teacher guides developed for these critical subjects as planned

The number of training centres of the Curriculum Assessment Policy Statements (CAPS) for Technical subjects visited during a training session

14 training sessions conducted

The number of schools visited for monitoring CAPS implementation in technical schools

27

 

The Department exceeded the following targets:

Performance Indicator

Target exceeded

The number of learners obtaining passes towards a National Senior Certificate (NSC) or extended Senior Certificate, including upgraded NSC per year

The set target was 20 000 and the Department reached a total of 73 780, a positive deviation of 53 780. The deviation was due to the quality of support provided and the inclusion of support by the Department of Higher Education and Training (DHET) community colleges and partnerships with Non-Governmental Organisation (NGO) support centres.

 

The target that was partially achieved was as follows:

Performance Indicator

Target partially achieved

The number of Mathematics training sessions/workshops monitored

The target was set at nine (9) but the Department was only able to monitor eight (8). A negative deviation of one (1). The reasons for the deviation was because in Quarter Four, the Western Cape and North West provinces, which adopted the Block Sessions to rollout 1+4, could not be visited as they cancelled their 1+4 sessions which were scheduled for Quarter Four.

 

 

7.1.3     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. Within this programme, of the ten (10) performance indicators, the Department fully achieved six (6), partially achieved one (1) and was unable to achieve three (3) targets set. The Department fully achieved or exceeded the following six indicators:

 

Performance Indicator

Target achieved or exceeded

The percentage of SGBs that meet minimum criteria in terms of effectiveness in sampled schools

The actual output was 96.9% (1 938) of 2 000 sampled schools against the set target of 70%, which represents a positive deviation of 26.9%

The percentage of schools producing the minimum set of management documents at a required standard (in sampled schools)

The target was set at 70% of 2 000 sampled schools and the Department reached a total of 86% (1 730), a positive deviation of 16%

The number of Funza Lushaka bursaries awarded to students enrolled for initial teacher education

The target was set at 13 500 and the Department reached a total of 15 134, which represents a positive deviation of 1 634. The substantial positive deviation was attributed to the Fees Must Fall Campaign, which resulted in a moratorium on fee increases at universities. The period after the Fees Must Fall Campaign resulted in lower fee increases than expected at universities. The target for the number of Funza Lushaka bursaries awarded in the 2017/18 Annual Performance Plan was based on the trends before the Fees Must Fall Campaign and was therefore lower than the actual number of awards the DBE was able to make.

 

The number of schools per PEDs monitored on the implementation of IQMS

Six (6) – no deviation

The number of PEDs monitored on the implementation of PMDS

Six (6) – no deviation

The number of PEDs that had their post provisioning process assessed for compliance with the post provisioning Norms and Standards

Nine (9) – no deviation

 

The four targets that were not achieved in this programme relate to teachers participating in diagnostic tests, as follows:

 

Performance Indicator

Targets not achieved

The number of teachers participating in the Mathematics diagnostic tests

The target was set at 10 000 but the Department was only able to reach a total of 3 670. A significant negative deviation of 6 330. The deviation is attributed to to some teachers not agreeing to take the tests, as well as Union resistance. The Department reported that engagements with teachers and Unions are ongoing with a view to change their perceptions.

The number of teachers participating in the Physical Science diagnostic tests

The target was set at 2 000 but the Department was only able to reach a total of 648. A negative deviation of 1 352. The reason for the deviation is as stated above with respect to participation in the Mathematics diagnostic tests.

The number of teachers participating in the Accounting diagnostic tests

The target was set at 2 000 but the Department was only able to reach a total of 393. A negative deviation of 1 607. The reason for the deviation is as stated above with respect to participation in the Mathematics diagnostic tests.

The number of teachers participating in the  English First Additional Language (EFAL) diagnostic tests

Partially Achieved

The target was set at 10 000 and the Department reached a total of 8 057. A negative deviation of 1 943. The reason for the deviation is as stated above with respect to participation in the Mathematics diagnostic tests.

 

 

7.1.4     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. Within this programme, of the 12 performance indicators, the Department achieved six (6), partially achieved two (2) and was unable to achieve four (4) targets. The Department fully achieved or exceeded the following six indicators:

 

Performance Indicator

Target achieved or exceeded

A bank of Language and Mathematics test items for Grade 3, 6 and 9 developed

The target was set at 150 and the Department developed a total of 3 485 test items, which represents a positive deviation of 3 335.

 

The number of NSC and Senior Certificate (SC) reports produced

Four (4) – no deviation

The number of question papers set annually for NSC and SC

The target was set at 348 and the Department reached a total of 376. A positive deviation of 28

Percentage of public schools using the standardized school administration system, SA-SAMS for reporting

The target was set at 98 percent and the Department reached a target of 98.5 percent. A positive deviation of 0.5 percent

The number of officials from districts that achieved below the national benchmark in the NSC participating in a mentoring programme

The target was set at 30 and the Department reached a total of 52, which represents a positive deviation of 22

An improvement plan for district offices to improve on areas that were rated unsatisfactory by school principals during the school survey.

An improvement plan was developed as targeted with no deviation.

 

 

The Department partially achieved the following two targets:

Performance Indicator

Targets partially achieved

The percentage of learners from public schools that are successfully uploaded on to LURITS 

The target was set at 98% and the Department was only able to reach a total of 97.7% (12 305 458 out of 12 595 742 learners). A negative deviation of 0.3% (290 284 learners). The negative deviation was attributed to learner records in the Provincial Data Warehouses having been rejected by LURITS during the uploading process. This was a result of minimum data quality validations not being met. The final output figure consisted of 11 917 270 active learners and 388 189 provisional learners on the LURITS system.

Percentage of district managers assessed against developed criteria

The target was set at 85 percent but the Department was only able to reach a total of 80%. A negative deviation of five (5). Some of the district directors are still not appointed permanently while others were appointed at a time when it was not compulsory to do the assessments.

 

The four targets that were not achieved in this programme relate to the provision of infrastructure through the ASIDI programme. The under-performance of the ASIDI programme has been a persistent challenge in the previous years. The status report of the four ASIDI targets in 2017/18 is as follows:

 

Performance Indicator

Targets not achieved

The number of new schools built and completed through ASIDI

The target was set at 115 but the Department was only able to reach a total of 12, which represents a significant negative deviation of 103. The Department the deviation to the following:

  • The delay in finalising and signing the session agreement to transfer projects taken from the Independent Development Trust (IDT) to the Development Bank of Southern Africa (DBSA) and Coega Development Corporation (CDC).
  • A total of 15 school’s projects were taken away from the Independent Development Trust (IDT) due to poor performance and re-allocated to the DBSA and CDC. All these projects are currently under construction.
  • Poor performing contractors/ implementing agents who led to delays in completion of projects, have been put on terms or terminated.
  • Inclement weather in the Eastern Cape led to delays in completion of projects.
  • Contractors on the 61 small and isolated schools project declined appointment and replacement contractors had to be appointed.

The number of schools provided with sanitation facilities through ASIDI

The target was set at 257 but the Department was only able to reach a total of 29, which represents a significant negative deviation of 229. The negative deviation was due to the following:

  • Poor performing contractors/ implementing agents who led to delays in completion of projects, have been put on terms or terminated.
  • Inclement weather in the Eastern Cape led to delays in completion of projects.

The number of schools provided with water through ASIDI

The target was set at 344 but the Department was only able to reach a total of 43. A significant negative deviation of 301. The reasons for the negative deviation are as stated above with reference to provision of sanitation. was due to the following.

The number of schools provided with electricity through ASIDI

The target was set at 134 but the Department was only able to reach a total of seven (7), which represents a negative deviation of 117. The department reported that implementation of the electricity sub-programme was completed, and the reconciliation of the scope of work allocated to different implementing agents was underway.

 

 

7.1.5     Programme Five: Educational Enrichment Services - This programme is responsible for developing policies and programmes to improve the quality of learning in schools. Within this programme, of the four (4) performance indicators, the Department achieved three (3) and partially achieved one (1) of the targets set. The Department achieved the following three targets:

 

Performance Indicator

Target achieved or exceeded

The number of schools monitored for the provision of nutritious meals

The target was set at 130 and the Department was able to reach a total of 205 thus exceeding the target by 75

The number of learners, teachers, officials and SGBs participating in social cohesion and gender equity programmes

The target was set at 6 000 and the Department was able to reach a total of 6 523. A positive deviation of 523

The number of Hot Spot Schools monitored towards implementation of the National School Safety Framework (NSSF)

The target was set at 46 and the Department was able to reach a total of 47. There was a positive deviation of one (1).

 

The target that was partially achieved is as follows:

Performance Indicator

Target partially achieved

The number of adjudicators, data capturers and Farm school conductors trained in the South African Schools Choral Eisteddfod (SASCE) programmes.

The target was set at 900 and the Department was only able to reach a total of 837, which represents a negative deviation of 63. Mpumalanga did not host a provincial capacity building workshop for adjudicators, data capturers and Farm school conductors in the 2017/18 financial year. Financial challenges were cited as the contributing factor. The DBE is responsible for the deployment of facilitators for this training to all the PEDs.

 

 

7.2 Service Delivery Performance, 2018/19

 

The Department’s performance for the First Quarter as per 2018/19 Annual Performance Plan, was as follows:

 

  • Programme One: Within this programme, two targets were annual targets and one was a quarterly target. The Department achieved 99.9 percent of the First Quarter target of 100 percent of service providers within the procurement unit paid within 30 days. The marginal deviation of 0.1 percent was due to system error experienced.   With regard to the two annual targets set for this programme, the Department did not receive new disciplinary cases during the First Quarter and 67 percent of received grievances cases were resolved within 30 days against the set annual target of 85 percent.
  • Programme Two: Within this Programme, there were 19 performance indicators with 11 annual, five quarterly and three bi-annual targets. Of the five quarterly targets set for the First Quarter, the Department achieved or exceeded three targets on the number of offline digital content packed and distributed to provinces; the number of schools visited for monitoring CAPS implementation in technical schools; and the number of schools per province monitored for the utilisation of ICT resources. The remaining two quarterly targets were not achieved. These were the number of schools with Multi-Grade classes implementing the Multi- Grade Toolkit monitored; and, the number of advocacy campaigns conducted on the Rural Education policy in the provinces. Of the three Bi-annually targets, the Department had achieved one target of monitoring 14 training sessions of CAPS for Technical subjects; reported that the monitoring of Mathematics training sessions/workshops would take place in the Second Quarter; and, further reported on two milestones towards the achievement of the target on 25 000 learners obtaining subject passes towards the NSC or extended SC, including upgraded NSC per year.
  • Programme Three: Within this Programme, there were two quarterly targets and eight annual targets. the Department achieved both quarterly targets on the number of PEDs monitored on the implementation of the IQMS and the number of PEDs monitored on the implementation of the Performance Management Development System (PMDS). Notably, with reference to the annual targets, the Department was on course to achieve only one of the four targets that were not achieved in 2017/18, relating to the participation of teachers in diagnostic tests. A total of 915 teachers participated in the EFAL diagnostic training against the set target of 2 000. There was low participation in the diagnostic training regarding the other three subjects.
  • Programme Four: All the targets in this programme are annual targets. Within the ASIDI programme, which has underperformed historically, the Department reported that a total of three schools were completed, five schools had reached completion and 83 schools were under construction. Based on this report, it is not clear at this stage whether the Department is on course to achieve the set annual target of 50 schools built and completed through ASIDI. Notably, following the trends of previous years, with reference to the provision of water and sanitation facilities to schools, there was not much progress towards the achievement of targets set as at the end of the First Quarter. A total of 29 schools were provided with water and sanitation facilities against the annual targets of 325 and 286 for these facilities respectively.
  • Programme: Five: Within this programme, the Department achieved all the three quarterly targets as set. No activity was undertaken towards the delivery of the set annual target of 900 professionals trained in SACE programmes.

 

7.3. Assessment of the 2017/18 performance of the Department, including by other Entities

 

7.3.1     Progress on the implementation of the Medium-Term Strategic Framework (MTSF) 2014-19

 

The DBE is making progress towards the implementation of the MTSF. As noted earlier in this report, the DBE added new indicators in its 2018/19 APP to ensure greater alignment with the MTSF and NDP, following the intervention of the Portfolio Committee and the AGSA.  Together with the PEDs, the DBE further developed 18 MTSF aligned Customised Programme Performance Measures (PPMs), during the period under review, for inclusion in the Provincial Annual Performance Plans. Most of the indicators are moving steadily upward though in some instances not at the level required in the MTSF and NDP. The number of learners passing matric at Bachelor level increased to 23.57 percent in 2017/18 from 22.61 percent in 2016/17. The NDP proposes a target of 450 000 learners passing Grade 12 at Bachelor level with the milestone of 300 000 by 2024. Similarly, the MTSF set a target of 250 000 or 34 percent Bachelor passes by 2019. Although the number of Bachelor passes has increased, at the current rate of improvement, the set target of 34 percent Bachelor passes by 2019 is unlikely to be realized.

 

Other outcomes that are moving in the right direction include that the matric pass rate improved from 72.5 percent in 2016 to 75.1 percent in 2017. Approximately 95 percent of children in Grade 1 have previously attended Grade R against the MTSF target of 100 percent who have received formal Grade R by 2018/19.  It is also noted that the SACMEQ IV study results showed that for the first time, South African learners at the Grade 6 level achieved Mathematics scores above the centre point of 500 points. The MTSF proposes a target of 550 in Language and Mathematics by 2019. In the 2015 Trends in International Mathematics and Science Study (TIMMS) results released in November 2016, South African learners showed the largest improvement of 87 points in Mathematics, and 90 points in Science.

 

Key challenges currently faced include educator union resistance to fully embrace certain indicators linked to the MTSF and NDP. These include the participation of teachers in diagnostic tests; the proportion of principals who have signed performance agreements, and, the proportion of principals appointed based on competency assessment processes. Further challenges include the achievement of set targets relating to the provision of infrastructure through the ASIDI programme, as highlighted in this report. 

 

7.3.2 Key issues raised by the Financial and Fiscal Commission pertaining to the

performance of the Department

 

The Financial and Fiscal Commission (FFC) noted that, apart from other key determinants of educational outcomes such as household and individual characteristics, teachers, classroom resources as well as community and district factors, school infrastructure has an essential role to play in addressing issues related to access and educational quality. The quality of school infrastructure, especially in respect of the physical conditions of school buildings could influence attendance and drop-out rates. Good school infrastructure could also impact teacher motivation. In this regard, the Commission’s view is that the regulations on norms and standards for school infrastructure will go a long way in enhancing teaching effectiveness and improving student learner outcomes.

 

With regard to the expenditure patterns in respect of education infrastructure, the FFC noted that although spending performance on the ASIDI programme has been poor since inception, the programme improved its spending to 101.6 percent in 2017/18 from 60.3 percent in 2016/17. In terms of service delivery performance of the programme, the FFC concurred with the view of the Portfolio Committee that the lack of progress in respect of targets relating to inappropriate structures, provision of water and decent sanitation was concerning. Similar to the findings of the AGSA, the FFC noted that key challenges hampering the ASIDI programme include the following:

 

  • Poor communication and sharing of information;
  • Slow procurement and implementation processes;
  • Inadequate management capacity especially at project management level;
  • Disincentives related to implementing agents not being the owner of a project;
  • Lack of effective systems for monitoring and controlling service providers; and
  • Poor financial management systems that result in late payments to service providers.

 

The FFC noted that, relative to general spending performance of infrastructure-related conditional grants, the EIG had performed relatively well, with actual spending averaging 96 percent of planned spending between 2011/12 and 2017/18. Despite the good spending record, trends raise concern on value in taxpayers’ money. 

 

With reference to the expenditure patterns in respect of non-infrastructure conditional grants, the FFC noted the following:

 

  • The National School Nutrition Programme: generally, funds were well spent over the period under review at an average of 97.5 percent. Key challenges included that few provinces had up-to-date and accurate stock registers; and, poor procurement practice were followed in that schools were not following a competitive process in terms of sourcing quotations from potential suppliers.
  • HIV/AIDS Life Skills Education Grant: with the exception of 2015/16 this grant had consistently underperformed though the magnitude of the underspending was not high. Expenditure on the grant improved to 98 percent in 2017/18 from 95 percent in 2016/17. Between 2016/17 and 2017/18 Limpopo province had reported the lowest expenditure with only 65 percent of its total allocation spent as at 2017/18.
  • Mathematics, Science and Technology Grant: Performance on this grant had been relatively good but there was a notable decline from spending of 98 percent in 2016/17 to 83 percent in 2017/18. Between 2015/16 and 2017/18, spending performance was consistently poor in the Free State and North West provinces. The FFC’s key concern was that the grant targets were not reported against in departmental annual reports or annual performance evaluation reports on conditional grants.
  • Learners with severe to profound Intellectual Disabilities: The FFC noted that apart from one province, all other provinces had been underperforming poorly on this grant. The average performance of provinces on the grant stood at 67 percent in 2017/18. The main reason for under-expenditure in some provinces was the delay in the recruitment of required personnel.

 

The FFC also highlighted the following regarding the National Norms and Standards for school funding:

 

  • KwaZulu-Natal province had been funding all quintiles below the national threshold amount since 2014
  • Mpumalanga was spending below national threshold for all quintiles in 2016, 2017 and 2018
  • Northern Cape was funding Quintiles 1 to 3 below national threshold since 2015

 

 

 

 

 

Portfolio Committee Observations

 

  • The Portfolio Committee noted the input and recommendations of the FFC on Basic Education, which include the following:  
  • More effective oversight over basic education conditional grants is required
  • The DBE should develop clear performance evaluation frameworks for the grants under its control – well defined performance indicators that can be tracked consistently across project cycle stages for all provinces and performance indicators should be based on quality, cost and time factors
  • More effective/stringent penalties are required for implementing agents who perform poorly
  • If the performance challenges and uneven access to school infrastructure and other educational inputs are not addressed, the wide disparities in educational outcomes between rural and urban provinces and between less affluent and more affluent schools, will persist
  • Policy and funding frameworks have attempted to entrench equal treatment of learners but funding framework mostly disregard historical disparities and other important constraints which affect disadvantaged schools.
  • Cases of persistent funding below national threshold should be investigated with adequate recovery plan to be devised – KZN, Mpumalanga, Northern Cape
  • The spending of budgets for its intended purpose by the PEDs remained a concern to the Portfolio Committee. The Department seemed to have very little powers to ensure proper utilisation of these funds as the PEDs had the authority to spend and allocate funds as per their respective priorities.
  • Members were concerned about under-expenditure on the MST, the LSPID and the HIV Life Skills Education (Limpopo province) conditional grants
  •  In respect of financial symmetry as it related to Basic Education, the question was whether the Department required more funds or was it a case of not using existing resources optimally.

 

8.         Statutory Bodies

 

            8.1        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.

 

8.1.1     Audited Financial Statements 2017/18

 

Table 1: Statement of Financial Position

Figures in Rand

2018

2017

Assets

   

Current Assets

 

 

Receivables from exchange transactions

2 116 180

1 576 999

Cash and cash equivalents

69 772 615

45 631 089

 

71 888 995

47 208 088

Non-Current Assets

 

 

Property, plant and equipment

63 440 435

64 171 080

Intangible assets

1 312 201

1 717 176

 

64 752 636

65 888 256

Total Assets

136 641 631

113 096 344

Liabilities

 

 

Current Liabilities

 

 

Payables from exchange transactions

5 748 024

2 339 002

Unspent conditional grants and receipts

1 547 642

107 766

Provisions

2 974 745

3 062 015

AFTRA deposit

-

155 560

 

10 270 411

5 664 343

Total Liabilities

10 270 411

5 664 343

Net Assets

126 371 220

107 432 001

Accumulated surplus

126 371 220

107 432 001

 

Analysis of Financial Position

The total assets increased by 21 percent due to a retained surplus and an increase in subscription/cash equivalents. Non-current assets remained unchanged with no acquisition of material capital assets. The current liabilities increased by 81 percent due to unspent grant and travel and accommodation. The Council had an accumulated surplus of 18 percent due to increased subscription and provincial building reserve fund. The financial position of SACE was positive

 

Table 2: Statement of Financial Performance

Figures in Rand

2018

2017

Revenue

   

Revenue from exchange transactions

   

Revenue

70 602 761

 

Other income

270 750

 

Interest received

2 800 390

 

Gain on disposal of assets and subsidies

4 954

 

Total revenue from exchange transactions

73 678 655

63 536 897

 

 

 

Revenue from non-exchange transactions

 

 

Transfer revenue

 

 

Government grants

8 303 124

7 239 127

Total revenue

81 981 979

70 776 024

 

 

 

Expenditure

 

 

Employee benefit costs

33 648 716

34 456 252

Depreciation and amortisation

2 664 948

2 032 953

Lease rentals on operating lease

630 981

559 723

Debt Impairment

154 477

398 283

Operating Expenses

25 943 632

22 597 546

Total expenditure

63 042 754

60 044 757

Surplus for the year

18 939 225

10 731 267

 

Analysis of Financial Performance

Revenue from operating transactions increased by 16 percent due to increased subscriptions. There was an increase of 15 percent on CPTD subsidy spending with a total revenue increase of 16 percent. Personnel expenditure decreased by 15 percent as four senior positions remained vacant pending the job evaluation process. SACE operating expenditure increased by 15 percent with a total expenditure increase of five percent. SACE had a surplus of 19 million.

 

Table 3: Statement of Changes in Net Assets

Figures in Rand

       Building Reserves

Accumulated Surplus

Total Net Assets

Balance at 01 April 2016 as restated

63 702 019

32 998 715

96 700 734

Changes in net assets

 

 

 

Transfer between reserves

(63 702 019)

63 702 019

 

 

 

 

 

Total Transfer

(63 702 019)

63 702 019

-

Surplus for the year

-

10 731 267

10 731 267

Total recognised income and expenses for the year

(63 702 019)

74 433 266

10 731 267

Total Changes

(63 702 019)

74 433 266

10 731 267

 

 

 

 

Balance at 01 April 2017

 

107 431 995

107 431 995

Changes in net assets

 

 

 

Surplus for the year

 

18 939 225

18 939 225

Total Changes

 

18 939 225

18 939 225

 

 

 

 

Balance at 31 March 2018

 

126 371 220

  1. 371 220

 

Analysis of Changes in Assets

The total net assets increased by 18 percent due to retained surplus and increased subscriptions. There was no acquisition of material non-current assets.

           

Table 4: Statement of Cash Flow

Figures in Rand

2018

2017

Cash flows from operating activities

 

 

Receipts

 

 

Membership, registration, reprints and other receipts

69 433 634

61 254 895

Grants

9 743 000

7 239 127

Interest income

2 800 390

179 814

Other interest income

-

2 100 242

 

81 977 024

70 774 076

Payments

 

 

Employee costs

(33 872 977)

(34 364 909)

Payment suppliers and others

(22 282 381)

(24 884 916)

 

(56 155 358)

(59 249 825)

Net cash flows from operating activities

25 821 666

11 524 253

 

Analysis of Changes in Assets

Cash flow into SACE increased by 16 percent with the net cash flow increasing by 124 percent. Africa Forum of Teaching Regulatory Authorities (AFTRA) deposits were temporarily held in SACE account while AFTRA was in the process of opening its account facilities. There was a net increase in cash and cash equivalents on 31 March 2017 - cash and cash equivalents stood at R 69.8 million.

 

8.1.2     Audit Report

SACE received an unqualified audit opinion for 2017/18. There were a few misstatements of information identified and corrected.

 

8.1.3     Programme Performance

 

8.1.3.1  Programme 1: Registration of Teachers - Within this programme, SACE had three performance indicators with two over-achieved as follows:

  • The number of new registered educators – The target was set at 25 000 and SACE reached a total of 34 087. An overachievement of 9 087.

 

  • The number of registration documents updated – The target was set at 40 000 and SACE was able to reach a total of 45 454. An overachievement of 5 454.

SACE underachieved on the following indicator:

 

  • Vetting and verification - The target was set at 65 000 but SACE was only able to reach a total of 62 339. An underachievement of 2 661.

 

8.1.3.2  Programme 2: Ethics - Within this programme, SACE had only two performance indicators with achievements as follows:

  • The number of beneficiaries to be appraised of the code of Professional Ethics i.e. Educators, parents and officials – The target was set at 10 000 but SACE was only able to achieve 7 715. An underachievement of 2 285.

 

  • The number of concluded cases as measured against the number of cases received for the year - The target for the actual number of cases received was set at 500 and SACE was able to reach 509. An overachievement of nine. However, of the 509 reached, the actual number finalised stood at 327. An underachievement of 182.

 

 

8.1.3.3  Programme 3: CPTD Management System - Within this programme, SACE had six performance indicators and was able to overachieve two, fully achieve one and underachieve three targets as follows:

  • The number of educators orientated and signed-up for participation in the CPTD system – The target was set at 80 000 PL1 educators but SACE was only able to reach a total of 74 022 educators. A negative deviation of 5 978.
  • The percentage of signed up teachers who engage in three types of Professional Development (PD) Activities (Type 1: Self-Initiated Professional Development (PD) activities, Type 2: School Initiated PD Activities and Type 3: Externally Initiated PD Activities) - The target was set at 65 percent for Type 1 (106 340), 55 percent Type 2 (89 980) and 40 percent Type 3 (65 440). SACE performed as follows:
  • Type 1 – 32 percent achievement (552 352). A negative deviation of 33 percent (53 988)
  • Type 2 – 30 percent achievement (49 570). A negative deviation of 24.7 percent (40 409).
  • Type 3 – 12.3 percent achievement (20 123). A negative deviation of 27.7 percent (45 317).

 

  • The percentage of signed up educators who meet the minimum requirement of 150 CPTD points over the three-year cycle. (Disaggregated by Cohort-Principals, Deputy Principals, Heads of Departments (HODs and Post Level 1 (PL1) Educators - The target was set at 70 percent (23 352 of 33 360) but SACE was only able to reach a total of 4.9 percent (1 163). A negative deviation of 22 189 (95.01 percent).
  • The number of Approved Professional Development Providers subjected to quality assurance by SACE in a financial year - The target was set at 130 and SACE was able to reach this target with no deviation.
  • The number of new Professional Development Providers processed in the quarter of submission (in terms of approved status, not approved status, rejected and in process) - The target was set at 120 providers processed and SACE was able to reach a total of 164. An overachievement of 44.
  • The number of new Professional Development Activities Processed in the quarter of submission (in terms of endorsed status, not-endorsed status, rejected and in process) - The target was set at 600 activities processed. SACE was able to process a total of 1 526. An overachievement of 926.

 

            8.1.3.4  Programme 4: Professional Standards – The draft Professional Teaching Standards Framework and the actual standards were produced and consulted on widely through the teachers, teacher unions, higher education institutions, provincial education departments, the Department of Higher Education and Training (DHET), the DBE, the Education Deans Forum, independent schools’ associations and other stakeholders. The standards were ready for final approval by Council in November 2018 and gazetting before the 2018/19 financial year. They aimed to ensure that the professional standards inform all teacher education and development stages - from pre-service teaching practice through in-service (continuing development). They would also inform all teacher education and development stages, from pre-service through in-service continuing development. The roll-out and implementation of the professional standards would start with the provisional registration and induction of newly-qualified teachers, prior to the awarding of full registration status. They would then be phased-in for the practising educators.

 

8.1.3.5  Programme 5: Research – Research activities included the following reports:    

  • Research trends analysis of a 5-year review study on disciplinary cases reported to SACE from 2013 to 2017;
  • The role of institutional networks in the professional registration of teachers in South Africa;
  • A Pilot Report from the South African Qualifications Authorities (SAQA) on Data Matching: Redefining the SACE Registration Scope; and
  • Final Report: A qualitative study on factors and conditions facilitating and contributing to sexual relationships with learners in schools.
  • Two Teacher Seminars and Conferences were held.
  • Policy Briefs included:
    • Low participation rates on the implementation of the CPTD Management System.
    • Factors and environment that enhances sexual misdemeanours between learners and teachers.

 

8.1.4     Portfolio Committee Observations

 

  • Members queried reasons for the surplus reported in SACE’s Annual Report
  • Members also queried why it took the Council so long to finally request a Sexual Offences Register and Child Protection Register
  • The Portfolio Committee raised concerns with the number of cases that were carried over year-on-year and queried whether SACE had the necessary competent staff in the Ethics Department. Further to this, Members were concerned with the slow pace at which cases were being processed
  • Members queried whether certain posts had been filled and whether these posts were funded posts, costed and advertised. Members also queried the status of the job evaluation processes.
  • Members queried reasons why SACE was not able to ensure that data of new sign-ups were speedily captured as they should. What measures were in place to ensure that uncaptured sign-ups were captured.
  • Members also queried timeframes for ensuring that SACE provincial offices were established – and queried how SACE was currently reaching out to districts and regions. Members also queried the SACE relationship with provinces in respect of the registration of educators.
  • In respect of unqualified teachers, Members queried as to whom these are accountable when there are cases of misconduct.
  • Members requested details of plans in place to improve the audit opinion to a clean audit in the next financial year.
  • Members were of the view that CPTD was critical for teachers and raised concerns that teachers were not participating in these programmes. Members queried whether SACE had considered deregistration of educators who refused to participate in CPTD programmes. Members also queried whether SACE had ever deregistered educators and ensured that they are barred from employment in the education sector.
  • Members were aware that not all cases were being reported to SACE as they should and queried whether SACE had considered any sanctions against affected schools.
  • Members sought clarity on the issue of positive and restorative discipline and requested more details on this approach.
  • Members also queried whether any SGB appointed educator was ever guilty of offences and misconduct.

 

8.1.5     Responses

 

The Council sought legal opinion on issues around struck-off educators. The idea of positive discipline spoke to self-discipline and ethical considerations – there were a number of endorsed programme in this regard. SACE worked collaboratively with SAPS in respect of affidavits in the absence of a functional and updated register.  The SAPS also requested a clearance certificate in addition. The Council had cases where principals had been charged for not reporting on misconduct and violations. The Council was making good progress with the registration in provinces. SACE was in the process of moving away from deregistration and opting for recertification instead. All vacancies had been budgeted for, costed and advertised.

 

8.1.6     Portfolio Committee Recommendations

 

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

 

  • Submit an action plan, with reasonable targets and time-frames in response of actions on issues raised by the Auditor-General.

 

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

 

8.2.1     Background and mandate

Umalusi is the Quality Council responsible for qualifications registered on the General and Further Education and raining Qualifications Sub-Framework (GFETQSF), which is part of the National Qualifications Framework (NQF). The Council ensures that the providers of education and training have the capacity to deliver and assess qualifications and learning programmes and that they are doing so to expected standards of quality.

 

The core business of Umalusi is to:

  • Develop and manage a framework of qualifications for General and Further Education and Training (GFET) that is benchmarked internationally;
  • Quality assure qualifications and curricula;
  • Confirm that assessment is fair, valid and reliable;
  • Quality assure the provision of education and training, and assessment providers; and
  • Ground its work in research to ensure informed positions and approaches.

 

  1. Performance Information for 2017/18 – The overall status of performance of the Council stood at 83 percent achieved and 17 percent not achieved.

 

The performance status per programme was as follows:

                        Programme 1 – Umalusi achieved 67 percent and unachieved 33 percent

                        Programme 2 – Umalusi achieved 86 percent against 14 percent not achieved

                        Programme 3 – Umalusi achieved 100 percent.

 

8.2.2.1  Programme 1: Administration– Programme 1 covered 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).

 

Within this programme, Umalusi had six performance indicators and was able to record achievement on the following:

  • Approval of APP by 31 March – The target set was 100 percent and Umalusi was able to reach this target.
  • Submission of quarterly reports to oversight bodies as per timeline - The target set was 100 percent and Umalusi was able to reach this target.
  • Communication platform utilisation - The target set was 100 percent and Umalusi was able to achieve the target.
  • Compliance with the Department of Public Service and Administration (DPSA) Governance framework - The target set was 80 percent and Umalusi was able to achieve 85 percent.

 

Umalusi had two performance indicators that recorded under-achievement as follows:

  • Submission of performance agreements and performance assessments – The target set was 100 percent but Umalusi was only able to achieve 79 percent. This was due to late submission of performance management documents due to tight deadlines. Management has updated the Policy on Performance Management Policy. The CEO will implement consequence management for all late submissions.

 

  • Payment of service providers within 30 days - The target set was 100 percent but Umalusi was only able to achieve 99 percent. Under-performance was due to ineffective monitoring of internal control. There was a need for improved internal control and processes for receiving and validating invoices.

 

8.2.2.2  Programme 2: Qualifications and Research– Programme Two covered the following sub-programmes:

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

 

Within this programme, Umalusi had seven performance indicators and was able to record achievement on the following indicators:

  • Management of qualification in the sub-framework - The target set was 100 percent and Umalusi was able to reach this target at 100 percent.
  • Status report on the Curriculum - The target set was 100 percent and Umalusi was able to reach this target at 100 percent.
  • Submitted candidate’s records - The target set was 75 percent and Umalusi was able to over-achieve this target at 86 percent.
  • Free-error candidate’s records for which a certificate is printed - The target set was 75 percent and Umalusi was able to over-achieve this target at 99.9 percent.
  • Verification requests processed within 2 working days - The target set was 95 percent and Umalusi was able to over-achieve this target at 98 percent.
  • Research reports completed - The target set was 100 percent and Umalusi was able to over-achieve this target at 143 percent.

Umalusi under-achieved on the following indicator:

  • Datasets created within 21 working days -  The target set was 95 percent and Umalusi was only able to achieve 92 percent. There were challenges with quality assurance checks to finalise the datasets on time. The description of the indicator has been revised to specify the final stage of datasets created within the prescribed timeframe. The 21 days exclude “waiting time” for assessment bodies to provide supporting documentation.

 

8.2.2.3  Programme 3: Quality Assurance and Monitoring - Programme Three covered the following sub-programmes:

  • Quality Assurance and Assessment (QAA); and
  • Evaluation and Accreditation.

                                     

Within this programme, Umalusi achieved all the targets set, as follows:

  • Moderation of question papers - The target set was 100 percent and Umalusi was able to over-achieve target at 103 percent.
  • Quality Assurance Assessment Reports produced - The target set was 100 percent and Umalusi was able to over-achieve target at 106.6 percent.
  • Comprehensive reports produced an accreditation of independent schools - The target set was 100 percent and Umalusi was able to achieve the set target.
  • Comprehensive reports produced an accreditation of private colleges - The target set was 100 percent and Umalusi was able to achieve the set target.
  • Comprehensive reports produced an accreditation of private assessment bodies - The target set was 100 percent and Umalusi was able to achieve the set target.

 

Human Resources – Employment and Vacancies:

Salary Band

 
  1.  

No. of

  •  

2017/2018 Approved posts

2017/2018

No. of employees

2017/2018 Vacancies

% of Vacancies

Top management

  1.  
  1.  
  1.  
  •  
  •  

Senior Management

  1.  
  1.  
  1.  
  •  
  •  

Professional qualified

  1.  
  1.  
  1.  
  1.  
  1.  
  •  
  1.  
  1.  
  1.  
  1.  
  1.  
  •  
  1.  
  1.  
  1.  
  1.  
  1.  
  •  
  1.  
  1.  
  1.  
  •  
  •  
  1.  
  1.  
  1.  
  1.  
  1.  
  1.  

 

The vacancy rate was reduced from 13 percent in March 2017 to 5 percent by the end of the 2017/18 financial year.

 

  1. Financial Matters

 

8.2.3.1  Financial Report - Indicators identified with errors were reported to the DBE, corrected and approved by the Minister. The performance information management system has been approved. The Council will introduce new approaches to validate performance information.

 

Table 1: Statement of Financial Position

 

2018 (R)

2017 Restated* (R)

Assets

 

 

Current Assets

 

 

Cash and cash equivalents

59 842 376

66 419 451

Receivables from exchange transactions

1 840 145

5 746 107

 

61 682 521

72 165 558

 

 

 

Non-Current Assets

   

Property, plant and equipment

36 054 348

33 438 151

Intangible assets

34 685

55 620

Prepayments

6 554 335

-

Operating lease asset

-

17 160

 

42 643 368

33 510 931

Total Assets

104 325 889

105 676 489

 

 

2018 (R)

2017 Restated* (R)

Liabilities

 

 

Current Liabilities

 

 

Payables from exchange transactions

17 230 514

15 912 541

 

 

 

Non-Current Liabilities

 

 

Operating lease liability

7 071

-

Employee benefit obligation

4 766 000

3 136 000

 

4 773 071

3 136 000

Total Liabilities

22 003 585

19 048 541

Net Assets

82 322 304

86 627 948

 

 

 

2018 (R)

2017 Restated* (R)

 

 

 

Revenue

148 360 132

145 943 741

Revenue from exchange

23 748 132

27 265 741

Revenue from non-exchange

124 612 000

118 678 000

 

 

 

Other income

3 482 694

2 610 106

Investment income

5 062 409

4 129 176

Net Revenue

156 905 235

152 683 023

 

 

 

2018 (R)

2017 Restated* (R)

Expenditure

 

 

Other operating expenses

(18 783 464)

(16 052 049)

Loss on sale of property, plant and equipment

(37 637)

(13 545)

Certification expenses

(5 814 393)

(3 269 361)

Communication expenses

(6 255 071)

(9 319 189)

Consulting and professional fees

(3 876 464)

(3 678 109)

Depreciation amortisation

(3 371 847)

(3 217 461)

Moderator and verifier costs

(35 069 781)

(30 987 315)

Employee costs

(67 614 409)

(59 598 089)

Printing and stationery

(2 059 703)

(3 849 456)

Travel and accommodation – local

(17 272 110)

(17 904 992)

Actuarial losses

(1 056 000)

(96 051)

 

 

 

Net Expenditure

(161 210 879)

(147 985 617)

 

 

  • Reportable Matters: The tender regarding the renovation of Building 41 was awarded to a Joint Venture with three (3) separate entities in March 2017 for the value of R36 million. The project started in May 2017. Payments were made to the value of R10,9 million. (R4,4 million capitalised as Work in progress & R6,5 million as Prepayment for long lead items). Umalusi became aware of allegations of fraud regarding the submitted tender documents. One JV member reported the allegation pertaining to forgery of signature through his lawyers early November 2017. Umalusi followed due process, with advice from legal counsel in terms of applicable legislation, but the providers did not respond to Umalusi’s request for further information on the matter. Consequently, the contract was cancelled on 23 November 2017. The matter was reported to all relevant authorities and a case of corruption was opened with SAPS. Umalusi is in the process of instituting a civil claim against the Joint Venture. While pursuing the case Umalusi will initiate a new tender process for the renovation of Building 41.

                                                                                 

  • Accumulated Surplus:  The Department assisted with the request to retain surpluses of R42 million and has been granted by National Treasury.  A revised budget for 2018/19 was submitted to DBE which included projects.

 

  1. Audit Report

Umalusi achieved its 17th unqualified audit opinion since 2001. Material findings included the following:

 

  • Effective and appropriate steps were not taken to prevent irregular expenditure amounting to R11 068 727;
  • An amount R79 320 in irregular expenditure was identified during the external audit process whereas it could not be detected by the monitoring processes of the Entity;
  • Financial Statements submitted for auditing were not prepared in accordance with prescribed financial reporting framework as required by section 55(1) (b) of the PFMA.

 

  • Irregular Expenditure:
    • The building renovation tender was not in full compliance with the Construction Industry Development Board (CIDB) Regulations (R10,989,407). The matter was investigated and it was found that no official was liable in terms of the law for the irregular expenditure.
    • The renewal of contracts was made without going through a competitive process of sourcing three quotes (R79 320). A process of progressive disciplinary steps will be followed by management.
    • The following were condoned by Council:
      • Non-compliance with SCM Regulations (R81,709 – (2015/16))
      • Acquired goods without going through a competitive process of sourcing three quotes (R140,547– (2016/17))
      • Renewal of contract without going through a competitive process of sourcing three quotes (R37,278 – (2016/17))

 

  • Current Issues and the Way Forward - The external auditors raised the following

findings, amongst others, in the management report:

  • accreditation income recognition;
  • irregular expenditure monitoring;
  • contract management monitoring; and
  • internal controls regarding the management of performance reporting.

Management is already in the process of addressing these findings in the current financial year.

 

  1. Portfolio Committee Observations
    1. The Portfolio Committee raised concern over issues of SCM processes and procedures not being followed e.g. three-quotes requirements – and queried whether there were any action and/or disciplinary measures taken against errant officials.
    2. Members queried whether the Council had any further links or dealings with the Joint Venture (JV) in respect of possible recovery of the money.
    3. Members also queried how the Umalusi Council was appointed and the processes involved in appointing the Council.
    4. Members queried the timeframe for filling of vacant post in the establishment.
    5. Members queried whether the budget cuts had any impact on the work of the Council and whether there had to be any adjustment to targets.
    6. Members queried whether the Council received any outside public/private funding. Members also queried how the Council was managing virements/funding for unplanned activities

 

  1. Responses:

The Council, in the last Financial Year, had commenced with a cycle of updating policies and processes – and issues of inadequate monitoring was highlighted. The Council also noted that there was a lack of in-depth SCM knowledge – although errors were identified, these were not reported as it should. Although no official was liable in terms of law there was a need to conduct an assessment to find root causes.The Council was looking to recover monies from the JV members. The Council received no further funding from outside public/private partnerships. The Umalusi Council was appointed by the Minister of Basic Education by way of calls for nominations of people to serve on the Council. The Minister then appoints members to the Council as well as the Chairperson. The Council indicated that the work of Umalusi had suffered due to budget cuts and requested that the Umalusi budget be increased to expand on their sampling. Members of the Council had signed a pledge to ensure a clean audit opinion in the next financial year.

 

8.5        Portfolio Committee Recommendations

           

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

 

  • Submit an Action Plan, with reasonable targets and time-frames in response of actions on issues raised by the Auditor-General. Umalusi should also submit a progress report to the Portfolio Committee on the implementation of the Action Plan during the Third Quarter of 2018/19.

 

9.         Overall Portfolio Committee Observations

 

9.1 Department of Basic Education

 

9.1.1 Technical issues, overall performance and reporting

 

  • As in previous years, the Portfolio Committee welcomes the quality and depth of information reported in the 2017/18 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 Committee further commends the Department for improving its overall performance towards the achievement of its set targets from fully achieving 70 percent in 2016/17 to fully meeting 73 percent in the 2017/18 financial year.

 

  • In terms of reporting, the Portfolio Committee appreciates the effort of the DBE in continuing to ensure that its plans and programmes are aligned with those of the NDP and the MTSF. The Committee notes in particular that the DBE added new indicators in its 2018/19 APP to ensure greater alignment with the MTSF and NDP, following the intervention of the Portfolio Committee and the AGSA.  The Committee also notes that together with the PEDs, the DBE further developed MTSF aligned Customised Programme Performance Measures (PPMs), during the period under review, for inclusion in the Provincial Annual Performance Plans.

 

  • The Committee remains concerned regarding the slow progress in the implementation of certain indicators linked to the MTSF and NDP such as the proportion of principals who have signed performance agreements and the proportion of principals appointed based on competency assessment processes.

 

  1. Audit Outcomes

 

  • The Portfolio Committee is deeply concerned with the regression in the Department’s audit findings from an unqualified audit opinion in previous years to a qualified audit opinion in 2017/18. The Committee notes that despite measures that management put in place during the year under review to improve the control environment in ASIDI, the modified audit opinion still relates to this programme. The Committee is concerned that, as noted by the Auditor-General, the Department did not have an adequate system of ensuring that infrastructure assets from ASIDI are properly accounted for, which resulted in the understatement of the amounts disclosed pertaining to these assets.

 

  • The Committee notes that irregular expenditure was reduced from R621 million in 2016/17 to R154 million in 2017/18, and that wasteful and fruitless expenditure reduced significantly from R11.2 million in 2016/17 to R495 000 in the current financial year. However, the Committee is concerned that irregular expenditure, and wasteful and fruitless expenditure still exist. The Committee urges the Department to fast track the implementation of the necessary measures to ensure there is no re-occurrence.

 

  • The Committee is concerned about the recurring findings on the reliability of reported information in respect of LURITS in Programme 4; misstatements in the financial statements resulting in restatement of corresponding figures; non-compliance issues around annual financial statements; persistent internal control deficiencies, including leadership oversight; and, inadequate consequence management.

 

The Committee is encouraged that steps are being taken to prevent a recurrence of the modified audit opinion, which include the increased involvement of the Internal Audit Unit and the appointment of the permanent post of Deputy Director General: Infrastructure.

 

          9.1.3 Financial issues

 

  • The Portfolio Committee welcomes the improved overall expenditure of the allocated budget from 95.82 percent in 2016/17 to 99.7 percent in 2017/18. The Committee is particularly pleased with the improved spending on the ASIDI programme from 60.3 percent in 2016/17 to 101.6 percent in 2017/18. However, the Committee is concerned that, despite the good spending record in the ASIDI programme in 2017/18, the audit finding of wasteful and fruitless expenditure and other challenges in the programme raise concern over value in taxpayers’ money. 

 

  • The Committee notes from the Annual Report of the Department that expenditure on ASIDI projects increased at the end of the 2017/18 financial year. This as a result of projects that were reallocated from poor performing Implementing Agents to better performing Implementing Agents. The Committee further notes from the Department’s 2018/19 First Quarter report that the ASIDI projects have gained momentum. The Department reported that 83 schools were currently under construction and another five had reached partial completion. Based on the current acceleration on the projects, it would appear that the budget allocation will not be enough to complete projects that are currently running.

 

  • The Committee remains concerned about Implementing Agents who perform poorly with regard to the ASIDI programme and urges the Department to put more effective/stringent penalties against them. Members also query why the Department is not considering dealing directly with contractors to avoid inefficiencies experienced when going through Implementing Agents.

 

  • 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 once again notes with concern that many learners still do not benefit from scholar transport. The Committee has expressed itself on numerous occasions through oversight reports, on the need for all qualifying learners to benefit from this service. The Committee thus urges relevant authorities to fast track the implementation of plans to allocate ring-fenced funds to be utilised for learner transport.

 

  • The Portfolio Committee notes that although the Department’s headcount was reduced by 37 in the First Quarter of 2018/19, which resulted in lower than projected expenditure on compensation of employees, the Department is still reportedly 18 above its headcount target for the year. The Committee urges the Department to implement its planned headcount reduction strategies to stay within the ceiling for compensation of employees for 2018/19.
  • The Portfolio Committee once again urges the Department to take the necessary steps to ensure that the budget follows learners, including those who migrate to other provinces.

 

     9.1.4     Performance per Programme

 

                                    9.1.4.1  Programme 1: Administration

 

  • The Portfolio Committee is satisfied that this programme has maintained its previous year’s record of achieving its targets set in all three performance indicators.

 

9.1.4.2  Programme 2: Curriculum Policy, Support and Monitoring

 

  • The Portfolio Committee notes that although the sector has progressed significantly in providing adequate LTSM, universal coverage, that is, every learner having a textbook for every subject, remains a challenge. The Committee further notes that, as the A-G’s audit findings shows, textbook retention and retrieval is not effectively monitored and implemented at schools.

 

  •  The following findings of the AGSA’s 2017/18 audit regarding curriculum coverage require the attention of the Department:

 

  • Not all educators timely cover topics outlined in the ATP and CAPS and some schools HoDs do not compile curriculum coverage reports
  • Some principals do not report on the state of curriculum coverage at the end of every school term.
  • Some schools do not monitor and implement corrective measures where curriculum coverage deficiencies are identified. 
  • Some schools do not establish and implement systems and processes to monitor curriculum coverage.
  • Some education districts do not communicate directives to ensure monitoring of curriculum coverage. 
  • •Some education districts did not report on curriculum coverage at all levels. (4 provinces had findings
  • Some education districts and PEDs do not monitor and implement corrective measures where deficiencies on curriculum coverage are identified.

 

  • The Committee notes from the A-G’s audit findings that the following deficiencies identified in its 2016/17 report regarding Grade R are still prevalent:
  • Inadequate infrastructure, including classroom size, inappropriate and unsafe playground and ablution facilities
  • Inappropriate teacher to learner ratio and qualifications.
  • Members noted the lack of capacity to print Braille and queried whether the Department would consider in-house government printing works for this function.
  • The Portfolio Committee welcomes the training of teachers for the deaf but raises concern over issues around the lack of resource material and inadequate training for deaf teacher assistance to teach content.
  • The Portfolio Committee notes the report that progress is being made in the roll-out of ICT in schools but once again urges the Department to intensify its monitoring to ensure that access to ICT resources reaches 100 percent by 2019, as required by the Medium Term Strategic Framework.

 

  • Members once again query the amount of disabled learners participating in the Second Chance Matric Programme as well as the face-to-face tuition. The Portfolio Committee urges the Department to ensure that the Programme is inclusive.

 

9.1.4.3  Programme 3: Teacher and Education Human Resources Development and Institutional Development

 

 

  • The Portfolio Committee remains concerned regarding the recurring underperformance in relation to the targets on the number of teachers who have written the Self-Diagnostic Assessments for English First Additional Language (EFAL), Mathematics, Physical Science and Accounting. The Committee notes that although there is an improvement compared to 2016/17, the variance between the indicator target and the departmental achievement remains high, except for EFAL.

 

9.1.4.4  Programme 4: Planning, Information and Assessment

 

  • The Portfolio Committee remains concerned regarding the underachievement in respect of the targets relating to the ASIDI programme on completed schools to replace inappropriate structures, provision of water and decent sanitation. The Committee is particularly concerned that the variance between the indicator targets and the departmental achievement remains high.

 

  • The Committee notes with concern that the LURITZ data is still not reliable as alluded to by AGSA

 

  • Members noted the capacity constraints in respect of district monitoring and support and queried measures in place to strengthen this area.

 

  • Members raised a concern that Professional Services Providers (PSP) for the ASIDI programme were utilised for services outside their core mandate.

                                           

9.1.4.5  Conditional Grants

 

The Committee is concerned about underspending of the Maths, Science and Technology, HIV and AIDS Life Skills, and Learners with Severe to Profound Intellectual Disabilities conditional grants. The Department should provide the necessary support to the relevant provinces in order to decisively deal with this challenge.

 

10. Overall Portfolio Committee Recommendations

 

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

  • Provide Parliament within a comprehensive Action Plan with timeframes to address the 2017/18 AGSA’s audit findings, within three months 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. The Action Plan should include a focus on how the Department will address the following recurring challenges:

 

  • Irregular expenditure, and fruitless and wasteful expenditure;
  • The reliability of the reported information in the LURITS database in Programme 4;
  • Material misstatements in the reported performance information and financial statements;
  • Non-compliance issues around annual financial statements;
  • Internal control deficiencies, including leadership oversight; and,
  • Inadequate consequence management

 

  • Submit a progress report on the implementation of Infrastructure Norms and Standards, within three weeks of the adoption of this report by the National Assembly.
  • Continue to intensify the implementation of inclusive education to reach all learners with special education needs, including ensuring that all schools for special needs education are well resourced and adequately adapted for learners with special needs and that educators are adequately trained and developed.

 

  • Together with Provincial Education Departments, address deficiencies in respect of curriculum coverage and textbook retention and retrieval system, as noted by the Auditor-General.

 

  • Provide the necessary support to the relevant Provincial Education Departments to ensure effective and efficient utilization of conditional grants. The Department should consider developing clear performance evaluation frameworks for the grants under its control, with well defined performance indicators that can be tracked consistently across project cycle stages for all provinces and performance indicators should be based on quality, cost and time factors. A process should be put in place to hold to account those Provincial Education Departments that do not comply.

 

  • Implement the planned headcount reduction strategies to ensure that the Department remain within the compensation of employees ceiling.

 

  • Strengthen the monitoring of the roll-out of ICT in schools, particularly in rural areas, to ensure that access to ICT resources reaches 100 percent by 2019, as required by the Medium Term Strategic Framework.

 

  • Fast track the effective implementation of competency assessments for principals in all the Provincial Education Departments since this indicator is linked to the imperatives of the NDP.

 

  • Put more effective/stringent penalties against Implementing Agents who perform poorly in relation to the ASIDI programme.

 

  • Take the necessary steps to ensure that the budget follows learners, including those who migrate to other provinces.

 

  • Address the deficiencies identified by the Auditor-General regarding Grade R, including infrastructure, teacher learner ratio and qualifications.

 

  • Strengthen the monitoring and implementation of curriculum coverage as well as textbook retention and retrieval.

 

  • Strengthen district monitoring and support to schools. There should be consequence management for district officials who consistently underperform.

 

  • Ensure that all training on inclusive education and special education needs is adequate, including for deaf teacher assistants to teach content.

 

  • Ensure that the Second Chance Matric Programme is inclusive of learners with special education needs with effect from 2019.

 

  • Improve performance in relation to the indicators on teacher participation in self-diagnostic assessments.

 

  • Improve performance in respect of the indicators relating to the ASIDI programme, namely, completed schools to replace inappropriate structures, provision of water and decent sanitation.    

 

  • Together with relevant authorities, fast track the implementation of plans to allocate ring-fenced funds for learner transport.

 

  • Consideration should be made for additional funding for the ASIDI programme, given that expenditure on ASIDI projects increased at the end of 2017/18 and further that the First Quarter 2018/19 report showed that the programme had 83 schools under construction and another five schools had reached partial completion. Based on the current acceleration on the projects, it would appear that the budget allocation will not be enough to complete projects that are currently running.

 

  • Consideration should be made to increase the budget of Umalusi due to its expanded mandate.

 

Report to be considered.

 

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