ATC181031: Report of the Portfolio Committee on Higher Education and Training on The 2018/19 First Quarter Report of the Department of Higher Education and Training, dated 31 October 2018

Higher Education, Science and Innovation

REPORT OF THE PORTFOLIO COMMITTEE ON HIGHER EDUCATION AND TRAINING ON THE 2018/19 FIRST QUARTER REPORT OF THE DEPARTMENT OF HIGHER EDUCATION AND TRAINING, DATED 31 OCTOBER 2018
 

1. INTRODUCTION

Section 40 (1) (f) of the Public Finance Management Act, 1999 (Act No.1 of 1999) makes provision for the accounting officer of a department to submit all reports, returns, notices and other information to Parliament. The Act also stresses the need for accounting officers to regularly monitor and report on the performance of their Departments against the agreed budget for the year.

Section 5 (1) (c) of the Money Bills Amendment Procedure and Related Matters Act, 2009 (Act No. 9 of 2009) states that the National Assembly (NA), through its committees, must annually assess the performance of each national department with reference to the expenditure report of such department published by the National Treasury in terms of section 32 of the PFMA.

The Portfolio Committee has an oversight function over the Department and it is responsible to closely monitor the progress towards the achievement of financial and non-financial performance of the Department against its pre-determined service delivery or performance targets. The quarterly assessments of the Department’s financial and non-financial performance also assist the Committee in preparation for the submission of the budgetary review and recommendation report (BRRR) as required by section 5 (2) of the Money Bills Amendment Procedures and Related Matters Act, 2009 (Act No. 9 of 2009).

In light of the above, Portfolio Committee on Higher Education and Training (herein referred to as the Committee) considered the 2018/19 first quarter performance report of the Department of Higher Education and Training (DHET) on 15 August 2018. The 2018/19 first quarter covers the period between 1 April to 30 June 2018.

2. OVERVIEW AND ASSESSMENT OF THE DEPARTMENT’S 2018/19 FIRST QUARTER SERVICE DELIVERY PERFORMANCE

The 2018/19 Annual Performance Plan of the Department has a total of 110 targets, of which 75 pertain to direct outputs, while 35 relate to the performance of the entire post-school education and training (PSET) system. For the quarter under review, the Department had 21 targets and all were achieved.

 

2.2. Overview of programme service delivery performance

2.2.1. Programme 1: Administration

The purpose of this programme is to provide strategic leadership, management and support services to the Department.

The programme has 10 targets for the 2018/19 financial year. For the quarter under review, the programme had one target, which was to develop a report on the implementation of Corporate Governance of information and communications technology (ICT) Policy Framework which was achieved as planned. The Department achieved alignment of the ICT Strategy (connectivity to all TVET Colleges), automation of business processes, development of new examination system and work and e-recruitment.

2.2.2. Programme 2: Planning, Policy and Strategy

The purpose of the programme is to provide strategic direction in the development, implementation and monitoring of Departmental policies and the Human Resource Development Strategy for South Africa.

The programme has 11 targets planned for the 2018/19 financial year. For the quarter under review, the Department had six (6) targets on the milestones towards achieving the annual targets and all were achieved as planned. The targets that were achieved included: 25 percent completion level of the development of quarterly report on the implementation of Open Learning in PSET, 25 percent completion level of the development of a draft report on international relations monitoring report, 25 percent completion level of the development of a report on the implementation of recognition of prior learning (RPL); 25 percent completion level of the development of a report on the implementation of the career development service (CDS); international relations; 25 percent completion  level of the development first draft annual report skills supply and demand and 25 percent completion level of the development of project plan on data collection for annual statistics on PSET report.

2.2.3. Programme 3: University Education

The purpose of this programme is to develop and coordinate the policy and regulatory framework for an effective and efficient university education system. Furthermore, it provides financial support to universities, the National Student Financial Aid Scheme (NSFAS) and the National Institute for Higher Education (NIHE).

For the quarter under review, there were no specific targets due for completion. However, the Department reported on progress with regard to the targets that were not achieved in the fourth quarter of 2017/18, which was the development of a National Plan for Post-School Education and Training (NP-PSET) and development of a Policy Framework on Collaboration between Professional Bodies, Government Departments and Quality Councils. The Department reported that a draft plan was completed in October 2017. However, timeframes had to be adjusted due to the finalisation of the Fees Commission report and government policy decisions related to its recommendations. Another setback was the changes in the Ministry and a need to have the Minister’s concurrence before releasing the draft plan for public comments. The development of a Policy Framework on Collaboration between Professional Bodies, Government Departments and Quality Councils was delayed by the fact that the Director responsible for it left the Department and there were also legal issues around the development of the framework. The Department worked with the Council on Higher Education (CHE) and Professional Bodies to address the issues. It was hoped that the Framework would be published by the end of 2018.

2.2.4. Programme 4: Technical and Vocational Education and Training

The purpose of this programme is to plan, develop, implement, monitor, maintain and evaluate national policy, programmes, assessment practices and systems for TVET.

The programme has 25 for the 2018/19 financial year. For the quarter under review, there were nine (9) reports due for completion and all were completed, namely: certification backlog; a report on the conduct of public TVET college examination centres during national examinations and assessments; a report on implementation of the IT examination services system; a report on the roll-out of the nine TVET college campuses (Nongoma, Balfour, Msinga, Lusikisiki, Graaf Reinet, Aliwal North and Sterkspruit); a report on the operationalisation of the newly built TVET college campuses (Thabazimbi, Bhambanana and Nkandla); a report on implementation of the national infrastructure asset management system for TVET colleges; a report on implementation of a national infrastructure maintenance plan for the TVET college sector; a report on the projections of budget estimates and implementation; a report on implementation of the South African Institute for Vocational and Continuing Education and Training (SAIVCET).

2.2.5. Programme 5: Skills Development

The purpose of the programme is to promote and monitor the National Skills Development Strategy (NSDS III) and to develop a skills development policy and regulatory framework for an effective skills development system.

The programme has eight targets for the 2018/19 financial year. For the quarter under review, there were three (3) targets planned and all were achieved, namely: report on the implementation of the National Skills Development Strategy (NSDS); average of 80 days to process qualifying trade test applications for trade testing from the receipt of trade test applications until the trade test was conducted and development of a single national information management system for artisan development. The Department reported that work was underway and a business case for data load specification has been developed as the first step of system development process and the design of the database was under construction. It was reported that the Automated Trade Test System would greatly contribute to the standardisation of trade testing for all trades and improved quality thereof.

For the quarter under review, the programme had one system target planned, that was to achieve 61 percent national artisan learners trade test pass rate. The actual achievement was 57 percent. The Department reported that various factors have an impact on the pass rate, such as most of the candidates would lack the requisite competencies. It was noted that INDLELA is not a training provider, and it only assessed the candidates when they enrol for trade testing and during trade testing.

2.2.6. Programme 6: Community Education and Training

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

For the 2018/19 financial year, the programme has six (6) targets. For the quarter under review, one oversight report was due for completion, namely; report on CET college sector performance (2017 academic year) which was completed.

 

3. OVERVIEW AND ASSESSMENT OF THE DEPARTMENT’S 2018/19 FIRST QUARTER FINANCIAL PERFORMANCE

3.1. Overview and assessment of the overall budget and expenditure

Table 1: 2018/19 First Quarter budget and expenditure

Programme	Main Appropriation R'000	Q1 Actual expenditure R'000	Expenditure as % of available budget	Q1 projected expenditure	Variance from projected expenditure	% variance from projected expenditure
Administration	432.3	93.6	21.7	103.7	10.1	9.7
Planning, Policy and Strategy	80.2	13.8	17.2	17.6	3.8	21.8
University Education	59 147.1	29 710.6	50.2	30 950.7	1 240.1	4.0
Technical and Vocational Education and Training	10 739.7	2 260.9	21.1	3 009.7	748.8	24.9
Skills Development	262.6	61.3	23.3	63.9	2.7	4.2
Community Education and Training	2 358.8	555.4	23.5	586.5	31.1	5.3
Total	73 020.6	32 695.5	44.8	34 372.1	2 036.6	5.9
Current Payments	9 391.5	2 040.5	21.7	2 189.6	149.1	6.8
Compensation of employees	8 957.0	1 957.0	21.8	2 054.3	97.3	4.7
Goods and Services	434.5	83.5	19.2	135.3	51.8	38.3
Transfers and Subsidies	63 620.5	30 651.7	48.2	32 539.8	1 888.1	5.8
Payments for Capital Assets	8.6	2.0	23.0	2.8	0.8	29.0
Total	73 020.6	32 695.5	44.8	34 732.1	2 036.6	5.9
Direct charge against the National Revenue Fund	16 929.4	4 155.0	24.5	4 232.3	77.3	1.8
National Skills Fund	13 543.5	3 324.0	24.5	3 385.9	61.9	1.8
Sector Education and Training Authorities	3 385.9	831.0	24.5	846.5	15.5	1.8
Grand Total	89 950.0	36 850.5	41.0	38 964.5	2 114.0	5.4

Source: National Treasury, Standing Committee on Appropriations 1st Quarter Expenditure Report 2018/19 Financial Year

The Department received a total allocation of R89.950 billion for the 2018/19 financial year, inclusive of direct charges against the National Revenue Fund. For the quarter under review (1 April to 30 June 2017), the projected expenditure amounted to R34.7 billion excluding direct charges. However, the actual expenditure for the quarter amounted to R33 billion, which was a 44.8 percent expenditure as a percentage of the available budget for the 2018/19 financial year. The Department recorded an under-expenditure amounting to R2.2 billion. This was mainly attributed to delays in the transfer payment of the earmarked grants in Programme 3: University Education and transfer payments to non-profit institutions in Programme 4: Technical and Vocational Education and Training.

The allocation for spending on current payments for the 2018/19 financial year amounts to R9.391 billion. For the quarter under review, the Department’s projected expenditure amounted to R2.2 billion, of which R2.1 billion was the projected expenditure on compensation of employees and R135.3 million for goods and services. The Department recorded lower than projected expenditure amounting to R97.3 million on compensation of employees. This was attributed to vacant posts in Programme 4: TVET, particularly the critical post of the Deputy Director-Genera (DDG) which provision was made, but not filled as projected. Other vacant posts were at TVET Colleges, which were not yet filled as anticipated. There was also a delay in the claims received for CET College lecturers from KwaZulu-Natal and the Western Cape, and other vacant posts in Programme 6 in the Department which also contributed to lower than projected spending.

The allocation for goods and services for 2018/19 amounts to R434.5 million. For the quarter under review, the projected expenditure amounted to R135.3 million and the actual spending was R83.5 million, which represents 19.2 percent of the total available budget for goods and services.  The lower than projected spending of R51.8 million, which represents 38.3 percent variance from projected spending was recorded in the first quarter.  This was due to outstanding invoices from the State Information Technology Agency (SITA) for the Department’s transversal systems (such as BAS and Persal), including outstanding payments to the Department of Justice for the service rendered to the Department by State Attorneys.

The allocation for spending on transfer and subsidies for the 2018/19 financial year amounts to R63.6 billion. For the quarter under review, the Department’s projected expenditure amounted to R32.5 billion, however, the actual was expenditure amounted to R30.7 billion. This resulted in the under expenditure amounting to R1.9 billion.

With regard to direct charges against the National Revenue Fund, the total budget for the year amounts to R16.9 billion, of which R3.4 billion is allocated to the National Skills Fund (NSF) and R13.5 billion is for SETAs. For the quarter under review, the projected expenditure amounted to R4.2 billion and the actual expenditure was R4.2 billion, resulting in lower than projected spending amounting to R77.3 million.

Comparatively, the overall spending rate in this quarter under review, including direct charges was slightly higher than spending in the same quarter of the prior financial year (2017/18). The overall spending rate increased by 3.5 percent from 41.3 percent in the 2017/18 to 44.8 percent in 2018/19.

3.2. Overview and assessment of the programme budget and expenditure for 2018/19 First Quarter

3.2.1. Programme 1: Administration

This programme received an allocation amounting to R432.3 million for 2018/19. The projected expenditure for the first quarter amounted to R103.7 million and the actual spending amounted to R93.6 million, which represents 21.7 percent of the available budget for the year. The programme recorded a lower than projected spending amounting to R10.1 million, which is 9.7 percent variance from projected expenditure.

The lower than projected spending of R10.1 million for the 2018/19 first quarter was caused by the outstanding invoices from the SITA for the Department’s transversal systems.

 

 

3.2.2. Programme 2: Planning, Policy and Strategy

The total allocation for this programme for 2018/19 amounts to R80.2 million. For the quarter under review, the Department projected to spend R17.6 million. The actual expenditure was R13.8 million, recording lower than projected spending amounting to R3.8 million. The programme expenditure for the quarter was in line with the planned spending for the year up to this quarter.

3.2.3. Programme 3: University Education

This programme was allocated R59.1 billion for the 2018/19 financial year. For the quarter under review, the Department projected to spend R30.9 billion. The expenditure at the end of the quarter amounted to R29.7 billion, which was R1.2 billion lower than projected. The lower than projected spending was attributed the delay in the following grants: Clinical Training, Infrastructure and Efficiency; University Capacity Development; New University Establishment Costs; and Historically Disadvantaged Institutions. These transfers were all not processed during the months of May and June 2018 as anticipated. The Department cited that it was awaiting audited reports from universities before it disburses the funds.

The delays in the transfer of payment for Infrastructure and Efficiency Grants to universities are a recurring challenge. National Treasury has advised the Department to put measures in place to fast-track the analysis of the submission by institutions of higher learning so as to facilitate the timeous payment of infrastructure earmarked grants to institutions as planned. 

3.2.4. Programme 4: Technical and Vocational Education and Training

The programme received an allocation of R10.739 billion for the 2018/19 financial year. For the quarter under review, the Department’s projected expenditure was R3 billion and the actual expenditure was R2.260 billion, which represents 21.1 percent spending rate of the available budget for the year. The programme recorded a lower than projected spending amounting to 748.8 million. The lower than projected spending was as a result of delays in the transfer payment of Infrastructure and Efficiency Grant (EIG), which is earmarked for TVET Colleges’ infrastructure refurbishments and maintenance. The EIG is a new allocation for TVET Colleges, and the Department was finalising disbursement criteria of the grant.

3.2.5. Programme 5: Skills Development

The programme received an allocation of R262.6 million in 2018/19 financial year. The programme’s actual expenditure for the quarter was R61.3 million from the projected expenditure of R63.9 million. The programme’s quarterly expenditure was in line with planned spending for the year up to this point.

3.2.6. Programme 6: Community Education and Training

The programme’s allocation for the 2018/19 financial year amounts to R2.358 billion. For the quarter under review, the programme’s expenditure amounted to R555.4 million from the projected expenditure of R586.5 million. The programme recorded a lower than projected spending amounting to R31.1 million, which was mainly due to delayed receipt of claims for the remuneration of CET lecturers from KwaZulu-Natal and the Western Cape, and vacant posts in the Department that were not filled as projected due to difficulties in securing suitable candidates.

4. Committee observations

The Committee having assessed the first quarter performance report 2018/19 of the DHET made the following observations:

4.1.       The Committee noted a recurring challenge with the filling of vacant posts as planned. This was evidenced by lower than projected spending of R97.3 million on compensation of employees for the quarter under review. It was noted that the majority of the posts were in Programme 4: TVET, particularly the critical post of the Deputy Director-General for which provision was made, but not filled as projected. Other vacant posts are at Technical and Vocational Education and Training (TVET) Colleges. The Department reported that the contributing factors to the delays in filling of vacant posts were difficulties in processing the high number of applications received (particularly of the many job advertisements for the TVET and Community Education and Training (CET) College staff) and difficulties in securing suitably qualified candidates for critical posts. The Department further noted that strategies such as using an external service provider to process the high volumes of applications have been put in place to assist in fast tracking the filling of posts.

4.2.       The Committee welcomed the progress made with filling of principals’ posts and Deputy-Principals at TVET Colleges.

4.3.       The Committee was concerned about the recurring underspending on the transfer payments of infrastructure and efficiency grants for universities. For the quarter under review, the Department recorded underspending which amounted to R1.2 billion. During the 2017/18 financial year, National Treasury has requested the Department to explore a more efficient process of administering the university infrastructure grants and to table a more representative payment schedule for the infrastructure grant to avoid repeated deviations from the projected expenditure. However, the Department has not implemented the recommendation of National Treasury. There is a huge demand for infrastructure maintenance and development at all institutions and the delays in transferring the funds to alleviate these challenges and ensure expansion of access and success of students is concerning.

4.4.       The Committee expressed a concern about the under-expenditure to the amount of R31.1 million under Programme 6: CET, which was attributed to the delays in the claims received for CET College lecturers from KwaZulu-Natal and the Western Cape, and other vacant posts in the programme in the Department.

4.5.       The Committee was concerned about the delays in the tabling of the Central Applications Services Bill and the National Student Financial Aid Bill.

4.6.       The Committee expressed a concern pertaining to the number of irregularities (47) detected during the March 2018 examination in the TVET sector.

4.7.       The Committee expressed a concern with regard to the data anomalies in the TVET sector, which contributed to the certification problem and delays by NSFAS to pay the outstanding allowances due to students.

4.8.       The Committee expressed a concern pertaining to the capacity of TVET colleges to manage the Department’s revamped IT examination service system for colleges.

4.9.       The national artisan learner trade test pass rate, which stood at 57 percent against the target of 61 percent was noted as a concern, given the huge demand of artisans to grow the economy.

4.10.     The Committee commended the development of the open learning for technical and vocational skills such as electrical engineering. However, the Committee raised concerns about the practical component of the learning process.

4.11.     The Committee expressed a concern with regard to the underfunding of the CET sector and the realization of the mandate of CET colleges as per legislation, the White Paper for Post-School Education and Training and the National Development Plan. It was noted that the majority of the community learning centres were not offering fit for purpose programmes to equip young people and adults with basic skills to access economic opportunities.

4.12.     The Committee expressed a concern with regard to the delays by the Western Cape CET to elect the Student Representative Council.

 

 

 

5. Recommendations

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

5.1.       The Department should ensure that vacant posts are filled as planned to curb the recurrence of underspending on compensation of employees. Whilst welcoming progress made with the filing of 10 principal posts at TVET Colleges, the Department should prioritise the filling of the two outstanding vacant principal posts.

5.2.       The Department should explore efficient processes of administering the university infrastructure grants and to table a more representative payment schedule for the infrastructure grant to avoid repeated deviations from the projected expenditure. The delays in transferring the payments of infrastructure grants will consequently delay the implementation of projects as processes require proper planning and at times it takes longer. This will further delay submission of reports by universities.

5.3.       The Department should strengthen its monitoring of CET Colleges and fix the systemic challenges to ensure that claims for lecturers are submitted and processed timeously. This will ensure that lecturers are paid on time and underspending due to delays in the receipt of claims is curbed.

5.4.       The Department should expedite the development of the Central Applications Services Bill and the policy to regulate the administration of fee-free education.

5.5.       The Committee welcomed the reduction in the leakage of TVET examination papers experienced, however, urged the Department to ensure that the exam paper leaks are prevented at all costs to maintain the credibility of the TVET college examination system.

5.6.       The Department should explore mechanisms to support ill prepared candidates who come for trade test assessment at INDLELA. This would increase their chances of passing THE artisan learner trade test.

5.7.       The Committee recommends that the Department should ensure that funding bids are submitted to National Treasury for the CET sector to be able to execute its legislative mandate.

5.8.       The Portfolio Committee on Higher Education and Training will confer with the Portfolio Committee on Basic Education on the lack of provision of opportunities for Matric rewrite.

5.9.       The Department should implement consequence management against the Western Cape CET Council for its non-compliance with the CET Act for ensuring that the Student Representative Council is elected.

Report to be considered.