ATC191205: Report of the Portfolio Committee on Higher Education, Science and Technology on the 2019/20 First Quarter Financial and Service Delivery Performance Report of the Department of Higher Education and Training, dated 3 December 2019

Higher Education, Science and Technology

REPORT OF THE PORTFOLIO COMMITTEE ON HIGHER EDUCATION, SCIENCE AND TECHNOLOGY ON THE 2019/20 FIRST QUARTER FINANCIAL AND SERVICE DELIVERY PERFORMANCE REPORT OF THE DEPARTMENT OF HIGHER EDUCATION AND TRAINING, DATED 3 DECEMBER 2019

 

The Portfolio Committee on Higher Education, Science and Technology (hereinafter referred to as the Committee), having considered the 2019/20 First Quarter financial and non-financial performance report of the Department of Higher Education and Training (hereinafter referred to as the Department), reports as follows:

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) determines that the National Assembly (NA), through its committees, must annually assess the performance of each national department in relation to the expenditure report of said department published by the National Treasury in terms of section 32 of the PFMA.

The Portfolio Committee performs an oversight function over the Department and it is responsible for closely monitoring the progress made with regard to 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 its preparation for the annual submission of the budgetary review and recommendation report (BRRR) as determined 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, the Committee considered the 2019/20 first quarter performance report of the Department on 15 October 2019. The 2019/20 first quarter covers the period between 01 April to 30 June 2019.

2. OVERVIEW AND ASSESSMENT OF THE DEPARTMENT’S 2019/20 FIRST QUARTER SERVICE DELIVERY PERFORMANCE, 01 APRIL TO 30 JUNE 2019

For the 2019/20 financial year, the Annual Performance Plan of the Department has a total of 90 targets, of which 61 (67.8%) are direct outputs of the Department and 29 (32.2%) are system targets relating to the performance of the entire Post-School Education and Training (PSET) system. For the quarter under review, the Department had 12 planned targets shared amongst the four budget programmes: 2: Planning, Policy and Strategy, 4: Technical and Vocational Education and Training, 5: Skills Development and 6: Community Education and Training. Of the 12 targets, six (50%) were achieved as planned and six (50%) were not 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. For the 2019/20 financial year, the Programme has seven planned outputs. For this Quarter under review, there were no planned outputs.

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. For the 2019/20 financial year, the Programme has 10 planned outputs. For the period under review, the programme had one planned output. The Draft Policy Framework on Gender-Based Violence was gazetted for public comments on 2 May 2019.

2.2.3. Programme 3: University Education

The aim 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 2019/20 financial year, the Programme has a total of 37 predetermined outputs, of which 21 are direct outputs and 16 system outputs. For the quarter under review, there were no planned outputs.

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. For the 2019/20 financial year, the Programme has a total of 21 predetermined outputs, of which 12 (57.14%) are direct outputs and nine (42.86%) are system outputs. For the period under review, the Programme had five planned outputs, of which two (40%) were achieved and three (60) were not achieved as planned. The target to have 65 per cent of TVET colleges compliant to approved financial governance standards was exceeded by 4 per cent and the target to issue certificates to qualifying candidates three months following publication of results period of three months was achieved as planned. 

Underperformance was recorded in the following areas: 40 percent (R593.600 million) of TVET college maintenance expenditure achieved in terms of approved infrastructure maintenance plans was not achieved as planned. The actual achievement was 2.7 per cent (R41.543 million), the targets to have 100 per cent of public TVET examination centres conducting the national examination and assessments in compliance with national policy and a quarterly report on the reduction of certification backlog were not achieved as planned.

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 11 predetermined outputs, of which nine are direct deliverables and two system deliverables. For the period under review, the programme had five planned outputs, of which two (40%) were achieved and three (60) were not achieved as planned. The average lead time of 60 days from trade test application received until trade test is conducted was exceeded by 23 days and one Sector Education and Monitoring Report was produced.

Underperformance was recorded in the following areas: percentage (65%) of national artisan learners trade test pass rate, including INDLELA (9% below the target); 5 000 new artisan learners registered (2 801 below the target) and 2 500 new artisan learners qualified per annum (1 408 below the target).

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 2019/20 financial year, the Programme has four predetermined outputs, of which two are direct outputs and two system outputs. For the Quarter under review, the Programme had one target, which was achieved as planned. A Monitoring and Evaluation Report on the CET college sector performance for the 2018/19 financial year was developed and approved by the Director-General by 30 June 2019.

3. OVERVIEW AND ASSESSMENT OF THE DEPARTMENT’S 2019/20 FIRST QUARTER FINANCIAL PERFORMANCE

3.1. Overview and assessment of the overall budget and expenditure

Table 1: 2019/20 First Quarter budget and expenditure summary

Programme

 

Available budget

 

 

 R'000

Q1 Actual expenditure

 

 

R'000

Expenditure as % of available budget

Q1 projected expenditure

 

R’000

Variance from projected expenditure

R’000

% variance from projected expenditure

 

1: Administration

460.4

97. 8

21.3%

113.1

15.3

13.5%

2: Planning, Policy and Strategy

90.8

 

15.9

17.6%

21.1

5.1

24.4%

3: University Education

73,409.9

 

37,385.4

50.9%

37,863.6

478.2

1.3%

4: Technical and Vocational Education and Training

12,721.8

 

 

2,829.3

22.2%

2,857.1

27.8

1.0%

5: Skills Development

282.4

 

67.5

23.9%

69.9

2.4

3.4%

6: Community Education and Training

2,532.8

 

 

599.9

23.7%

622.6

22.7

3.6%

Sub-total

89,498.2

40,995.9

45.8%

41,547.3

551.4

1.3%

Direct charges

SETAs

National Skills Fund

 

18,758.5

15,006.8

3,751.7

 

 

4,448.5

3,558.8

889.7

 

23.7%

23.7%

23.7%

 

4,689.6

3,751.7

937.9

 

 

241.1

192.9

48.2

 

 

5.1%

5.1%

1.7%

 

 

Total

108,256.7

45,444.4

42.0%

46,237.0

792.3

1.7

Source: National Treasury, Standing Committee on Appropriations 1st Quarter Expenditure Report 2019/20 Financial Year

For the 2019/20 financial year, the Department received a total allocation of R108.157 billion, inclusive of direct charges against the National Revenue Fund for the Sector Education and Training and Authorities (SETAs) and the National Skills Fund (NSF). For the quarter under review (1 April to 30 June 2019), the Department’s projected expenditure amounted to R46.237 billion including the direct charge. The actual expenditure at the end of the first quarter amounted to R45.444 billion, with lower than projected spending of R793 million, which constitute 1.7 per cent as a percentage of the available quarterly budget for the 2019/20. 

For the quarter under review, the Department’s projected expenditure on current payments amounted R2.338 billion, of which R2.183 billion was for compensation of employee costs and R155 million was for goods and services. Expenditure on economic classification at the end of the quarter amounted to R2.254 billion, with lower than projected spending amounting to R83.6 million. Expenditure on compensation of employees for the first quarter amounted to R2.183 billion, which was 22.3 per cent as a percentage of the available budget for the 2019/20 financial year. Expenditure on goods and services amounted to R100.5 million. Underspending on compensation of employees and goods and services amounted to R29.7 million and R54 million respectively.

With regard to transfers and subsidies, the total allocation for the 2019/20 financial year amounted to R79.498 billion, with the projected expenditure for the first quarter amounting to R39.205 billion. Actual expenditure at the end of the quarter amounted to R38.741 billion, recording an under expenditure amounting to R463.7 million. The lower than projected spending was mainly attributed to delayed earmarked transfers to universities due to cash flow projections and due to new reporting requirements introduced for the first time this financial year; projections of skills levies which exceeded the actual payments, compensation of employees due to unfilled vacancies and goods and services as well as equipment due to outstanding invoices.

Comparatively, the overall spending rate during this quarter under review was higher than spending in the same quarter of the prior financial year (2018/19). The overall spending rate increased marginally by 1 per cent from 41.0 per cent in the 2018/19 to 42.0 per cent in 2019/20.

3.2. Overview and assessment of the programme budget and expenditure for 2017/18 First Quarter

3.2.1. Programme 1: Administration

For the 2019/20 financial year, the Programme’s available budget amounts to R460.4 million and the projected expenditure for the first quarter amounted to R113.1 million. The actual expenditure at the end of the first quarter amounted to R97.9 million, recording a lower than projected spending amounting to R15.3 million. The lower than projected spending was attributed to outstanding invoices for various goods and services.

Comparatively, the spending rate in this quarter under review is slightly slower than spending in the same quarter of the prior financial year (2018/19). The spending rate decreased by 0.4 per cent from 21.7 per cent in the first quarter of 2018/19 to 21.3 percent in 2019/20 first quarter.

3.2.2. Programme 2: Planning, Policy and Strategy

This Programme received an allocation of R90.8 million for the 2019/20 financial year. For the quarter under review, the projected expenditure amounted to R21.1 million and the actual expenditure amounted to R15.9 million. This represents a spending rate of 17.6 per cent as a percentage of the available budget for the year. The Programme recorded lower than projected spending amounting to R5.1 million. Lower than the projected expenditure by the Programme was mainly due to the post of the Deputy Director-General and other funded vacant posts that could not be filled as anticipated. Comparatively, the spending rate in this quarter under review was 0.4 per cent higher from the spending rate of 17.2 per cent in the same quarter of the prior financial year (2018/19).

3.2.3. Programme 3: University Education

The Programme’s total budget for 2019/20 amounts to R73.409 billion, and the projected expenditure for the first quarter amounted to R37.864 billion. The actual expenditure at the end of the quarter amounted to R37.385 billion, which represents 50.9 per cent as a percentage of the available budget for the year. The Programme recorded lower than projected spending amounting to R478.2 million, which was attributed to delays in the transfer payments of the infrastructure and other earmarked grants to higher education institutions. National Treasury reported that the Department was awaiting audited reports from the universities before it disburses the funds. It was expected that payments for Clinical Training, Infrastructure and Efficiency, and block grants will be processed during the months of July and August 2019. Comparatively, the spending rate in this quarter under review was 0.7 per cent higher from the spending rate of 50.2 per cent in the same quarter of the prior financial year (2018/19).

3.2.4. Programme 4: Technical and Vocational Education and Training

For the 2019/20 financial year, the programme’s available budget amounted to R12.722 billion and the projected expenditure for the first quarter amounted to R2.857 billion. The actual expenditure at the end of the first quarter amounted to R2.829 billion, with a lower than projected spending amounting to R27.8 million. The lower than projected spending was attributed mainly to claims for TVET colleges’ officials, markers and moderators which were not received on time. Comparatively, the spending rate in this quarter under review increased by 1.1 percent from the 21.1 per cent spending rate in the same quarter of the prior financial year (2018/19).

3.2.5. Programme 5: Skills Development

The Skills Development Programme’s available budget for 2019/20 amounts to R282.4 million, with the projected spending for the quarter amounting to R69.9 million. The actual expenditure at the end of quarter amounted to R67.5 million, with lower than projected spending amounting to R2.4 million. The programme’s quarterly expenditure was in line with planned spending.

 

3.2.6. Programme 6: Community Education and Training

For the 2019/29 financial year, the Programme’s available budget amounts to R2.533 billion. The projected expenditure for the quarter for the first quarter amounted to R622.8 million. The actual expenditure at the end of the first quarter amounted to R599.9 million with lower than projected spending amounting to R22.7 million. Lower than projected spending was mainly attributed to the delayed receipt of claims for the remuneration of Community Education and Training (CET) College officials, markers, examiners and moderators, and vacant posts in the department that could not be filled as projected due to difficulties in securing suitable candidates.

3.2.7. Concluding remarks on the 2019/20 First Quarter financial and service delivery performance

For the 2019/20 first quarter, the Department was able to spend 42.0 per cent of the total allocated budget amounting to R108.257 billion for the financial year, including direct charges. For the quarter under review, the Department’s projected R46.237 billion. However, actual spending was lower than projected by R792.5 million. The bulk of lower than projected spending amounting to R478.2 million was recorded in Programme 3: University Education, followed by R27.8 million in Technical and Vocational Education and Training, R22.7 million in Community Education and Training and R15.3 million and R2.4 million in Administration and Skills Development programmes respectively.  The overall spending rate increased marginally by 1 per cent from 41.0 per cent in the prior year (2018/19) to 42.0 per cent in 2019/20. The Department achieved 50 per cent of the targets planned for the first quarter.

4. COMMITTEE OBSERVATIONS

The Committee having assessed the first quarter performance report 2019/20 of the DHET made the following observations and key findings:

4.1.       The Committee was concerned about the underperformance of the Department, especially in programmes 4: Technical and Vocational Education and Training and 5: Skills Development. Both programmes achieved only 40 per cent of the predestined targets.

4.2.       The Department continually experiences delays with the transfer of infrastructure and other earmarked grants to higher education institutions.

4.3.       The Committee was concerned about the slow spending on TVET college Conditional Infrastructure Efficiency Grants, where the Department achieved 2.79 per cent (R41.543 million) against the target of 40 per cent (R593.600 million), despite the need to address the maintenance backlog in the sector.

 5. RECOMMENDATIONS

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

5.1.       The Department should put mechanisms in place to address underperformance in the Technical and Vocational Education and Training and Skills Development.

5.2.       The Department should put mechanisms in place to address the delays in the transfer of infrastructure and other earmarked grants and ensure timeous allocation of the funds to institutions of higher learning.

5.3.       The Department should capacitate TVET colleges to ensure that information required for processing of funding applications for maintenance grants is relevant. Furthermore, the Department should ensure that all colleges comply with the conditions to receive infrastructure maintenance grants.

5.4     The Department should submit its responses to the Committee recommendations on a quarterly basis

Report to be considered.

 

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