ATC200720: Report of the Select Committee on Education and Technology, Sport, Arts and Culture on the Impact of COVID-19 on the Strategic Plan and Annual Performance Plan of the Department of Basic Education and its Entities in Respect of Budget Vote 17: Higher Education and Training, dated 20 July 2020

NCOP Education and Technology, Sports, Arts and Culture

The Select Committee on Education and Technology, Sport, Arts and Culture (hereinafter referred to as the Committee), having considered the 2020/21 Special Adjustment Budget Vote 17 of the Department of Higher Education and Training (hereinafter referred to as the Department), reports as follows:

1. INTRODUCTION

Subsequent to the World Health Organisation (WHO) declaring the COVID-19 outbreak as a global pandemic, on 21 March 2020, the President of the Republic of South Africa, Mr Cyril Ramaphosa, announced measures to be implemented towards containing the spread of COVID-19. The measures included declaring the COVID-19 pandemic a national disaster, in terms of the Disaster Management Act, 2002 (Act No. 57 of 2002). On 21 April 2020, the President announced an extraordinary COVID-19 budget amounting to R500 billion. The COVID-19 budget is a fiscal support package that includes spending towards COVID-19 response. The President said “the pandemic required an economic response that is equal to scale of disruption it is causing”.

The President stated that R130 billion of this R500 billion budget will come from reprioritisation within the current (2020/21) budget. The relief packages are meant to scale up capacity in the public health system and mitigating the effects of restricted economic activity for households and businesses. The President also announced tax relief measures for the companies, including a 4-month holiday for companies’ skills development levy contributions. On 24 April 2020, the Minister of Finance, Mr T Mboweni, during a media briefing to outline R500 billion Economic Support Package and what it would entail and where the funds would be sourced from. The Minister stated that the skills development levy holiday is expected to provide relief of around R6 billion.

 

For the post-school education and training sector, this meant that the Department and its entities would reprioritise their current funding to respond to the impact of COVID-19. Furthermore, the Sector Education and Training Authorities (SETAs) and the National Skills Fund will lose a four-month skills development levies income due to the holiday.

Section 30 (1) of the Public Finance Management Act, 1999 (Act. No 29 of 1999) as amended, provides that the Minister may table an adjustment budget in the National Assembly as and when necessary. Section 12 of the Money Bills and Related Matters Act, 2009 (Act No. 9 of 2009) as amended, provides that the Minister must table a national adjustments budget as envisaged in section 30 of the Public Finance Management Act. In accordance with the aforementioned legislative provisions, on 24 June 2020, the Minister of Finance introduced the supplementary budget.

The Select Committee on Education and Technology, Sport, Arts and Culture and the Portfolio Committee on Higher Education, Science and Technology considered the 2020/21 Annual Performance Plan (APP) and 20/21 – 2024/25 Strategic Plan of the Department of Higher Education and Training on Thursday, 14 May 2020.   Subsequent to this process the review of its statutory body i.e. the National Students Financial Aid Scheme (NSFAS) was deliberated   on 11 and 20 May 2020. Due to the current COVID-19 Lockdown, all meetings were held virtually via Microsoft TEAMS.

Legally, the Department was only able to present on what was tabled to Parliament in March 2020 (pre-COVID-19) – and the report would have to be adjusted to make provision for the impact of the COVID-19 Lockdown on the Budget of the Department and its Statutory Body (NSFAS). The Department and NSFAS, therefore presented their adjusted budget allocations to the Committee on Wednesday, 15 July 2020.

The purpose of this report is, therefore, to account for work done by the Committee in considering the Special Adjusted Budget Vote 17 of the Department.

1. Those that appeared before the Joint Committees during the adjustments presentations included the following:

1.1.1.   Ministry of Higher Education, Science and Technology

Hon B Manamela: Deputy Minister, Mr B Mzoneli: Chief of Staff Office of the Deputy Minister, Mr B Bingwa: Office of the Minister and Mr S Mamphekgo: Office of the Deputy Minister.

1.1.2. Department of Higher Education and Training (DHET)

Mr G Qonde: Director-General (DG), Mr T Tredoux: Chief Financial Officer (CFO), Dr D Parker: Deputy Director-General (DDG) University Education, Mr Z Mvalo: DDG Skills Development, Dr B Mahlobo: Acting DDG Community Education and Training (CET), Ms A Singh: Acting DDG Technical and Vocational Education and Training (TVET), Ms N Gasa: DDG Planning, Mr F Toefy: Chief Director Strategic Planning, Ms S Ramnarian: Chief Director Communications and Mr R Mgiba: Director Strategic Planning.

 

1.1.3. National Student Financial Aid Scheme (NSFAS)

Dr R Carolissen: Administrator, Ms S Mncwabe: Advisor to the Administrator, Ms S Zungu: Advisor to the Administrator and Ms S Tshiwula: Manager.

 

2. THE IMPLICATIONS OF THE COVID-19 PANDEMIC ON THE MANDATE OF THE DEPARTMENT

Measures put in place by the government to contain the spread of COVID-19, which amongst others, included, declaring the COVID-19 pandemic a national disaster, in terms of the Disaster Management Act, and the national lockdown from 26 March 2020 have adversely impacted the PSET sector. Academic activities at contact institutions (universities, Technical and Vocational Education and Training (TVET) and Community Education and Training (CET) colleges), and skills development interventions programmes funded by the SETAs and the National Skills Fund (NSF) were disrupted. Similarly, the activities of other public institutions within the PSET sector, especially those that require on-site visits had to be halted.

• Institutions experienced loss of tuition, training and research time, especially during the early period of the national lockdown where movement was restricted;
• The extension of the 2020 academic year to 2021, especially for the TVET and the university sectors and the financial implications for the National Student Financial Aid Scheme (NSFAS), to support students for the additional months;
• Delays in the completion of current infrastructure development projects, especially student accommodation, which is a priority area for the Department and universities to alleviate the current shortage of accommodation. This has already caused significant budget overruns at many institutions;
• Delays in the completion of construction of new TVET college campuses and the refurbishments of the dilapidated colleges’ infrastructure. This will result in lower than projected spending on infrastructure and efficiency grants at the institutions.
• Reprioritisation of funding already allocated for specific purposes towards funding infrastructure for multimodal remote learning. This includes the purchasing of laptops and data for staff to work remotely, personal protective equipment and to ensure campus readiness in terms health and safety;
• Reprioritisation of the NSFAS funds to purchase learning devices for students at TVET colleges and universities;
• Impact on international students who reside outside the country and would only be allowed to return to the during lockdown Level 1 due to the current travel restrictions;
• Loss of jobs will impact on the ability of self-funded students to pay tuition and accommodation fees and this will put the financial health of institutions at risk;
• Due to lockdown, universities may find it difficult to generate third stream funding for research and this will impact negatively on their research output for the current academic year;
• Operational instability at TVET colleges due to closure and opening of campuses as a result of increasing positive COVID-19 cases, and the high cost associated with the decontamination of campus facilities;
• Impact on quality of teaching and learning due to a large number of staff in some colleges falling under the category of comorbidities, and therefore cannot be on duty. Resultantly, managing classes is therefore difficult;
• Loss of revenue from income-generating services for the Quality Councils, including the South African Qualifications Authority;
• Loss of income for the SETAs and the National Skills Fund amounting to R8 billion due to the four months’ holiday skills development levies contribution. This will have an adverse impact on the skills training, especially for the youth who are not in education, employment and training; and
• The contracting economy will have a potential decline in the absorption of the PSET graduates in the labour market.

3. ANALYSIS OF THE REVISED BUDGET PER PROGRAMME

The Special Adjustment Budget thus supplements the February 2020 Budget by reallocating resources from programmes or activities that have already been put on hold during the lockdown period, from projects where implementation dates could be moved out to the next financial year or projects and from spending activities that are not critical to the core service delivery requirements of departments. Funds are moved to services and programmes which are critical in responding to the COVID-19 pandemic.

 

 

 

 

Table 1: 2020/21 revised programme allocations

R thousands	2020/21 Main budget	Downward revisions		Reallocations		2020/21 Total net change proposed	2020/21 Total allocation proposed
		Suspension of funds (COVID-19 purposes)	Virements from (COVID-19 purposes)	Allocated to (COVID-19 purposes)	Virements to (COVID-19 purposes)
Administration	491 228	-45 725	-1510	-	1510	-45 725	445 503
Planning, Policy and Strategy	214 476	-16 407	-	-	-	-16 407	198 069
University Education	80 083 350	-5 733 017	-	4 827 404	-	-905 613	79 177 737
Technical and Vocational Education and Training	13 813 565	-911 598	-	172 203	-	-739 395	13 074 170
Skills Development	318 512	-18 371	-	-	-	-18 371	300 141
Community Education and Training	2 552 862	-8 882	-	-	-	-8 882	2 513 980
Direct charges against the National  Revenue Fund	19 412 896	-8 122 380	-	-	-	-8 122 380	11 290 516
Total	116 856 889	-14 856 380	-1510	-	1510	-9 856 773	107 000 116

Source: National Treasury 2020

 

The Department’s initial allocation for the 2020/21 financial year as tabled in February 2020 amounted to R116.85 billion. The budget was made up of R97.44 billion from voted funds (Department’s programme budget) and R19.41 billion from Direct Charges against the National Revenue Fund, for the Sector Education and Training Authorities (SETAs) and the National Skills Fund (NSF). Due to the reprioritisation of the current budget towards responding to COVID-19, the budget is revised downwards, resulting in the reduction in baseline allocation amounting to R9.85 billion. The total budget reduction comprises of R1.73 billion from the voted funds and R8.12 billion from the Direct Charges against the National Revenue Fund. Therefore, the Department’s 2020/21 initial allocation decreases from R116.85 billion to R107.00 billion. This represents an overall reduction of 8.4 per cent. Voted funds decreases from R97.44 billion to R95.70 billion and Direct charges decreases from R19.41 billion to R11.29 billion. Of the Department’s total reduction of R1.73 billion, R157.31 million was taken from compensation of employees, R159.39 million from goods and services and R1.41 billion from transfers and subsidies.

 

Table 2: 2020/21 revised allocations per economic classification

R thousands	2020/21 Main budget	Downward revisions		Reallocations		2020/21 Total net change proposed	2020/21 Total allocation proposed
		Suspension of funds (COVID-19 purposes)	Virements from (COVID-19 purposes)	Allocated to (COVID-19 purposes)	Virements to (COVID-19 purposes)
Economic classifications
Current payments	10 989 443	-316 704	-1510		1510	-316 704	10 672 739
Compensation of employees	10 281 060	-157 310	-	-	-	-157 310	10 123 750
Goods and Services	708 383	-159 394	-1 510	-	1 510	-159 394	548 989
Transfers and subsidies	105 851 184	-14 539 676	-	4 999 607	-	-9 540 069	96 311 115
Departmental agencies and accounts	54 799 705	-10 632 473	-	2 500 000	-	-8 132 473	46 667 232
Higher education institutions	44 796 106	-3 210 000	-	2 327 404	-	-882 596	43 913 510
Foreign governments and international organisations	4 112	-		-	-	-	4112
Non-profit institutions	6 251 261	-697 203	-	172 203	-	-525 000	5 726 261
Payment for capital assets	16 262	-	-	-	-	-	16 262
Machinery and equipment	15 862	-	-	-	-	-	15 862
Software and other tangible assets	400	-	-	-	-	-	400
Payments for financial assets	-	-	-	-	-	-	-
Total	116 856 889	-14 856 380	-1510	4 999 607	1510	-9 856 773	107 000 116

Source: National Treasury 2020

 

The initial allocation for current payments amounted to R10.98 billion, of which R10.28 billion was for compensation of employees and R708.38 million for goods and services. The allocation is reduced by R316.70 million to R10.66 billion. Allocations for compensation of employees and goods and services is reduced by R157.31 million and R159.39 million, respectively. Initial allocation for spending on transfers and subsidies in 2020/21 as per the February 2020 budget, amounted to R105.85 billion. This constituted 90.58 per cent of the Department’s total budget, including Direct Charges against the National Revenue Fund. The initial allocation of R105.85 million is reduced by R9.54 billion to R96.31 billion. Reductions are effected as follows: R8.13 billion for departmental agencies and accounts, R882.59 million for higher education institutions and R525.00 million for non-profit organisations. The largest reduction in terms of transfer and subsidies amounting to R8.12 billion, which represents 85.1 per cent of the total reduction is for the SETAs and the NSF. Original allocation for payments for capital assets amounting to R16.26 million is retained.

 

3.1. Overview and analysis of the 2020/21 revised budget per programme

The Department’s budget, excluding Direct Charges funds its six programmes.

 

3.1.1. Programme 1: Administration

The programme’s initial appropriation amounted to R491.22 million, which was adjusted downward by R45.72 million. Therefore, the adjusted appropriation amounts to R445.50 million. The reductions amounting to R33.59 million and R12.13 million are effected in compensation of employees and goods and services, respectively. Virements amounting to R1.51 million were effected in the programme towards reallocation for COVID-19 related expenditure.

 

3.1.2. Programme 2: Planning, Policy and Strategy

The programme’s initial appropriation amounted to R214.47 million. The allocation was reduced by R16.40 million to R198.06 million. The reduction amounting to R13.48 million, R1.70 million and R1.21 million are effected in compensation of employees, goods and services and transfers and subsidies, respectively. In terms of transfers and subsidies, the reduction amounting to R1.21 million is effected in the South African Qualifications Authority (SAQA) baseline funding. There were no virements and reallocation of funds in this programme.

 

3.1.3. Programme 3: University Education

The programme’s initial budget amounted to R80.08 billion, which represented 82.18 per cent of the Department’s total voted funds. Reductions amounting to R905.61 million are effected, reducing the initial allocation to R79.17 billion. Reductions are effected as follows: R14.47 million in compensation of employees, R1.59 million in goods and services and R889.54 million in transfers and subsidies. Included in the R889.54 million reductions in transfers and subsidies, is the baseline reductions amounting to R1.42 million from the Council on Higher Education (CHE) and R5.52 million for the NSFAS.

An amount of R4.82 billion has been suspended and reallocated towards COVID-19 purposes. Of this, R2.50 billion is from the National Student Financial Aid Scheme subsidy towards purchasing of student learning devices; R2.11 billion from University subsidies meant for the planned new five-year Historically Disadvantaged Institutions Development Programme and the implementation of phase 7 of the new Generation of Academics Programme will be delayed to 2021/22. The funds will be used by institutions to procure personal protective equipment (PPE) and several universities will be providing laptops and data to students for online learning. An amount of R210.00 million from universities infrastructure and efficiency grant towards providing an infrastructure to support online learning. Consequently, new university infrastructure projects will be delayed, but institutions will honour existing contractual agreements and spend on essential maintenance.

 

3.1.4. Programme 4: Technical and Vocational Education and Training

The programme received an allocation amounting to R13.81 billion during the initial appropriation in February 2020. The initial appropriation is adjusted downward by R739.39 million to R13.074 billion. Reductions are effected as follows: R73.68 million in compensation of employees. This will result in the suspension of filling of vacancies; R140.71 million in goods and services and R525.00 million in transfers and subsidies. Of this, R370.00 million is from the Infrastructure and Efficiency Grant: Subsidies for TVET colleges, R5.00 million from Operationalisation of new TVET college campuses: Subsidies and R150.00 million from TVET colleges: Subsidies. The budget cut in terms of TVET college subsidies will impact on the 2021 intake of the Centres of Specialisation Programme. The intake will be deferred to the 2022 academic year. The Institutions are procuring the required personal protective equipment. Some TVETs will be providing devices and data to students for online learning and catch-up programmes. An amount of R172.20 million is reallocated towards COVID-19 purposes.

 

3.1.5. Programme 5: Skills Development

The programme’s initial appropriation amounted to R318.51 million. The allocation was reduced by R18.37 million to R300.14 million. The reduction amounting to R13.93 million and R2.51 million are effected in compensation of employees and goods and services, respectively. There were no virements and reallocation of funds in this programme.

 

3.1.6. Programme 6: Community Education and Training

The programme’s initial appropriation amounted to R2.52 billion. The allocation was reduced by R8.88 million to R2.51 billion. The reduction amounting to R8.13 million and R744 thousands are effected in compensation of employees and goods and services, respectively. There were no virements and reallocation of funds in this programme.

 

4. NATIONAL STUDENT FINANCIAL AID SCHEME

The NSFAS’s initial total revenue amounted to R38.45 billion. The budget was made up of R1.4 billion in entity revenue (R47.3 million from administration fees, R1.3 billion in interests and R32 million recovered funds for related costs), R37 billion (i.e. R34.7 billion in DHET Loans and Bursaries; R299.1 million from the DHET Administration Grant, R1.5 billion from other Government units, R332.8 million from Department agencies and accounts and R70.7 million from Higher Education Institutions).

The initial DHET – Admin funding allocation to programme 1: Administration amounting to R275.44 million decreases by R5.52 million. Despite this reduction, the NSFAS reported additional funding approved by the Minister of Higher Education, Science and Innovation as follows: additional grant for the Administration extension to August 2020 amounting to R7.8 million, additional grant for cost associated with disbursement to TVET colleges (R10.3m), Contact centre consultants (R10.8 million), forensic investigation (R5.0 million), Court Road renovation (R10.0 million). The total revenue of the NSFAS increased to R38.50 billion.

 

An amount of R2.50 billion is suspended and reallocated towards purchasing of student learning devices. However, NSFAS objected to the onerous conditions place on it by National Treasury. The NSFAS indicated that the R2.50 billion suspension of student grant funds and the earmarking of that for student devices cannot be implemented because the full original student grant funds is required for the normal 2020 academic year disbursements.

 

5. COMMITTEE OBSERVATIONS AND DELIBERATIONS

 

5.1. Department of Higher Education and Training

The Committee raised the following with the Department of Higher Education and Training (DHET), in respect of the proposed allocations and possible adjustments in respect of Budget Vote 17: Higher Education and Training:

• The Committee noted with concern that at least R1 billion has been taken from the University and TVET Infrastructure and Efficiency Grant which was allocated for the construction of new universities and sites of TVET colleges. Members further queried the future plans to recover these funds to complete the intended projects.
• The Committee also noted with serious concern the fact that the Department did not receive additional funding to respond to the impact of COVID-19.
• The Committee noted with serious concern the impact of SETAs and the NSF budget cuts on the production of artisans. Members queried the Department’s intentions to achieve the target of 93 000 artisans during this lockdown into account.
• The Committee further noted the budget cut amounting to R739.39 million in programme 4: TVET of which the great concern was the cut in Infrastructure and Efficiency Development Grant which is meant to address the backlog in maintenance and refurbishment of the TVET infrastructure.
• The Committee was also concerned about the issue of student accommodation which has always been a huge problem in both universities and TVET Colleges. The Committee enquired about the plans that the Department has to ensure that it recovers over the medium term.
• The Committee noted that the 2020 academic year would spill into the first quarter of 2021 and the financial implications for the universities and TVET colleges in terms of payment of fees should be dealt with.
• The Committee noted the process by the Department to comprehensively assess the impact of the budget cuts on the approved Strategic and the Annual Performance Plans (2020/21) was underway and encouraged the Department to come back with updated information.
• The Committee noted that the current certification backlog which was of grave concern. An enquiry was therefore made on the status of the ‘day zero’ of certification backlog and plans that the Department has to process the backlog in the coming months and reach this target during and beyond this Covid-19 pandemic.
• The Committee also noted with concern the loss of curriculum development for TVET Colleges for the year. Members indicated that the Nated courses N4, N5 and N6 were largely outdated and it was previously alluded that these curricula were being upgraded. Therefore, Members worried about the impact that the Convid-19 pandemic would have on curriculum development process.
• The Committee commended the Department for appointing people with skills in their positions, especially women.
• The Committee stressed the importance of women empowerment and access to education to promote women leadership. Members also emphasized that the Department needed to ensure that they give preference to young women especially when it comes to learnership in order to develop them.

 

5.2. National Student Financial Aid Scheme

• The Committee noted with concern the adjusted budget amount of R38.5 billion for NSFAS, which in essence indicated an increase of R100 million. However, according to the Adjustment Appropriation Bill, the amount indicated a budget cut of more than R5 million.
• The Committee also noted that NSFAS has objected to the suspension of a reallocation of funds for student devices and that the matter was currently with the National Treasury.
• The Committee noted the tender process that was currently underway at NSFAS. A request was made for the Entity to keep the Committee on the loop regarding the process and report the final report on this. Members also queried whether the wallet system that is currently being used by NSFAS was still going to be used when the new tender system was approved.
• The Committee noted with concern the human resources issues that NSFAS had and commended Entity for taking care of these issues.

 

6. RECOMMENDATIONS

The Committee, having considered and deliberated on the Special Adjustment Budget of the Department of Higher Education and Training recommends that the Minister of Higher Education, Science and Innovation consider the following:

 

 

 

6.1. Department of Higher Education and Training

6.1.1.   The Department should develop a framework to guide all the institutions on fees for the extended academic year.

6.1.2.   The Department should ensure that the budget cut in goods and services in programme 4: TVET does not derail progress in terms of addressing the certification backlog and the plans to reach day zero backlog.

6.1.3.   The Minister should undertake further engagements with Treasury with respect to the need for the Department to be allocated additional funding in response to the COVID-19 pandemic in the PSET system.

1. The Department and entities should table the revised Strategic Plans and Annual Performance Plans 2020/21.

 

6.2. National Student Financial Aid Scheme

6.2.1.   The Minister should make sure that they fast track the employment of capable Chief Executive Officer (CEO) and the Chief Financial Officer (CFO) of NSFAS in order to provide the orderly transition back to normal operations at NSFAS without losing the gains that had been made during the period of administration.

6.2.2.  The NSFAS should make sure that it deals with all the fraud syndicates that are still operating in NSFAS.

6.2.3.  The NSFAS should continue to minimize large gatherings of applicants by using electronic communication channels and they should continue with such strategy even after the lockdown if it bears positive result.

 

1. Conclusion

Having satisfied itself in its engagement with the Department of Higher Education and Training and the National Students Financial Aid Scheme on their Adjustments Budgets in respect of Budget Vote 17: Higher Education, the Select Committee on Education and Technology, Sport, Arts and Culture recommends that the adjustments budget be adopted and that the House approves the proposed adjustments budget in respect of Budget Vote 17: Higher Education and Training.