ATC210413: Report of the Portfolio Committee on Higher Education, Science and Innovation on the 2022/23 Third Quarter Expenditure and Non-Financial Performance Report Of The Department Of Higher Education And Training, 15 March 2023

Higher Education, Science and Innovation

Report of the Portfolio Committee on Higher Education, Science and Innovation on the 2022/23 Third Quarter Expenditure and Non-Financial Performance Report Of The Department Of Higher Education And Training, 15 March 2023

The Portfolio Committee on Higher Education, Science and Innovation (“the Committee”), having considered the 2022/23 Third Quarter performance report of the Department of Higher Education and Training (“the Department”), reports as follows:

INTRODUCTION

Section 40 (1) (f) of the Public Finance Management Act (PFMA), 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 the said department published by the National Treasury in terms of section 32 of the PFMA.

The Committee conducts in-year monitoring and assessment of the service delivery and financial performance of the Department towards achieving the performance indicators and targets as set out in the Annual Performance Plan. 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).

The Committee considered the 2022/23 Third-Quarter expenditure performance report of the Department on 15 February 2023.

OVERVIEW AND ASSESSMENT OF THE DEPARTMENT’S QUARTERLY EXPENDITURE AND PERFORMANCE

2.1. 2022/23 THIRD-QUARTER PERFORMANCE

Table 1: Budget allocation and expenditure for the Third-Quarter of the 2022/23 financial year

R million	Main Appropriation	Adjusted Budget	Q3 Actual expenditure	Expenditure as % of Available Budget	Q3 Projected expenditure	Variance from projected expenditure	% Variance from projected expenditure
Programme
Administration	493,7	492,0	324,2	65,9%	347,9	23,7	6,8%
Planning, Policy and Strategy	4 912,9	4 695,9	2 417,5	51,5%	553,3	-1 864,2	-336,9%
University Education	88 581,7	88 839,9	87 218,8	98,2%	88 483,2	1 264,4	1,4%
Technical & Vocational Education & Training	12 623,1	12 725,2	8 814,5	69,3%	8 929,9	115,4	1,3%
Skills Development	421,6	407,0	314,8	77,3%	221,6	-93,2	-42,1%
Community Education & Training	2 481,9	2 577,7	1 970,2	76,4%	1 925,6	-44,6	-2,3%
Sub-total	109 514,9	109 737,6	101 060,2	92,1%	100 461,5	-598,7	-0,6%

Direct Charges: SETAs	16 495,5	16 990,5	12 230,4	72,0%	12 269,6	39,2	0,3%
Direct Charges: NSF	4 123,9	4 247,6	3 057,6	72,0%	3 067,4	9,8	0,3%
Sub-total	20 619,3	21 238,1	15 288,0	72,0%	15 337,0	49,0	0,3%

Total	130 134,2	130 975,8	116 348,2	88,8%	115 798,5	-549,8	-0,5%

Source: National Treasury, 2023

The Department’s adjusted budget for the 2022/23 financial year, amounted to R130,134 billion, which is inclusive of R109,514 billion of voted funds and R20,619 billion of direct charges against the National Revenue Fund. The budget was adjusted to R130,975 billion during the 2022 Adjustment Budget. The projected expenditure for the 2022/23 Third-Quarter amounted to R115,798 billion, comprising R100,451 billion of voted funds and R15,337 billion of direct charges. At the end of the 2022/23 Third-Quarter, the Department had spent R116,348 billion, which comprised R101,060 billion of voted funds and R15,288 billion of direct charges against the National Revenue Fund. Excluding the direct charges, the Department had recorded higher than the projected spending of R598,7 million or 0.6 per cent. The higher than projected spending was attributed to transfers of infrastructure and efficiency grants to universities and TVET colleges, which were brought forward to Quarter 3 from Quarter 4.

In terms of spending on the Compensation of Employees, the Department had spent R6,74 million, against the quarterly projected expenditure amounting to R7,565 billion against the projected expenditure of R7,690 billion. The underspending on the Compensation of Employees for the Quarter amounted to R125,2 million or 1.6 per cent. An amount of R353,9 million was spent on goods and services, recording lower than the projected spending amounting to R62,8 million or 15.1 per cent against the quarterly projected expenditure of R416,7 million.

Expenditure on transfers and subsidies amounted to R93,133 billion against the budget of R92,345 billion, recording higher than projected quarterly expenditure of R788,3 million or -0.9 per cent. Spending on payments for capital assets amounted to R7,1 million against the projected expenditure of R8,6 million, recording a lower than the projected spending amounting to R1,5 million or 17.0 per cent.

2.2. Overview and assessment 2022/23 Third-Quarter service delivery performance

For the 2022/23 Third-Quarter, the Department had 47 targets. The targets were shared among the six budget programmes, namely, Administration, Planning, Policy and Strategy; University Education, Technical and Vocational Education and Training (TVET), Skills Development and Community Education and Training (CET). The Department achieved 21 targets or 44.7 per cent of the 47 targets.

(i) Programme 1: Administration

The programme provides strategic leadership, management and support services to the Department. The programme four targets and achieved one (1) or 25 per cent of the targets

Targets not achieved include:

Percentage (100%) of valid invoices received from creditors paid within 30 days and actual achievement was 99.56 per cent. The Department cited the omission of emailed invoices for processing as the reason for not achieving the target.
Percentage (80%) of disciplinary cases resolved within 90 days per annum, actual achievement was 77 per cent. It was noted that Gauteng, Free State and Northern Cape regions did not finalise cases within 90 days; and
Percentage (98%) of network connectivity uptime per annum, actual achievement was 91.66 per cent. The Department ascribed the partial achievement to the rolling blackouts due to ESKOM load shedding that affected sites without generators at the Regional Offices, including the power cuts by the City of Tshwane at DINAYE House.

At the end of the 2022/23 Third-Quarter, the programme had spent R324,2 million, recording lower than projected spending amounting to R23,6 million or 6.8 per cent. The lower than projected spending was under compensation of employees and ascribed to vacant posts that were not filled as projected due to the length of time required to sift through the high number of applications received, and under goods and services as invoices for travel and subsistence were received later than expected for processing.

(ii) Programme 2: Planning, Policy and Strategy

The programme provides strategic direction in the development, implementation and monitoring of departmental policies and in the human resource development strategy for South Africa. The programme had three targets and achieved 100 per cent of the planned targets for the Third-Quarter.

The programme had spent R2,417 billion, against the quarterly projected expenditure of R553,3 million, recording higher than projected spending amounting to R1,8 billion or 337 per cent. The higher than projected spending was ascribed to the earlier than expected approval by the Minister for the Department to release the infrastructure and efficiency funds to universities and TVET to institutions which met the criteria (submission of their procurement strategy, implementation plan and institutional capacity assessment).

(iii) Programme 3: University Education

The programme develops and coordinates policy and regulatory frameworks for an effective and efficient university education system and to provide financial and other support to universities, the National Student Financial Aid Scheme and national higher education institutions.

For the Quarter under review, the programme had 18 targets and achieved 11 or 61 per cent of the targets.

Targets that were not achieved include:

A Fee Regulation Framework submitted to the Minister for approval by 31 December 2022. It was reported that a Fee Regulation Framework was not submitted to the Minister for approval as planned. The Department further noted that the Minister had approved the proposed CPI increase for the 2023 academic year to a maximum of 5.1 per cent for tuition fees and CPI+2 to a maximum of 7.1 per cent for accommodation fees on 13 December 2022.
Student funding policy submitted to the Minister for approval by 30 October 2022. The Student funding policy was not submitted to the Minister for approval as planned, and it was reported that the Cabinet required that more work be done on the draft policy and for the draft to be consulted on before returning to the Cabinet for approval for implementation.
Number (1 098 000) of students’ enrolments at public universities annually, (actual achievement was 1 068 046); number (14 750) of graduates in engineering annually, (actual achievement was 12 605); number (11 0001) of graduates in natural and physical sciences annually, (actual achievement was 10 608); number (10 000) of human health science annually, (actual achievement was 9 558) and number (14 500) of masters graduates annually (actual achievement was 13 796). The underachievement in these targets was attributed to the impact of the COVID-19 pandemic on university graduations.

The Programme had spent R87,218 billion at the end of the 2022/23 Third-Quarter, against the projected quarterly expenditure of R88,483 billion. The lower than projected spending amounted to R1,264 billion or 1.4 per cent. The lower than projected expenditure was attributed to the delays in the transfer payments to higher education institutions for the earmarked grants. These grants could not be processed as initially projected as the required progress reports were not timeously received. The transfer to the National Student Financial Aid Scheme (NSFAS) for operations was lower than projected by R54 million. this amount was shifted to NSFAS in 2022 Adjustment Budget and will be made in the Fourth-Quarter.

(iv) 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 had 15 targets and achieved three or 20 per cent of the planned targets

Targets not achieved include, amongst others:

Number (580 849) of students enrolled at TVET colleges annually, (actual achievement was 565 088). The Department reported that colleges were still struggling to recover from the COVID-19 impact and a decrease in funding;
Number (329 554) of TVET colleges receiving funding through NSFAS bursaries annually, (actual achievement was 270 134). It was reported that NSFAS informed the Minister that the Auditor-General of South Africa (AGSA) and NSFAS agreed that the entity submits the updated Financial Statements by 31 March 2023;
Examination results released to qualifying students within 40 days from the last day of the exams timetable (per cycle). No results were released during the Quarter;
Number (72 298) of TVET college students completing N6 qualification annually, (actual achievement was 57 245). The underachievement was ascribed to curriculum changes;
Number (13 552) of TVET college students completing NC(V) Level 4 annually, (actual achievement was 12 507). The underachievement was attributed to curriculum changes;
Percentage (70%) of TVET college lecturers with professional qualifications, (actual achievement was 0 per cent). The Department reported that it was analysing data from colleges; and
Number (250) of TVET college lecturers holding appropriate qualifications supported to acquire professional qualifications annually. The Department did not report on the target due to outstanding reports from universities and colleges.

The programme had spent R8,814 billion against the projected quarterly expenditure of R8,929 billion at the end of the Third-Quarter, recording lower than projected spending amounting to R115,3 million or 1.3 per cent. The underspending was due to continued delay in the implementation of the Post-Provisioning Norms (PPN), which will place TVET employees on the Department’s payroll system. It was reported that the Department cannot implement the norms at some colleges as these colleges have not yet submitted all the necessary documents.

(v) Programme 5: Skills Development

The programme promotes and monitors the National Skills Development Strategy. Develop skills development policies and regulatory frameworks for an effective skills development system. For the Quarter under review, the programme had two targets, and had achieved one or 50 per cent of the targets.

The programme did not achieve the following target on the percentage (100%) of the allocated SETA Mandatory Grants paid to employees. The Department reported that it had yet paid the SETAs levy for December 2022, from which to pay a Mandatory Grant to employers.

The programme had spent R314,8 million against the quarterly projected expenditure amounting to R221,6 million, recording a higher than the projected spending of R93,2 million or 42.2 per cent. The higher than projected spending was due to the transfer of R100 million to the National Skills Fund for the Presidential Youth Employment Intervention (PYEI), which was brought forward to the Third-Quarter as the revised proposal for the PYEI project piloting a performance model for demand-led skills training was accepted, allowing for these funds to be released.

(vi) 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. The programme had five targets during the Quarter under review. The programme achieved two or 40 per cent of the planned targets.

Targets not achieved include:

Number (266 424) of students enrolled in CET colleges annually, (actual target was 143 031). The underachievement was ascribed to less emphasis placed on programme diversification and responsiveness to the community needs, Colleges were under resourced and under marketed;
Number (40 000) of CET college students completing GETC: Level 4 annually, (actual achievement was 10 611). The underachievement was attributed to the under resourcing and under marketing of colleges; and
Percentage (100%) of CET colleges compliant with the policy on the conduct and management of examination and assessment. The examination process for CET colleges was still in progress during the Quarter under review.

At the end of the 2022/23 Third-Quarter, the programme had spent R1,970 billion, against the quarterly projected expenditure of R1,925 billion, recording higher than projected spending amounting to R44,6 million or 2.3 per cent. The higher than projected spending was ascribed to the implementation of the standardisation of CTE lecturer posts to the nearest notch being back-dated to 01 April 2022.

OBSERVATIONS

The Portfolio Committee having considered the 2022/23 Third Quarter expenditure and non-financial performance report of the Department of Higher Education and Training, makes the following observations:

3.1. Programme 1: Administration

3.1.4. The delays with the filling of vacant positions especially those located at institutional level (TVET colleges) was noted as a continuous concern.

3.2. Programme 2: Planning, Policy and Strategy

3.3. Programme 3: University Education

3.3.1. The delays in the finalisation of the comprehensive student funding policy for higher education was noted as a serious concern. It was noted that the missing middle students in particular, are mostly affected by the lack of dedicated financial assistance to meet their learning needs, including postgraduate students.

3.4. Programme 4: Technical and Vocational Education and Training

3.4.1. The overall performance of this programme during the Quarter under review was disappointing. Out of the 20 targets planned for the Third-Quarter, only three were achieved, and the Department cited delays in the submission of reports by colleges as a key factor contributing to underperformance.

3.5. Programme 5: Skills Development

3.5. Programme 6: Community Education and Training

4. SUMMARY

The Committee was concerned with the Department’s overall performance for the Quarter under review. The Committee stated that the underperformance was unacceptable. There were 28 targets planned during the Second-Quarter, and 15 (54%) of the targets were achieved. Similarly, there were 47 targets planned in the Third-Quarter and three (45%) of the 47 targets were achieved. The primary reason provided for the under-performance recorded in both quarters related to human resources capacity challenges, which in essence hinders the ability of the Department to perform in line with its pre-determined objectives.

The Committee was gravely concerned about the performance of some key delivery programmes such as TVET, which achieved only three of the 15 planned targets. There was no clear indication from the Department about the plan to ensure that employees responsible for under-performance will be held to account. Furthermore, the Department did not provide specific timeframes to implement corrective measures to address under-performance. The Committee’s view was that there is an urgent need to look into the underlying reasons for under-performance and put measures in place to ensure that there is no recurrence of poor performance in the remaining last quarter of 2022/23. The Department committed to rectifying the poor performance, and the Committee undertook to closely monitor the commitment by the Department.

5. RECOMMENDATIONS

The Committee having assessed the 2022/23 Third-Quarter expenditure and performance report of the Department makes the following recommendations:

5.1. Programme 1: Administration

5.2. Programme 2: Planning. Policy and Strategy

5.3. Programme 3: University Education

5.4. Programme 4: TVET

5.5. Programme 5: Skills Development

5.5.1. The Department should ensure that SETAs mandatory grants to employers are paid on time so that their planned training and development programme are not negatively affected.

5.6. Programme 6: CET

5.6.1. The utilisation of universities and TVET colleges infrastructure as community learning centres (CLCs) should be expedited to improve the teaching and learning environment in the sector.

Report to be considered.

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