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Department of Education

Presentation to Standing Committee on Appropriations: Expenditure and Budget Implementation for the First Quarter of

2009/10

16 October 2009

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Areas Addressed in the Presentation

• Introduction• Spending trends per programme• Spending trends per economic classification• Reasons for % spent per programme• Reasons for % spent per economic

classification• Reasons for % spent on transfer payments• Monitoring and Evaluation of Budget

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Introduction

• The total budget of the Department for 2009/10 amounts to R21,287 billion

• The majority of the budget consists of transfer payments as follows:University Sector: R15,3 billionConditional Grants: R2,6 billionPublic Entities: R2,2 billionOther Transfers such as UNESCO: R12,1 million

• The remainder of the budget (R1,2 billion) consists of the followingCompensation of Employees: R314,7 millionExaminers and Moderators: R31,3 millionDepartmental Operations: R139,9 millionDepartmental Projects: R187,9 millionEarmarked Funds: R499,2 million

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Spending trends per programme

Programme Budget Exp at 30 June

% Spent

R’000 R’0001: Administration 225 902 38 720 17.14%

2: System Planning and Monitoring 115 364 19 924 17.27%

3: General Education 315 543 60 811 19.27%

4: Further Education and Training 210 895 67 752 32.13%

5: Social and School Enrichment 2 890 873 457 589 15.83%

6: Higher Education 17 498 098 9 345 734 53.41%

7: Auxiliary and Associated Services 30 496 5 189 17.02%

Total 21 287 171 9 995 719 46.96%

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Spending trends per economic classificationEconomic Classification Budget Exp 30 June ‘09 % Spent

R’000 R‘000

Compensation of Employees 345 978 87 159 25.19%

Goods and Services 817 979 82 838 10.13%

Financial transactions in assets and liabilities 0 33 -

Transfer Payments

Provinces and municipalities 2 571 929 458 664 17.83%

Departmental agencies and accounts 2 233 036 1 089 417 48.79%

Universities and technikons (current) 15 229 196 8 259 568 54.24%

Foreign governments and international organisations 11 912 0 -

Non-profit institutions 50 50 100%

Households 0 3 821 -

Universities and technikons (capital) 68 000 7 325 10.77%

Capital Expenditure

Machinery and equipment 9 008 2 732 30.33%

Software and other intangible assets 83 4 112 4954%

Total 21 287 171 9 995 719 46.96%

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Reasons for Expenditure Trend - Programmes

• Programme 1: Administration (17.14%)– New office building – Unitary Fee

• Programme 2: System Planning and Monitoring (17.27%)– NEEDU and HRMIS projects – bulk of expenditure is planned for third

and fourth quarter – Filling of posts on IQMS is slower than projected

• Programme 3: General Education (19.27%)– Teacher Development: Maths and Science – bulk of expenditure is

planned for second and third quarter– Systemic Evaluation Earmarked Funds – bulk of expenditure is planned

for third and fourth quarter

• Programme 4: Further Education and Training (32.13%)– Mainly examination and assessment function with seasonal expenditure

trend

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Reasons for Expenditure Trend - Programmes

• Programme 5: Social and School Enrichment (15.83%)– NSNP conditional grant – transfers to some provinces were withheld– Kha Ri Gude – spending is in accordance with plans– Majority of activities are scheduled for third quarter of the financial

year

• Programme 6: Higher Education (53.41%)– Transfers to Universities and Technikons is bulk of spending on this

programme– Spending on programme is in accordance with plans

• Programme 7: Auxiliary and Associated Services (17.02%)– Transfers to UNESCO will take place in the fourth quarter and to the

Commonwealth of Learning in the second quarter as projected– Spending on the remainder of programme is in accordance with

plans

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Reasons for Expenditure Trend - Economic Classification

• Compensation of Employees (25.19%)– Spending is higher than projected due to:

- Payments to examiners and moderators- Payment of new Ministry: Higher Education and Training

• Goods and Services (10.13%)– As a result of cost containment measures that the Department had

to put in place on certain areas to prevent over-expenditure on other areas, the spending on this item is still low

– Projects such as IQMS, NEEDU and NSNP (earmarked funds) are also influenced by these cost containment measures

– The execution of the activities of the Department is in accordance with the strategic plans

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Reasons for Expenditure Trend - Economic Classification

• Financial Transactions in Assets and Liabilities (Over-expenditure)– Expenditure is related to the approved writing-off of salary

overpayments and no shows– In line with Government’s policy, the Department does not budget

for this item

• Transfers and Subsidies (48.8%)– See separate slide

• Machinery and Equipment (Over-expenditure)– Implementation of new Ministry for Higher Education– Assets incorrectly classified as goods and services in ENE instead

of Software and Intangible Assets

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Reasons for Expenditure Trend - Transfer Payments• 76.05% of transfer and subsidies is in respect of the University Sector as follows:

– Block grants (R12.767 billion) • Treasury approval to transfer 3/12 of subsidy to institutions during April as

well as during May. Thereafter 1/12 from June up to November – funds are for an academic year – institutions self-funded from January to December.

– Interest and Redemption (R40.6 million) • Paid to universities on a claims basis

– Infrastructure and Efficiency Funds (R1.462 billion)• Paid to universities based on progress reports submitted

– Development Funds (R688.829 million)• Paid to universities based on progress reports submitted

– Ad hoc (R338.4 million)• Paid to universities based on progress reports submitted

– Paid to 30 June 2009: R8.267 billion (54.04%)

• Departmental agencies and accounts– Obtained Treasury approval to transfer funds to the NSFAS in April, May,

August, September and November – funds are for an academic year.– All the other Public Entities, i.e. CHE, Umalusi and SAQA receive funds

quarterly during April, July, October and January– Paid to 30 June 2009: R1.089 million (48.79%)

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Reasons for Expenditure Trend - Transfer Payments

• Provinces and Municipalities– HIV and Aids conditional grant – transfers - quarterly basis – National School Nutrition Programme conditional grant – transfers - quarterly

basis– Paid to 30 June 2009: R458.664 million (17.83%)

• Foreign Governments and International Organisations– UNESCO membership fees paid during January/February of each year– Commonwealth of Learning paid during August 2009– Paid to 30 June 2009: R0

• Non profit institutions – transfer to Childline South Africa once-off at the beginning of the financial year

– Paid to 30 June 2009: R50 000 (100%)

• Households – ad hoc – leave gratuities paid in respect of officials who retire– Paid to 30 June 2009: R3.821 million

Monitoring and Evaluation of the Budget

• Administrative and financial systems are in place in the Department

• Expenditure is monitored on a monthly basis and responsibility managers are requested to provide reasons if the progress on projects is not satisfactory.

• The Ministers are informed of the spending trends in terms of the Public Finance Management Act.

• Senior Management at least once a month discusses the spending trends and reprioritisation of activities within the objectives of the Department are considered when necessary

• Cost containment measures were implemented