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PUBLIC HEARING ON CONDITIONAL GRANTS

AND CAPITAL EXPENDITURE

Parliament 2nd September 2008

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• 2008/09 Conditional Grants Allocation

• First quarter Conditional grants spending

• National School Nutrition Programme

• HIV and Aids

• Infrastructure Allocation to Provinces

• Early Childhood Development

• Conclusion

Contents

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Overall Departmental expenditure at 30 June 2008

Budget

June 2008 Expenditure

Balance

% Actual Spending Outstandi

ng Commitm

ents

R ' 000 R ' 000 R ' 000 R ' 000

Total Department 6,598,569 1,607,075 4,991,494 24.35% 118,318

Current Expenditure 5,514,366 1,387,406 4,126,960 25.16% 95,591

Compensation of employees 4,910,055 1,273,890 3,636,165 25.94% 0

Goods and services 604,311 113,516 490,795 18.78% 95,591

Transfers and Subsidies 640,809 155,134 485,675 24.21% 92

Provincial and Local Government 0 0 0 0.00% 0

Departmental agencies 4,922 0 4,922 0.00% 0

Public corporations 0 0 0 0.00% 0

Non profit institutions 598,109 145,534 452,575 24.33% 70

Households 37,778 9,600 28,178 25.41% 22

Capital Assets 443,394 64,535 378,859 14.55% 22,635

Buildings and fix structures 392,576 61,372 331,204 15.63% 20,201

Machinery and equipment 50,818 3,163 47,655 6.22% 2,434

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Trends in Education Conditional Grants

AllocationActual

Exp. AllocationActual

Exp. AllocationActual

Exp. Allocation1st

Quart Further Education and Training - - 30,000 29,426 36,574 36,574 52,200 26,100 National School Nutrition Programme 68,515 60,627 72,672 72,672 68,023 68,004 82,498 36,397 HIV and AIDS 8,402 7,961 8,865 8,865 9,217 9,163 9,800 1,312 Infrastructure Allocation to Provinces 60,259 60,259 59,268 59,268 119,723 119,714 129,066 28,634 Total 137,176 128,847 170,805 170,231 233,537 233,455 273,564 92,443

% Spent % Growth % Spent%

Growth % Spent % Growth % Spent%

GrowthFurther Education and Training 0% 98% #DIV/0! 100% 22% 50% 43%National School Nutrition Programme 88% 100% 6% 100% -6% 44% 21%HIV and AIDS 95% 100% 6% 99% 4% 13% 6%Infrastructure Allocation to Provinces 100% 100% -2% 100% 102% 22% 8%

Conditional Grant2005/06 2006/07 2007/08 2008/09

Actual spending on FET Recapitalistion Grant for 1st quarter by Colleges is R5,672 million representing 21,73% spending against the allocation

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• The department recorded a good performance in term of conditional grants spending from the past financial years

• In 2006/07 spending for all grants was 100 per cent• The reduction in the allocation of National School

Nutrition programme in 2007/08 created a pressure

• The grant was exhausted and commitments amounting to R19 million could not be paid

Trends in Education Conditional Grants

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The 2008/09 Budget Allocation

Allocation 2007/08 2008/09 Increase %

Increase 2009/10

Conditional Grants: 232,963 273,364 40,401 17.3% 292,645 HIV/AIDS 9,217 9,800 583 6.3% 10,341 Nutrition Programme 68,023 82,498 14,475 21.3% 94,758 PIG 119,723 129,066 9,343 7.8% 187,546 FET 36,000 52,000 16,000 44.4% -

Total Allocation 232,963 273,364 40,401 17.3% 292,645

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2008/09 First Quarter Performance

Conditional Grant

R ' 000

HIV/AIDS 9,800 1,312 8,488 13.39%National School Nutrition Programme 82,498 36,397 46,101 44.12%Infrastructure Allocation to Prov inces 129,066 28,634 100,432 22.19%FET Colleges Recapitalisation 52,200 26,100 26,100 50.00%

Totals 273,564 92,443 181,121 33.79%

Expenditure

till JuneBalance

% Actual

SpendingBudget

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• The main objective for this grant is to Educate learners on Life Skill and HIV and AIDS and Care and Support to those infected and affected by HIV and AIDS

• The grant recorded a slow expenditure of 13 per cent in the first quarter

• Expenditure is expected to increase in the second and the third quarters

• The allocation for this grant will be exhausted at the end of the financial year

HIV and AIDS Grant

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• The grant recorded 44.12 per cent for the first quarter

• The high expenditure was mainly as a result of payment of previous year commitments

• It is projected that the grant will over spend by R23 million in the current financial year

• Other challenges– Insufficient administration budget for operational

resources e.g. vehicles, computers.– Insufficient personnel for monitoring and

administration at District and Provincial Offices.

National School Nutrition Grant

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• The first quarter expenditure not far from the 25 per cent norm (22.19 per cent)

• Slow expenditure as a result of delays in the awarding of the contract for construction of 15 schools

• The process finalized and contractors are on site

• Expenditure expected to increase in the 2nd quarter

Infrastructure Allocation to Provinces

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• Anticipated over-expenditure on allocations for existing projects (other than 15 schools) due to – bids closing above estimates – Escalation costs– Cost increases due to non-performance of

original contractors

• Therefore have limited funds available to commence new projects.

Challenges for Infrastructure

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Capital Expenditure

Item BudgetR’000

ExpenditureR’000

Available budget

R’000

% spent

Building & other fixed structures.

391 494 61 057 330 437 15.59

Machinery & Equipment. 51 900 3 479 48 421 6.70

Total. 443 394 64 536 378 858 14.55

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• Bulk of the budget for machinery is for Computers for schools (R36 million)

• The department constituted a task team to investigate alternatives to the SITA procurement processes

• Only during the week of 18 August 2008, the decision was taken to follow the SITA route. 

• It is expected that orders will be placed by end November 2008

Reasons for slow spending

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ECD BUDGET2008/2009 Allocation Amount (R’000)

Grade R SUBSIDY & RESOURCE BUDGET R 50,092

TEACHERS PAID ON PERSAL R 13,166

TOTAL R 63,258

PLANNED EXPENDITURE FOR 2008/2009 (Grade R classes already selected and receiving subsidy) R 59, 017

BALANCE TO IDENTIFY NEW SCHOOLS R 4,241

Additional Schools (in process of identification) Between 250 & 300

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PERFORMANCE OF GRADE R FUNDING (excluding salaries paid via Persal)

FINANCIAL YEAR

BUDGET R'000

EXPENDITURE R'000 % SPENT

2002/2003 4,638 3,608 77.79%

2003/2004 12,091 11,307 93.52%

2004/2005 29,949 28,270 94.39%

2005/2006 31,557 31,072 98.46%

2006/2007 33,829 33,827 99.99%

2007/2008 39,576 38,184 96.48%

2008/2009 50,092 24,358 48.63%

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CURRENTLY FUNDED INSTITUITIONS

Number of schools/sites according to urban/ruralNumber of Schools % Number of classes %

Public SchoolsUrban 62 7.64% 195 16.30%Rural 395 48.65% 646 54.01%Independent SchoolsUrban 85 10.47% 85 7.11%Rural 270 33.25% 270 22.58%TOTAL 812 100.00% 1196 100.00%

Number of schools/sites according to poverty rankingNumber of Schools % Number of classes %

Quintile 1 232 28.57% 428 35.79%Quintile 2 90 11.08% 174 14.55%Quintile 3 80 9.85% 139 11.62%Quintile 4 42 5.17% 81 6.77%Quintile 5 13 1.60% 19 1.59%Independent Schools 355 43.72% 355 29.68%

TOTAL 812 100.00% 1196 100.00%

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PAYMENTS• SUBSIDY FOR TEACHERS’ SALARIES • The subsidy allocation for salaries are made as

follows:• R1 800.00 (unqualified teachers)

– Teachers below the relevant NQF level 4 qualification

• R3 000.00 (under-qualified teachers)– Teachers with the minimum relevant NQF Level 4

qualification (National Certificate in Early Childhood Development) but not fully qualified

• R5 000.00 (qualified teachers)– Teachers with the appropriate 3-year teacher’s

qualification (relevant to ECD)

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PAYMENTS-CONTROL MEASURES• Transfers are only made if all the relevant

forms have been submitted in time and are correct.

• The following forms need to be completed and attached before the next transfer is made to the institution:

• Claim form / Certificate of Compliance

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PAYMENTS-CONTROL MEASURES

• Financial Statement – Grade R Subsidy indicating expenditure for the previous funds received: Attached with:

•Monthly signatures of teacher receiving a salary at the back of the Financial Statement

•Original or certified copies of all invoices of resources procured with FSDoE funds for the implementation of Grade R

•An original or certified copy of the bank statement indicating the amount for previous funds received for the Grade R subsidy

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Pre-Grade R.

• The pre-Grade R allocation for 2008/09 is R6.9 million

• The department planned to train 200 Pre-Grade R practitioners towards NQF Level 5 during this current financial year.

• The preparation towards advising the bid for training is underway.

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Pre-Grade R achievements

• 2007/08 250 practitioners from 100 community-based sites were trained towards NQF Level 4 and 96% were successful (Flemish Project)

• Developed Pre-Grade R Curriculum through the assistance of the Flemish Project

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• Monthly Finance Committee meetings are held to discuss underspending and remedial actions

• Quarterly review sessions are held to provide feedback on service delivery and the budget.

• Monthly expenditure reports are sent for the attention and the comment of the HOD and the Executive authority.

• Each branch is allocated a management accountant to assist with all financial related queries including budget management

• Letters are written to managers who underspent to inform them of the status quo and the implications of their underspending.

• Where underspending persist affected manager are brought before the executive leadership and the MEC to account for their actions.

• Where managers are not able to spent despite all the interventions funds are diverted and spent in line with objectives of the department.

Monitoring Capacity

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Monitoring Capacity Continued

• National School Nutrition Programme grant

Lack of human resource capacity is experienced under this project

Regular progress reports, monthly/quarterly

• HIV and AIDS grant

Monitoring is effective with a full-time Provincial co-ordinator ensuring that the activities take place strictly to the approved business plan and assisted by District Directors

• Infrastructure Allocation to Provinces

Monitoring is effective between the Department and the Department of Public Works, Roads and Transport through monthly meetings held between the two departments

• Further Education and Training grant

Actual spending by College is monitored on a monthly basis by officials at Head Office.

Reasons for under / over spending must be submitted on a monthly basis by the respective Colleges

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CHALLENGES• Most of the schools in the lower quintiles that still

have to be identified for Grade R Funding are farm schools with a Grade R or Grade 1(to be used as benchmark) enrolment of less than 10 learners

• Additional classrooms need to be built for some schools to enable them to offer Grade R. ECD section busy with audit to determine the exact need.

• HR Implications– Growing Grade R also requires that additional officials be

appointed at District level for monitoring and support

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Conclusion• Generally spending on conditional grants was low in

the first quarter• Department project over expenditure on National

School Nutrition Programme• Expenditure on Infrastructure Allocation to increase

as construction of 15 schools started

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