THE ROLE OF THE FFC IN THE BUDGET PROCESS
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THE ROLE OF THE FFC IN THE BUDGET PROCESS WITH SPECIAL REFERENCE TO EDUCATION ---------------------------------------------------------------- PRESENTATION TO THE PORTFOLIO COMMETTEE O3 APRIL 2001. WHAT IS THE FINANCIAL AND FISCAL COMMISSION?.

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THE ROLE OF THE FFC IN THE BUDGET PROCESS WITH SPECIAL REFERENCE TO EDUCATION

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The role of the ffc in the budget process with special reference to education

THE ROLE OF THE FFC IN THE BUDGET PROCESS

WITH SPECIAL REFERENCE TO EDUCATION

----------------------------------------------------------------

PRESENTATION TO

THE PORTFOLIO COMMETTEE

O3 APRIL 2001

FOR AN EQUITABLE SHARING OF NATIONAL REVENUE


What is the financial and fiscal commission

WHAT IS THE FINANCIAL AND FISCAL COMMISSION?

The Financial and Fiscal Commission is established in terms of the 1996 Constitution through the Financial and Fiscal Commission Act.

The role, function and powers of the Commission are determined by:

  • The Constitution,

  • The Financial and Fiscal Commission Act, and

  • The Intergovernmental Fiscal Relations Act.

FOR AN EQUITABLE SHARING OF NATIONAL REVENUE


What is the commission s key function

WHAT IS THE COMMISSION’S KEY FUNCTION?

The Commission must consider:

  • The annual vertical division of revenue between the national, provincial and local spheres.

  • The horizontal division of revenue between the provinces, and

  • Any other

    - Conditional or

    - unconditional allocations to provinces or Local Government.

FOR AN EQUITABLE SHARING OF NATIONAL REVENUE


Ffc 2001 rec0mmendation s response from government

FFC 2001 REC0MMENDATION’S:Response from Government

  • The provincial equitable share should provide forconstitutionally mandated basic levels of social service provision and provinces should be held accountable forthe delivery of such services;

  • The FFC suggested that basic services be defined in terms of cost per beneficiary with allowances made for variations in the cost of delivery for different target groups and the inclusion of national (or provincial) policy parameters.

FOR AN EQUITABLE SHARING OF NATIONAL REVENUE


Towards an equitable share of national revenue

Towards an Equitable share of National Revenue

  • FFC approach to Equitable share

    (MATRIX)

  • The provincial equitable share:

    - With a particular emphasis on basic education, primary health care and social security = (S)

    - The Basic Element (B),

    • The Institutional Element (I).

FOR AN EQUITABLE SHARING OF NATIONAL REVENUE


The role of the ffc in the budget process with special reference to education

UTILIZATION OF NATIONALLY RAISED REVENUE

NATIONAL SPHERE

(current / capital)

PROVIN-

CIAL SPHERE

(current / capital)

LOCAL SPHERE

(current / capital)

TOTAL

(current/ capital)

EQUITABLE SHARE

NES +

PES +

LES =

ES

Debt Servicing

ContingencyReserve

S-Element

Constitutionally Mandated Obligations (including Basic Services)

I-Element

Institutional & Administrative

B-Element

Other Constitutional Functions

CONDITIONAL GRANTS

n/a

PCG (+)

LCG (=)

CG

Infrastructure

Capacity Building

TOTAL

NES (+)

PES+PCG

(+)

LES+LCG

(=)

TNR+NB

FOR AN EQUITABLE SHARING OF NATIONAL REVENUE


The costed norms approach an analytical tool for the pes

- The Costed Norms approach: An Analytical Tool for the PES

  • For the next three-year MTEF cycle, starting in 2001, the FFC proposes that constitutionally mandated basic social services be provided and be explicitly budgeted for.

  • The FFC uses the costed norms approach as a method for recommending the indicative resources for the provision of CMBS. The rights of citizens to these CMBS are to be progressively realised.

FOR AN EQUITABLE SHARING OF NATIONAL REVENUE


Definition

DEFINITION

“The costed norms approach is a formula based method for calculating the financial resources necessary for the provision of constitutionally mandated basic service levels, given nationally mandated norms and standards.”

FOR AN EQUITABLE SHARING OF NATIONAL REVENUE


Three broad implementation steps

THREE BROAD IMPLEMENTATION STEPS

  • Constitutionally mandated basic level of social services should be determined nationally and should be expressed in terms of norms and standards for each programme area.

  • Fiscal requirements should be determined by taking account of factors affecting provincial conditions and the macro-economic framework.

  • Total costs of providing basic education may then be calculated for each province.

FOR AN EQUITABLE SHARING OF NATIONAL REVENUE


The ffc approach as applied to education

THE FFC APPROACH AS APPLIED TO EDUCATION

FOR AN EQUITABLE SHARING OF NATIONAL REVENUE


The current ffc allocation formula

THE CURRENT FFC ALLOCATION FORMULA

  • Is based on the distribution among the provinces of children between the ages of 7 and 18 and the current enrolment in primary and secondary education

  • Each school age learner is counted as one learner and each over-and-under aged learner is considered the equivalent of ¾ of an appropriate age learner

FOR AN EQUITABLE SHARING OF NATIONAL REVENUE


The current ffc allocation formula continued

THE CURRENT FFC ALLOCATION FORMULA CONTINUED ……..

  • Aims to determine the minimum amount of money a province should spend in order to provide its learners with basic education

  • Where:

    • Basic education is defined in terms of providing primary and secondary education to learners in ordinary and special schools

FOR AN EQUITABLE SHARING OF NATIONAL REVENUE


Targeting poor learners

TARGETING POOR LEARNERS

  • Evidence has shown that the amount of money necessary to meet any given educational standard will vary both across and within provinces

  • Learners with various disadvantages require extra resources to achieve any given educational standard.

  • Costs are highest for poor, rural learners and lowest for non-poor urban learners

  • Basic education = Ordinary and Special school, rest in Basic (B)i.e. ABET, ECDP

FOR AN EQUITABLE SHARING OF NATIONAL REVENUE


Targeting poor learners continued

TARGETING POOR LEARNERS CONTINUED…

  • Cost per learner in a group is estimated using a series of weights multiplied by an average cost per province - taking account of differences.

  • Total cost to a province is average cost per learner multiplied by the number of learners enrolled.

  • A parameter is introduced to distinguish between funding “appropriate” and “inappropriate” age learners

  • Learners divided into9 groups distinguished by characteristics

FOR AN EQUITABLE SHARING OF NATIONAL REVENUE


Learner groups

LEARNER GROUPS

FOR AN EQUITABLE SHARING OF NATIONAL REVENUE


Learner weights

LEARNER WEIGHTS

  • Non-poor urban1.00

  • Non-poor rural 1.06

  • Poor urban1.23

  • Poor rural1.29

  • Inappropriate age 0.75

  • Speciallearners 2.30

FOR AN EQUITABLE SHARING OF NATIONAL REVENUE


Recent research findings by the ffc

RECENT RESEARCH FINDINGS BY THE FFC

  • Indicators used to identify target groups differ from one province to another

  • Wide variation in per capita non-personnel expenditure is noted

  • Provinces differentiate per capita spending by income group more finely than the FFC but place less emphasis on the urban-rural distinction

FOR AN EQUITABLE SHARING OF NATIONAL REVENUE


Ffc recommendation proposal for 2002 with regard to education

FFC RECOMMENDATION PROPOSAL FOR 2002With Regard to education

  • To work with stakeholders to establish norms and standards that will be common to all provinces. This will help produce a common definition of basic education that will be acceptable to all provinces

  • To include Early Childhood Development Programme and ABET in the PES model as a Constitutional Basic Mandated Service

FOR AN EQUITABLE SHARING OF NATIONAL REVENUE


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