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PRESENTATION TO THE SELECT COMMITTEE ON APPROPRIATIONS DATE: 24 TH AUGUST 2010

PRESENTATION TO THE SELECT COMMITTEE ON APPROPRIATIONS DATE: 24 TH AUGUST 2010. PRESENTATION OUTLINE. Infrastructure FET Grant HIV/AIDS National School Nutrition Program. INFRASTRUCTURE. INFRASTRUCTURE GRANT EXPENDITURE TRENDS 2010/11. REASONS FOR UNDER-EXPENDITURE.

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PRESENTATION TO THE SELECT COMMITTEE ON APPROPRIATIONS DATE: 24 TH AUGUST 2010

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  1. PRESENTATION TO THE SELECT COMMITTEE ON APPROPRIATIONS DATE: 24 TH AUGUST 2010

  2. PRESENTATION OUTLINE • Infrastructure • FET Grant • HIV/AIDS • National School Nutrition Program

  3. INFRASTRUCTURE

  4. INFRASTRUCTURE GRANT EXPENDITURE TRENDS 2010/11

  5. REASONS FOR UNDER-EXPENDITURE • The inability to honour payments in the last quarter of 2009/10 due to cost containment measures resulted in incorrect Table B5 for 2010/11 • Table B5 had to be revised thus leading to re-loading of infrastructure projects on BAS. This further resulted in first payments being effected in May • Inability to pay for projects, due to the following reasons: • Reconciliation with Public Works took longer than anticipated due to current projects not on B5 or underfunded on both B5 and BAS • Moratorium from Provincial Treasury, wherein the Department of Education was instructed not to commit any funds from the Provincial Infrastructure Grant for programme 2. • The allocation for the FET high school recapitalization will be utilized for planning in the 2011/12 implementation of infrastructure projects

  6. REMEDIAL ACTION • Due to the looming budget cut on the equitable share, it has been decided that current projects funded under equitable share, must be taken to the Provincial Infrastructure Grant • The abovementioned situation will reduce the under-expenditure drastically, since the intended projects are already continuing.

  7. FURTHER EDUCATION & TRAINING

  8. FIRST QUARTER EXPENDITURE REPORT

  9. ACTUAL EXPENDITURE PER COLLEGE

  10. REASONS FOR UNDER EXPENDITURE • Other expenses amounting to R1,931m were incurred at Head Office • Initially the transfers to FET Colleges were to be made twice a year but during April the Ministry for Higher Education indicated they must be paid quarterly. The actual transfer to Treasury was more. • Included in the payment for the quarter is the payment of educators who opted to remain with the old employer - these have now been transferred from this programme

  11. CHALLENGES • Non placement of educators who opted to remain with the old employer - these are costing the department approximately R33 million in the current financial year • The budget amount of R7,982 m set aside for the office and to finalise infrastructure projects in progress under this programme, is inadequate for the current financial year. There is projected over expenditure on infrastructure under this programme

  12. REMEDIAL ACTION • The Department is working with Higher Education Ministry in the process of placing the ex-college lecturers who opted to remain with the department back to the FET colleges • The department is utilising slow moving projects in order to temporarily fund the projected over expenditure but this will not assist once these projects pick up.

  13. HIV AND AIDS LIFESKILLS

  14. FINANCIAL TRENDS IN ALLOCATION/TRANSFERS/ACTUAL EXPENDITURE

  15. FIRST QUARTER EXPENDITURE REPORT

  16. ASSESSMENT OF MONITORING CAPACITY

  17. REASONS FOR UNDER-EXPENDITURE • A technical problem in the payment of an invoice for the OVC programme (BID SCMU-08/09-0016) trapped in the system for more than two months resulted in non payment of this tender until it was resolved in July 2010 • This also impacted negatively on the implementation of the OVC Programme and expenditure for the quarter. • Delays in the payment of stipends for 330 learner support agents (caregivers) and 223 Peer Group Trainers for April, May and June 2010 due to capacity problems in the directorate

  18. MECHANISM TO DEAL WITH THE UNDER-EXPENDITURE ) A Turnaround Plan has been developed to ensure that the HIV & AIDS Conditional Grant is not affected by the current budget pressures in the ECDOE Systemic challenges which were hindering the payment of invoices (BID SCMU-08/09-0016) have been sorted and a recovery plan has been developed to make up for the lost time in the OVC programme Two admin clerks have been placed in the Directorate and this will assist in payment of stipends on a monthly basis to the 553 volunteers (caregivers and PGTs)

  19. COMPLIANCE WITH REPORTING • Monthly In Year Monitoring meetings were held and monthly reports were submitted to FINCOMM • The programme compiled with the submission of reports to the Department of Basic Education as the transferring Department • All schools implementing the programme have also been monitored by districts • Annual Evaluation for 2009/10 was conducted from the 03-07 May 2010 and report and forwarded to Department of Basic Education

  20. NATIONAL SCHOOL NUTRITION PROGRAMME

  21. HISTORICAL PERSPECTIVE • Problematic Transfer from DOH to DOE in 2004 • - Inheritance of Q4,Q5 and ECD outside conditional grant • - Payment backlogs • Virtual Collapse of SNP in 2006 due to premature incorporation of cooperatives • Forensic Audit by Ngubane and Associates • Abrupt stoppage of programme due to investigation created more payment backlogs estimated at R 40 m 1

  22. HISTORICAL PERSPECTIVE (CONT.) • All outstanding invoices for these periods are being audited and additional funding will be required to eliminate payment backlogs. • Roll-over funds of 2007/08 ( R42, 362m) that was not granted to the Department may assist to deal with these payment backlogs

  23. FINANCIAL TRENDS IN ALLOCATION/ TRANSFERS / ACTUAL EXPENDITURE NATIONAL SCHOOL NUTRITION PROGRAMME

  24. BUDGET ALLOCATION

  25. EXPLANATION OF UNDER EXPENDITURE • Delays in the loading of the conditional grant budget in April (due to conditional grant codes) which allowed payments to be made only in the last week of April (mostly accruals for January to March 2010) • Slow, late and non submission of 1401’s BAS entity forms by schools which is an additional control measure and prerequisite for transfer of meal servers payments to schools. • The non awarding of NSNP tender resulted in further extension in April-June which was • approved late in June with the old price i.e.R1.65 instead of R1.95 for primary • schools and R2.00 for secondary schools instead of R2.95 and this translated to delays in • payments. • The extended tender continued to provide food excluding Quintile 2 senior secondary schools from April to June due to non-awarding of the tender

  26. MECHANISM TO DEAL WITH THE UNDER EXPENDITURE • Capacity issues in the programme are being addressed by assistance from the Payment Directorate to clear all the April- June payment backlogs. • Appointment of an Audit team to deal with payment backlogs dating back to 2004 to ensure clearance of backlogs. • In addressing under expenditure the memorandum of understanding (MOU ) signed by the Department with King Hintsa FET College to be extended in order to provide quintile 3 schools and primary schools with mobile kitchens and feeding utensils in the current quarter • Awarding of the new SNP and the rollout thereof in October 2010 will assist in addressing under expenditure. 5

  27. FIRST QUARTER EXPENDITURE REPORT

  28. COMPLIANCE WITH REPORTING • Monthly In year monitoring reports were submitted to FINCOM. • Monthly and Quarterly reports were submitted in compliance to DORA • Compliance to Menu and supplier performance has been monitored by Districts and Head Office staff (Coordinators and EDO’s) and action taken against non performing suppliers to avoid wasteful expenditure. • Regular monitoring visits by Districts staff and submission of reports as part of monitoring of spending. • Annual Evaluation for 2009/10 was conducted from the 24-29 May 2010 and reported and forwarded to Department of Basic Education

  29. . AREAS OF CONCERN CHALLENGES POSSIBLE CORRECTIVE MEASURES • The non awarding of previous years rollovers result in paying • backlogs and accruals from the current budget and this poses a challenge. • Continuous feeding of learners in quintiles 4 & 5 and standalone ECD centres will result in unauthorized expenditure in the current financial year • Delays in awarding of tenders advertised for feeding result in continuously extending contracts of current SNP suppliers • this results in deviation from the business plan in terms of implementation • of new menu with the new prices. • Payment of accruals and backlogs some dating back to 2004 results in utilization of current budget on accruals and backlogs . 7

  30. . AREAS OF CONCERN CHALLENGES (Cont.) POSSIBLE CORRECTIVE MEASURES • Weaknesses in monitoring result in inaccurate data for budget planning (e.g confirmation of number of grade R ‘s both at schools and at stand alone ECD sites, closed schools ,farm schools will assist the Department in accurate budget planning) • Staff shortage in the NSNP Directorate and in some districts is further exacerbated by the absence of a Director for NSNP and this affects implementation and management of the programme generally. • Labour unrest in the department at Head Office has an impact on the timely processing of payments and delays in awarding of tenders.

  31. . MECHANISMS TO DEAL WITH THE CHALLENGES • An application for a rollover or appeal for additional funding • will be made to the Provincial Treasury to deal with the • payment backlogs dating back to 2004 • Since no funding is available from the equitable share , feeding • of these learners under Q4and % and ECD centres will have to stop as from October 2010. These schools will be included in the 2011/12 Business Plan for the SNP Conditional Grant • SNP Tender has to be awarded by the first week in September 2010 to ensure timeous issuing of award letters and orders to new service providers by SCM . • Monitoring of programme to be improved and learner data to be • verified. • Payments to current service providers have been updated and are to be made within 30 days

  32. . AREAS OF CONCERN THANK YOU POSSIBLE CORRECTIVE MEASURES END

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