SELECT COMMITTEE ON APROPRIATIONS HEARING ON CONDITIONAL GRANTS EXPENDITURE

1. SELECT COMMITTEE ON APROPRIATIONS HEARING ON CONDITIONAL GRANTS EXPENDITURE Tuesday 6 September 2011 11

2. 1. DATA ON TRENDS IN ALLOCATION, TRANSFERS AND ACTUAL EXPENDITURE OF THE CONDITIONAL GRANTS OF THE DEPARTMENT The 1st Quarter 2011/12: The three month period ended 30 June 2011 conditional grants expenditure figures show that the Department has spent R341.44 million (66%) of its June 2011 YTD Section 40 projection of R519.11 million, as summarized in the tables hereunder. Net under spending of R177.66 million occurred mostly in compensation of employees of R24.70, goods & services of R88.76 million, transfers of R32.64 million and payments for capital assets of R31.54 million, summarized as follows: 22

3. 33

4. 44

5. Extracts from 2010/11 Audited Annual Financial Statements: The department has applied for the Conditional Grants funds totaling R489.7 million appropriated but not spent in the 2010/11 financial year to be rolled over to the 2011 / 2012 financial year. The request for roll over is supported by commitments where goods and services had been delivered or rendered and therefore funds were committed and the department is either awaiting submission of invoices by suppliers or invoices had been received but will be paid in the next financial year. 55

6. ASSESSMENT OF MONITORING CAPACITY THUS FAR FOR THE FINANCIAL YEAR 2011/12. INDICATING UNDER / OVER SPENDING AND WHAT THE CAPACITY CONSTRAINTS ARE THAT IMPACTED ON THESE OUTCOMES The Department has strengthened its monitoring capacity thus far for the financial year 2011/12 by requiring Programme and Grant Managers to address the MEC and SG at monthly In - Year - Monitoring meetings and account for the performance of the respective Grants. The following capacity constraints have adversely impacted on the outcomes: Compensation of Employees – the department has had challenges with problematic Conditional Grant persal link codes, which situation has recently been remedied. Goods and Services – theDepartment has not always been able to pay various key accounts timeously adversely impacting on the expenditure disclosed. This situation is currently being remedied through the Finance Cluster turnaround plans for accounts payable. In addition, Medsas interfaces with BAS in the month of June 2011 were not up to date, which has been rectified in July. Transfers and Subsidies - The primary reasons that transfer payments have not been moving is that there have been extensive challenges with the respective institutions in complying with the Public Finance Management Act requirements of Section 38(1)(j) (written assurance from the entity that that entity implements effective, efficient and transparent financial management and internal control systems; as well as Treasury Regulation 8.4.2 (…withholding transfers and subsidies to an entity where conditions attached to the transfer and subsidy have not been complied with) 66

7. 3. THE RECEIPT OF MONTHLY REPORTS FROM RECEIVING ENTITIES - Refer discussion in (2) above 4. DEPARTMENT’S SPENDING PLANS. BUSINESS PLANS ON THE SAID CONDITIONAL GRANTS - These are discussed in Annexures 1, 2 and 3 respectively 77

8. ANNEXURE 1 COMPREHENSIVE HIV AND AIDS GRANT • Introduction This is the first quarter of the 2011/12 financial year Conditional Grant Expenditure Report to the Select Committee on Appropriations 2.1 Purpose, Objectives of the Conditional Grant and Expected Outcomes To enable the health sector to develop an effective response to HIV and Aids; • To support the implementation of the National Operational Plan for comprehensive HIV and Aids treatment and care • To subsidise in–part funding for the antiretroviral treatment programme. 88

9. 2.2 Project List 99

10. 2.2 Project List cont. 1010

11. 2.3 Service Delivery Performance Table 1 : Performance Indicators and Targets 1111

12. 2.3 Service Delivery Performance cont. Table 1 : Performance Indicators and Targets 1212

13. 2.3 Service Delivery Performance cont. Table 1 : Performance Indicators and Targets 1313

14. 2.3 Service Delivery Performance cont. Table 1 : Performance Indicators and Targets 1414

15. 2.3 Service Delivery Performance cont. Table 1 : Performance Indicators and Targets 1515

16. 2.3 Service Delivery Performance cont. Table 1 : Performance Indicators and Targets 1616

17. 2.3 Service Delivery Performance cont. Table 1 : Performance Indicators and Targets 1717

18. 2.4. Quarterly Expenditure 2.4.1. Total Conditional Grant Expenditure 1818

19. 1919

20. 2.4.2. Total Conditional Grant Project Expenditure 2020

21. 2121

22. 2222

23. 2.5. Challenges and Remedial Steps NHLS - The expenditure on Goods & Services as at end June 2011 is R74,330m as against cash flow projections R147, 291m. Under expenditure (variance) is at 72,961m Reason: Invoices for the period Feb, March and April 2011 were not paid as decentralized NHLS funds to be paid by facilities first undergoes verification of invoices. SANBS - Reason: R37,0m allocated for blood and blood products was under spent as facilities who do not transfuse could not spend even though allocations to them were made. Facilities also prioritize spending Equitable Share allocation before closure rather than Conditional Grant allocation which has a longer life. Remedial action: The situation for both of the above – named has been remedied in subsequent months. CONDOMS Reason: Allocation of 28m was not spent due to new arrangements by National regarding payments of delivered condoms procured by provinces. Remedial action: National suppliers are being registered into EC database to enable invoicing by National including requests for other compliance requirements i.e. SBD 4, SBD 9 and Tax clearance. HIV Directorate / Procurement / Treasury will finalize this process to allow procurement of condoms. ARVs Reason: Allocations were overestimated as ARV prices were reduced by 53% whilst EC only reduced by 25%. Remedial action: An amendment will be made to shift funds to another economic classification 2323

24. 2.5. Challenges and Remedial Steps cont. Home Based Care Reason: Allocations of 17m for training of home based carers plus purchasing of home based kits was decentralized to districts whose spending is delayed by the district tender process and district supply chains Remedial action: Provincial Programme managers will facilitate expenditure through District tender processes. TBHIV Reason: Expenditure for activities (conferences and printing) done in April, May and June remains unpaid Remedial action: Provincial Programme managers to facilitate timely payment of commitment PMTCT Reason: Allocations were not spent in April, May and June due to tenders not awarded yet (e.g. printing of registers for PMTCT). Remedial action: Remedial Provincial 5 day tender to speed up the tender process HTA Reason: Allocation for purchase for HTA programme was not done as HTA Programme manager’s post is vacant post departure of the manager in April Remedial Action: EU Monitoring and Evaluation manager has been transferred to HIV Directorate to start by 1 August. Meanwhile procurement for HTA programme has been delegated and will be facilitated by Provincial Programme managers PEP Reason: Allocations to purchase PEP comfort packs was not done as selected Supplier 1 WITHDREW. Remedial Action: Procurement to be done through Supplier no2 2424

25. Annexure 2 FORENSIC PATHOLOGY SERVICES GRANT • Introduction Quarterly Conditional Grant Expenditure Report to the Select Committee on Appropriations 2.1 Purpose, Objectives of the Conditional Grant and Expected Outcomes To continue the development and provision of adequate mortuary services in all provinces 2.2 Programme or Project List Refer 2.4.2 hereunder 2525

26. 2.3 Service Delivery Performance Table 1: Performance Indicators and Targets 2626

27. 2727

28. 2.4 Quarterly Expenditure 2.4.1 Total Conditional Grant Expenditure 2828

29. 2929

30. ANNEXURE 3 HOSPITAL REVITALISATION GRANT 1. Purpose, Objectives of the Conditional Grant and Expected Outcomes To provide funding to enable provinces to plan, manage, modernise, rationalise and transform the infrastructure, health technology, monitoring and evaluation of hospitals; and to transform hospital management and improve quality of care in line with national policy objectives. 2.1. Project List and Service Delivery Performance Of the R382 million budget, the bulk (R317 million is for buildings) is allocated to major projects as follows: a. Cecelia Makiwane R 137 million b. St Elizabeth’s Hospital R114 million c. St. Patricks R 53.5 million d. Frontier R 43.2 million 3030

31. 3131

32. 3232

33. 3333

34. 3434

35. 3535

36. 3636

37. 3737

38. 3838

39. 2.2 Quarterly Expenditure 2.2.1 Total Conditional Grant Expenditure Expenditure in the first quarter of this year stood at R46 million compared to R51 million in the same period last year. This reflects a reduction in expenditure amounting to R4 million, albeit the programme budget increased from R360 million to R382 million. The bulk of this under expenditure is accounted for by Buildings The reason for this relates to late (in June 2011) commissioning of major Building Works 3939

40. 2.2.2 Total Conditional Grant Programme / Project Expenditure As per table below 4040

41. 2.3 Challenges and Remedial Steps 4141

42. 2.3 Challenges and Remedial Steps In terms of the graph above, expenditure is projected to pick up from the second quarter on wards While an expenditure of R73 million was planned for the first quarter, the second and third quarter expenditure are anticipated to reach R98 million and R109 million, respectively This positive expenditure growth is based on the bulk of the work of the afore-mentioned projects taking place during this period. Notwithstanding un under spending of R27 million in the first quarter, a revite budget amounting to R382 million will be spent by year as it is committed to live projects (bulk of which is buildings) • Note that the Infrastructure Unit together with the Budget Office and the departmental Project Implemementation Agency have put a process in place in order to improve settling of outstanding invoices • Note that since the end of June expenditure for this grant has improved and stood at R95 million by the end of August 2011 4242