Basic Education Supplementary Presentation: National &Provincial Education Expenditure Trends and

Projections

1

Presentation by Dept of Basic Education to the Joint Sitting of the HET & Basic

Education Portfolio Committees

Parliament, 13 October 2010

Department of Basic Education Expenditure Trends & Projections

2

2010/11 Allocation vs Expenditure per programme

Allocation Actual Expenditure at 30 Sept 2010

Balance % spent

R’000 R’000 R’000 R’000

1: Administration 252 813 114 126 138 687 45.1%

2: Curriculum Policy, Support and Monitoring

1 354 252 214 113 1 140 139 15.8%

3: Teacher Education Human Resource Development and Monitoring

513 717 450 474 63 243 87.7%

4: Planning, Quality Assessment and Monitoring and Evaluation

148 698 54 082 94 616 36.4%

5: Social Responsibility 3 896 720 2 000 864 1 895 856 51.3%

Total 6 166 200 2 833 659 3 332 541 45.9%

Spending trends per economic classificationEconomic Classification Allocation Actual

Expenditure at 30 Sept 2010

Deviation % spent

R’000 R’000 R’000 R’000

Compensation of Employees (Including Examiners and Moderators)

255 401 113 116 142 285 44.3%

Goods and Services 1 521 680 271 070 1 250 610 17.8%

Financial transactions in assets and liabilities 0 0

Transfer Payments 4 385 069 2 446 775 1 938 294 55.8%

Provinces and municipalities 3 931 371 2 013 898 1 917 473 51.2%

Departmental agencies and accounts 441 491 432 817 8 674 98.0%

Foreign governments and international organisations

12 157 0 12 157 0%

Non-profit institutions 50 0 50 0%

Households 60 -60

Capital Expenditure 4 050 2 698 1 352 66.6%

Machinery and equipment 4 065 1 658 2 387 40.8%

Software and other intangible assets 5 1 040 -1 035 20800.0%

Total 6 166 200 2 833 659 3 332 541 45.9%

Allocation per Programme over the 2010 MTEF

Programme 2010/11

R’000

2011/12

R’000

2012/13

R’000

P1: Administration 252 813 262 005 274 960

P2: Curriculum Policy, Support & Monitoring

1 354 252 1 757 789 1 895 622

P3: Teacher Education Human Resources Development and Management

513 717 546 027 573 541

P4: Planning, Quality Assessment and Monitoring and Evaluation

148 698 156 682 166 058

P5: Social Responsibility 3 896 720 4 827 309 5 189 135

TOTAL 6 166 200 7 549 812 8 099 316

Allocation Summary over the 2010 MTEF

SERVICE 2010/11

R’000

2011/12

R’000

2012/13

R’000

Compensation of Employees 199 910 210 729 221 940

Examiners and Moderators 13 830 14 660 15 393

Transfers to Public Entities 441 350 467 831 491 223

Other Transfers 12 348 13 081 13 730

Conditional Grants 3 931 371 5 048 080 5 447 384

Earmarked Funds 1 454 314 1 672 686 1 780 319

Departmental Operations 65 119 68 135 71 763

Projects 47 958 54 610 57 564

Total 6 166 200 7 549 812 8 099 316

Conditional grants over the 2010 MTEF

Conditional Grants 2010/11

R’000 2011/12

R’000

 2012/13R’000

Technical Secondary Schools Recapitalisation 80 000 200 000 210 000

Dinaledi Schools 70 000 100 000

HIV and Aids Life Skills 188 045 199 328 209 294

National School Nutrition Programme 3 663 326 4 578 752 4 928 090

TOTAL: CONDITIONAL GRANTS 3 931 371 5 048 080 5 447 384

Total Provincial Education Expenditure Trends and Budget

Pressures

8

9

Provinces

Approved Budget Adjusted Budget Actual Expenditure August 2010

Projected Expenditure Sept 2010-Mar 2011

Total Projected Expenditure for

2010/11

Projected under/(over)-expenditure

% Spent-August

2010

 PEDs

R'000 R'000

R'000 R'000 R'000 R'000 %

         

Eastern Cape 22 679 787 22 679 787 9 342 194 12 891 502 22 233 696 446 091 41.2%

Free State 8 539 463 8 539 463 3 227 524 5 357 204 8 584 728 ( 45 265) 37.8%

Gauteng 22 485 539 22 485 539 9 083 430 13 797 235 22 880 665 ( 395 126) 40.4%

KwaZulu-Natal 29 034 762 29 034 445 11 711 291 18 133 754 29 845 045 ( 810 283) 40.3%

Limpopo 18 814 610 18 814 610 7 305 461 12 277 792 19 583 253 ( 768 643) 38.8%

Mpumalanga 11 530 252 11 530 252 4 504 850 7 543 578 12 048 428 ( 518 176) 39.1%

Northern Cape 3 457 789 3 457 789 1 369 948 2 129 929 3 499 877 ( 42 088) 39.6%

North West 9 050 791 9 050 791 3 304 402 6 026 581 9 330 983 ( 280 192) 36.5%

Western Cape 11 845 691 11 845 691 4 620 621 7 225 070 11 845 691 39.0%

TOTAL 137 438 684 137 438 367 54 469 721 85 382 645 139 852 366 (2 413 682) 39.6%

The table below reflects a summary of the budget and expenditure figures obtained from In-year monitoring reports

10

•The total average expenditure by PEDs for the reporting period is R54,469 billion (39,6%) of the adjusted budget of R137,438 billion. The spending rate is lower compared to 41,8 per cent in 2009/10 due to cost containment measures introduced by the PEDs in 2010/11 financial year. •The PEDs are projecting an over-expenditure of R2,413 billion at the end of the financial year, but the current expenditure does not support that, clear picture will be realised once the annual increases have been finalised.

Compensation of employees•The PEDs incurred an expenditure of R43,682 billion (41,7%) of R104,643 billion on compensation of employees. The projected expenditure for the remaining months is R65,258 billion, resulting in over-expenditure of R4,297 billion at the end of the financial year. The current projected over expenditure is expected to increase after the conclusion of the improvement of conditions of services (ICS). The PEDs budgeted 5,3 per cent and the current percentage on the table is 7,5 excluding the expected increase in housing allowance of R300,00. Compensation of employees remains a cost pressure in the education sector and compromises service delivery regarding the shortage of other resources.

Goods and services •The actual expenditure on goods and services is very low at R3,841 billion, representing 26,4 per cent of R14,524 billion. Little improvement is expected in the course of the financial year, but this item is a target for cost containment measures as most of PEDs have already indicated during the first quarter visits.

11

Capital Assets•The actual expenditure on capital assets is still low at R1,511 billion, representing 21,1 per cent of R7,159 billion. Northern Cape reflects the highest spending rate of 38,4 per cent followed by KZN (36,6%) and Western Cape (31,9%), mainly on buildings and other fixed structures. The lowest expenditure is realised in Free State at 8,3 per cent. The expenditure on machinery and equipment has been slow, the highest being in Gauteng at 38,6 per cent and the lowest being North West at 1,6 per cent. Most of the PEDs indicated that this items will also suffer because of the cost cutting measured introduced.

Conditional Grants•The average spending for all conditional grants is less than 30,9 per cent except for new conditional grants Technical Schools which is low at 4,9 per cent. Only two PEDs, namely, Eastern Cape (35.0%) and Gauteng (3.1%) has spent on its budget for Technical Schools Recapitalisation. The Department continues to check readiness of the PEDs, in implementing the said conditional grant.

Personnel Expenditure Trends and Budget Pressures

12

Oversight : Planning & budget projections

•Projections for the 2010/2011 MTEF•Budget trends•Reasons for over expenditure•Recommendations

13

Projected cost : 2010/2011

14

ProvinceBudget with carry

through effect R'000 PED Budgets R'000 Variation R'000 Comment

EC 18,278,224 17,372,413 -905,811 Outside budget

FS 6,500,672 6,666,435 0 Within budget

GP 16,320,025 16,100,096 -219,929 Outside budget

KZN 22,402,126 22,022,542 -379,584 Outside budget

LP 15,135,536 14,667,809 -467,727 Outside budget

MP 8,988,367 9,217,097 0 Within budget

NW 6,944,098 6,814,709 -129,389 Outside budget

NC 2,665,977 2,674,086 0 Within budget

WC 8,773,312 9,107,962 0 Within budget

Total 106,008,336 104,643,149 -2,102,439 Outside budget

Budget Trends

15

Percentage in expenditure Percentage trend in IncreasesPROVINCES 2008/09 2009/10 2009/10 2010/11 2011/12 2012/13 % % % % % %Eastern Cape 100.0% 105.3% 18.1% 6.9% 7.2% 3.2%Free State 106.7% 98.9% 23.0% 7.4% 5.6% 4.6%Gauteng 102.7% 102.2% 21.0% 7.7% 10.1% 2.8%KwaZulu-Natal 103.7% 100.2% 20.4% 5.2% 6.3% 5.1%Limpopo 103.9% 103.8% 19.7% 7.5% 5.7% 4.2%Mpumalanga 106.0% 101.6% 19.1% 11.6% 7.0% 6.5%Northern Cape 111.4% 100.4% 24.3% 7.7% 8.2% 4.5%North West 100.0% 98.2% 17.1% 2.9% 9.1% 5.2%Western Cape 100.0% 100.2% 15.7% 11.1% 7.5% 5.4%TOTAL 102.9% 101.8% 19.5% 7.6% 7.4% 4.6%Expected growth percentage 17.5% 6.8% 6.80% 6.80%Explanation 11.5% COL+ 6% OSD

Reasons for shortfall• Filling of unfunded posts• Excess educators not placed which is costing

Education an estimated R2.9 billion• Incorrect grading of posts in offices by some

PEDs

RECOMMENDATIONS

1. Vacant teaching posts be frozen in cases whereby the curriculum is not compromised 2. Vacant teaching posts be filled if excess educators/bursars fit the profile of the post3. Office based posts be frozen in 2010/11 if they are not critical4. Clear criteria on what is “critical” must be determined5. Staff establishments on PERSAL must be aligned with approved staff establishment6. The Task Team established on filling of teaching posts must conclude their work and provide :-Guidelines on how educator posts at schools are to be filled in provinces in line with existing policy and collective agreements with preference given to excess educators and bursars. An exit strategy when placement is not possible.

17

School Infrastructure

With a focus on the Accelerated School Infrastructure Development

Initiative (ASIDI)

18

BASIC SERVICES AND IN-APPROPRIATE STRUCTURES

19

Summary per province

Schools below basic Functionality

Province No Of Schools Total Amount

Eastern Cape 1319 R 18 349 900 898

Free State 206 R 2 256 706 416

Gauteng 50 R 1 021 279 153

KwaZulu Natal 576 R 6 142 595 081

Limpopo 570 R 4 766 955 694

Mpumalanga 513 R 6 612 525 916

North West 144 R 1 058 363 659

Northern Cape 19 R 111 000 097

Western Cape 15 R 99 603 694

Totals 3412 R 40 418 930 608

Total R 40 418 930 608

Capacity R 30 562 560

Grand Total R 40 449 493 168

Projected Financial Requirements

20

2011/12 2012/13 2013/14 TOTAL

1. Infrastructure R 8 223 008 569 R 11 802 079 968 R 20 393 842 071 R 40 418 930 608

2. Capacity building 9.600 000 10 176 000 10 786 560 30 562 560

TOTAL R8 232 608 569 R11 812 255 968 R20 404 628 631 R 40 449 493 168

ASIDI FOCUS•2010-2014 Strategic Planning Period:

•Schools without water, sanitation, electricity and or fencing

•Schools constructed from inappropriate material and are a danger to learners and

educators and overcrowded schools•In addition, prioritised critical teaching and learning spaces in those identified schools

will be provided.•Phase delivered in an accelerated mode 21

ASIDI FOCUS•2015-2020 Strategic Plan

•Expand the provision of critical teaching and learning spaces that are essential to enhance

teaching and learning outcomes.•2020-2025 Strategic Plan period

•By 2025 schools and their teaching and learning environments will be at new and

relevant international best practice level of provision and functionality.

22

ASIDI FOCUS•2010-2025 Strategic Planning Period:

•Strategic Asset Management plan to be put in place and maintenance plans designed, budgeted

for and implemented for each school;•Develop and roll out an innovative strategy to incorporate E-Learning, mobile laboratories and libraries to enhance the learning and teaching

environment;•Future planning and backlogs arising from new

space requirements which present new challenges to be timeously addressed.

23

STATUS QUO•Developed ASIDI Initiative;

•Current funding in the 2010 MTEF amounts to R26b;

•Bid amounting to R40b submitted to National Treasury (includes capacity to DBE and provinces) but unlikely to

receive given budget pressures;•Service provider appointed for development of standard

school designs, specifications and a cost model; •Exploring the use of experienced programme/project

management support from the private sector to manage the programme for DBE;

•Exploring the use of implementing agents to provide programme management support.

24

Way Forward

Develop Model, funding arrangements, procedures, monitoring and reporting

Develop Implementation Plan and submit to Senior Management, HEDCOM & CEM for approval

Implement Plan and monitor

Consultations with affected provinces and stakeholders

25

Overall Conclusion• Provincial budgets are projected to remain under serious

pressure• This is largely due to pressure on personnel expenditure and

need for additional funding for school infrastructure• Improving the credibility of Provincial Education Budgets is a

very important priority• There is scope to improve efficiencies especially (but not

only) in personnel expenditure• DBE will focus on monitoring and support – including a

detailed expenditure review to be done in collaboration with Treasuries and PEDs