1

SELECT COMMITTEE ON FINANCE

PUBLIC HEARINGS

21 NOVEMBER 2006

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INTRODUCTION

Objective of this report• Allocation and spending trends• 2006/07 expenditure as at 30 September 2006 [Section 32 of PFMA],• and related service delivery outcomes.

On Conditional Grant Spending, On Capital Expenditure

• Give Progress with regard to the implementation of infrastructure projects

• Challenges and remedial actions taken where problems were experienced.

• Monitoring arrangements within the FSDoE• Conditional Grants planning for 2007/08

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Allocation trends: Conditional Grants

Conditional Grant 2002/03

R’000

2003/04

R’000

2004/05

R’000

2005/06

R’000

2006/07

R’000

2007/08

R’000

1. Early Childhood Development

3,616 4,836 1,000 - - -

2. HIV and Aids 10,083 9,958 7,337 7,947 8,424 8,845

3. NSNP - - - 53,817 64,784 68,023

4. FET Recapitalisation - - - - 30,000 36,000

5.Provincial Infrastructure 10,323 42,526 48,311 55,913 59,268 119,723

6. Own Infrastructure 24,877 - 65,315 73,360 76,881 80,725

TOTAL 48,899 57,320 121,963 191,037 239,357 313,316

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Conditional Grants spending trends continues

01020304050607080

90100

2001/02 2002/03 2003/04 2004/05 2005/06 2006/07

% spending

projection

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2005/06 SPENDING ON CONDITIONAL GRANTS

Budget Transfers Expenditure Balance Commit% Actual Spending

Grant R'000 R'000 R'000 R'000 R'000 03/06

HIV/AIDS 8,402 7,961 441 49 94.8%

National School Nutrition Prog 68,515 60,627 7,888 1,728 88.5%

Ow n Infrastructure Grant 80,017 66,734 66,297 13,720 722 82.9%

Provincial Infrastructure Grant 60,259 39,758 40,183 20,076 2,224 66.7%

Totals 217,193 106,492 175,068 42,125 4,723 80.6%

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Education Total Expenditure as at 30 September 2006

MAIN BUDGET

R’000

PROJECTED OUTCOME

R’000

ACTUAL

AS AT

30 SEPT 2006

R’000

ACTUAL AS % of

MAIN BUDGET

% (OVER) / UNDER OF

MAIN BUDGET

2005/06

as at

30 Sept 2005

R’000

Year –on- Year growth

(% Improve

ment from 05/06 to

06/07)

5,272,241 5,272,241 2,544,308 48,3% 1,7% 2,390,269 6,4%

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2006/07 TOTAL SPENDING BY ECONOMIC CLASSIFICATION

Description Budget R'000

Spending 1st Quarter (Apr - Jun)

R'000

% Spending 2nd Quarter

(Jul - Sep) R'000

% Balance R'000

Current expenditure 4,660,357 1,034,975 22.21 2,196,159

47.12 2,464,198

Compensation 4,185,793 976,710 23.33 2,046,262

48.89 2,139,531

Goods and services 474,564 58,265 12.28 149,764

31.56 324,800

Financial transactions in assets & liabilities

-

- -

133

-

-133

Transfers and subsidies 556,718 238,919 42.92 334,643

60.11 222,075

Provincial and local governments 13,544 2,914 21.52 2,933

21.66 10,611

Departmental agencies 3,000 - -

- -

3,000

Non profit institutions 521,728 232,191 44.50 324,169

62.13 197,559

Households 18,446 3,814 20.68 7,541

40.88 10,905

Payments for capital assets 55,166 6,316 11.45 13,506

24.48 41,660

Buildings and fixed structures 39,312 4,074 10.36 8,036

20.44 31,276

Machinery and equipment 15,854 2,242 14.14 5,470

34.50 10,384

Totals 5,272,241 1,280,210 24.28 2,544,308

48.26 2,727,933

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2006/07 TOTAL SPENDING BY PROGRAMME

Programme Budget R'000

Spending 1st Quarter(Apr - June)

R'000

% Spending 2nd Quarter

(Jul - Sep) R'000

% Balance R'000

1. Administration 353,986 76,611 21.64 174,577

49.32 179,409

2. Public Ordinary School Education

4,107,436 938,377 22.85 1,965,088 47.84 2,142,348

3. Independent School Subsidies

31,684 7,054 22.26 14,936

47.14 16,748

4. Public Special School Education

159,803 37,912 23.72 80,275

50.23 79,528

5. Further Education and Training

155,784 57,284 36.77 89,698

57.58 66,086

6. Adult Basic Education and Training

106,304 14,863 13.98 28,069

26.40 78,235

7. Early Childhood Development

49,638 4,038 8.13 17,999

36.26 31,639

8. Auxiliary and Associated Services

307,606 144,071 46.85 173,666

56.46 133,940

TOTAL 5,272,241 1,280,210 24.28 2,544,308 48.26 2,727,933

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2006/07 CONDITIONAL GRANTS SPENDING

Description Budget Transferred Spending 1st Quarter (Apr - Jun)

Spending 2nd Quarter

(Jul - Sep)

Balance

R000 R’000 R’000 % R’000 % R’000

HIV/AIDS 8,424 - 1,037 12.31 4,811 57.12 3,612

NSNP 64,784 - 17,829 27.52 34,225 52.83 30,559

Own Infrastructure 76,881 62,177

29,844 21.92

33,432 43.49 43,449

Provincial Infrastructure

59,268 53,868 33,185 55.99 26,083

FET Recap 30,000 30,000 63 0.21 2,749 9.16 27,251

Total 239,357 115,045 48,773 20.38 108,403 45.29 130,954

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HIV AND AIDS 2nd Quarter 2006/07

Output Description Allocation Spending 1st Quarter

(Apr - Jun)

Spending 2nd Quarter

(Jul - Sep)

Spending 31-10-2006

Balance

R’000 R’000 % R’000 % R’000 R’000

Advocacy 674 143 21.20 643 5.40 643 31

Training – Master Trainers and educators

3,117 319 10.20 1,893 60.73 2,588 529

Care and Support 1,264 67 5.30 855 67.64 1,055 209

Peer Education 1,011 426 42.20 726 71.81 811 200

Learning Support Materials

1,432 53 3.70 462 32.26 708 724

Support, Monitoring and Evaluation

505 20 4.00 192 38.02 328 177

Management and Administration

421 9 2.40 40 9.50 121 300

Total 8,424 1,037 12.30 4,811 57.11 6,254 2,170

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NSNP Expenditure2nd Quarter 2006/07

Activity Allocation R'000

Spending 1st Quarter

R'000

% Spent

Spending 2nd

Quarter R'000

% Spent

Spending 31-10-2006

R’000

Balance R'000

Actual feeding expenditure

50,620 12,806 28.40 24,535 48.47 29,056 21,564

Transfer payments (cooked meals)

12,136 5,017 61.60 9,655 79.56 10,226 1,910

Administration 2,028 6 0.30 35 1.73 40 1,988

Total 64,784 17,829 27.50 34,225 52.83 39,322 25,462

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NSNP Progress report 2nd quarter 2006/07

Activity Target Outcome 1st Quarter

Outcome

2nd Quarter

•Number of feeding days•Number of learners fed•Number of food production projects to be set up•Number of cooked meals to be served•Number of uncooked meals to be served•Number of community based SMME’s to be contracted

47

246 857

100

15 981

246 857

13

44

234 534

126

134 043

234 534

13

44

234 534

126

134 043

234 534

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•Number of scheduled monitoring visits per month•Number of food preparation areas found to be inadequate•Number of food preparation areas fount to be unhygienic

252

-

-

1 420

100

20

1 320

7

2

•Number of deviations from prescribed menus•Number of food items past its expiry date•Number of defaulting service providers – non-delivery•Number of defaulting service providers – food quality•Number of community members contracted

-

-

-

-

1

1

1

1

1 666

0

0

0

0

1 666

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NSNP – Corrective measures

Inadequate food preparation areas:• Schools are advised to change food preparation area and these

cases are followed up• Number of cases reduced from 100 in 1st quarter to 7 in 2nd quarterUnhygienic food preparation areas:• No storage facilities in most schools• Training of food handlers in all affected schools• Number of cases reduced from 20 to 2Deviations by service providers:• Service provider is called to order• Service provider is not paid for the deviations• No cases reported during 2nd quarterMonitoring• Quarterly meetings with principals• Regular monitoring reports• Feedback from monitors to head office

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FET RECAP EXPENDITURE2nd QUARTER 2006/07

College Amount Transferred

R'000

Spending 30 Sep 06

R'000

Balance R'000

% Spending 31 Oct 06

R'000

% Committed 31 Oct 06

R'000

Total%

(Comm and

Spent)

Flavius Mareka 6,000

927 5,073 15

2,108 35

3,155 88

Goldfields 10,000

209 9,791 2 4,130 41

4,953 91

Maluti 5,000

1,563 3,437 31

1,563 31

3,268 97

Motheo 9,000

50 8,950 1

731 8

1,344 23

Total 30,000

2,749 27,251 9 8,532 28

12,720 71

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Challenges and the Intervention Strategy to improve expenditure on Recap

Challenges• Staff shortage to handle

the project as well as finances

• Low levels of expenditure

• Procurement of goods and services

• Monitoring and support systems

Interventions• Appointment of finance

officers at Colleges

• Funds have been committed through approved tenders and signed contracts

• Monthly reporting is done by responsible managers

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CAPITAL EXPENDITURE 2ND QUARTER 2006/07

*R117,7 million of capital transfers was transferred to PWRT forcapital projects of which an amount of R66,617 million was actually spent by30 September 2006. Currently in process of transferring the funds back toeducation to ensure correct reporting on infrastructure spending. Amount hasalready been corrected in Adjustment Budget.

Description Capital Transfers Capital Assets Total Capital

Budget R'000

Spending 30 Sep 06

R'000

Budget R'000

Spending 30 Sep 06

R'000

Budget R'000

Spending 30 Sep 06

R'000

% Spent

1. Buildings and fixed structures 126,499

66,617* 39,312

8,036

165,811

74,653 45.02

2. Machinery & equipment

-

- 15,854

5,470

15,854

5,470 34.50

Total 126,499

76,263 55,166

13,506

181,665

80,123 44.10

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INFRASTRUCTURE 2nd Quarter 2006/07

Project Implementing Agency (PIA)

2006/07 Allocations

R'000

2006/07 Transfers

R'000

Exp as at 30 June 06

R'000

Exp as at 30 Sep 06

R'000

Own Infrastructure Grant 76,881 62,177New schools PWR&T 52,300Additional facilities PWR&T 13,830Various final & fee accounts, planning, etcPWR&T 3,851Renovations & Rehabilitations Education 6,900

Provincial Infrastructure Grant 59,268 53,868New schools PWR&T 34,600Additional facilities PWR&T 15,315Various final & fee accounts, planning, etcPWR&T 3,953Renovations & Rehabilitations Education 3,000PPP Education 1,400Completion of sportfields Education 1,000

Equitable Share - Capital 29,662 1,650 3,755 7,352Renovations & Rehabilitations Education 28,012Renovations & Rehabilitations PWR&T 1,650

Equitable Share - Current 8,500 684 2,294 Letsema Education 1,500Day-to-day maintenance ( All districts)Education 7,000

GRAND TOTAL 174,311 117,695 34,602 76,263

30,163

PROGRAMME

33,432

33,185

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MAJOR CAPITAL PROJECTS FOR 2006/07

CapitalInfrastructureProjects

New schools ExpectedCompletion date

Allocation2006/7

To commence 2006/7 Kopanong (Bloemfontein)Mautse Primary (Mautse)

Sites handed over 4 October2006

R10 millionR7,3 million

Ongoing fromprevious financialyears (multi-year projects)

Marematlou, Kgotso-Uxolo, Hlaboloha,

Mokgwabong,

J C Motumi,

Dr. Mngoma, EE Monese

November 2006June 20071st phase completed2nd phase December 20061st phase completed2nd phase December 20071st phase completed2nd phase December 2007June 2007June 2007

R6,3 millionR8,1 millionR9,7 million

R9,7 million

R12,8 million

R12 millionR11 million

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MAJOR CAPITAL PROJECTS FOR 2006/07 (Continue)

CapitalInfrastructureProjects

Additionalfacilities atschools

Expected Completion date

Allocation2006/7

To commence 2006/7 (14 Projects)LK Ntlhabathi,Kgutliso,Nteboheng,Motsekuwa, Marobe,Kagisano,Moso,Reiketseditse, Hlolohelo,Bahale,Lehutso,St. Lawrence,Ikanyegeng, Zama

December 2006November 2006December 2006December 2006October 2006October 2006October 2006October 2006October 2006September 2006November 2006October 2006October 2006October 2006

(R 26,85 million)R3,7 millionR2,08 millionR3,17 millionR3,1 millionR1,6 millionR1,3 millionR1,2 millionR2,06 millionR1,3 millionR0,63 millionR1,33 millionR2,2 millionR0,88 millionR2,3 million

Ongoing fromprevious financialyears (multi-year projects)

Qhubeka Completed R2,3 million

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MINOR CAPITAL PROJECTS FOR 2006/07

Category No of schools

Budget Progress Expected completion date

Major renovations 5 R2,720 15% 31 March 2007

Fences 20 R4,000 15% 31 Jan 2007

Conversion for disabled 10 R5,015 10% 31 Jan 2007

Provisioning of strong rooms 16 R1,470 20% 31 Jan 2007

Provisioning of water 75 R2,830 40% 31 Jan 2007

Sanitation VIP 24 R3,293 20% 31 Jan 2007

Conversion of pit toilets 5 R1,100 10% 31 Jan 2007

Septic tanks 5 R0,957 15% 31 Jan 2007

Provision of electricity* 15 - 5% 31 Dec 2007

New toilet blocks 13 R6,875 30% 28 Feb 2007

Toilet blocks for educators 12 R3,778 20% 28 Feb 2007

Letsema 100 R1,500 10% 31 Jan 2007

Mobiles (unacceptable structures) 15 R2,000 15% 31 Jan 2007

* Executed by ESKOM

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PPP PROJECTS FOR 2006/07

• Stages of feasibility study completed:– Needs analysis– Solutions Options Analysis– Due Diligence– Economic Evaluations– Value Assessment (presented to Project Team on 19 October

2006)– Procurement Plan

• Presentation of feasibility study to Executive Management• Submission of feasibility study to National Treasury• Procurement to start immediately after TA1

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CHALLENGES ON INFRASTRUCTURE

Capital (Public Works)• Capital expenditure on track, except for allocations made for

2006/07 for two new schools (Kopanong & Mautse).• Under expenditure on these two projects to be used to fast-track

school fencing programme (projects earmarked for 2007/08 brought forward to be completed before March 2007.

Minor Capital (Education)• Expenditure to date below target, but improving since majority of

sites handed over.• Mechanisms to expedite payments – dedicated staff.• Assisting contractors’ cash flow challenges through cessions.• More frequent site visits by inspectors – more regular payments.

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MONITORING MECHANISMSGrant Reporting framework

FET Recapitalisation • FET Colleges submit individual monthly progress reports to provincial department• Provincial progress reports (expenditure and non-financial performance information) are submitted quarterly to national department• Monthly expenditure report, as required by section 40(4)(c) of PFMA, submitted to provincial treasury and national department

HIV/AIDS

NSNP

• Monthly expenditure report, as required by section 40(4)(c) of PFMA, submitted to provincial treasury and national department• Progress reports (expenditure and non-financial performance information) are submitted monthly and quarterly to national department

Provincial Infrastructure Grant

Own Infrastructure Grant

• Monthly expenditure report, as required by section 40(4)(c) of PFMA, submitted to provincial treasury• Monthly Infrastructure Reports giving full details on each project submitted to provincial treasury

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CONDITIONAL GRANTS PLANNING for 2007/08

Grant Progress

FET Recapitalisation •Inter-provincial meeting held 12 – 14 September 2006 where development of business plans and format were discussed

•Colleges busy drafting business plans

•Officials from National Education to visit province 9 October to assist with finalisation of business plans

•Due date for submission of business plans is 25 November 2006

HIV and AIDS

NSNP

• Draft business plans submitted to national department

Provincial Infrastructure Grant

Own Infrastructure Grant

• Draft infrastructure plan submitted to provincial treasury

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CONCLUSIONMonitoring of and reporting on expenditure againstBudgets is done through:

Monthly Executive Reports on spending against budget Bilateral with National and Provincial Treasury 26

September 2006 Finance Committee meetings were held on 27 and 31

October Meeting with National Education on 7 November 2006 Quarterly review for second quarter held 16 and 17 November 2006

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Education Budget-means to quality education

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THANK YOU