PRESENTATION TO THE STANDING COMMITTEE ON FINANCE AND ECONOMIC AFFAIRS

19 February 2001

Appropriation Adjustment Budget 2000/1 Bill 16 February 2001

1. INTRODUCTION

The 2000-2001 financial year has been a good year for educational performance, especially the Senior Certificate Examinations. In addition, it was a year during which a number of new policies have been implemented.

Most important of these was the funding of schools as provided for by the Norms and Standards for School Funding. The norms provided for differentiated school funding based on the relative poverty of communities and the implementation of section 21 thereof which transfers powers, to schools that are ready, to self manage budgets in relation to recurrent expenditure.

The implementation of the Admissions Policy especially in relation to Grade 1 in 2000 was successfully implemented. This policy requires the admission age to Grade 1 learners to be seven years old. This resulted in reduced enrolments in grade 1 as a result of other seven old already being in the system as a result of the previous admissions policy.

The department has been involved in a process of restructuring which was implemented in the last quarter of this financial year.

Three regional offices were closed down and eighteen education districts were reduced to twelve districts which are now wholly located within local government demarcations. The districts are responsible for the provision of all pre-tertiary education within its demarcation. They will provide both professional and administrative services to schools. As such they will receive a large number of delegated powers to ensure effective management of education and service delivery at the lowest level.

As early as November 2000, a new financial branch was created by the employment of a Chief Financial Officer, a Chief Director for Financial Management and a Director for Education Financing and Planning. Two more posts were created viz., a Chief Director: Educational Financial Planning and Director: Management Information Systems. This is in addition to the Director: Finance position on the old structure.

2. ADJUSTMENT BUDGET 2000/1

The adjustments that have to be effected during 2000/1 include:

• The payment of the Chief Financial Officer's Salary by the department of Finance and Economic Affairs for a period of three years. The amount of R154,000 is for the period December to March 2001.
• The improvements in conditions of service as negotiated was 1,5% higher than budgeted for. As a result an additional amount of R111,842 million was allocated to the department for improvements in conditions of service.
• Rollover for Education Policy Reserve fund. As a result of the late allocation of funds in 1999/2000, the unspent portions of the budgets for approved quality intervention projects were rolled over on the advice of the National Department of Education.
• Allocation from the Department of Health for school and workplace HIV/AIDS-related interventions and projects.

The final Appropriation Adjustment Budget for Education - Vote 5

R'000 R'000

Voted Budget
• 6 835 484 Transfers Finance
• CFO Salary 154
• Improvements in Conditions of Service 111 842
• TAF/GDE/124 - Roll-over for PRF 12 490

Suspensions

• Health TAF/DHA/186 - AIDS Programme 1 500 Adjustments 125 987 Adjusted budget 6 961 471
• During 2000, the National Department of Education allocated R2,296 million for HIV/AIDS projects in Education. Provincial Treasury has advised us that this is included in the Voted Budget.

3. UNFORESEEABLE AND UNAVOIDABLE EXPENDITURE

There were no unforeseeable and unavoidable expenditure incurred by the department during the 2000-2001 Financial Year.

4. FUNDS FOR EMERGENCIES

There is no expenditure in relation to emergencies incurred by the department during the 2000-2001 Financial Year.

5. SAVINGS - OVERSPENDING/UNDERSPENDING

In terms of our projections to the 31 March 2001, Gauteng Department of Education will have a potential underexpenditure of R127 Million. The reasons and action to be taken are as follows:

• Personnel-Unspent: R90 Million provided for Mutually Agreed-upon Severance Packages (formally Voluntary Severance Packages) in relation to teacher college staff who will not be absorbed by the Department or the Universities. The funds have not yet been utilised due to the late gazetting of the incorporation of the colleges into universities. We have requested for a rollover of the R90 million to be used for the payment of Mutually Agreed-upon Severance Package (MASP) in the 2001/2 Financial Year.
• Personnel-Savings: As a result of the non-filling of vacancies due to:

• restructuring; and
• the time it takes to fill educator vacancies in institutions created by natural attrition such as death, retirement and resignations;

personnel savings have been realised. The projected savings amount to R10 million. This is within acceptable levels of variance

• Non-personnel: The remaining R37 Million is located under the non-personnel expenditure budget. This amount is mainly located in allocations to schools, on whose behalf we procure goods and services. In this regard, the department has developed plans to support these schools in spending the remaining portion of their allocations before the end of the financial year. R37 Million will be transferred to schools in addition to the transfers specifically earmarked to address school infrastructure.

6. ROLLOVERS REQUIRED

As result of a late proclamation of the Incorporation of teacher colleges into the Higher Education Sector and the terms of incorporation, the department was unable to begin the process of rationalising the sector. The process has begun and will be completed by the end of 2001. In discussion with the Provincial Treasury, it is agreed that the rollover of R90 million will be granted for the payment of MASPs in 2001/2 Financial Year.

7. BUDGET CONTROL AND MANAGEMENT

As a result of the new financial branch created, capacity has been developed for the effective management of the department's budget. Already, the new team has begun to impact on the management and utilisation of the department's budget and expenditure.

However, this requires the development of appropriate systems that will ensure effective management and accountability.

The team has already impacted on the 2001-2002 Budget by ensuring greater and more detailed planning and the allocation of funds to support the plans of the different units. This will ensure that the Department's budget will be more credible in 2001-2002.

In addition, the department will ensure greater financial management and accountability at all levels. In the case of districts and head office chief-directorates, senior state accountants will be employed to support senior managers in their financial management and responsibilities.

8. CONCLUDING REMARKS

As a result of the structural changes and the implementation of new policies, the department has had to manage the budget tightly but did experience problems in ensuring that the restructuring did not affect the financial management and utilisation of funds. In this regard the department had to centralise the management of budget for the last quarter. This was done without affecting the overall structure of the budget. This was done to minimise the impact on service delivery as a result of the movement of personnel and the establishment of new offices.

We are confident that we would spend our budget as planned and allocated.

Lebelo Maloka
Gauteng Department of Education
011 355 1509
082 902 9880
lebelom@gpg.gov.za