Framework for Strategic Plans and Annual Performance Plans: briefing by National Treasury

Meeting report

Framework for Strategic Plans and Annual Performance Plans
Ms Euody Mogaswa, Director: Budget Reform, National Treasury, explained in terms of the Government Wide Monitoring and Evaluation framework, National Treasury was responsible for managing performance information. In view of that, the following framework had been developed:

• Framework for Managing Programme Performance Information (FMPPI):
This was issued by National Treasury in May 2007 and it outlined the key concepts in the design and implementation of management systems to define, collect, report and use performance information in the public sector. It clarified definitions and standards for performance information in support of regular audits.

National Treasury had realised the quality of performance information in planning and budgeting documents was not appropriate. There was a need to improve the quality of reported performance information, and as a result they had developed a further framework:

• New Framework for Strategic Plans and Annual Performance Plans
This was issued to national departments in September 2010 and it provided a guide of what should be in the Strategic Plan and Annual Performance Plan - taking other existing policies, plans and the budget into consideration. It was not a replacement for the FMPPI. Both frameworks should be used by entities when preparing planning documents, especially for performance information.

It aim was not to guide how policy and long-term planning processes should be done, but rather indicate how the components of such policies and plans were to be implemented over a five-year period. Another reason for it was to improve the quality of accountability documents particularly performance information and to align planning, budgeting, implementation, monitoring and evaluation, and reporting – in line with Government Wide Monitoring and Evaluation. The framework was not prescriptive as the templates could be customized because departments and entities were different. The Treasury Regulations indicated what was prescribed. It had been developed in collaboration with the National Planning Commission, the Department of Performing Monitoring and Evaluation (DPME) and the Auditor-General.

Ms Mogaswa explained the flow of information in planning which started from the constitutional and legislative mandates that informed the planning frameworks of all spheres of government. The information on that higher level would inform what would go into the strategic plan which would include five year goals and targets and the strategic objectives. The information that was in the strategic plan would inform what went into the annual strategic plans and that would inform what went into the institutional operational plans and individual performance agreements.

Ms Mogaswa showed by means of diagrams the documents of the planning, budgeting and reporting cycles and the development of Strategic Plans and Annual Performance Plans within context as the information going into the planning documents of departments would have to come from all three spheres of government. The strategic plan of the department would be informed by the Medium Term Strategic Framework (MTSF) which had the broad government priorities and key policies, and that would inform the National Plans and Frameworks, Sectoral Strategies as well as the Provincial Growth and Development Strategy. The President’s State of the Nation Address would inform what went into the Programme of Action and based on that the Premiers would give their State of the Province Addresses. All that information would inform what the departments would put into their strategic plans and annual performance plans. From the bottom up they had the local Government Integrated Development Plans (IDPs) that would be taken to the District Offices which would also inform what went into the strategic and annual performance plans.

She produced diagrams side-by-side of the three parts to the strategic plan and annual performance plan.

Strategic Plan
These should be five-year plans aligned to broader government strategies – ideally aligned to the electoral cycle. It should ideally not be changed over the 5-year period unless there were significant policy changes relating to the mandate or the service delivery environment. Amendments could be tabled in the next tabling period or as an annexure to the Annual Performance Plan. Strategic Plan did not replace the need for long-term planning or other more specific plans – it should be used to prioritise and plan the progressive implementation of its other plans and focus on strategically important issues.

• Part A: strategic overview, vision, mission, values and the strategic goals over a five-year period.
• Part B: strategic objectives, resource implications and the risks
• Part C: links to other plans such as long-term infrastructure plan, conditional grants, review of public entities, public-private partnerships.

Annual Performance Plans (APPs)
They aim to link the plans, budgets and the performance of an institution . They present programme performance indicators and targets – to achieve goals and objectives over the MTEF.

• Part A: recent developments in the operational environment and link budget – for achieving strategic goals and objectives.
• Part B: strategic objectives, performance indicators and targets for programmes / subprogrammes.
• Part C: budgets for infrastructure projects, changes to conditional grants, public entities and public-private partnerships.
• Quarterly performance reports would be expected based on the quarterly targets set in the APPs
• APPs would inform Annual Reports.

Ms Mogaswa explained essential concepts:
(1) Strategic goals
• Goals identified areas of the institutional performance critical to the achievement of the mission.
• Relate to national priorities for the sector/cluster.
• Should be realistic and achievable.
• Should ideally be SMART, that is, be written in a statement of intent that was Specific, Measurable, Achievable, Relevant and Time-bound.

(2) Strategic objectives
• Should clearly state what the institution intended to do to achieve its strategic goals.
• Should generally be stated in a form of an output statement
• Should include strategic intentions, specific interventions and progress measures.
•  Written as a performance statement that is SMART.
 
(3) Performance indicators
• Track the on-going performance of the institution.
• There should be a comprehensive list of internal core indicators in budget document and strategic plan.
• For concurrent functioning of departments and entities it was important to be careful in selecting core indicators and report only on its specific functions.
• Ensure consistency of indicators in all documents including strategic plan, annual performance plan, annual reports and budget documents.

(4) Targets
• Applicable in the annual performance plan but not the strategic plan.
• The baseline and targets should be expressed in terms of numbers and if a percentage was used then the absolute numbers should be presented as well.
• Where appropriate the annual targets for the budget year needed to be broken into quarterly targets.

The indicator measurement had four elements: the indicator definition which identified what should be measured over what period of time; the baselines which included the first measurement of the indicator; targets which were the score which one would like to achieve; and the actual output which was the score for each indicator.

Quarterly Performance Reports
Ms Mogaswa stated that their purpose was to report on overall progress made with the implementation of the department’s performance plan both quarterly and annual basis. This could be viewed as an enabling mechanism that allowed accounting officers to track progress against what had been planned and what was actually achieved with regard to service delivery outputs. The Treasury Regulation 5.3.1 provided that quarterly performance results had to be tabled at the Executive Authority each quarter. They should lead to the Annual Results that would be reflected in the Annual Reports.

The timeframes for the production of the Quarterly Performance Report was provincial departments must submit this within 30 days after the end of each quarter to National Treasury. For the fourth quarter, they should report on the department’s performance against all programme performance indicators. The national departments would only start submitting quarterly performance reports to the National Treasury only in 2011/12 financial year.

Annual Reports
This was a formal requirement for year-end reporting and the ultimate accountability document. It should align with planning documents such as the strategic plan and the annual performance plan. It should provide information to the legislatures so they could exercise proper oversight. The information should be published so that civil society could engage with the government meaningfully.

It records, reports and evaluates the past year’s performance and contains:
Part A: Legislative Oversight Role
Part B: Performance (Non-financial Data)
Part C: Financial statements – Auditors Report
Part D: Human Resource Data.

The purpose of linking plans to budgets ensured operational effectiveness. The key link between the objectives as reflected in the strategic plan and operational budgets should reflect the main areas of responsibility or service delivery.

Ms Mogaswa discussed and gave examples of the performance information required in the strategic plan,  the annual performance plan and annual report in terms of Strategic goals, Strategic objectives, Performance indicators and Targets (see document).

Treasury Regulations (Chapters 5 and 30) were being amended to reflect the concepts of the strategic plan and annual performance plan, and they would be published for public comment. Key changes were:
- Strategic plan must be a 5-year plan.
- Collaboration between different spheres of government and between departments and related entities must be reflected.
- It must be signed off by the Executive Authority
- There should be submission of the first draft to the National Treasury and DPME for comments.
- There must be submission of quarterly reports to the National Treasury and DPME.

Ms Mogaswa concluded that the strategic plans that were tabled at the beginning of 2011 may not fully comply with the new framework especially for national departments because there was no time to engage with the departments for comment. However, they would use the 2011/12 financial year to go through all the processes of working through the strategic plans and annual performance plans. The plans that would be tabled at the beginning of 2012 should be aligned to the new framework. They had also emphasized that the outcomes and outputs in the Service Delivery Agreements (SDAs) should be reflected in the strategic plans and they had provided a template for definition of indicators.

Discussion
The Chairperson thanked Ms Mogaswa for her informative presentation.

Mr D Van Rooyen (ANC) said that he welcomed the presentation but raised a concern about the lack of collaboration in the three spheres of government. He was not sure how it was going to be done because it was difficult to have collaboration in all spheres. He was pleased with the bottom-up approach but was not clear how it would be realized.

Dr Z Luyenge (ANC) appreciated the presentation because it would assist them in their oversight duties. He asked how they were going to monitor and evaluate the quarterly performance reports from the department because monitoring was done during the cycle progress and evaluation was done at the end of the cycle so as to compare the allocated funding and the desired outcomes. He also asked if the Auditor-General (AG) was going to look at the financial spending side as well as the documentation supporting the expenditure and was there any indication that the AG would also look at the non-financial side of expenditure.

Ms Mogaswa responded that in terms of ensuring collaboration in the three spheres of government, there were forums between the National Treasury especially on concurrent functions of departments. There were forums that involved the National Treasury, the Provincial Treasury and the relevant departments where, in terms of planning, they had to sit together. Local government would have to indicate what their plans were not only the Integrated Development Plans (IDPs) but also other plans that would feed into the provincial information that would then go into the national plan. So departments knew what their responsibility was for that sector and what must go into the different plans to ensure they implemented this. It had not really been as ideal as they would like it to be but Treasury was facilitating and involving all the role players. There were different forums that ensured collaboration amongst the three spheres of government to make sure that there was improvement and all the relevant information was incorporated into those plans. They were monitoring this to make sure that they were implemented and that budget was aligned in those plans.

In terms of monitoring and evaluation, the strategic plans and annual performance plans would be analyzed by Treasury and the DPME. They would give them input to ensure they were aligned to the requirements of the framework and also what went to the plans was aligned to broad government priorities.

In terms of quarterly reporting, she stressed that it was not only based on expenditure but specifically on performance information. They would engage with them on a quarterly basis to check whether there was progress which was correctly referred to as monitoring by Dr Luyenge. But in terms of the evaluation at the end of the term, that would be the responsibility of the DPME. On Treasury’s side, they would be only assisting with in-year monitoring. The information that was reported via in-year monitoring would go to the annual reports and that information would be taken to Parliament for accountability by the departments.

The Office of the Auditor-General (OAG) was a part of the process and they had already started auditing performance information in 2005/6. They were auditing in phases and their findings had not been officially expressed as an opinion but they had outlined these opinions in the management report. They would continue to audit performance information which is why they had involved them when they were developing the framework and also when they did the training on the framework. They were actually looking and had a category of  “the consistency, reliability and usefulness of the information”. The OAG was actually checking whether the information that was reported in the different documents had “the evidence” that the departments had done something as required by their plans. National Treasury had been having discussions with the OAG and PM&E about their approach because National Treasury had been getting feedback from the departments and entities about the approach the OAG was using in auditing performance information where in some cases there was a feeling that the OAG was telling them what information to put in and that somehow contributed to the changing of policy direction - but there were on-going discussions about this. However, the OAG was definitely auditing performance information and not just financial information.

Mr Van Rooyen stated that the presenter referred to “forums” which was an old way of avoiding not answering directly or not giving a relevant answer. The President espoused the approach that they should do things differently in order to champion service delivery issues. By referring to forums, the presenter took a status quo approach. He asked how they could move from that approach because at the end of the day service delivery was negatively affected. The people who were under pressure due to service delivery protests were the councillors at local government level. They needed to do things differently. However, Treasury’s perspective was enforcing these “noble plans” they were coming up with for all spheres of government to follow. It was very important to change gear, especially in terms of implementing the “beautiful strategies” Treasury was coming up with.

Mr L Suka (ANC) asked to what extent Treasury was capacitated to do the job because they would have a situation whereby only two or three people were capacitated to oversee the whole implementation process as far as the departments were concerned. And to what extent had they capacitated the departments to deliver on these regulations and frameworks because there was no uniformity amongst the departments.

Ms Mogaswa replied about enhancing local government performance with regard to planning and spending. She said she could get people from Inter-Governmental Relations to give the Committee a detailed outline of what Treasury was doing to ensure there was an interface between local and provincial governments in relation to planning and spending.
With regard to the capacity of National Treasury in analyzing the plans and giving assistance to the departments, she was comfortable in saying there was capacity. Basically the framework was developed by Budget Reform in conjunction with Inter-Governmental Relations and Public Finance. After they had developed the framework, they had trained people in the Public Finance and Inter-Governmental Relations divisions. They had invited departments and public entities to workshops to take them through the framework and its requirements and as well as how to implement the framework, and what to put in each section of the strategic plan and annual performance plan.

When those plans came to Treasury, they would go to the Public Finance division because they would interface with the departments. Different people from the Public Finance division were responsible for a specific department and each person would be looking at the plan for their assigned department an analyzing it. They had developed a check list which stated when they had a strategic plan and annual performance plan, what was it that they were looking for and how to ensure that the plan was of good quality, the information comprehensive and a true reflection of the strategy of the department and also aligned to broad government initiatives. The Public Finance and the Budget Reform divisions of National Treasury would be looking at the national planning documents and Inter-Governmental Relations (IGR) would be looking at provincial departments, and that would be done together with the Department  of Performance Monitoring and Evaluation (DPME). They would have a consolidated comment on the document together with DPME and advise the departments on the document so that by the time they tabled their plans, they would already received feedback information from Treasury and the DPME.

On the quarterly report, she stated that there was a template in the framework and the provincial departments had a standardized template. They were also developing a template for national departments for quarterly reports. The basic information would be standardized as far as possible depending on the type of department and they would assess that information. They were looking at monthly and quarterly expenditure reports but there would be also a template for performance information and the same people in the Budget Reform, Public Finance division and IGR would be analyzing those quarterly reports. They would be able as a team to advise and assist the departments to ensure that the information got through and was understood. In provinces, the Provincial Treasury and IGR would ensure that they assisted and advised the provincial departments. The quality of quarterly reports would not happen immediately and would take a long time to achieve. In the national departments they would request quarterly performance reports with verified information from departments and entities, and for some departments it would be a manual verification which would take longer. They should be given time to verify so that the information verified was appropriate information.

In terms of capacitating the departments, Ms Mogaswa stated that they had provided training and offered technical assistance after the training to take them through a step by step approach on how to develop a strategic plan. The technical assistance unit was available to assist the departments with their strategic plans. Some departments and entities had used that technical unit as a facility to get that assistance.

Mr Van Rooyen said that the technical assistance that was provided by Treasury should be given whenever it was necessary because if there was such technical assistance, departments and entities would avoid using outside consultants. He hoped they were capacitated enough to give that technical assistance, and they needed to encourage that trend. He asked if there was any circular that had been issued by the Treasury to encourage such practice.

Dr Luyenge stated that there was a problem with Inter-Governmental Relations forums because they could not rely on informal structures and in the past no decisions could be implemented from such forums. He hoped because of new changes that decisions taken from such forums would be implemented or considered by relevant stakeholders.

Mr Van Rooyen asked if there was any template for quarterly reporting of national departments as was the case in the provinces because it was expected of the Committee to have such kind of a tool. If it was not yet developed what should they do as a committee?

Ms Mogaswa replied that it was not only local governments that were using consultants to develop their strategic plans, but also national government departments. They had tried to discourage the use of consultancies when developing strategic plans. They tried to explain the framework to the departments in a way that they would be able to develop their plans on their own. If they looked at the requirements of the framework, it was not really a new thing that they developing. They would not have to start afresh or not know where to start. Every department and entity had a strategic plan but it was only to enhance, improve and add information and change the way information was reported. They did not need new resources or a consultant to do their plans. This was just a mindset issue and they had tried to address that. They hoped that the message had got through and there was going to be more communication between Treasury and the departments.

The technical assistance unit was available and they had enough capacity but they would not be able to assist at one go all the departments and entities, it depended when the need arose and how much they were needed. It was not everybody that needed technical assistance to go there and start from scratch. They would respond to the requests as they came in order to be able to assist as far as possible.

They had not issued any circular to discourage the use of consultants but when they monitor the expenditure information they always looked at the percentage of spending on consultancies especially by programmes where they identified higher spending on consultants. They queried that expenditure with the particular department which were aware that they should not spend money on consultants.

The template on quarterly reports was in progress and the Budget Reform office was developing it. For national departments, the Quarter 1 information would be required by the end of June 2011and the template would be available within the next two weeks. But beside that, they wanted improve the template in the framework and the departments already knew what kind of information that was required.

The Chairperson said that the issue of overall expenditure had created a problem for the Committee in its oversight duties. She was concerned that there was always a repetition of the indicators on overall expenditure of the department and it was a question of copy and paste since the 2005/06 financial year and that was a problem. In slide 20, it highlighted that an indicator was a measurable tool that was used. The strategic goals did not follow the measurable objectives of the department. It failed to align the overall expenditure to the selected performance indicators. National Treasury had developed and taken the framework to the three spheres of government without giving the Committee a chance to identify problems in the framework. The framework was therefore not equipped for the Committee to do its oversight duty and it was not happy about the framework.

Mr Van Rooyen emphasized that a circular was needed to demonstrate about how they would deal with issues of irregular expenditure and the unnecessary use of consultants by departments because it was a binding document.

Ms Mogaswa stated that she would take the issue about the circular back to the Treasury and she would get back to the Committee. She agreed with the Chairperson that they were should have given the framework to the Committee for comment before they released it to other spheres of government. The Committee could still do that and then let them know where the challenges were. Treasury could take these into consideration and see how could they change the framework in order to enable the departments to provide information that would be useful for the committee to perform its oversight function with information that was more relevant and adequate.

In terms of the selected performance indicators that were provided in the Estimates of National Expenditure (ENE), basically the department should have the same indicators if their programme structure and policy has not changed. The problem that they were having was that sometimes the information that was put in the ENE was what they thought would be easily reported on or information that was easily accessible. If the quality of the information was not good, they always engaged with the department to try and get better indicators. That was why initially they introduced the selected term indicators but if they limit to term indicators they restricted the department and missed some of the important information. They were not giving a limited number but they still say a high level of indicators and the reason they said its “selected” was because when they had indicators by programme, they ended up having operational indicators where people talked about number of training sessions and the workshops but that was not really the indicator of what the core function of a programme was. The indicator should be able tell which programme it was linked to so that it was aligned to the expenditure. Target setting was also a problem with departments because sometimes one finds that it does not correspond to the way the information was received or they did not recorded the information in a way it was supposed to be reported. The development of indicators and target setting was an ongoing process that they had to continue improving together with the departments and with the assistance of the committee as well. Performance management information was also an on-going process and that was why they were always introducing new guidelines. It was very important for the Committee to raise those concerns to improve the quality of the reports.

The Chairperson thanked Ms Mogaswa for the important and informative report and adjourned the meeting.