INVITATION TO PUBLIC HEARINGS ON DIVISION OF REVENUE ACT

NCOP: SELECT COMMITTEE ON FINANCE

5 MARCH 2007
NCOP SELECT COMMITTEE: 5 MARCH 2007 - DIVISION OF REVENUE BILL, 2007/08

1. The information below aims at justifying the three specific questions raised by the NCOP Select Committee, as follows:

· All conditional grants earmarked for Mpumalanga Department of Education should be reduced because it has failed to appear before the committee during the whole of last financial year (2006/07) to respond on the performance of its conditional grants, majority of which are under performing;

· Reducing the school nutrition grant of the Eastern Cape and North West as they are severely under-performing; and

· Reducing the HIV/Aids conditional grant to Limpopo Province and KwaZulu-Natal which have under-performed.

2. Before the spending performance of any of the provinces can be considered, the committee should once again note the following:

· A once-off allocation of R200 million was made available for the NSNP conditional grant in the 2005/06 Adjusted Estimates. Spending on this allocation was mainly for once-off circumstances such as for the equipping of kitchens. Since the additional allocation only came into effect as late as January 2006, it was not possible for provinces to utilise all these funds before 31 March 2006. The under expenditure in provinces is as a result of unspent portions of this R200 million and not under-expenditure on the original grant. Spending in all the provinces exceeded the original allocation as indicated in Table 1.

Table 1: Expenditure for 2005/06 in R’000 (1)

Province	Original Allocation	Additional R200 million	Total Available Funds	Total Expenditure
Eastern Cape Free State Gauteng KwaZulu-Natal Limpopo Mpumalanga Northern Cape North West Western Cape	194 288 53 817 83 006 198 849 167 836 70 235 24 628 79 357 40 135	43 314 11 747 18 118 43 402 36 633 15 330 5 375 17 321 8 760	237 602 65 564 101 124 242 251 204 469 85 565 30 003 96 678 48 895	213 019 60 628 91 580 198 980 191 072 76 479 28 770 107 072 49 336
Total	912 151	200 000	1 112 151	1 016 936

Source: Department of Education Annual Report 2005 - 2006

· Due to grant-specific circumstances as well as the impact of the school calendar year on spending patterns in provincial education departments, there would be uneven spending in some programmes. This is as a result of a variety of activities that are unevenly spread over the financial year. Consequently, provinces experience “seasonal” spending trends, with the result that spending should not be projected on a straight line basis.

3. Mpumalanga

The Department is not in a position to comment on the attendance of the provincial MEC and the Head of the PED at committee meetings. However, the following information is relevant to the spending record of the province in terms of the current three education conditional grants:

NSNP:

2005/06: For the 2005/06 financial year, the province spent 89,38% of the total grant transfer (including their portion of the R200 million). This represents total spending of 108,89% if the additional funds are excluded.

2006/07: The province has spent 78,23% of the allocated funds as at 31 January 2007. When school holidays are taken into account, this is in line with the province’s estimates for the year and is, therefore, on target. The province is currently targeting approximately 485 000 learners in all quintiles from Grade R to 7. Of the total schools targeted, 443 are no-fee schools. The province manages to spend on average less per meal than in most of the provinces.

HIV/Aids:

2005/06: During this period, the province spent 102,17% of the allocated budget for this grant. The Department succeeded in raising awareness through training programmes for educators and learners. Educators also received intensive training during the financial year on how to support infected and affected learners.

2006/07: The province has spent 86,45% per cent of the allocated budget as at 31 January 2007.

FET Colleges Recapitalisation:

2006/07: Actual spending at FET College level amounts to 53,28% as at the end of January 2007. Although this appears to be low, it is in line with the total average spending for all provinces (53,12%). Commitments are not included. Actual spending as at the end of February 2007 is estimated at approximately 58%. One of the FET Colleges in the province (Gert Sibande College) managed to utilise all its funds.

4. Eastern Cape

NSNP:

2005/06: For the 2005/06 financial year, the province spent 89,65% of the total grant transfer (including their portion of the R200 million). This represents total spending of 109,64% if the additional funds are excluded.

2006/07: The province has spent 67,75% of the total transfer as at 31 January 2007. The province is currently targeting approximately 3 850 schools in all quintiles from Grade R to 4. Feeding is taking place in 1 197 no-fee schools. It should be acknowledged that the province experienced a delay in feeding at the beginning of the 2007 academic year due to the suspension of senior officials responsible for the programme. Contracts with suppliers were also terminated. Feeding has, however, commenced during February 2007 after new contracts were put into operation. An increase can be expected on the average spending. In addition, the province is experiencing a slow submission of invoices from service providers. The Department of Education is providing support to the province to develop a sustainable implementation plan to address the problems experienced and to ensure that feeding is not again interrupted.

5. North West

NSNP:

2005/06: The province spent 110,75% of the total grant transfer (including their portion of the R200 million). When the impact of the additional funds is excluded, total spending was 135% of the original allocation.

2006/07: The province has spent 95,15% of the allocated funds as at 31 January 2007. This is a warning for possible over expenditure. As indicated during the committee’s hearing on 13 February 2007, the province did receive additional funding from their provincial treasury to cover the estimated shortfall and effected some savings within the Vote as a whole to ensure that they do not overspent. The province is currently targeting approximately 375 000 learners from Grade R to 4.

6. Limpopo

HIV/Aids:

2005/06: The province spent 87,69% of the total grant.

2006/07: The province has spent 47,11% of the allocated funds as at 31 January 2007. Although this is low, the province planned to utilise approximately R8 million of their allocation to purchase E-thena computers and software to enhance the teaching of life skills and HIV/Aids programmes in schools.

7. KwaZulu-Natal

HIV/Aids:

2005/06: The province spent more than 100% of the total grant and utilised normal voted funds to conclude all programmes during the year.

2006/07: The province has spent 63,93% of the allocated funds as at 31 January 2007. The province is, however, experiencing problems with the capturing of financial transactions on the BAS system with the result that all the expenditure has not been captured to date. Meetings have been conducted between provincial coordinators and district teams in order to resolve the problem. It can be expected that the level of expenditure will be satisfactory by the end of the financial year.