The Budgetary Review and Recommendation Report (BRRR) of the Portfolio Committee on Higher Education and Training dated, 19 October 2011

The Portfolio Committee on Higher Education and Training, having assessed the performance of the Department of   Higher Education and Training, reports as follows:

1. Introduction

1.1 The Committee

The Portfolio Committee on Higher Education and Training was established in terms of Chapter 4 of the Constitution and Rule 199 of the Rules of National Assembly to exercise oversight and the monitoring of the newly established Department of Higher Education and Training and its entities. The Committee shared the Department’s vision for location of the sub-systems of further education and training colleges, adult education and training, higher education, workplace learning, and skills development initiatives into one department. This created an opportunity for maximising coordination among these components of the learning delivery system.

The mandate of the Committee:

In fulfilling its constitutional powers and responsibility, the Committee performed the following functions:

 

  • Facilitate public participation, monitoring and exercise oversight function over the work of the Department;
  • Confer with relevant governmental and civil society organs on higher education and training matters;
  • Enhance and develop the capacity of its Members to exercise effective oversight over the Executive Authority in higher education and training;
  • Monitor whether the Department of Higher Education and Training fulfill its mandate;
  • Process and recommend legislation, international protocols and conventions relating to higher education and training;
  • Participate in National and International educational conferences; and
  • Engage in any activities and programmes aimed at the development and delivery of quality public education to all South Africans.

 

The Committee’s oversight mandate was informed in large measure by the priorities of government stipulated in various policy pronouncements, which included the Medium Term Strategic Framework (MTSF, 2009 – 2014), the annual State of the Nation Address (SONA) and the Strategic and Operational Plan of the Department.

 

In preparation for the BRRR, the Committee among other things considered the Annual Report 2010/11 of the Department of Higher Education and Training, held a meeting with the Auditor-General regarding the audit outcomes of the Department and its entities for 2010/11, considered expenditure progress of 2011/12, considered Section 32 reports of the National Expenditures for the first quarter, strategic plan 2010 – 2015 of the Department, considered issues raised by the President in the State of the Nation Address in relation to higher education  and other relevant sources of information. The Committee further considered the annual financial performance report 2010/11 of the Department’s entity namely; National Student Financial Aid Scheme. The Council on Higher Education did not present its Annual Report 2010/11 since its accounting authority was not present in the meeting.

 

SECTION: 1

 

1.2 The Department

Mandate

  • Increasing the rate at which the key skills necessary for economic growth and social development are delivered;
  •  Serving the growing number of young people and adults;
  •  Providing alternative entry points into and pathways through the learning system;
  •  Providing quality post-school learning irrespective of where learning takes place (i.e. college, university or workplace); and
  •  Providing easy pathways across the various learning sites.

 

2. Department’s Strategic Priorities and Measurable Objectives

 

2.1 Measurable Objectives of the Department

Five critical programmes determine the work of the Department. Within each of the programmes, the Department identified a number of measurable objectives, which related specifically to the purpose:

 

Programme 1: Administration

The purpose of this programme was to provide strategic leadership, administration, executive support and corporate services. Within this programme, and for the 2010/11 financial year, the Department reported the following:

  • As a newly established Department, the focus for 2010/11 was to put the necessary administrative systems, policies and procedures into place, as well as to provide core capacity for the smooth running of the department.

•          One key focal area was the filling of critical senior management positions

 

Programme 2: Human Resource Development, Planning and Monitoring Coordination

The purpose of this programme was to establish the Human Resource Development (HRD) Council and its structures and to support, develop an integrated management information system for planning and monitoring purposes, pursue African advancement and enhanced international cooperation in education and training, provide effective legal advice, on time, to the Minister, the Department, government and the public on education legislation and law, and establish a well functioning social inclusion, equity and transformation unit within the department. Within this programme, and for the 2010/11 financial year, the Department reported the following:

  • The Human Resource Development Council of South Africa (HRDCSA) was established and functional;
  • Survey data collections and baseline data was collected for FET Colleges and Adult Education and Training Centres;
  • Participated in and contributed to meetings of the African Union (AU) and Southern  African Democratic Countries (SADC), as well as structured bilateral meetings with a number of other African countries;
  • The Further Education and Training Colleges Amendment Bill, 2011, The Higher Education Laws Amendment Bill, 2011 and the Skills Development Amendment Bill, 2011 were referred; and
  • Rendered strategic support and a liaison role to the DHET-SAQA–SABC Education Career Guidance advocacy project.

 

Programme 3: University Education

The purpose of this programme was to improve enrolment planning so as to produce quality graduates, provide appropriate policy frameworks for improvement of teaching and learning, provide regulatory support to universities, support universities in enhancing both student and university governance and leadership, ensure an adequate supply of quality teachers for the Basic Education System. Within this programme, and for the 2010/11 financial year, the Department reported the following:

  • Compiled a national enrolment plan in line with the parameters of the Government priorities and growth possibilities within the university sector and the proposed MTEF allocations;
  • Constituted two Task Teams to make recommendations on the establishment of new universities in Mpumalanga and the Northern Cape;
  • 7 University statutes were approved and gazetted; and
  • A long term Integrated Strategic Planning Framework for Teacher Education and Development for South Africa (2011-25) was approved and published.

 

Programme 4: Vocational and Continuing Education and Training

The purpose of this programme was to support the development of college institutional capacity to achieve transparency, enhanced performance, accountability and efficiency, to plan and monitor the equitable distribution of funding to increase access to a variety of approved programmes in public FET Colleges and public Adult Learning Centers. Within this programme, and for the 2010/11 financial year, the Department reported the following:

  • Developed manuals and guidelines for implementing generally accepted accounting practices in colleges;
  • The funding norms for FET Colleges were implemented;
  • Expansion of NC(V) offerings in FET Colleges through the introduction of 3 new vocational programmes; and
  • Permission was granted to 4 FET Colleges to provide higher education qualifications under the authority of higher education institutions.

 

Programme 5: Skills Development

The purpose of this programme was to support and manage the functioning of SETAs in implementing the National Skills Development Strategy, advise the Minister on a National Skills Development Policy and Strategy,  To establish and manage the National Artisan Moderation Body (NAMB) and provide assessment and moderation services.  Within this programme, and for the 2010/11 financial year, the Department reported the following:

·         All 23 SETAs implemented their approved 2010/11 Service Level Agreements;

·         The Minister approved and published the new SETA landscape that was implemented on 1 April 2011;

·         Held public consultations with regard to the National Skills Development Strategy (NSDS III) and the new SETA landscape; and

·         The National Artisan Moderation Body (NAMB) was formally launched by the Minister on 30 November 2010.

 

SECTION: 2

 

3. Analysis of Section 32 Expenditure Reports

3.1 Current expenditure trends

 

A cursory overview of the appropriations in Vote 17 and the spending of 2011/12 reflected the following:

The Department spent R14.9 billion or 39.9% of the total budget for 2011/12 by the end of the 1st quarter. The majority spending, R9.8 billion was under transfers and subsidies to universities. The Department also transferred R1.6 billion in direct charges against the National Revenue Fund to SETAs and the NSF. On top of this it transferred R1.4 billion to provinces and municipalities for FET colleges’ conditional grants.

 

The breakdown for each of the programmes is as follows:

 

Programme 1: Administration

Spending in programme 1 amounted to R27.5 million or 17% of the available budget against the projected R41.2 million by the end of the first quarter. The slower than expected spending was mainly in goods and services, and due to delays in the receipts of invoices.

 

Programme 2: Human Resource Development, Planning and Monitoring Coordination

Spending in programme 2 amounted to R6.8 million or 20% of the available budget against projected expenditure of R7.3 million, mainly due to delays in the receipt of invoices for computer equipment and transport services.

 

Programme 3: University Education

Spending in programme 3 amounted to R11.7 billion or 50% of the available budget. In the approved drawings the Department projected to have spent R12.3 billion by the end of the first quarter. The slower than expected spending was attributed to transfers and subsidies that were not completed as planned due to delays in the process of the releasing of earmarked funds to universities.

 

Programme 4: Vocational and Continuing Education and Training

Spending in programme 4 amounted to R1.438 billion or 32% of the available budget. In the approved drawings the Department projected to have spent R1.466 billion by the end of the first quarter.

 

 Programme 5: Skills Development

Spending in programme 5 amounted to R20.5 million or 16% of the available budget against projected expenditure of R33.4 million for the first quarter. The slower than expected spending was mainly attributed to a delay in transferring funds to the QCTO because the newly established entity delayed in submiting its business plan to Treasury.

 

3.2 Expenditure trends for 2010/11

The following were the expenditure trends of the Department per programme for 2010/11:

 

Programme

Allocation

R’000

Actual Expenditure

R’000

Deviation

R’000

% Spent

R’000

1: Administration

R125 132

R121 397

R3 735

97.0%

2: Human Resource  Development, Planning and Monitoring Coordination

R24 542

R23 678

R864

96.5%

3: University Education

R19 537 919

R19 536 049

R1 870

99.9%

4: Vocational and Continuing Education and Training

R3 946 110

R3 942 527

R3 583

99.9%

5: Skills Development

R142 499

R128 703

R13 796

90.3%

6: Direct Charges

R8 424 228

R8 379 259

R44 969

99.5%

 

Reasons for deviations

 

Programme 1: Administration (Unspent: R3.735 million)

·         Signing of service level agreement between Department and SITA took longer than anticipated.

Programme 2: Planning and Monitoring (Unspent: R0.864 million)

·         Vacant posts not filled as projected and the concomitant saving on goods and services.

·         Saving on membership fees due to the favourable exchange rate

 

Programme 3: University Education (Unspent: R1.870 million)

·         Delay in the appointment of the Ministerial Task Teams for the establishment of the new universities in Mpumalanga and the Northern Cape as well as the review of the current and future position of MEDUNSA at the University of Limpopo resulted in work that started later than planned.

Programme 4: Vocational and Continuing Education and Training (Unspent: R3.583 million)

·         Cost containment measures put in place in the examination and assessment function to prevent over-expenditure.

·         Vacant posts not filled as projected and the concomitant saving on goods and services.

Programme 5: Skills Development (Unspent: R13, 796 million)

·         Under-spending of the QCTO and the filling of posts in the QCTO that was dependent on the amendments made to the Skills Development Act.

·         Under-spending on the Institute for National Development of Learnerships Employment Skills and Labour Assessments (INDLELA)  security system previously managed by the Department of Labour.

 

 

4. Analysis of the Annual Report and Financial Statements of the Department

 

The Department of Higher Education and Training remained focused on ensuring that it delivered on the commitments made in the Strategic Plan during the period under review.

The Department spent R23 billion or 99% of the total available budget by the end of the 4th quarter. The majority spending was under transfers and subsidies to universities and was in line with expectations.

Report of the Auditor-General

The Department received an unqualified audit opinion. Key matters raised by the Auditor-General included:

Significant uncertainties

·         As disclosed in disclosure note 19 to the financial statements, the Department was the defendant in a number of law suits. The Department was opposing the claims and the ultimate outcome of these cannot be presently determined.

Irregular Expenditure

·         As disclosed in disclosure note 24 to the financial statements, the Department incurred irregular expenditure of R 4 023 000 due to non-compliance with supply chain management processes.

Findings on performance information

·         Inadequate explanations for major variances between the planned and the actual reported targets for the programmes relating to Universities, Vocational and Continuing Education and Training, and Skills Development.

·         Reported performance information was deficient in respect of consistency and measurability.

Non compliance

·         The accounting authority transferred funds to an entity without first obtaining a written assurance from that entity in compliance with the Public Finance Management Act (PFMA).

·         Goods and services with transaction value of between R10 000 and R500 000 were procured without having at least three written quotations from prospective suppliers in line with the PFMA.

·         A verification process was not followed for all new appointments.

 

SETAs

·         Twenty one SETAs received unqualified audit opinion in 2010/11.

·         One SETA with qualified opinion in 2010/11(Service SETA).

·         One SETA with disclaimer opinion (Public Service SETA).

·         Adequate supporting documentation was not available at some SETAs.

·         Adequate policies and procedures not in place at some SETAs.

·         Investments held by Local Government SETA were not in compliance with the Treasury Regulations.

 

SECTION: 3

5. Consideration of Reports of Committee on Public Accounts

The Committee on Public Accounts did not consider the Department’s annual financial statements for the year under review.

 

6. Consideration of other Sources of Information

State of the Nation Address (SONA) 2011

The 2011 State of the Nation Address outlined the following strategic priorities relevant to higher education and training sector:

·         Placing of education and skills development at the centre of economic development

·         Filling of all vacant funded posts.

·         Investing in youth to ensure a skilled capable workforce to support growth and job creation in South Africa.

·         Conversion of NSFAS loans to bursaries for all students that passed their final year undergraduate studies.

 

7. Committee Observations

7.1 Department

The Committee commended the Department for receiving an unqualified audit opinion although this does not translate into effective service delivery. Concerns were raised with regards to the following key issues:

·         Delays in finalisation of the organogram  and filling of vacant funded posts;

·          Challenges experienced by previously disadvantaged merged institution;

·          The three universities put under administration namely, Tshwane University of Technology (TUT), University of KwaZulu-Natal (UKZN) and Walter Sisulu University (WSU);

·          Delays in operationalisation of the QCTO and NAMB;

·         Insufficient progress in the establishment of universities in Mpumalanga and Northern Cape;

·         The poor conditions of service for AET practitioners;

·         The appointment of employees without proper verification and signing of employment contract; and

·         Reporting on targets not included in the Strategic Plan.

 

7.2 NSFAS

With regards to NSFAS, the entity was commended for receiving an unqualified audit opinion in 2010/11 from a disclaimer in 2009/10 although this came at a huge cost to the organization. Concerns were raised with regard to the following key issues:

·         High staff turn over at senior management level;

·          Blurring of roles of executive committee and administration;

·         Delays in finalization of disciplinary hearings;

·          Poor decision making at management level;

·          Inadequate IT systems, extensive use of consultants;

·         Inadequate loan recovery systems; and

·          High personnel costs and poor attendance of board meetings.

 

 

 

 

 

8. Conclusion

The Department reported for the first time as a single Department in the 2010/11 financial year. The Department had challenges relating to filling of vacant funded posts due to various reasons provided by the officials. The AG was of the opinion that the Department was compliant with the relevant Treasury regulations for the year under review apart from the irregular expenditure of R4 million that were as a result of poor management at Indlela. The improvement in the financial performance of SETAs was commended for the 2010/11 financial year. The Committee took note of the fact that the Department did not report on progress regarding establishment of provincial offices.

The Committee further requested to be informed of the intended actions of the Department regarding the improvement of enrollment practices at universities, especially the requirements needed to quality for university access. The Committee requested to be informed regarding the dismissal of the former CEO; the delays in the filling of this vacancy and the developments in the labour court case in this regard.

 

SECTION: 4

9. Recommendations

The Portfolio Committee on Higher Education and Training strongly recommends that the Minister of Higher Education and Training consider the following:

 

Programme 1: Administration

The Minister should ensure that:

·         The Department addresses the concerns raised by the Auditor-General in its Annual Report 2010/11, and its entities adhere to the correct procurement processes and also consider appropriate remedies for transgressions.

 

Programme 2: Human Resource Development, Planning and Monitoring Coordination

 

The Minister should ensure that:

·         The Department finalises its organogram in the current year under review and fill all vacant funded posts to realize its goals and objectives.

·         The Department set out clear measurable objectives and ensures its future reporting is line with stated objectives in the current financial year.

 

Programme 3: University Education

The Minister should ensure that:

·         The Department develops and submits a clear comprehensive bid to the National Treasury regarding the establishment of the universities in Mpumalanga and Northern Cape in the year under review.

·         The implementation of acceptable recommendation of the Task Team Report on Student Accommodation is expedited.

·         The Department evaluates the impact of merged institutions of higher learning and also addresses the challenge regarding the attrition and retention of academics in institutions of higher learning.

  • The Department empowers and capacitates institutions of higher learning in terms of governance and leadership.
  • Funding is available for the unbundling of the University of Limpopo.

 

Programme 4: Vocational and Continuing Education and Training

The Minister should ensure that:

·         The Department finalises the operationalization of the Quality Council on Trades and Occupations (QCTO) and National Artisan Moderation Body (NAMB) in the year under review.

·         Further support is provided to public Further Education and Training colleges, especially regarding their financial administration and compliance with audit requirements

·         The Department’s Adult Education and Training programme is prioritized and conditions of services for AET practitioners are improved and standardized.

·         The Department assists in training and development of FET college lecturers in order to capacitate the 57% of lecturers who are not qualified.

·         The challenges with articulation between FET Colleges and higher education institutions are resolved.

·         The Department evaluates the merger of FET colleges in order to address prevalent disparities and foster good governance.

 

Programme 5: Skills Development

The Minister should ensure that:

·         SETAs adhere to the statutes of the PFMA and consider appropriate remedial action against transgressors.

·         SETA targets are clear and aligned with the National Skills Development Strategy (NSDS) III, Industrial Policy Action Plan (IPAP), New Growth Path (NGP) and the Human Resource Development Strategy (HRDSA).

The Committee was of the strong opinion that the Department of Higher Education and Training required a higher budgetary allocation for University Education, Vocational and Continuing Education and Training and Skills Development to increase access to higher and further education training and employment opportunities for the unemployed youth.

 

Report to be considered