(THE FOLLOWING REPORT REPLACES THE REPORT OF THE PORTFOLIO COMMITTEE ON HIGHER EDUCATION AND TRAINING, PUBLISHED IN THE ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS DATED TUESDAY, 23 OCTOBER 2012; P3424).

The Budgetary Review Recommendation Report (BRRR) of the Portfolio Committee on Higher Education and Training on the performance of the Department of Higher Education and Training for the 2011/12 financial year dated 17 October 2012
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 the 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) and the Strategic and Operational Plan of the Department.

 

In preparation for the BRRR, the Committee considered, amongst others, the Annual Report 2011/12 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 2011/12, considered quarterly reports of 2011/12, considered Section 32 reports of the National Expenditures for the first quarter, the strategic plan 2010 – 2015 of the Department and other relevant sources of information.

 

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.

 

a) Programme 1: Administration

The purpose of this programme was to conduct management of the Department and provide centralised support services. Within this programme, and for the 2011/12 financial year, the Department reported the following:

  • 133 appointments were made and 843 posts were filled. Staff turnover had been reduced from 12% to 7.6%.
  • The call centre continued to provide meaningful services to citizens by responding to 95% of the Presidential Hotline queries.
  • 27 posts for regional offices were created and a pilot project started in KwaZulu-Natal and the Eastern Cape.
  • Challenges of the programme included; inadequate Information Communication Technology (ICT) services, no risk management capacity and inadequate facilities for call centre operators.

 

b) Programme 2: Human Resource Development, Planning and Monitoring Coordination

The purpose of this programme was to provide strategic direction in the development, implementation and monitoring of the Department policies and coordinate activities in relation to the (Human Resource Development Strategy) HRDS for South Africa. Within this programme and for the 2011/12 financial year, the Department reported the following:

  • The Information Framework and Career Advice Services Framework were developed.
  • Data collection of FET and Artisan sectors was strengthened and an electronic web based data collection system was developed.
  • Agreements of cooperation were signed with Cuba, Rwanda and Burundi.
  • The Higher Education Laws Amendment Bill 2011 and Skills Development Bill 2011 were promulgated. The FET Colleges Amendment Bill 2011 was approved by both Houses of Parliament.
  • The establishment of the Ministerial Task Team on Recognition of Prior Learning was supported and public submissions on the proposed qualifications sub-frameworks were received.

 

c) Programme 3: University Education

The purpose of this programme was to develop and coordinate policy and regulatory frameworks for an effective and efficient university education system, to provide financial support to universities, the National Student Financial Aid Scheme (NSFAS), and the National Institute for Higher Education (NIHE). Within this programme and for the 2011/12 financial year, the Department reported the following:

  • The Ministerial Statement on Enrolment Planning in universities for 2011/12 to 2012/14 was approved and communicated to all universities.
  • The Project Plan and Project Steering Committee to oversee the establishment of the two new universities were approved.
  • The Project plan for the establishment of a national Central Application Service was developed and wok had commenced.
  • The Minimum Requirements for Teacher Education Qualifications (MRTEG) was published in the Government Gazette as policy and implementation had commenced.
  • The Foundation Phase for Teacher Education was strengthened.
  • Challenges of the programme included; three universities were placed under administration (University of Zululand, Tshwane University of Technology and Walter Sisulu University), two independent assessments in Vaal University of Technology (VUT) and Central University of Technology (CUT) were undertaken and there was staff shortage within the branch.

 

d) Programme 4: Vocational and Continuing Education and Training (VCET)

The purpose of this programme was to plan, develop, evaluate, monitor and maintain national policy, programmes and systems for vocational and continuing education and training, including FET colleges and post literacy Adult Education. Within this programme, and for the 2011/12 financial year, the Department reported the following:

  • The community education and training centres and the conversion of FET Colleges into VCET Institutions had been gazetted as delivery institutions for the VCET sector.
  • The National Senior Certificate for Adults was published for public comment.
  • A Ministerial Task Team was established to review the NCV qualifications at levels 2 - 4.
  • The Internal Continuous Assessment (ICASS) guidelines were developed to strengthen the NCV delivery.
  • Access into FET colleges was significantly expanded through the R1.270 billion bursary allocation awarded to 165 273 students enrolled in state-subsidized programmes.
  • The Quality Council for Trades and Occupations (QCTO) assumed the role of quality assurance for N4 - N6, including the National Diploma in Report 191.
  • Nine National Examination cycles were held (seven were for the FET College sector, and two for AET).
  • The success rates based on November 2011 results showed a dramatic improvement in success rates averaging 40% across levels
  • The identification of 28 illegally operating private colleges and the arrest of their managers.
  • Challenges of the programme included; capacity constraints in the areas of on-site security, staff allocation and budget allocation with regard to the examination function, delays in securing the National Treasury Technical Assistance Unit to provide technical expertise in scoping and supporting the move of the provincial VCET functions, budgets and personnel to the Department and continued operation of unregistered private institutions

 

e) Programme 5: Skills Development

The purpose of this programme was to promote and monitor the National Skills Development Strategy (NSDS III).  Within this programme, and for the 2011/12 financial year, the Department reported the following:

  • The National Artisan Moderation Body (NAMB) was partly operationalised and appointed as the first assessment quality partner for the QCTO.
  • 13 168 Artisan learners completed training nationally.
  • The Skills conference on the deepening of understating of the NSDS III was convened.
  • SETA levies were managed and disbursed on a monthly basis.
  • New SETA landscape and establishment of SETAs were published in the government gazette
  • Challenges of the programme included; staff vacancies at INDLELA; Regular breakdown of IT services due to cable theft limited the efficiency of INDLELA operations and, the delay in the provision of advice on the Annual Performance against the NSDS III by the National Skills Authority (NSA).

 

f) Financial Statements

Programme

Allocation

R’000

Actual Expenditure

R’000

% Spent

1: Administration

155 688

152 404

97.9%

2: Human Resource  Development, Planning and Monitoring Coordination

38 734

38 074

98.3%

3: University Education

23 428 991

23 428 356

100.0%

4: Vocational and Continuing Education and Training

4 545 463

4 540 838

99.9%

5: Skills Development

130 638

122 025

93.4%

6: Direct Charges (SETAs and NSF)

10 095 113

10 025 251

99.3%

Total

38 394 627

38 306 948

99.8%

 

g) Allocation versus Expenditure Variances

Programme 1: Administration

  • Slow filling of vacant positions and concomitant under-expenditure on machinery and equipment.
  • Lower than expected invoicing of Audit work by 31 March 2012.

 

Programme 2: Human Resource Development, Planning and Monitoring Coordination; Programme 3: Universities and Programme 4: Vocational and Continuing Education and Training

  • Had no material allocation versus expenditure variances.

 

Programme 5: Skills Development

  • Under-spending on the Indlela security system.

 

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 the first quarter of the 2012/13 financial year reflected the following:

The Department had a total budget of R41.1 billion of which R9.6 billion, or 23.4%, fell under direct charge payments to SETAs and the National Skills Fund (NSF). Exclusive of direct charges, the Department had a total budget of R31.5 billion. Over 98% of the total budget was under Transfers and Subsidies. The majority of these transfers fell under Programme 3 to Universities. Exclusive of Direct Charges, the Department spent R14.4 billion or 45% of the total budget available by the end of the quarter. Planned expenditure at this point in the year was R14.6 billion. The Department was therefore behind on total spending by R261 million.

 

 

 

 

3.2 Programme spending trends are as follows:

 

a) Programme 1: Administration

Expenditure was R36.1 million, or 20.6% of the available budget of R175.5 million. Planned expenditure was R42.2 million, thus the Department was behind in expenditure by R6.1 million. This was primarily due to payments to office accommodation being lower than projected since a new building that met the Department’s needs had still not been found.

 

b) Programme 2: Human Resource Development, Planning and Monitoring Coordination

Expenditure was R9.5 million, or 49.5% of the available budget of R40.7 million. Planned expenditure was R9.2 million, in this regard the Department was broadly on track.

 

c) Programme 3: University Education

Expenditure was R13 billion, or 49.5% of the available budget of R26.2 billion. Planned expenditure wad R13.1 billion, thus the Department was behind by R143.5 million. This was primarily due to lower transfers than originally projected, mainly due to the non-release of the infrastructure earmarked grants to universities.

 

d) Programme 4: Vocational and Continuing Education and Training

Expenditure was R1.3 billion, or 26.4% of the available budget of R5 billion. Planned expenditure was R1.4 billion, thus the Department was behind by R107.3 million. This was primarily due to delays in the transfer of the conditional grant for FET colleges to the Western Cape due to a mistake in the banking details. The payment was processed in July.

 

e) Programme 5: Skills Development

Expenditure was R22.2 million, or 22.2% of the available budget of R100.1 million. Planned expenditure was R26.9 million, so the Department was behind by R4.7 million. This was primarily due to lower than expected claims under SETA coordination for Goods and Services such as accommodation, travel and communications.

 

 

 

 

 

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 R38 billion or 99.8% of the total available budget by the end of the 4th quarter with R87 million under-expenditure. The majority spending (R23 billion) was under transfers and subsidies to universities and was in line with expectations.

4.1 Report of the Auditor-General

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

a) Significant uncertainties

·         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.

b) Irregular Expenditure

·         The Department incurred irregular expenditure of R2 million due to non-compliance with supply chain management processes.

c) Restatement of Corresponding Figures

·         Lease commitments for the 2010/11 financial year had been restated.

d) Performance Information

·         Major variances were not in all cases supported by sufficient evidence.

e) Entities

·         22 universities received unqualified audit opinions with one university (Walter Sisulu University) receiving a qualified audit opinion.

·         28 FET colleges received unqualified audit opinions with six receiving qualified audit opinions, one disclaimer and 15 did not submit at time of review.

·         16 SETAs received unqualified audit opinions with four receiving qualified audit opinions and one disclaimer (Local Government SETA).

·         National Student Financial Aid Scheme (NSFAS), Council on Higher Education (CHE), South African Qualifications Authority (SAQA), National Skills Fund (NSF) and Quality Council on Trades and Occupations (QCTO) received unqualified audit opinions.

 

SECTION: 3

5. Consideration of Reports of the 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) 2012

The 2012 State of the Nation Address outlined the following strategic priorities relevant to the 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.

 

7. Committee Observations

7.1 Department

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

·         The Committee was seriously concerned with the shortage of staff in some branches of the Department as this adversely impacted on service delivery goals.

·         The R402 million irregular expenditure reported by the Auditor-General from SETAs was highlighted as a key concern for the Committee.

·         It was noted with concern that the Department incurred  irregular expenditure of R2 million while in the previous financial year it also incurred irregular expenditure of R4 million.

·         The Committee emphasized that non-compliance to the supply chain management polices and regulations was unacceptable and, should not be a norm within the Department and its entities.

·         The fact that the Local Government SETA received a disclaimer and more than four SETAs received a qualified audit opinion for the 2011/12 financial year symbolised that there were serious problems with the governance and management of SETAs. This further enhanced a debate for the review of SETAs existence.

·         It was noted with concern that there were no guidelines or standard framework requirements for the submission of annual financial statements by universities and FET colleges.

·         It was also noted with concern that the Department had not resolved the INDLELA security system, owing to the delay by the Department of Public Works.

·         The Committee was concerned that the Department did not successfully meet its target of establishing regional offices in all nine provinces as promised in the previous financial year.

·         It is a matter for concern that the Department spent 99.8% of its total budget but did not achieve all the targets set in the 2011/12 financial year. This symbolized poor planning by the Department.

·         The backlog of outstanding National Certificate Vocational NC(V) certificates for graduates of FET colleges remained a serious concern for the Committee since these young people could neither find employment nor further their education.

·         The Committee also noted with concern that some learners did not receive their learnership certificates due to service providers’ no longer in operation.

·         It was noted with concern that the National Skills Fund (NSF) incurred irregular expenditure of R174 million in the 2011/12 financial year.

·         The Committee was also concerned about the lack of sustainability of the current funding of the operationalisation of the National Artisan Moderating Body (NAMB).

 

 

 

 

 

7. Conclusion

The Department reported for the second time as a single Department in the 2011/12 financial year. The Department received an unqualified audit opinion for the second time consecutively and this was commended by the Committee. The inadequate financial performance of SETAs was highlighted as a serious concern for the Committee. The Committee took note of the fact that the Department’s annual report did not report on quantitative information in certain projects that were implemented. The overall financial performance of the Department had improved from the previous financial year although there were certain areas in some of the branches which required urgent attention.

 

SECTION: 4

8. Recommendations

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

a) Programme 1: Administration

The Minister should ensure that:

·         The Department fills outstanding posts, especially in the University Education and Vocational and Continuing Education and Training branch.

·         The Department should finalize all the outstanding disciplinary hearings cases and conduct qualification and job history verification of new employees as required by the Public Service Commission.

·         The Department addresses all the findings raised by the Auditor-General.

b) Programme 3: University Education

The Minister should ensure that:

  • The development of guidelines and standard framework regulations for annual financial statements of universities is prioritised to minimize inconsistency in assessments of their annual reports.
  • Graduates are assisted in obtaining work placement opportunities.
  • Monitoring of and support to public institutions of higher learning with regard to governance and financial management should be intensified.

 

c) Programme 4: Vocational and Continuing Education and Training

The Minister should ensure that:

  • The concern regarding outstanding NC(V) certificates is urgently addressed.
  • Reporting guidelines for the assessment of FET colleges’ annual reports are developed urgently.
  • Improved access to PERSAL in all FET colleges is prioritised.
  • Intensify the monitoring of and support to FET Colleges to ensure that allocated budgets are used accordingly.

 

 

d) Programme 5: Skills Development

The Minister should ensure that:

  • The Department exercises its oversight mandate on SETAs to ensure that they report monthly on their financial and non-financial performance information.
  • SETAs are fully supported to improve their financial management systems to curb irregular expenditure.
  • SETAs 2012/13 strategic plans and annual performance plans are signed within the required time frames.
  • A bid is submitted to National Treasury to realise full operationalisation of the NAMB.
  • The Department should ensure that all learnership certificates are released to students and necessary steps be taken against service providers that failed to honour the learnership contracts.

 

 

Report to be considered