Presentation to the Standing Committee on Appropriation 16

Presentation to the Standing Committee on Appropriation 16 November 2011 1

Presentation Outline • PART 1 Spending as at the end of the second quarter • PART 2 Spending on Infrastructure 2

PART 1 Spending as at the end of the second quarter 3

ADJUSTED APPROPRIATION AGAINST END OF SECOND QUARTER EXPENDITURE FOR THE 2011/12 FINANCIAL YEAR PER PROGRAMME Programmes Administration Curriculum Policy, Support and Monitoring Teachers, Education Human Resources and Institutional Development Planning, Information and Assessment Educational Enrichment Services Total Main Appropriation Adjusted Appropriation R’ 000 2011/12 Expenditure April 2011 to September 2011 R’ 000 Deviation R’ 000 % 301 740 299 292 129 777 169 515 43. 36 1 835 137 1 848 933 422 012 1 426 921 22. 82 521 989 525 757 480 738 45 019 91. 44 6 387 529 6 578 806 2 630 926 3 947 880 40. 00 4 821 739 4 827 678 2 762 229 2 065 449 57. 22 13 868 134 14 080 466 6 425 682 7 654 784 45. 64 Expenditure in the first six months of 2011/12 was R 6. 426 billion, or 45. 6 per cent of the adjusted appropriation of R 14. 080 billion for the year as a whole.

ADJUSTED APPROPRIATION AGAINST END OF SECOND QUARTER EXPENDITURE FOR THE 2011/12 FINANCIAL YEAR PER ECONOMIC CLASSIFICATION 2011/12 Expenditure April 2011 to September 2011 R’ 000 Main Appropriation Adjusted Appropriation R’ 000 245 532 241 448 105 498 135 950 43. 70 Examiners and Moderators 16 660 765 15 895 4. 60 Transfers to Public Entities 467 831 458 640 9 191 98. 04 11 066 11 109 1 536 9 573 13. 83 Conditional Grants 10 546 380 10 736 898 5 387 381 5 349 517 50. 18 Earmarked Funds 1 601 828 1 614 201 342 845 1 271 356 21. 24 School Infrastructure Backlogs Indirect Grant 700 000 - Departmental Operations 213 361 218 153 116 093 102 060 53. 22 65 476 74 166 12 924 61 242 17. 43 13 868 134 14 080 466 6 425 682 7 654 784 45. 64 Economic Classification Compensation of Employees Other Transfers Projects Total Deviation R’ 000 %

DETAILS OF EARMARKED ALLOCATIONS/TRANSFERS OVER THE 2011/12 FINANCIAL YEAR 2011/12 Services Earmarked Funds: Main Appropriation Adjusted Appropriation Expenditure April 2011 to September 2011 R’ 000 Deviation R’ 000 % 1 601 828 1 614 201 342 845 1 271 356 21. 24 496 082 497 612 129 330 368 282 26. 00 EPWP Kha Ri Gude 43 981 12 800 31 181 29. 10 Curriculum Review 80 000 8 923 71 077 11. 15 899 435 160 935 738 500 17. 89 Integrated Quality Management System 35 259 15 765 19 494 44. 71 Systemic Evaluation 20 657 7 174 13 483 34. 73 Kha Ri Gude Mass Literacy Project Workbooks National Assessments: Grades 3, 6 and 9 National Education and Evaluation Development Unit - 8 906 - 11 947 2 659 9 288 22. 26 National Schools Nutrition Programme 14 467 16 404 5 259 11 145 32. 06 10 546 380 10 736 898 5 387 381 5 349 517 50. 18 200 000 210 518 60 000 150 518 28. 50 70 000 28 000 42 000 40. 00 Educational Infrastructure Conditional Grant 5 498 300 5 678 300 2 559 366 3 118 934 45. 07 National School Nutrition Programme 4 578 752 2 680 217 1 898 535 58. 54 199 328 59 798 139 530 30. 00 Conditional Grants: Technical Secondary Schools Recapitalisation Conditional Grant Dinaledi Schools Conditional Grant HIV and Aids

DETAILS OF EARMARKED ALLOCATIONS/TRANSFERS OVER THE 2011/12 FINANCIAL YEAR 2011/12 Services Earmarked Funds: Adjusted Appropriation Expenditure April 2011 to September 2011 R’ 000 Deviation R’ 000 % 1 614 201 342 845 1 271 356 21. 24 497 612 129 330 368 282 26. 00 EPWP Kha Ri Gude 43 981 12 800 31 181 29. 10 Curriculum Review 80 000 8 923 71 077 11. 15 899 435 160 935 738 500 17. 89 Integrated Quality Management System 35 259 15 765 19 494 44. 71 Systemic Evaluation 20 657 7 174 13 483 34. 73 8 906 - National Education and Evaluation Development Unit 11 947 2 659 9 288 22. 26 National Schools Nutrition Programme 16 404 5 259 11 145 32. 06 10 736 898 5 387 381 5 349 517 50. 18 210 518 60 000 150 518 28. 50 70 000 28 000 42 000 40. 00 Educational Infrastructure Conditional Grant 5 678 300 2 559 366 3 118 934 45. 07 National School Nutrition Programme 4 578 752 2 680 217 1 898 535 58. 54 199 328 59 798 139 530 30. 00 Kha Ri Gude Mass Literacy Project Workbooks National Assessments: Grades 3, 6 and 9 Conditional Grants: Technical Secondary Schools Recapitalisation Conditional Grant Dinaledi Schools Conditional Grant HIV and Aids

DETAILS OF EARMARKED ALLOCATIONS/TRANSFERS OVER THE 2011/12 FINANCIAL YEAR 2011/12 Services Transfers to Public Entities Adjusted Appropriation Expenditure April 2011 to September 2011 R’ 000 Deviation R’ 000 % 467 831 458 640 9 191 98. 04 449 440 - 100. 00 18 391 9 200 9 191 50. 02 11 109 1 536 9 573 13. 83 10 739 - 27 - Guidance Counseling &Youth Development Centre: Malawi 100 - ETDP SETA 158 - 100. 00 Childline South Africa 50 - Households 35 1 371 (1 336) 3 917. 14 - 7 (7) - NSFAS: Fundza Lushaka Bursaries Umalusi Other Transfers UNESCO Membership Fees ADEA Claims against the state

MAIN APPROPRIATION AGAINST ADJUSTED APPROPRIATION FOR THE 2011/12 FINANCIAL YEAR 2011/12 Adjustments Appropriation Programmes Main Appropriation Roll-overs R’ 000 Virements and Other Shifts Adjustments R’ 000 Adjusted Total Adjustments Appropriation R’ 000 301 740 - (3 414) 966 (2 448) 299 292 1 835 137 12 048 4 353 (2 605) 13 796 1 848 933 521 989 - 460 3 308 3 768 525 757 Planning, Information and Assessment 6 387 529 15 901 (5 155) 180 531 191 277 6 578 806 Educational Enrichment Services 4 821 739 1 937 3 756 246 5 939 4 827 678 13 868 134 29 886 - 182 446 212 332 14 080 466 Administration Curriculum Policy, Support and Monitoring Teachers, Education Human Resources and Institutional Development Total The total allocation for the Department increased by 1. 53% (R 212. 332 million) from R 13 868. 134 million in the Main Appropriation to R 14 080. 466 million in the Adjusted Estimates. Included in the R 14 080. 466 million are transfer payments to the National Student Financial Aid Scheme (3. 19%), conditional grants to provincial education departments (76. 25%) and other transfers and subsidies (0. 21%). The specifically and exclusively appropriated School Infrastructure Backlogs indirect grant (4. 97%) represents the bulk of the payments for capital assets. The balance of the Adjusted Estimates consists of earmarked funds, including workbooks for literacy and numeracy and the Kha Ri Gude Mass Literacy Campaign (11. 47%) as well as compensation of employees, payments to examiners and moderators, projects and operational expenditure (3. 91%).

OVERVIEW OF THE ADJUSTED ESTIMATES OF NATIONAL EXPENDITURE ALLOCATIONS FOR 2011/12 Programmes Main Appropriation Adjusted Appropriation R’ 000 Increase / (Decrease) R’ 000 % 301 740 299 292 (2 448) (0. 81) 1 835 137 1 848 933 13 796 0. 75 521 989 525 757 3 768 0. 72 Planning, Information and Assessment 6 387 529 6 578 806 191 277 2. 99 Educational Enrichment Services Total 4 821 739 4 827 678 5 939 0. 12 13 868 134 14 080 466 212 332 1. 53 Administration Curriculum Policy, Support and Monitoring Teachers, Education Human Resources and Institutional Development Programme 1: Administration The decrease of R 2, 448 million is due mainly as a result of the reorganisation of the Department with a decrease in the compensation of employees allocation in this programme as well as a shifting of funds towards other activities due to the alignment of underfunded units and the allocation for newly established units. Programme 2: Curriculum Policy, Support and Monitoring The increase of R 13, 796 million is due mainly to the roll-overs of R 12, 048 million in respect of the Technical Secondary Schools Recapitalisation conditional grant as well as courier services rendered for the Mass Literacy Campaign. The remainder of the increase is as a result of the reorganisation of the Department with a consequential increase in the compensation of employees allocation required for this programme. Programme 3: Teachers, Education Human Resources and Institutional Development The increase of R 3, 768 million is due mainly due to the shifting of functions of R 3 million in respect of the Curriculum and Professional Development Unit project to this programme as well as an increase in the compensation of employees allocation due to the reorganisation of the Department.

OVERVIEW OF THE ADJUSTED ESTIMATES OF NATIONAL EXPENDITURE ALLOCATIONS FOR 2011/12 (CONTINUE) Programme 4: Planning, Information and Assessment The increase of R 191, 277 million is due to the roll-over of R 15, 901 in respect of service providers verifying and capturing the marks of grades 3, 6 and 9 in the national assessments as well as specialised computer services required for the Learner Unit Record Information and Tracking System. An increase of R 180 million has furthermore been additionally allocated towards the Education Infrastructure conditional grant for disaster management in the provinces (school buildings). The following amount per province has been allocated: Province Amount Allocated R’ 000 North West Limpopo Mpumalanga Kwa-Zulu Natal Free State Eastern Cape Total: Disaster management shift 3 960 23 040 3 600 17 820 6 480 125 100 180 000 Programme 5: Educational Enrichment Services The increase of R 5, 939 million is due mainly to the roll-over of R 1, 937 million for a National School Nutrition Programme baseline study. The remainder of the increase is as a result of the reorganisation of the Department with a resulting increase in the compensation of employees allocation required for this programme.

PART 2 Spending on infrastructure 12

TOTAL INFRASTRUCTURE SPENDING AS AT 30 SEPTEMBER 2011 • The second quarter spending is R 3, 786, 749 billion or 43% of the total budget of R 8, 764, 933 billion. • EC is the lowest spending department with a reported spending of only 18 % against an expected spending of 50% as at the end of the second quarter. 13

2 ND QUARTER SPENDING ANALYSIS • Gauteng has reported a spending of 40%. This is an improvement on the expenditure reported at the end of the first quarter. However this is not a satisfactory indication of improvements in spending as the 3 rd and 4 th quarter projections are very high and may not be achieved as indicated. • Mpumalanga and Limpopo have reported over- spending as at the end of the second quarter of 83% & 67% respectively. This is a clear indication that these provinces will significantly over- spend their total infrastructure budget by the end of the 2011/12 financial year. • Given these indications, it becomes apparent that while the sector has attained an average spending of only 7% below the expectation of 50% at the end of the second quarter, there are those department that will significantly under- spend while others will significantly overspend. 14

EDUCATION INFRASTRUCTURE GRANT AS AT 30 SEPTEMBER 2011 • 50% of the EIG has to date been transferred to PEDs. • EC , FS, NC & WC have spent less than the below 40% of the 50% that has currently been transferred. • 4 th transfer due on 18 Nov 2011 15

INTERVENTION TO IMPROVE SPENDING IN THE 2011/12 FINANCIAL YEAR • The 2011/12 financial year poses an immediate challenge to the sector to implement interventions to manage current spending. As mentioned some PEDs may over- spend while others may underspend. • The following is monitored to assist provinces: • Effective supervision and oversight in the planning process to ensure that correct needs are identified and addressed • Alignment of planning and budgetting • Adherence to project management principles, including monitoring of projects • Capacity/skills • Procurement/Supply Chain management 16

MEASURES TO IMPROVE SPENDING • The sector is experiencing significant challenges with planning and capacity to plan at the provincial level. The following are actions taken by DBE to assist PEDs address these planning and capacity challenges: – DBE has developed an Action Plan to address identified gaps in the planning process of PEDS. This plan identifies actions that need to be taken by PEDs and DBE to address these planning challenges. A planning and design manual has been developed and all infrastructure personnel will receive training based on the manual. – A Short Term Technical Assistant Team has been appointed to look at the User Asset Management Plans of PEDs to assist them to develop comprehensive plans and project lists. The team will also be responsible for developing tools to assist PEDs improve infrastructure planning. – DBE has established a PSU within the DBE to monitor the implementation of infrastructure and services provision by the various Professional Service Providers (PSP’s) and Implementing Agents (IA’s) that the Department of Basic Education and provinces are utilizing for the implementation of the infrastructure programme. 17

INTERVENTIONS TO IMPROVE SPENDING IN THE 2011/12 FINANCIAL YEAR…. • The PSU will also be responsible to continuously track progress on projects; inspect work in progress and in completed projects to evaluate quality of work as well as monitoring expenditure per project on a monthly basis • Increased monitoring planning, budgeting , expenditure, project management and procurement issues are interrogated and a sample of projects are visited. Based on the findings from these visits, remedial actions are devised with the province and monitored by the DBE. • DBE is working with IDIP to develop an HR strategy to address capacity constraint with regards to infrastructure in PEDs. The strategy is at an advanced stage. • Training is planned on infrastructure procurement and the gateway process as articulated in the CIDB toolkit. This will include officials in the supply chain units in provinces 18

INTERVENTIONS TO IMPROVE SPENDING IN THE 2011/12 FINANCIAL YEAR…. • • • The following have also been done to improve planning and implementation: Concluded guidelines for infrastructure planning and these will be implemented in provinces Upgrade and update the NEIMS database to ensure accurate data for planning; Finalised the infrastructure planning and prioritization model ; Standardized school designs have been finalised and will be released for use in provinces A school infrastructure costing model has been developed and will be released to provinces to assist with preliminary costing for projects 19

PROGRESS ON ACCELERATED SCHOOLS INFRASTRUCTURE DELIVERY INITIATIVE (ASIDI) 20

Progress on Inappropriate Structures 2011/12 Programme: DBSA Tender Award and Site Handover Tender Evaluation & Adjudication Completed Tender Closes Briefing Session Availability Date for Tender Documents Adverts Out in Newspapers q. The PSU has been appointed and assumed duty on 27 September 2011 q. Appointment of contractors for the 50 schools is progressing as per the table below. q. Approximately 400 BIDS sold and 150 BIDS were returned q. The evaluation committee is being constituted by DBSA with DBE representatives and the evaluation process has been concluded. q. Adjudication committee met on the 14 th November 2011. PHASE 1: 28 SCHOOLS OUT OF INITIAL 50 SCHOOLS 16 October 2011 [Sunday Times /City Press /Daily Dispatch] 06 Nov 2011 [Sunday Times /City Press] 07 -Nov-11 [Daily Dispatch] 25 -Oct-11 26 -Oct-11 04 -Nov-11 11 -Nov-11 PHASE 2: 22 SCHOOLS OUT OF INITIAL 50 SCHOOLS 15 -Nov-11 16 -Nov-11 29 -Nov-11 06 -Dec-11 18 to 21 November 2011 07 to 14 December 2011 21

Progress on Water and Sanitation 2011/12 Programme EC: MVULA TRUST q Mvula Trust has awarded 18 projects to contractors and 32 additional projects will be awarded to contractors by the 14 TH November 2011 q. The table below indicates the projected site handover dates as well as anticipated completion dates. No of Schools per Phase Tender Award and Site Handover Latest Planned Practical Latest Planned Completion Final Completion PHASE 1: 18 SCHOOLS 19 to 24 October 2011 31 Dec 2011 - Feb 2012 Mar-11 PHASE 2: 32 SCHOOLS 03 to 09 November 2011 31 Dec 2011 - Feb 2012 Mar-11 22

Progress on Water and Sanitation 2011/12 Programme : IDT Progress on Electrification 2011/12 Programme : ESKOM IDT q. The MOA with IDT is in the process of being finalised q 27 schools in the North West have been assessed ESKOM q. MOA with ESKOM has been signed q 155 projects are in the planning process throughout the country. q. The projects cost is estimated at R 66 mil 23

Progress on Water and Sanitation 2011/12 Programme : KZN q. KZN started with planning process on the 30 August 2011 and are in the process of implementing 79 Projects q 32 of the projects are in planning stage and 47 in tender stage No of Schools for Implementation Planning Stage 47 30 -Aug-11 32 30 -Aug-11 Tender Award and Site Handover 09 - Nov-11 Latest Planned Practical Completion Final Completion 15 -Feb-12 Apr-12 q. The projects cost is estimated at R 57. 5 mil 24

Progress on Water, Sanitation and Electrification 2011/12 Programme : FS q. FS appointed a Project Manager on the 17 th August 2011 q. They are in the process of implementing 38 projects for water, 14 for Sanitation and 31 for Electrification q. The time lines are as indicated in the table below. Management Consultant appointed Site visits Preparation of contract documentation Tender/Quotations Evaluation & Appointments Construction period Final handover WATER 17 Aug 2011 Aug -Sept 2011 Oct-Nov 2011 30 Nov 2011 Dec 2011 Feb 2012 March 2012 SANITATION 17 Aug 2011 Aug -Sept 2011 Oct-Nov 2011 30 Nov 2011 Dec 2011 Feb 2012 March 2012 ELECTRIFICATION 17 Aug 2011 Aug -Sept 2011 Oct-Nov 2011 30 Nov 2011 Dec 2011 Feb 2012 March 2012 q. The projects are estimated at R 22 mil 25

PLANNING 2012/13 AND 2013/14 : ASIDI q. Additional 50 inappropriate schools in the EC and 100 schools from other provinces will also be implemented in the 2012/13 q. PSU will beginning with the scoping to this effect and to conclude by mid December q. Eradication of the basic services backlog is targeted in the 2012/13 q. A criterion is being developed to identify schools which require Libraries, Laboratories and Administration block. Twelve (12) schools per province are targeted. q. The balance of inappropriate schools will be eradicated in 2013/14 26

THANK YOU 27