Consolidated Quarterly Reporting for the Technical Secondary Schools Recapitalisation Programme

Quarter 2 (July – September 2011)

Presentation to Portfolio Committee on Education (PC)

22 November 2011

PURPOSE OF THE RECAPITALISATION OF TECHNICAL SCHOOLS

The purpose of the recapitalization of technical schools is to improve conditions of technical schools and modernize them to meet the teaching requirements of learners in the technical fields and increase the number of suitably qualified and technically skilled graduates from these schools.

The project is administered as a conditional grant and is implemented by provinces during the MTEF 2011/12-2013/14.

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THE REPORTING FRAMEWORK

The Technical Schools recapitalisation grant framework requires the Department of Basic Education to monitor compliance with the reporting requirements by ensuring that provinces report monthly on their cash-flow projections and quarterly on their performance targets.

As at 31 October 2011 the Department had received signed copies of the reports from Mpumalanga, North West and Western Cape. Other provinces have submitted draft copies of their reports.

The Department has also relied on the expenditure reports received from provincial treasuries in order to make analysis of the quarter performance.

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GRANT/PROJECT OUTPUTS

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1. Building or re-designing workshops at technical schools to support the technical subject offerings ( Annual Target: 32);

2. Refurbishing workshops in technical schools to comply with safety laws and to meet minimum industry standards (Annual Target: 147);

3. Buying and installing new machinery and equipment consistent with the technical subjects that are offered in technical schools (Annual Target: 191); and

4. Training and up-skilling teachers at technical schools to acquire new trends, practical skills, and developments in their technical subjects (Annual Target: 578).

PERFORMANCE REPORTING

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PERFORMANCE REPORTING FOR THE SECOND QUARTER OF 2011

PROVINCETARGETS FOR OUTPUTS DURING THE SECOND

QUARTER

TARGETS ACHIEVED FOR

Q2 FINANCIAL RESOURCES REMARKS ON ACHIEVEMENT OR DEVIATION

 Grant Output 

1Grant Output 

2Grant Output 

3Grant 

Output 4 Yes No

Funds Transferred – 

Q2Funds Spent – 

Q2

 

EASTERN CAPE 1 4 10 31 X 7 517 2368Total delay in procurement and

low expenditure

FREE STATE 0 4 44 150 X   2 886 5456 On target

GAUTENG 0 0 0 0 N/A   6 119 0No targets for Q2. In progress for 

Q3

KWAZULU-NATAL 0 0 0 0 N/A 7 713 0No targets for Q2. Delay in

procurement for Q3

LIMPOPO 0 0 8 70 X 5 490 1620Delay in procurement and

delivery of equipment

MPUMALANGA 4 4 5 120   X 3 616 4542Completing last period’s target and in progress with 2011/12 targets

NORTHERN CAPE 0 10 10 0 X   1 533 6155 On target

NORTH WEST 0 0 0 55 X 3 403 1192

On target for the quarter but under-spending on next quarter

targets

WESTERN CAPE 0 0 5 16 X  1 724 -2175 In progress 

TOTAL Q1 TRANSFER =R20,000 40,000 19158

TRANSFERS AND EXPENDITURE AS AT 30 SEPTEMBER 2011

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Province

Annual Allocation excl. Adjustment

Amount Transferred

Amount Spent per Province

Amount Committed to Goods and Services

Total Amount Spent (incl Commitments)

% Spent on Transfers

% Spent on Total Allocation (excl. Commitments)

Total Amount Not Yet Transferred

Total Amount Retained/Unspent

EC  37 584 11,275 3116 0 3116 28% 8% 26,309 34,468

FS  14 428 4,329 5,456 0 5456 126% 38% 10,099 8,972

GP  30 596 9,179 9,514 0 9514 104% 31% 21,417 21,082

KZN  38 563 11,569 123 0 123 1% 0% 26,994 38,440

LP  27 450 8,235 1,620 0 1620 20% 6% 19,215 25,830

MP  18 078 5,424 16410 0 16410 303% 91% 12,654 1,668

NC  7 667 2,300 6,418 0 6418 279% 84% 5,367 1,249

NW  17 015 5,105 1,689 0 1689 33% 10% 11,910 15,326

WC  8 619 2,584 6,872 0 6872 266% 80% 6,035 1,747

TOTAL 200,000 60,000 51,218 0 51,218 85% 26% 140,000 148,782

COMPARISON OF FINANCIAL PERFORMANCE FOR 2010 & 2011

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Comparison of Financial Performance between two quarters of 2010 and 2011

Period 2010/11 2011/12

Variance (2011-2010) % Change

2010/11 2011/12

Variance (2011-2010) % Change  Quarter 1 Quarter 1 Quarter 2 Quarter 2

                 

Annual Allocation 80,000 200,000 120,000 150% 80,000 200,000 120,000 150%

Transfer per quarter 12,000 20,000 8,000 67% 16,000 40,000 24,000 150%

Expenditure for the Quarter 1,200 32,060 30,860 2572% 5,655 19,158 13,503 239%

Balance 78,800 167,940 89,140 113% 74,345 180,842 106,497 143%

                 

% Exp to Allocation 1.50% 16.03% 14.53% 968.67% 7.07% 9.58% 2.51% 35.51%

% Exp to Transfer 10.00% 160.30% 150.30% 1503.00% 35.34% 47.90% 12.55% 35.51%

ANALYSIS OF THE QUARTERLY REPORTS

• The transfer of funds to all province of R60 million has been effected to date. Expenditure has increased from R39 million in the first quarter to R51, 2 million, with Mpumalanga having the highest expenditure at R16,4 million.

• In comparison to the same period last year, the expenditure for 2011/12 has substantially increased.

• The overall expenditure and delivery of outputs has, however, not significantly improved as expected during the second quarter. As much as 85% of the transfers have been spent, only 26% has been spent on the overall allocation. The expected norm for expenditure during this period is 30% or more of the annual allocation and this should increase substantially based on the direct transfers to schools.

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CHALLENGES FACED BY THE IMPLEMENTING AGENCIES

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PROVINCE CHALLENGES REMEDIAL MEASURES

EASTERN CAPE •Procurement Delays

•Budget planning (Budget projections exceed the

allocated funds)

•Revise targets to match funding

•Focus on infrastructure first

•Outsource implementing responsibility

FREE STATE •On target •Intensified monitoring and reporting

GAUTENG •Delays in procurement •Finalise tender

•Intensify and compress delivery schedules

KWAZULU-NATAL •Delays in procurement •Finalise tender

•Intensify and compress delivery schedules

LIMPOPO •Incorrect recording of expenditure

•Delays in delivery of equipment

•Reconcile accounts monthly

•Revise terms of delivery with suppliers

MPUMALANGA •Focusing or spending time and resources on last

year’s outputs

•Delays for this year’s outputs

•Finalise last year’s outputs

•Intensify and compress delivery schedules for

this year’s outputs

NORTHERN CAPE •On target •Intensified monitoring and reporting

NORTH WEST •Delays in procurement •Finalise tender for building

•Finalise transfer of funds to schools

WESTERN CAPE •On target •Intensified monitoring and reporting at school

level

OVERALL CHALLENGES FACED BY THE IMPLEMENTING AGENCIES

• Lack of integrated operational planning at provincial level between the different sections/directorates of the provincial departments of education and other departments such as Public Works, Infrastructure etc.

• Delays in processes such as development of tenders, approval of procurement processes and payment have adverse effect in the efficient implementation of the grant.

• Inadequate on site monitoring of delivered outputs by the provincial and national coordinators creates a lack of information that would be used for proactive responses.

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INTERVENTIONS TO MITIGATE CHALLENGES BY THE DEPARTMENT

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On-site support to the provincial officials in terms of addressing the delays related to the procurement processes is being provided and it forms part of the continuous grant monitoring plan;

Guidelines to assist in the implementation of the project have been developed such as detailed procurement plans and specifications for tender documents,

The development of a transversal tender for all procurement items is being reconsidered by provinces; and

Based on the expenditure recorded it evident that the provisions of the Division of Revenue Act, Section (16)(1)(c) with regards to withholding of transfers should be applied to the following provinces with lower expenditure: Eastern Cape, KwaZulu-Natal, Limpopo and North-West.

The establishment of a dedicated unit to enhance the implementation of the grant will also play a crucial role.

RECOMMENDATION

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The Committee is requested to note the following:

1. Performance of the programme for the second quarter of 2011/12

2. The establishment of a dedicated unit within DBE to enhance the performance of the programme.