summary of provincial receipts summary of expenditure by vote & economic classification

PRESENTATION ON PRESENTATION ON EASTERN CAPE EASTERN CAPE

PROVINCIAL PROVINCIAL EXPENDITURE FOR EXPENDITURE FOR

2012/13 2012/13

SELECT COMMITTEE ON FINANCE SELECT COMMITTEE ON FINANCE 14 MAY 201314 MAY 2013

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• Summary of provincial receiptsSummary of provincial receipts

• Summary of expenditure by vote & economic classificationSummary of expenditure by vote & economic classification

• Conditional grants performance for the yearConditional grants performance for the year

• Infrastructure performance for the yearInfrastructure performance for the year

• ConclusionConclusion

PRESENTATION OUTLINE

2

SUMMARY OF PROVINCIAL RECEIPTS

• 100% of the Equitable share was received from National• Of the conditional grants a total amount of R286.242 million was not received by

the province due to slow spending during the financial year on the following conditional grants:

o Health Professions Training and Development grant – R928 thousando Human Settlements Development grant – R284.813 milliono Mass Sport and Recreation Participation Programme grant – R584 thousand

Table 1: Eastern Cape Receipts, March 2013

(R'000) Original

budget

2012/13

Adjustment Adjusted

Budget

2012/13

Actual

Receipts

(Year to

Date)

Over (-) /

Under (+)

Actual as %

of Adjusted

Budget

Equitable Share 46,940,272 619,616 47,559,888 47,559,888 - 100.0%

Conditional Grants 9,683,319 14,330 9,697,649 9,411,407 286,242 97.0%

Ow n Source Receipts 774,477 - 774,477 1,019,034 (244,557) 131.6%

TOTAL 57,398,068 633,946 58,032,014 57,990,329 41,685 99.9%

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• On Provincial Own Revenue, the Province collected R1.019 billion or 131.6% against the adjusted budget of R774.477 million resulting in over collection amounting to R244.557 million mainly from the following departments:

o Provincial Planning and Treasury - R141.342 million from interest earned on bank balances

o Rural Development and Agrarian Reform - R82.724 million mainly from the surrender by the ECRFC of prior years’ surplus funds

o Health - R33.469 million due to the over collection on patient fees

SUMMARY OF PROVINCIAL RECEIPTS (cont’d)

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SUMMARY OF PROVINCIAL EXPENDITURE BY VOTE

• Overall the Province spent R55.928 billion or 97.4% of its adjusted budget resulting in under expenditure of R1.469 billion or 2.6%

Department (R'000) Original

budget

2012/13

Adjusted

Budget

2012/13

Actual

spending to

date

Over (-) /

Under (+)

Spending

Actual

spending as

% of

Adjusted

Budget

Basic Education 26,287,986 26,754,712 26,062,773 691,939 97.4%

Health 15,166,038 15,734,549 15,565,088 169,462 98.9%

Social Dev elopment & Special Programmes 1,782,421 1,778,308 1,746,145 32,163 98.2%

Office of the Premier 404,531 400,954 396,838 4,116 99.0%

Prov incial Legislature 384,082 415,759 406,985 8,774 97.9%

Roads and Public Works 3,741,601 3,808,724 3,800,366 8,358 99.8%

Local Gov ernment & Traditional Affairs 788,451 813,374 790,242 23,132 97.2%

Rural Dev elopment & Agrarian Reform 1,694,130 1,680,652 1,584,469 96,183 94.3%

Economic Dev elopment & Env ironmental Affairs 936,063 835,368 807,538 27,830 96.7%

Transport 1,322,994 1,486,683 1,452,913 33,770 97.7%

Human Settlements 2,574,537 2,570,744 2,279,019 291,725 88.7%

Prov incial Planning & Treasury 352,143 342,269 321,528 20,741 93.9%

Sport, Recreation, Arts & Culture 705,454 711,181 650,802 60,379 91.5%

Safety & Liaison 64,373 63,313 63,147 166 99.7%

TOTAL 56,204,804 57,396,591 55,927,852 1,468,738 97.4%

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• The following departments mainly contributed to the under spending;• Education R691.939 million (2.6%)

o Payment of temporary educators whose contracts were extended until 31 March 2013

o Delay in the payment of the Rural Allowance incentive schemeo Delay in the payment of temporary educators appointed by SGBso Most of these payments have subsequently been made

• Health R169.462 million (1.1%)o Delays in replacing critical posts (medical officers, specialists etc.) vacated

during 2012/13o These posts were advertised in March 2013 and will be filled in the current year

• Rural Development & Agrarian Reform R96.183 million (5.7%)o Capacity challenges with emerging contractors and lack of detailed planning and

implementation of projects as well as the withholding of the transfer to the public entity that did not surrender surplus funds

SUMMARY OF PROVINCIAL EXPENDITURE BY VOTE (cont’d)

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• The following departments mainly contributed to the under spending;• Human Settlements R291.725 million (11.3%)

o Lack of capacity by contractors, delays in the procurement processes as well as challenges with housing beneficiary administration and provision of bulk infrastructure

• Sport, Recreation, Arts and Culture R60.379 million (8.5%) o Non filling of vacant library assistant posts and delays in the procurement

processes for modular libraries & sport equipment

SUMMARY OF PROVINCIAL EXPENDITURE BY VOTE (cont’d)

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SUMMARY OF EXPENDITURE – ECONOMIC CLASSIFICATIONItem (R'000) Original

budget

2012/13

Adjusted

Budget

2012/13

Actual

Spending

Over (-) /

Under (+)

Spending

Actual

spending as

% of the

Adjusted

Budget

Current Payments 45 425 862 47 041 742 46 254 348 787 394 98.3%

Compensation of employ ees 36 355 019 36 907 625 35 871 270 1 036 355 97.2%

Goods and Serv ices 9 070 843 10 134 117 10 379 528 (245 411) 102.4%

Transfers and Subsidies 7 661 532 7 451 140 6 893 304 557 836 92.5%

Capital Payments 3 117 409 2 903 709 2 779 474 124 234 95.7%

TOTAL 56 204 804 57 396 591 55 927 852 1 468 738 97.4%

• Compensation of Employees was the main contributor to the under expenditure of R1.469 billion as per reasons stated above

• Furthermore, the Province also employed measures to strictly manage CoE expenditure including;o Scrutinisation of all appointments by the Provincial Coordinating and Monitoring

Team (PCMT)o Centralisation of the appointment function for Education and Health in Treasuryo Dealing with PILIR cases and other leave management inefficiencies in Educationo Head count and personnel verification (HR connect project) in Education

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SUMMARY OF EXPENDITURE – ECONOMIC CLASSIFICATION

• Goods and services over spent during the year mainly due to budget pressures on key items:

• Medicines, NHLS, blood etc emanating from accruals in Health• The centralised procurement and payment of LTSM for section 21 schools (whose

budget is under transfers and subsidies) in Education• Communication & lease costs in Social Development

• The material under spending in Transfers and Subsidies is attributable to the following departments:

• Education (R204.404 million): Payment of LTSM for section 21 schools from Goods and Services as well as outstanding transfers to schools for norms and standards and School Nutrition Programme due to bank account rejections

• Human Settlements (R291.991 million): As previously stated

• Payments for Capital Assets under spent by 4.3% in 2012/13, against 16.1 % under expenditure in 2011/12

• This is mainly due to improved infrastructure expenditure • Machinery & equipment spending decreased from 83.8% in 2011/12 to 71% in

2012/13 due to general delays in procurement processes for equipment

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CONDITIONAL GRANTS PERFORMANCE FOR THE YEARConditional grant (R'000) Original

budget

2012/13

Adjustment Adjusted

budget

2012/13

Actual

Spending to

date

Over (-) /

Under (+)

% spent to

date of

adjusted

budget

Agriculture: Comprehensiv e Agricultural Support

Programme grant 195,198 1,044 196,242 173,455 22,787 88.4%

Agriculture: Disaster Management 2,011 - 2,011 414 1,597 20.6%

Agriculture: Ilima/Letsema Projects grant 42,000 1,980 43,980 38,891 5,089 88.4%

Agriculture: Land Care Programme grant: Pov erty Relief

and Infrastructure Dev elopment 16,823 - 16,823 15,012 1,811 89.2%

Basic Education: Dinaledi Schools grant 11,964 - 11,964 11,656 308 97.4%

Basic Education: Education Infrastructure grant 883,403 49,374 932,777 954,699 (21,922) 102.4%

Basic Education: HIV and Aids (Life Skills Education)

grant 35,252 3,434 38,686 37,697 989 97.4%

Basic Education: National School Nutrition Programme

grant903,644 4,170 907,814 897,490 10,324 98.9%

Basic Education: Technical Secondary Schools

Recapitalisation grant 30,000 3,040 33,040 18,527 14,513 56.1%

Health: Comprehesiv e HIV and AIDS grant 1,060,852 8,285 1,069,137 1,110,315 (41,178) 103.9%

Health: Health Infrastructure grant 258,862 47,852 306,714 306,177 537 99.8%

Health: Health Professions Training and Dev elopment

grant178,730 4,291 183,021 172,934 10,087 94.5%

Health: Hospital Rev italisation grant 402,678 57,495 460,173 414,544 45,629 90.1%

Health: National Health Insurance grant 11,500 - 11,500 8,093 3,407 70.4%

Health: National Tertiary Serv ices grant 682,445 19,974 702,419 668,149 34,270 95.1%

Health: Afcon grant 3,000 3,000 2,353 647 78.4%

Health: Nursing Colleges and Schools grant 14,660 - 14,660 12,394 2,266 84.5%

Higher Education and Training: Further Education and

Training Colleges grant 688,593 12,264 700,857 687,164 13,693 98.0%

Human Settlements: Human Settlements Dev elopment

grant2,200,006 - 2,200,006 1,999,016 200,990 90.9%

Human Settlements: Housing Disaster Relief 92,853 - 92,853 2,889 89,964 3.1%

Public Works: Dev olution of Property Rate Funds grant 200,825 4,473 205,298 199,847 5,451 97.3%

Arts and Culture: Community Library Serv ices grant 78,058 9,634 87,692 65,714 21,978 74.9%

Sport and Recreation SA: Mass Sport and Recreation

Participation Programme grant 66,056 1,765 67,821 59,275 8,546 87.4%

Public Works: Prov incial Roads Maintenance grant 1,369,985 - 1,369,985 1,380,095 (10,110) 100.7%

Transport: Public Transport Operations grant 174,466 - 174,466 174,466 - 100.0%

Public Works: EPWP Integrated grant for Prov inces 60,333 - 60,333 63,118 (2,785) 104.6%

Public Works: Social Sector EPWP Incentiv e grant for

Prov inces 22,121 - 22,121 19,297 2,824 87.2%

TOTAL 9,683,318 232,075 9,915,393 9,493,681 421,712 95.7%

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• Overall the Province spent R9.497 billion or 95.8% of its conditional grants adjusted budget resulting in under spending of R421.712 million. This is an improvement from 2011/12 year where the province spent R7.752 billion or 84.1% of its conditional grants budget, with under spending of R1.088 billion

• Comprehensive Agricultural Support Grant (CASP) and Agriculture Disaster Management Grant

• The under spending of R22.787 million (11.6%) on CASP and R1.597 million (79.4%) on the Disaster Management Grant is due to lack of detailed planning by the department, credit worthiness and cash flow challenges with emerging contractors which resulted in delays in implementing some projects

• An amount of R4.571 million has been recommended for roll over based on verifiable commitments

• Ilima/Letsema Projects Grant• The under spending of R5.089 million (11.6%) is due to internal planning

challenges that delayed the implementation of the ploughing programme• A roll over amount of R1.722 million has been recommended based on verifiable

commitments

CONDITIONAL GRANTS PERFORMANCE FOR THE YEAR (cont’d)

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• Land Care Programme Grant (cont’d)• The under spending of R1.811 million (10.8%) is due to procurement

challenges for the delivery of fencing material thus delaying the implementation of some projects

• A roll over of R94 thousand is recommended for roll over based on verifiable commitments

• Education Infrastructure Grant• The over expenditure of R21.922 million (2.4%) is due to a misallocation of

expenditure between the CG and ES infrastructure projects. Despite the misallocation, the department improved on its overall infrastructure spending through initiatives like Interdepartmental Accounting Model with Public Works as well as close monitoring through the CPMU

• National School Nutrition Programme• The under expenditure of R10.324 million (1.1%) is due to late submission of

invoices by service providers as well as rejections of transfers to schools due to changes in banking details

• R521 thousand has been recommended for roll over


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• HIV and AIDS (Life Skills Education)• The under spending is R989 thousand (2.6%) is due to late submission of invoices

by services providers• R500 thousand has been recommended for roll over based on verifiable

commitments

• Technical Secondary Schools Recapitalisation Grant• The under spending is R14.513 million (43.9%) is due to delays in the

procurement processes • A roll over of R2.947 million is recommended against the under expenditure

• Comprehensive HIV and AIDS grant • The over expenditure of R41.178 million (3.9%) is due to the misallocation of

the Care givers to the conditional grant as well as misallocation of NHLS payments from the NTSG grant. Journals to correct this have been subsequently effected


13

• Health Professions Training and Development Grant (HPTD)• The under expenditure of R10.087 million (5.5%) is due to late submission of

invoices by service providers. Furthermore, R928 thousand was withheld by National owing to under spending on the grant during the year

• A roll over of R1.557 million has been recommended

• Hospital Revitalisation Grant (HRG)• The under spending of R45.629 million (9.9%) is as a result of liquidation of a

contractor at Frontier and St Elizabeth hospital sites as well as labour unrest at the Cecilia Makiwane site

• National Health Insurance Grant (NHIG)• The under expenditure of R3.407 million (29.6%) is due to late submission of

invoices for the Facility Improvement and Integrated School Health projects. • R4 thousand has been recommended for roll over


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• National Tertiary Services Grant (NTSG)• The under spending is R34.270 million (4.9%) is due to delayed procurement

processes for the acquisition of 3 MRI scanners and outstanding invoices for work on the upgrading of hospital complexes

• An amount of R34.270 million has been recommended for roll over

• Nursing Colleges and Schools Grant • The under spending is R2.266 million (15.5%) due to delays in the

submission of progress certificates for upgrading of nursing college facilities• The full amount has been recommended for roll over based on verifiable

commitments

• Further Education and Training Colleges Grant • The under expenditure of R13.693 million (2%) is due to delays in the

implementation of KSD’ Cicira College project due to legal disputes with the contractor


15

• Human Settlements Development Grant (HSDG) and Housing Disaster Relief• The under spending of R200.990 million (9.1%) on the HSDG and

R89.964 million (96.9%) on the Housing Disaster Relief is due to poor contractor performance, late start in some projects, adverse weather conditions and beneficiary administration challenges

• Devolution of Property Rate Funds Grant• The under expenditure of R5.451 million (2.7%) is due to delays in

reconciliation of invoices between the municipalities and the department of Roads and Public Works

• Community Library Services Grant • The under spending of R21.978 million (25.1%) is due to challenges with the

appointment of library assistants, delays in the procurement processes for the modular libraries and late implementation of infrastructure projects



16

• Mass Sport and Recreation Participation Programme Grant• The under expenditure of R8.546 million (12.6%) is due to the late introduction of a

centralised tender for sport equipment and attire by the national department as well outstanding invoices for the national & provincial school athletics championships


• Provincial Roads Maintenance Grant • The over expenditure of R10.110 million (0.7%) is due to a misallocation of

expenditure between the CG and ES infrastructure that will be corrected

• EPWP Integrated Grant for Provinces • The over expenditure on the grant is R2.785 million (4.6%)

• Social Sector EPWP Incentive Grant for Provinces• The under spending of R2.824 million (12.8%) is mainly in Health due to delays in

the replacement Health Community workers


17

INFRASTRUCTURE PERFORMANCE – 2012/13 YEARVote Department Main

budget Adjusted

BudgetRevised S40 Projected exp April 2012-31 March 2013

Cummulative Actual Exp April to 31 March 2013

% of adjusted budget

spent April 2012 - 31

March 2013

(Over)/under compared to adjusted budget

Vote 06 Education 1 014 769 1 024 143 1 108 702 1 002 435 97.88% 21 708

Vote 03 Health 1 158 594 1 243 418 1 225 703 1 216 083 97.80% 27 335

Vote 08 Rural Dev. 138 764 138 764 145 883 113 735 81.96% 25 029

Vote 04 Social Dev. 44 410 46 725 42 799 43 292 92.65% 3 433

Vote 05 DRPW 2 500 145 2 513 379 2 515 040 2 467 558 98.18% 45 821

Vote 07 Local Govt. 9 081 10 048 10 278 4 107 40.87% 5 941

Vote 10 Transport 38 941 49 952 34 811 15 861 31.75% 34 092

Vote 14 DSRAC 47 937 49 124 46 456 35 005 71.26% 14 119

Vote 11Human Settlements 2 292 859 2 292 859 2 120 403 2 001 908 87.31% 290 951

Total 7 245 500 7 368 412 7 250 075 6 899 983 93.64% 468 429

• The Province spent R6.9 billion or 94% of its total adjusted infrastructure budget of R7.368 billion (equitable share and conditional grants) as at 31 March 2013. Infrastructure spending was at 82% of the adjusted budget at 31 March 2012.

• Total infrastructure spending excluding Human Settlements amounts to R4.898 billion or 97% from a total budget of R5.075 billion

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INFRASTRUCTURE PERFORMANCE – 2012/13 YEAR (cont’d)

• The total under-spending amounts to R468.429 million, however, in respect of Human Settlements the last tranche amounting to R284.813 million was withheld by the National Department for Human Settlements.

• In the Eastern Cape Province, the Departments of Roads and Public Works, Human Settlements, Health and Education account for a 96% share of the Infrastructure budget

• Smaller departments are generally underperforming in infrastructure spending and Treasury engaged these departments to determine the blockages. The following reasons were cited:o Poor quality of projects deliveredo Contractors commencing work without orders being issued

• The relevant engagements with respective HoDs and Centralised Project Management Unit (CPMU) have already commenced to resolve the bottlenecks

• The Department of Transport has since transferred the project (Mthatha airport project) to the National Department hence there is no progress in the expenditure

• In respect of infrastructure related conditional grants, the Province spent 94% of the total adjusted infrastructure budget by the end of March 2013

19


• Most of the infrastructure gains in Education can be attributable to the improved implementation of the Interdepartmental Accounting Model (IDA)o This is evidenced by 97.88% expenditure against budget o In terms of the model, DRPW pays the suppliers, claims from DoE and thereafter

journalizes the expenditure against the credit facility• Robust engagement with project managers responsible for Conditional grants • The establishment of a Cabinet Budget Committee for infrastructure to unlock

bottlenecks in the infrastructure value chain

20


• Infrastructure delivery focus areas going into 2013/14 include;• The capacitation of DRPW and CPMU will continue to be strengthened in order to

support the role of DRPW as the formal implementing agent of the Province• The Province has prioritized the improvement of the Provincial Roads network

including the access roads to rural schools and clinics. This will be funded through the Provincial fiscus. The Flagship projects will be funded from the local reserves and departments have been requested to submit their costed plans

• In order to enhance infrastructure delivery in the Province, focus will be on the promotion of integrated plans, improved coordination to avoid duplication in the 3 spheres of government to ensure optimal utilization of limited resources

• Departments will be supported to commence with the 2015/16 financial year plans by June 2013 so that the Province is allowed access to funding incentives for the 2015/16 financial year

• In order to improve value for money in respect of the infrastructure delivered, the infrastructure unit will be conducting site visits. Furthermore there is a focus on evidence based reporting; all infrastructure payments must be supported by payment certificates which are accompanied by photos which show the progress on site including the project management system

21

• Treasury is focusing on institutionalising the lessons learnt particularly on the improved infrastructure spending. These include:o Rolling out of the Interdepartmental Accounting Model to other infrastructure

departmentso Strengthening of the CPMU/DRPW to facilitate planning and implementation by

provincial infrastructure departmentso Appointment of infrastructure specialistso Implementation of IDMS

• With the improved spending in 2012/13, Treasury will also strengthen its monitoring controls to ensure that the increased spending is commensurate with value created on the ground/impact assessment. These controls include:o Continuation of service delivery site visitso Detailed verification of March expenditure spike

• Treasury will continue to institutionalise the Accountability Model wherein letters will be issued to the Executive Authorities to give account on poor performance by their departments

CONCLUSION

22

summary of provincial receipts summary of expenditure by vote & economic classification

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