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SELECT COMMITTEE ON FINANCE

PUBLIC HEARINGS

13 FEBRUARY 2007

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INTRODUCTION

Objective of this report• Allocation and spending trends• 2006/07 expenditure as at 31 December

2006 [Section 32 of PFMA],• and related service delivery outcomes.

On Conditional Grant Spending, On Capital Expenditure

• Challenges and remedial actions taken where problems were experienced.

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EXPENDITURE BY PROGRAMME AS AT 31 DECEMBER 2006

Programme Budget R'000

Compen sation R'000

Goods and

Services R'000

Transfers R'000

Capital R'000

Total Cur, Transfers,

Capital R'000

Balance R'000

2nd quarter

spending%

3rd quarter

spending %

1. Administration 389,765 191,568 83,208 2,386 7,101 284,263 105,502 49.14 72.92. Public Ordinary School Education 4,148,114 2,687,325 112,091 230,906 18,046 3,048,368 1,099,746 48.19 73.53. Independent School Subsidies 31,684 0 0 22,371 0 22,371 9,313 47.14 70.64. Public Special School Education 163,162 99,514 2,630 19,404 182 121,730 41,432 53.85 74.65. Further Education and Training 157,949 72,000 127 32,426 0 104,553 53,396 57.81 66.26. Adult Basic Education and Training 72,056 40,979 3,821 90 96 44,986 27,070 28.79 62.47. Early Childhood Education 49,608 8,410 165 21,674 0 30,249 19,359 37.48 61.08. Auxiliary and Associated Services 320,919 4,693 76,527 21,530 119,210 221,960 98,959 57.39 69.2Total 5,333,257 3,104,489 278,569 350,787 144,635 3,878,480 1,454,777 48.75 73.0

Expenditure as at 31 December 2006

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REASONS FOR UNDERSPENDING AS AT 31 DECEMBER 2006

PROGRAMME %Spent Reason(s) for underspending

Administration 72,9 •Bursaries for 2007 academic year still to paid•E-education outstanding payments

Public Ordinary School 73.5 •Outstanding payment for Textbooks •Transfer payment to section 21 schools for the first quarter

Independent Schools 70,6 •Payment to schools are made quarterly. The next and final payment of R8million will be effected in before the end of January 2007

Special Schools 74,6 •Payment are made quarterly

Further Education and Training

66 •Transfers to FET colleges for recapitalisation. An amount of R4million is committed. Colleges offered financial management support

Adult Basic Education & Training

62,4 •Textbooks for ABET learners still to be paid. The amount involved is R7 million•Incorrect classification of ABET educators on PERSAL.An investigation is underway

Early childhood Development

61 •Payments/transfer to Grade R sites are effected in January every year. Expected expenditure at year end is 99%

Auxiliary & Associated Services

69 •Salaries to markers are paid in December-January•Expenditure on Leaner support programmes(NSNP,Orphans,Learner transport, Hostels)•Own infrastructure Fund. To be spent 100% by February 2007

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SPENDING BY ECONOMIC CLASSIFICATION AS AT 31

DECEMBER 2006Budget Spent Commit Balance

R ' 000 R ' 000 R ' 000 R ' 000

5,333,302 3,864,000 152,542 1,469,302 48.75% 73.01%

Current Expenditure 4,694,788 3,382,983 129,950 1,311,805 47.44 72.06%

Compensation of employees 4,164,195 3,104,491 1,059,704 49.02 74.55%

Goods and services 530,593 278,492 129,950 252,101 33.30 52.49%

Transfers and Subsidies 449,673 336,152 129 113,521 62.35 74.75% Provincial and Local Gov (Regional Service Council Levy) 6,979 2,936 4,043 23.23 42.07%

Departmental agencies 3,000 3,000 0 0.00 100.00%

Non profit institutions 421,268 317,679 129 103,589 64.34 75.41%

Households 18,426 12,537 5,889 42.43 68.04%

Capital Assets 188,841 144,865 22,463 43,976 45.48 76.71%

Buildings and fix structures 167,945 133,583 18,662 34,362 21.28 79.54%

Machinery and equipment 20,896 11,282 3,801 9,614 28.64 53.99%

3rd quarter %

2nd quarter %

•Goods and Services:- low spending due to outstanding payments for LTSM.•Transfers and subsidies to Prov. and Local Gov:- under spending due to termination of Regional Service Council Levy. Funds to be utilised elsewhere.•Transfers and subsidies to Households:- mainly for payment of leave gratuities.•Machinery and equipment:- mainly computer equipment and school furniture

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Allocation trends: Conditional Grants

Conditional Grant 2005/06

R’000

2006/07

R’000

% Growth

2007/08

R’000

% Growth

2008/09

R’000

% Growth

2009/10

R’000

2. HIV and Aids 7,947 8,424 9.4 9,217 6.3 9,800 5.5 10,341

3. NSNP 53,817 72, 672* 5.0 68,023 7.4 73, 070 6.9 78,112

4. FET Recapitalisation - 30,000 20.0 36,000 45.0 52,200 -100 -

5.Provincial Infrastructure

55,913 59,268 102.0 119,723 6.3 127,236 39.5 177,546

6. Own Infrastructure 73,360 76,881 5.0 80,725 23.9 100,026 9.9 109,978

TOTAL 191,037 239,357 31.05 313,688 15.51 362,332 3.77 375,977

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Conditional Grants - spending trends

01020304050607080

90100

2001/02 2002/03 2003/04 2004/05 2005/06 2006/07

% spending

projection

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SPENDING ON CONDITIONAL GRANTS AS AT 31 DECEMBER

2006Budget R'000

Spending as at

31/12/06 R'000

Balance R'000

% Spent as at

30/09/06

% Spent as at

31/12/06

HIV/AIDS 8,865 8,150 715 58.0% 91.9%NSNP 72,672 46,262 26,410 53.0% 63.7%Infrastructure Grant (Provincial) 59,268 56,603 2,665 55.9% 95.5%Infrastructure Grant (Ow n) 82,875 64,649 18,226 40.2% 78.0%FET Recapitalisation 30,000 26,064 3,936 27.2% 86.85%

Totals 253,680 201,728 51,952 46.6% 79.52%

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CAPITAL EXPENDITURE 3rd QUARTER 2006/07

Description

Capital Transfers Capital Assets Total Capital

Budget

R'000

Spending 31 Dec 06

R'000

Budget

R'000

Spending 31 Dec 06

R'000

Budget

R'000

Spending 31 Dec 06

R'000

% Spent

1. Buildings and fixed structures 126,499 108, 920 41, 446

24, 663 167, 945

133, 583 79.54

2. Machinery & equipment -

- 20, 936

11, 282

20, 936

11, 282 53.89

Total 126,499 108, 920 62, 382 35, 945

188,881

144, 865 76.70

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HIV AND AIDS AS AT DECEMBER 2006

Output Description Allocation Spending (as at Dec 06)

R’000 R’000 %

Advocacy 674 674 100

Training – Master Trainers and educators

3,117 3,131 100.45

Care and Support 1,264 1, 264 100

Peer Education 1,011 1, 011 100

Learning Support Materials 1,432 1, 327 92.67

Support, Monitoring and Evaluation 505 506 100.20

Management and Administration 421 237 56.29

Roll-over 441

Total 8,865 8, 150 91,93

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NSNP Expenditure3rd Quarter 2006/07

Activity Allocation

R'000

Spending as at

31 Dec 2006

R,000

Spent

%

Commitment as at

31 Dec 2006

R’000

Balance

R’000

Actual feeding expenditure

51, 931 36, 057 69.43 15, 778 15, 874

Transfer payments (cooked meals)

18, 791 10, 438 55.55 - 8, 353

Administration 2, 034 198 9.73 363 1, 836

Total 72, 756 46, 693 64.18 16, 141 26, 063

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NSNP – Challenges and Corrective measures

• Newly developed standardized invoices format was discussed and agreed upon with the service providers

• Coordinators were advised to hold meetings with the service providers

• Invoices will be sent to Head Office after 5 days end of the month• Monthly reports must be submitted to Head Office • Implement transfer payments to all NSNP schools for honoraria and

fuel (November 2006 -January 2007)• Monitoring visits of 4 schools per month by Provincial Office Officials

for NSNP.• Ensure that outstanding payments of all service providers are

processed by 10 March 2007.

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CHALLENGES ON INFRASTRUCTURE

Capital (Public Works)• Capital expenditure on track.

Minor Capital (Education)• Expenditure to date below target, but improving since

majority of sites handed over. 100% commitments in February 2007 – all small renovations and maintenance.

• Mechanisms to expedite payments – dedicated staff.• Assisting contractors’ cash flow challenges through

cessions.• More frequent site visits by inspectors – more regular

payments.

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CONCLUSIONMonitoring of and reporting on expenditure againstBudgets is done through:

Monthly Executive Reports on spending against budget Finance Committee meetings are held on monthly bases, the last

meeting was held on 19 January 2007 Quarterly review for third quarter was held on the 26 January 2007 Monitoring of expenditure is done by Management Accountants per

branch Appointment of 5 additional Deputy Directors: Financial

Management to strengthen the Districts financial capacity

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Education Budget-means to quality education

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THANK YOU