Department of Higher Education and Training Briefing on 2017/18 Annual Report Presentation to the Select Committee on Education and Recreation 24 October 2018

Presentation Outline 1. Strategic Overview 2. Programme Performance on Predetermined Objectives Achievements Reasons for non-achievement and current status 3. Financial Information A brief summary of each report A summary of Financial Statements Action Plan to improve audit findings Impact of 2017/18 financial outcomes on Departmental operations

Overview of performance against targets The 2017/18 APP had a total of 120 targets Of these, 86 were DHET-specific deliverables, encompassing the following: The development and review of steering mechanisms System funding Infrastructure development Teaching and learning support Partnership development System oversight monitoring (performance, governance and financial management) There were 34 system targets. These included areas such as access, success, transformation and other systemic areas of strategic interest to the Department

Strategic Overview The Department remained focused on ensuring that the key goals of PSET are addressed to ensure that South Africans: Have access to education and training of the highest quality; Do not face barriers in receiving education and training, especially in relation to disability, gender, race and geographic location Succeed in their academic endeavors Receive education and training that is responsive to the needs of the economy and society The year under review will be remembered for the December 2017 announcement of fully subsidized higher education and training for students from poor and working classes

Strategic Overview In steering the system, various interventions were made during 2017/18, namely: Consolidation of the Teaching Development and Research Development Grants to improve University Capacity. The Development Grant is intended to transform teaching, learning, researching and leading in public higher education institutions The development of the Macro Infrastructure Framework to improve planning, monitoring and delivery of infrastructure at universities Dedicating attention to performance reporting, financial management and the funding framework for TVET colleges Strengthening governance oversight of programme and curriculum in TVET colleges Development of a policy framework to improve TVET college qualification offerings

Strategic Overview Our pursuit of improving service delivery amongst CET colleges in 2017/18 is evidenced by: The introduction of a Service Delivery Framework for CET colleges Implementation of teaching and learning improvement plans The induction of CET college Council members to improve governance and management The Department is also making steady progress in the review and integration of the skills development landscape. The National Skills Development Plan was approved as a framework to inform the process

Strategic Overview The 2017/18 Annual Report provides the overall performance of the Department in terms of predetermined objectives and financial management: Part A: General Information: pages 3-10 Part B: Performance Information: pages 25-116 Part C: Governance: pages 117-121 Part D: Human Resource Management: pages 123-126 Part E: Financial Information: pages 167 Summary of Performance Of the 86 Department-specific targets, 81 (94%) were achieved Of the 5 targets not achieved, 3 were in Programme 1 and 2 in Programme 3 Of the 34 PSET system targets, 24 (71%) were achieved

Programme 3: University Education The purpose of this programme is to develop and coordinate policy and regulatory frameworks for an effective and efficient university education system, and it provides financial support to universities, the National Student Financial Aid Scheme and National Institute for Higher Education The focus of the branch during the year under review was on: Oversight on the university system performance in respect to areas such as access, success, transformation, etc. Development of mechanisms to address deficiencies or challenges in specific areas identified in the university system (steering mechanisms) Management of various funding grants

Programme 3: University Education Performance against planned 2017/18 targets: Of the 20 planned outputs for the 2017/18 financial year, 18 (90%) were achieved, including: Review of the NSFAS Act completed - Regulations approved and published Cohort Study Report on First-Time Entering Undergraduates in Higher Education (2000 to 2015) - published on website Central Applications Service policy has been developed and approved

Programme 3: University Education Oversight reports (15) covering the following: HEAIDS programme Financial health of universities Foundation provision grant Teaching development grant Teaching and learning development capacity improvement programme Research development grant Research outputs Infrastructure and efficiency grant New universities earmarked grant Performance of the system against Ministerial enrolment targets Institutional governance Staffing South Africa’s Universities’ Framework Compliance of PHEIs with regulations BRICS partnerships Student leadership capacity development programme

Programme 3: University Education Of the 20 planned targets for 2017/18, two (10%) were not achieved, namely: Development of the National Plan for PSET Reason: The time frame had to be adapted due to the need to wait for the finalisation of the Fees Commission report and government policy decisions related to its recommendations Changes in the Ministerial portfolio and a need to have their concurrence before releasing for public comment; delayed the consultation process Corrective Action: Planned consultations with the Minister (1st quarter of 2018/19) Finalise the plan based on decisions on policy matters for approval by the Minister by the end of the 2018/19 financial year

Programme 3: University Education Policy Framework on collaboration between professional bodies, government departments and quality councils Reason: Chief Director driving the project resigned; challenges in project management led to delays; draft is complete but required some revisions before submitting to the Minister for approval to be published for comment Corrective Action: Draft framework has been completed and will be published for public comments after approval by the Minister

Performance of HE Sub-Sector Performance indicator Of the 16 2017/18 targets, 11 (69%) have been achieved: Performance indicator Target 2017/18 Actual 2017/28 1. Students enrolled in public higher education institutions (n)* 995 000 975 837 2. Graduates in Engineering Science from universities (n)* 13 000 12 386 3. Graduates in Human and Animal Health from universities (n)* 10 400 10 087 Graduates in Natural and Physical Sciences from universities (n)* 8 300 8 093 Graduates in Initial Teacher Education from universities (n)* 20 800 22 123 Doctoral graduates from universities (n)* 2 700 2 797 7. Proportion of universities meeting standards of good governance (%) Baseline% ** established 8. Research Masters graduates (n)* 7 600 7 968 9. Success rates at Universities (%)* 78% 10. Higher Education undergraduate success rate (contact) (%)* 83%

University System Performance Performance Indicator Target: 2017/18 Actual 2017/18 11. Higher Education undergraduate success rate (distance) (%)* 68% 12. Universities offering accredited TVET College qualifications (n) 1 13. University academic staff with PhDs (%)* 45% 14. Additional first-time entrants (black and women) to the academic workforce in addition to normal replacement and plans (n) 100 549 15. First year students in foundation programmes (n) 18 500 20 685 16. Eligible university students obtaining financial aid* 205 000 225 950 *2016 academic year

Reasons for underperformance on University system targets Performance Indicator Reasons for under performance Students enrolled in public higher education studies at universities There is a decline in enrolments at UNISA due to the implementation of their admissions criteria and a new online registration system Graduates in Engineering Science from universities There are fewer students entering university from basic education with the requisite mathematics results Graduates in Human Health and Animal Health from universities The Department will engage with institutions to identify blockages Graduates in Natural and Physical Sciences from universities* Proportion of universities meeting standards of good governance The good governance score card was only approved in December 2017. The baseline will be established in July 2018 * Note: This may be related to the fact that there are fewer students entering university from basic education with the requisite mathematics results

Programme 4: TVET The purpose of this programme is to plan, develop, implement, monitor, maintain and evaluate national policy, programmes, assessment practices and systems The focus of the branch during the year under review was on: Review of steering mechanisms to address deficiencies or challenges in specific areas identified for the TVET college system Teaching and learning support TVET college infrastructure development and maintenance TVET college sector performance

Programme 4: TVET ALLOCATION TVET Budget allocation TVET Compensation of Employees 5 535 383 Lecturing and Support Staff 5 377 029 College Management Staff 158 354 TVET Direct Transfers 1 328 096 Total Programme Funding 6 863 479 NSFAS Bursaries 2 437 620 Total TVET Allocation 9 301 099

Programme 4: TVET ALLOCATION Funding Categories 2016/17 R’000 2017/18 Baseline Growth Rate % Compensation of Employees 5 297 007 5 535 383 4.5% Transfers and Subsidies 1 274 848 1 328 096 4.2% Total programme funding 6 571 855 6 863 479 4.4% NSFAS Bursaries 2 321 543 2 437 620 5.0% Total TVET Allocation 8 893 398 9 301 099 4.6%

Programme 4: TVET ALLOCATION 2017/18

Provincial Allocation Percentages Province Percentage Gauteng 23.5% Kwa-Zulu Natal 17.8% Eastern Cape 14.2% Western Cape 12.4% Limpopo 11.4% Mpumalanga 7.1% Free State North West 5.4% Northern Cape 1.6% Total 100% Province Percentage Gauteng 23% Kwa-Zulu Natal 18% Eastern Cape 14% Western Cape 12% Limpopo 11% Mpumalanga 7% Free State North West 5% Northern Cape 2%   100% 20

Provincial allocation Percentages 21

2017/18 Headcount Enrolments in TVET Colleges

Programme 4: TVET Performance against planned DHET-specific targets All 28 planned DHET-specific outputs for the 2017/18 financial year were achieved as follows: Review of Frameworks: Reviewed Funding Framework for TVET colleges Reviewed departmental policy framework on TVET qualifications Teaching and learning support: A revised plan for the review of curricula within the TVET colleges Plan for TVET college lecturer development

Programme 4: TVET Infrastructure maintenance: Infrastructure funding model for TVET college sector Infrastructure maintenance plan for TVET college sector A national infrastructure asset management system for TVET colleges Roll out plan for the construction of nine TVET college campuses

Programme 4: Infrastructure Infrastructure maintenance: Infrastructure maintenance plan for TVET college sector 50 Colleges have completed Asset Register 48 Colleges have completed first round of maintenance plans A national infrastructure asset management system for TVET colleges TVETNIAMS software licensing approved Data test completed on software 18 Colleges have submitted Site Plans

Programme 4: Infrastructure Capital Infrastructure: Roll out plan for the construction of nine TVET college campuses 12 of 16 sites awarded (3 initial and 9 new) 2 sites not awarded (Vryheid & Nkandla B) 2 sites contracts cancelled (Giyani & Balfour) Thabazimbi operational, Nkandla A @ 98% (legal action in progress), Bhambanani phase 1 ready for occupation (86%) Construction commenced on 6 sites (Graaff Reinette; Sterkspruit; Aliwal North; Umzimkhulu; Msinga; Lusikisiki; Nongoma) Construction to commence at Greytown & Kwaqgikasi Civil disruptions to site operations: Balfour, Aliwal North (Local Business Forums, local labour recruitment disputes despite extensive consultation and representative PSC’s

Programme 4: TVET Oversight reports (16) covering the following: Conduct of public TVET college examination centres during national examinations and assessments (x4) Eradication of certification backlogs (x4) Compliance to recommended governance standards Performance of students in TVET colleges Implementation of strategic partnerships Implementation of IT examination system Student Support Services Teaching and learning support

Programme 4: TVET There were 10 targets for the TVET college system 7 (70%) of these have been achieved: Outcome indicator Target 2017/18 Actual 2017 Headcount enrolments in TVET colleges (n) 710 535 703 705* NC(V) L4 certification rates (%) 30% 41.7%* N3 Certification rates (%) 55% 65.8%* N6 certification rates (%) N6: 40% 66.1%* Number of months to issue certificates to qualifying candidates 3 months 3.4 months Percentage of public TVET college examination centres evaluated in conducting national examinations and assessments in compliance with national policy 100%   100%* 7. TVET throughput rate Establish baseline 33.47% 8. Number of qualifying TVET students obtaining financial assistance 200 000  255 557* 9. Percentage of funded NC (V) L4 students obtaining qualification within stipulated time Establish baseline (2012 to 2014 cohort) 10. Percentage of TVET institutions evaluated on implementation of proposed best practice policies and guidelines issued by the DHET (%) 100%  56% *2016 academic year

Reasons for underperformance on TVET system targets Performance Indicator Reasons for under performance Headcount enrolment in TVET college funded from other sources There were fewer enrolments by TVET colleges in occupationally directed programmes than anticipated Number of months to issue certificates to qualifying candidates On average, certificates are issued to qualifying candidates within 102 days (3.4 months) predominantly due to the large volume of certificates that needs to be couriered. TVET institutions evaluated on the implementation of proposed best practice policies and guidelines Majority of TVET colleges experienced cash flow challenges due to a delay in NSFAS payments. This affected compliance ratings to the approved governance standards Financial policy implementation was also slower than expected

Programme 5: Skills Development The purpose of this programme is to promote and monitor the National Skills Development Strategy, develop a skills development policy and regulatory framework for an effective skills development system Its focus during the year under review was on: Implementation of the National Skills Development Strategy by SETAs Governance of SETAs Security infrastructure at INDLELA Trade testing at INDLELA Review of steering mechanisms to address deficiencies or challenges in specific areas identified for the skills development system 14 Targets if we unpack monitoring reports i.e. 8 main targets + 6 System targets

Programme 5: Skills Development Performance against planned DHET-specific targets All 8 planned DHET-specific targets for the 2017/18 financial year were achieved as follows: The National Skills Development Plan Quarterly reports on the implementation of National Skills Development Strategy A report on the governance of SETAs A report security infrastructure development at INDLELA Processing trade test applications within an average of 69 days as compared to the planned 100 days (this is an improvement from 120 days in 2016/17) 14 Targets if we unpack monitoring reports i.e. 8 main targets + 6 System targets

Programme 5: Skills Development Performance indicator 5 (83%) of 6 targets in the skills development system were achieved during the 2017/18 financial year Performance indicator Target 2017/18 Achievement 2017/18 Number of work based learning opportunities 130 000 162 659 Number of new artisans qualified per annum 21 110 21 151 Number of new artisan learners registered nationally per annum 27 750 32 330 National Artisan Learners Trade Test pass rate (including INDLELA) 58% 54% Percentage of national artisan learners who are employed or self-employed 60%   Proportion of SETAs meeting standards of good governance (%) 100% 14 Targets if we unpack monitoring reports i.e. 8 main targets + 6 System targets

Reasons for underperformance on system targets Performance Indicator Reasons for under performance National artisan learners trade test pass rate (including INDLELA) INDLELA also tests a lot of self-funding candidates who broadly do not have sufficient workplace training experience as compared to those who go through formal SETAs or industry artisan training programmes

Programme 6: CET The purpose of this programme is to plan, develop, implement, monitor, maintain and evaluate national policy, programme assessment practices and systems for Community Education and Training Its focus for the year under review was on: Developing a service delivery model for the CET college system Developing a funding Framework for the CET college system Reporting on teaching and learning in CET colleges Policy framework for reporting by CET colleges Monitoring and reporting on the CET college system performance All six outputs/targets were achieved as planned

CET College System Performance Outcome indicator target Both system targets were not achieved: Outcome indicator target Target 2017/18 Actual Headcount Enrolment in CET Colleges (n) 310 000 273 431 Certification rate in formal CET qualifications (%) 38% 35,9%

Reasons for underperformance on CET college system targets Performance Indicator Reasons for underperformance Headcount Enrolment in CET Colleges (n) Poor advocacy and learner recruitment strategy Certification rate in formal CET formal qualifications (%) Insufficient learning and teaching support materials due to lack of funding. The current system of procurement through TVET colleges was not responsive to the sector

Programme 2: Planning, Policy and Strategy The purpose of this programme is to provide strategic direction in the development, implementation and monitoring of Departmental policies and the human resource development strategy for South Africa Its areas of focus during the 2017/18 financial year was on: Oversight on the following: Open Learning in PSET Recognition of Prior Learning Social Inclusion in PSET Career Development Services International Relations Skills Supply and Demand Information Management Systems Statistics on PSET

Programme 2: Planning, Policy and Strategy Performance against planned outputs/targets All 12 annual targets were achieved: NQF Amendment Bill was approved by Cabinet for submission to Parliament. The Bill provides for: Verification of all qualifications or part-qualifications by SAQA Formulation of criteria for evaluating foreign qualifications Establishment and maintenance of separate registers of misrepresented or fraudulent qualifications A separate register for professional designations Referral of qualifications or part qualifications to SAQA for verification and evaluation Offences and penalties which have a bearing on fraudulent qualifications

Programme 2: Planning, Policy and Strategy Produced a List of Occupations in High Demand To inform skills planning in the country to support the Department’s planning processes with respect to enrolment planning and resource allocations Finalised the Strategic Policy Framework on Disability Guide universities and colleges to create an enabling environment for people with disabilities Ensure the attainment of the NDP target: 2% of people with disabilities having the right skill sets and obtaining relevant qualifications

Programme 2: Planning, Policy and Strategy Produced two reports to inform planning within the PSET system: Investment trends in PSET Statistics on PSET Initiated institutionalisation of career development Produced oversight reports on: Social Inclusion in PSET Open Learning in PSET Career Development Services Status of international relations Developed a Communication Strategy for student support services Finalised the design of the Management Information System for public Community Colleges

Programme 1: Administration The purpose of this programme is to provide strategic leadership, management and support services to the Department Its focus areas in the 2017/18 financial year were: Filling of funded vacancies Improving the human resource recruitment and selection process Management of disciplinary cases Management of creditor payments

Programme 1: Administration Performance against targets 9 (75%) of 12 targets were achieved as follows: The Department has revised its Human Resource Plan during the financial year Developed a plan to improve human resource recruitment and selection process 94,8% of funded vacancies were filled during the 2017/18 financial year Developed a plan to reduce the number of days to resolve disciplinary cases Developed a system to track invoices received from creditors

Programme 1: Administration Performance against targets Developed a remedial plan on audit findings in the previous financial year All (100%) audit issues were attended to through an Action Plan Department received an unqualified audit opinion for the 2016/17 financial year ICT improvement initiatives were implemented as planned: ICT strategy and system implementation ICT improvement plan Data centre infrastructure Implementation of an ICT governance framework ICT procurement plan

Programme 1: Administration 3 (25%) of the 12 targets were not achieved as follows: Number of days to fill advertised positions It took an average of 188 days to process appointments in 2017/18 financial year instead of the targeted 180 days It is an improvement from 222 days in the 2016/17 financial year The main reason for underachievement is the high volumes of applications To mitigate this, an improvement plan has been developed and approved Implementation of an e-recruitment system

Programme 1: Administration 100% of disciplinary cases resolved within 90 days 97% of disciplinary cases were resolved within 90 days This is also an improvement from the previous year’s performance which was 22% Underperformance is attributed to the postponement of cases and the shortage of trained Chairpersons Corrective action: Improvement plan has been approved Conducting training on initiating, investigating and chairing disciplinary cases Appointment of additional staff at head office and regional office to increase capacity

Programme 1: Administration Percentage of invoices received from creditors paid within 30 days 97.96% of invoices were paid within 30 days The reason is that there are delays in the processing of invoices that are eventually rejected due to wrong banking details These must be corrected through the system before the payments could again be processed

Programme 1: Administration Actions in the 2018 Action Plan Audit Action Plan in respect to ICT Audit findings Findings Actions in the 2018 Action Plan User Access Management (Systems Controllers and Users) Quarterly reviews for system administrators are being conducted by GITO and quarterly reviews for users are being conducted by business units (directorates that own systems). This is an ongoing activity Information Technology Strategy not approved The Information Technology Strategy was approved on 11 January 2018 IT Risk Assessments not conducted Risk assessments were conducted by GITO and the Risk Management unit on 07 June 2018 Environmental Management issues at INDLELA and Ndinaye House (Server rooms) Access control registers have been put at both INDLELA and Ndinaye House server rooms. The server room at INDLELA has been upgraded and all fire safety measures addressed Business Continuity Plan (BCP) not developed and not linked to the IT DRP Supply Chain Management (SCM) processes are in place to appoint the service provider to develop the BCP

Financial Information

Annual Report: Financial Information Financial information presented in the Annual Report comprises the following: The report of the Accounting Officer The report of the Audit Committee The report of the Auditor-General Financial Statements (including the Appropriation Statement, Notes to the Appropriation Statement, Statements of Financial Performance, Financial Position and Changes in Net Assets as well as the Cash Flow Statement, Accounting Policies, Notes to the Annual Financial Statements and Supplementary Annexures) The focus on this section is on the following aspects: A brief summary of each report A summary of the Financial Statements The Action Plan to improve audit findings The impact of the 2017/18 financial outcomes on Departmental operations

Report of the Accounting Officer The report of the Accounting Officer provides a summary of the financial affairs of the Department including an overview of significant events, key policy decisions and spending trends that includes the matters addressed by the relevant Branch Heads on the performance of each Branch It further includes a narrative pertaining to services, capacity constraints and organisational arrangements alongside corporate governance arrangements endorsed within the Department The report of the Accounting Officer is presented from pages 169 to 194 of the Annual Report

Report of the Audit Committee The Report of the Audit Committee expresses the Committee’s views on the effectiveness of internal controls within the Department, the quality of reporting in terms of PFMA requirements, as well as the operations of Internal Audit and Risk Management within the Department Based on the information contained in the Report, the Audit Committee has expressed its satisfaction with the unqualified audit opinion The Audit Committee expressed concerns of some non-compliance regarding internal controls, information technology and performance information reporting The Audit Committee regularly brings the matters of concern to the attention of the Accounting Officer and Executive Authority Controls have been appropriately implemented in the majority of disciplines in the Department

Report of the Audit Committee Improvements in controls were specifically identified in Supply Chain Management and the disclosures of financial information A lack of controls within Human Resources still exist due to the magnitude of functions and large volumes of staff since the function shift. In some cases the required action plans were not implemented on time to prevent audit findings in full Controls within IT has been identified as a high risk for the Department. There has been a lack of identifying critical risks and ensuring timely interventions to prevent instability within the IT environment The detail of the Report of the Audit Committee is presented from pages 195 to 197 of the Annual Report

Report of the Auditor-General The Department received an unqualified audit opinion regarding its financial statements. No material misstatements were identified in the financial statements and no material non-compliance were identified with specific legislative requirements. Material findings were, however, identified in respect of the usefulness and reliability of performance information of Programme 3: University Education, Programme 4: Technical and Vocational Education as well as Programme 6: Community Education and Training. The findings are mainly related to inappropriate record management that did not allow the Auditor-General to confirm the reported achievements Detail regarding the findings on performance information is available from page 200 and 201 of the Annual Report

Financial Statements: Appropriation Statement The Appropriation Statement provides an indication of the Department’s spending against the final Appropriated Funds for the year In summary, the position is as follows: R’000 Final Appropriation: 68 601 440 Including - Voted Funds 52 307 639 - Direct Charges 16 293 801 Actual Expenditure: 68 589 421 Including - Voted Funds 52 295 860 - Direct Charges 16 293 561 Variance (Underspending) 12 019 (0.018%) * Detailed Information per Programme and Economic Classification is presented from pages 208 to 223 of the Annual Report

Financial Statements: Appropriation Statement Summary of variance of R12.019 million per programme: Programme R’000 Administration 3 346 Planning, Policy and Strategy 1 323 University Education 969 Technical and Vocational Education and Training 616 Skills Development 833 Community Education and Training 4 692 Direct Charges 240 Total 12 019

Financial Statements: Appropriation Statement Summary of variance of R12.019 million per economic classification: Economic Classification R’000 Compensation of Employees (Natural attrition/Unfilled vacancies) 5 734 Goods and Services (Mainly Travel and Subsistence/Stationery) 3 169 Transfers payments (Favourable exchange rate for membership fee to the Commonwealth of Learning, University interest and redemption payments as well as Direct Charges) 654 Capital (Equipment) 2 462 Total 12 019

Financial Statements: Irregular Expenditure Irregular expenditure is presented in Note 26 of the Notes to the Financial Statements (page 256 of the Annual Report) The total irregular expenditure as at 31 March 2018 amounts to R149.204 million, of which R92.419 million was carried over from 2016/17 as reported in the 2016/17 Annual Report An amount of R2.010 million from 2016/17 was condoned during the 2017/18 financial year The irregular expenditure for 2017/18 is based on carry-through costs of contracts that were reported as irregular during 2016/17 for which final investigations were not completed as at 31 March 2018

Action Plan to Improve Audit Findings Each Branch completed an audit action plan to address the control deficiencies based on the audit findings These plans address the areas raised in the Audit Report in conjunction with all other matters identified during the audit resulting in audit queries The action plan has been approved by the Director-General and progress will be reported on a regular basis to the Minister, Director- General and Audit Committee The first report from Branches has been received and is currently being reviewed and consolidated by the Office of the CFO

Financial Statements: Impact on Operations The level of spending did not have a negative impact on the operations of the Department Strict measures had to be set in place to prevent overspending of the Vote However, when the results of provisions, accruals and commitments are also taken into account, the Department could have overspent The outcome of expenditure within the current economic climate is already placing similar pressures on the Department for the 2018/19 reporting period Significant pressure is still experienced due to the additional responsibilities and function brought about by the TVET and CET function shift, including regional presence and the monitoring of the entire system

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