1 Department of Education Presentation to Standing Committee on Appropriations: Expenditure and Budget Implementation for the First Quarter of 2009/10 16 October 2009

2 Areas Addressed in the Presentation Introduction Spending trends per programme Spending trends per economic classification Reasons for % spent per programme Reasons for % spent per economic classification Reasons for % spent on transfer payments Monitoring and Evaluation of Budget

3 Introduction The total budget of the Department for 2009/10 amounts to R21,287 billion The majority of the budget consists of transfer payments as follows: University Sector: R15,3 billion Conditional Grants: R2,6 billion Public Entities: R2,2 billion Other Transfers such as UNESCO: R12,1 million The remainder of the budget (R1,2 billion) consists of the following Compensation of Employees: R314,7 million Examiners and Moderators: R31,3 million Departmental Operations: R139,9 million Departmental Projects: R187,9 million Earmarked Funds: R499,2 million

4 Spending trends per programme ProgrammeBudgetExp at 30 June % Spent R’000 1: Administration % 2: System Planning and Monitoring % 3: General Education % 4: Further Education and Training % 5: Social and School Enrichment % 6: Higher Education % 7: Auxiliary and Associated Services % Total %

5 Spending trends per economic classification Economic ClassificationBudgetExp 30 June ‘09% Spent R’000R‘000 Compensation of Employees % Goods and Services % Financial transactions in assets and liabilities 033- Transfer Payments Provinces and municipalities % Departmental agencies and accounts % Universities and technikons (current) % Foreign governments and international organisations Non-profit institutions50 100% Households Universities and technikons (capital) % Capital Expenditure Machinery and equipment % Software and other intangible assets % Total %

6 Reasons for Expenditure Trend - Programmes Programme 1: Administration (17.14%) –New office building – Unitary Fee Programme 2: System Planning and Monitoring (17.27%) –NEEDU and HRMIS projects – bulk of expenditure is planned for third and fourth quarter –Filling of posts on IQMS is slower than projected Programme 3: General Education (19.27%) –Teacher Development: Maths and Science – bulk of expenditure is planned for second and third quarter –Systemic Evaluation Earmarked Funds – bulk of expenditure is planned for third and fourth quarter Programme 4: Further Education and Training (32.13%) –Mainly examination and assessment function with seasonal expenditure trend

7 Reasons for Expenditure Trend - Programmes Programme 5: Social and School Enrichment (15.83%) –NSNP conditional grant – transfers to some provinces were withheld –Kha Ri Gude – spending is in accordance with plans –Majority of activities are scheduled for third quarter of the financial year Programme 6: Higher Education (53.41%) –Transfers to Universities and Technikons is bulk of spending on this programme –Spending on programme is in accordance with plans Programme 7: Auxiliary and Associated Services (17.02%) –Transfers to UNESCO will take place in the fourth quarter and to the Commonwealth of Learning in the second quarter as projected –Spending on the remainder of programme is in accordance with plans

8 Reasons for Expenditure Trend - Economic Classification Compensation of Employees (25.19%) –Spending is higher than projected due to: - Payments to examiners and moderators - Payment of new Ministry: Higher Education and Training Goods and Services (10.13%) –As a result of cost containment measures that the Department had to put in place on certain areas to prevent over-expenditure on other areas, the spending on this item is still low –Projects such as IQMS, NEEDU and NSNP (earmarked funds) are also influenced by these cost containment measures –The execution of the activities of the Department is in accordance with the strategic plans

9 Reasons for Expenditure Trend - Economic Classification Financial Transactions in Assets and Liabilities (Over-expenditure) –Expenditure is related to the approved writing-off of salary overpayments and no shows –In line with Government’s policy, the Department does not budget for this item Transfers and Subsidies (48.8%) –See separate slide Machinery and Equipment (Over-expenditure) –Implementation of new Ministry for Higher Education –Assets incorrectly classified as goods and services in ENE instead of Software and Intangible Assets

10 Reasons for Expenditure Trend - Transfer Payments 76.05% of transfer and subsidies is in respect of the University Sector as follows: –Block grants (R billion) Treasury approval to transfer 3/12 of subsidy to institutions during April as well as during May. Thereafter 1/12 from June up to November – funds are for an academic year – institutions self-funded from January to December. –Interest and Redemption (R40.6 million) Paid to universities on a claims basis –Infrastructure and Efficiency Funds (R1.462 billion) Paid to universities based on progress reports submitted –Development Funds (R million) Paid to universities based on progress reports submitted –Ad hoc (R338.4 million) Paid to universities based on progress reports submitted –Paid to 30 June 2009: R8.267 billion (54.04%) Departmental agencies and accounts –Obtained Treasury approval to transfer funds to the NSFAS in April, May, August, September and November – funds are for an academic year. –All the other Public Entities, i.e. CHE, Umalusi and SAQA receive funds quarterly during April, July, October and January –Paid to 30 June 2009: R1.089 million (48.79%)

11 Reasons for Expenditure Trend - Transfer Payments Provinces and Municipalities –HIV and Aids conditional grant – transfers - quarterly basis –National School Nutrition Programme conditional grant – transfers - quarterly basis –Paid to 30 June 2009: R million (17.83%) Foreign Governments and International Organisations –UNESCO membership fees paid during January/February of each year –Commonwealth of Learning paid during August 2009 –Paid to 30 June 2009: R0 Non profit institutions – transfer to Childline South Africa once-off at the beginning of the financial year –Paid to 30 June 2009: R (100%) Households – ad hoc – leave gratuities paid in respect of officials who retire –Paid to 30 June 2009: R3.821 million

Monitoring and Evaluation of the Budget Administrative and financial systems are in place in the Department Expenditure is monitored on a monthly basis and responsibility managers are requested to provide reasons if the progress on projects is not satisfactory. The Ministers are informed of the spending trends in terms of the Public Finance Management Act. Senior Management at least once a month discusses the spending trends and reprioritisation of activities within the objectives of the Department are considered when necessary Cost containment measures were implemented