1. 27 November 2018
PRESENTATION ON THE CONDITIONAL GRANT TO THE SELECT COMMITTEE ON APPROPRIATION
16 MAY 2018
MANCO

2. PURPOSE Performance during 2017/18; and
Brief the Select Committee members on the implementation of ECD Conditional Grant with specific focus on
Performance during 2017/18; and
Progress made on implementation during 2018/19

3. Reminder of Background

4. BACKGROUND
In order to enhance the implementation of the ECD policy, Treasury has allocated R812 million as a conditional grant for 2017/18 (R ) and 2018/19 (R ). This is to enable National DSD to better control and ring-fence expansion of ECD in the country in line with the approved national Integrated ECD Policy.
The allocation will be used to increase coverage of children accessing ECD services through the ECD subsidy to poor children as well as assist to improve the conditionally registered ECD centres to meet basic requirements in order to be fully registered.
The grant is divided into two:
Subsidy component
ECD maintenance component

5. KEY CONDITIONS OF THE ECD CONDITIONAL GRANT
Subsidy Grant
The grant will assist registered centres that are not fully funded from the equitable share, fully registered centres that are not funded or conditionally registered partial care facilities not funded offering Early Childhood Development programmes.
The subsidy is targeted for qualifying children from birth to 5 years or until they enter Grade R.
The value of the subsidy paid is at a rate of R15 per child for a maximum period of 264 days.

6. KEY CONDITIONS OF THE ECD CONDITIONAL GRANT
Maintenance Grant
Partial care facilities offering ECD programmes that are registered conditionally will be eligible for the maintenance grant.
Minor building and maintenance improvements aimed at ensuring ECD centres comply with the health and safety norms and standards, as identified by the National Department of Social Development will be funded from the grant.
The maximum value to be spent per ECD centre for maintenance improvements is R100 000.00
Prior approval for any amount exceeding the R100 000 should be obtained from the HOD and CFO.
The exceeding amount should not be more than 30% of the R100 000.
Provinces must conduct assessments of conditionally registered centres and cost them in order to qualify for maintenance grant funding in 2018/19.
All maintenance projects must be recorded on the National Treasury Infrastructure Reporting Model (IRM).

7. ECD CONDITIONAL GRANT 2017 MTEF ALLOCATIONS
2017/18
2018/19
2019/20
R' 000
Early Childhood Development Grant
ECD subsidy expansion
ECD centre maintenance
68 720
78 746
83 127

8. COMPLIANCE TO THE GRANT FRAMEWORK 2017/18

9. RESPONSIBILITIES OF NATIONAL DEPARTMENT
National Responsibility
Compliance 1
Appointment and management of service providers;
Completed 2
Develop Business Plans and submit after they get signed off by Heads of Department to national DSD; 3
Provinces to implement the Business Plans as approved by national department (national should be notified in writing about deviations before implementation can take place);
 Completed 4
Comply with terms and conditions of the receiving officer outlined in the Division of Revenue Act (DoRA); 5
Submit monthly financial reports to National Treasury 15 days after the end of the month; 6
Submit quarterly performance reports to national department within 30 days after the end of each quarter;

10. SUBMISSION OF BUSINESS PLANS
Province
Date Signed by HOD
Acting DG’s
NT Submission EC
04 April 2017
10 April 2017
April 2017 FS
28 February 2017
31 March 2017 GT
28 March 2017
KZN
10 March 2017 LP
07 March 2017 MP NC
13 March 2017 NW
29 March 2017 WC
06 March 2017

11. RESPONSIBILITIES OF PROVINCIAL DEPARTMENT
National Responsibility
Compliance 1
Appointment and management of service providers;
Completed 2
Develop Business Plans and submit after they get signed off by Heads of Department to national DSD; 3
Provinces to implement the Business Plans as approved by national department (national should be notified in writing about deviations before implementation can take place);
 Completed 4
Comply with terms and conditions of the receiving officer outlined in the Division of Revenue Act (DoRA); 5
Submit monthly financial reports to National Treasury 15 days after the end of the month; 6
Submit quarterly performance reports to national department within 30 days after the end of each quarter;

12. Financial allocations, payments and expenditure 2017/18

13. TOTAL ALLOCATION TO PROVINCES
Column A
Allocation
2017/18
R'000
Eastern Cape
56 365
Free State
18 398
Gauteng
38 489
KwaZulu-Natal
71 879
Limpopo
41 085
Mpumalanga
25 799
Northern Cape
13 761
North West
32 686
Western Cape
19 150
Total

14. SUMMARY 2017/18 BUDGET VS ACTUAL TRANSFERS AND EXPENDITURE AS AT 31 MARCH 2018
Province
Budget Allocation
Transferred by National DSD at 31 March 2018
Spent at
31 March 2018
Percentage Spent by Provincial DSD
R'000 %
Eastern Cape
56 365
27 238
48%
Free State
18 398
12 937
70%
Gauteng
38 489
35 938
93%
KwaZulu-Natal
71 879
100%
Limpopo
41 085
36 034
88%
Mpumalanga
25 799
23 645
92%
Northern Cape
13 761
11 710
85%
North West
32 686
20 304
62%
Western Cape
19 150
18 770
98%
Totals
81%

15. BUDGET VS EXPENDITURE PER PROVINCE PER GRANT COMPONENT AT 31 MARCH 2018
EASTERN CAPE DSD
ALLOCATIONS R
TOTAL EXPENDITURE %
Spent
UNSPENT
31 MARCH 2018
% Available
Total
48%
52%
Subsidy
62%
38%
Maintenance
0.00 0%
100%
Administration
20%
80%
FREE STATE DSD
ALLOCATIONS R
TOTAL EXPENDITURE %
Total Available
Total
70%
30%
Subsidy
99% 1%
Maintenance
35%
65%
Administration
91% 9%

16. BUDGET VS EXPENDITURE PER PROVINCE PER GRANT COMPONENT AT 31 MARCH 2018
GAUTENG DSD
ALLOCATIONS R
TOTAL EXPENDITURE %
Total Available
Total
93% 7%
Subsidy
96% 4%
Maintenance
98% 2%
Administration
47%
53%
KWAZULU-NATAL DSD
ALLOCATIONS R
TOTAL EXPENDITURE %
Available/Over
Total
100% 0%
Subsidy
Maintenance
0.00
Administration

17. BUDGET VS EXPENDITURE PER PROVINCE PER GRANT COMPONENT AT 31 MARCH 2018
LIMPOPO DSD
ALLOCATIONS R
TOTAL EXPENDITURE %
Total Available
Total
88%
12%
Subsidy
101%
-1%
Maintenance
50%
Administration
52%
48%
MPUMALANGA DSD
ALLOCATIONS R
TOTAL EXPENDITURE %
Total Available
Total
92% 8%
Subsidy
97% 3%
Maintenance
Administration
29%
71%

18. BUDGET VS EXPENDITURE PER PROVINCE PER GRANT COMPONENT AT 31 MARCH 2018
NORTHERN CAPE DSD
ALLOCATIONS R
TOTAL EXPENDITURE %
Total Available
Total
85%
15%
Subsidy
100%
0.00 0%
Maintenance
79%
21%
Administration
82%
18%
NORTH WEST DSD
ALLOCATIONS R
TOTAL EXPENDITURE %
Total Available
Total
62%
38%
Subsidy
69%
31%
Maintenance
24%
76%
Administration
61%
39%

19. BUDGET VS EXPENDITURE PER PROVINCE PER GRANT COMPONENT AT 31 MARCH 2018
WESTERN CAPE DSD
ALLOCATIONS R
TOTAL EXPENDITURE %
Total Available
Total
98% 2%
Subsidy
Maintenance
100%
0.00 0%
Administration

20. MAINTENANCE COMPONENT

21. CATEGORIES FOR MAINTENANCE COMPONENT
Health and Safety
Minor Building improvement (including disability accessibility)
Early Learning Material
Equipment

22. PROVINCIAL PERFORMANCE ON THE MAINTENANCE GRANT PER QUARTER
Province
Annual Target Q1 Q2 Q3 Q4
Total ECD’s benefiting from the grant (Q1-4)
Current % of ECD’S Benefiting against the annual target
Western Cape 13 -
100%
Mpumalanga 62 44 18
Free State 79 26 53
Limpopo 98 90 8
Northern Cape 65 11 2 52
North West 48 4 6 10
21%
Eastern Cape 96 0%
Gauteng 15
KwaZulu Natal
117
Total
593 81
180
198
459
77%

23. METHODS OF ASSESSMENT AND FIXING THE ECD’S IN 2017/18
Province
Assessments and Costing
Fixing of the ECD’s
Gauteng
Used a service provider for assessments and costing.
Appointed contractors
North West
Used DSD officials
Western Cape
Used a service provider for assessments and costing
Mpumalanga
Transferred to the NPO
Northern Cape
Free State
Limpopo
Used Dept of Public Works
KwaZulu Natal
Appointed contractors and transferred to the NPO
Eastern Cape

24. REASONS FOR UNDER-PERFORMANCENW
The strike action in the NW resulted in the province not being able to perform on the grant particularly in the last quarter which compromised on service delivery. EC
Delay in finalising the recruitment of the Construction Project Manager and Project Managers impacted on the performance as technical skills were required.
The two Project Managers were recruited in Nov and Dec 2017 respectively.
Assessments from the EC DRPW were received in November and December 2017.
Bills of Quantities were then complied from the assessments by the two Project Managers in December 2017 and January 2018.
Briefing for phase one tender was advertised on 02 February 2018 and closed on 05 March 2018, phase two was advertised on 23 February and closed on 23 March 2018.
The Business Forum in Alfred Nzo District raised issues during the two tender briefing sessions. This resulted in the cancellation of the tender.

25. STRATEGIES TO BE EMPLOYED TO ADDRESS UNDER-PERFORMANCENW
Complete the application for the rollover of funds and continue with the fixing the ECD’s identified for 2017/18 when operations resume in the province subject to the rollover request being approved. EC
The conclusion of the recruitment of the Construction Project Manager by end June 2018.
Plan of Action on the 95 ECD’s that did not benefit from the grant in 2017/18
Application for rollover of funds from 2017/2018 was made to Provincial Treasury.
Outcome of the rollover of funds is still to be confirmed.
National DSD
Reduced the allocation on the maintenance grant for 2018/19 from R12 million to R5 million for the EC to enable the province to address their challenges and fine tune their processes.
EC is expected to provide weekly progress reports and national DSD (representatives from infrastructure and ECD programme) will be conducting bi-weekly site visits to the province to ensure that all challenges are addressed timeously.
The quarterly ECD conditional grant meetings with provinces will continue but the representation from provinces will be elevated to that of a Chief Director and the project manager for the grant.

26. SUBSIDY COMPONENT

27. TARGETED VS ACTUAL NUMBER OF CHILDREN THAT BENEFITED FROM THE SUBSIDY
PROVINCE
TARGETED NUMBER OF CHILDREN
NUMBER OF CHILDREN THAT BENEFITED
NUMBER OF DAYS
Eastern Cape
11 047
8 420
209
Free State
2 085
2 084
264
Gauteng
8 818
9 079
KwaZulu-Natal
14 614
14 615
Limpopo
7 601
9 414
215
Mpumalanga
4 625
Northern Cape
910
1 221
North West
6 631
6 632(Q3)
248
Western Cape
4 151
4 265
TOTALS
60 355

28. HIGH LEVEL CHALLENGES IN IMPLEMENTATION OF THE CONDITIONAL GRANT SUBSIDY COMPONENT
Corrective measures
Not all provinces provided the subsidy for 264 days. The 264 days was not enforced as a condition in the conditional grant framework.
The 2018/19 conditional grant framework has the 264 days and the rate of R15 per day as conditions in the conditional grant frameworks.
Progress reports not always submitted in line with the agreed timelines.
The Department uses a claiming process. The claim form requires that all compliance documents be submitted before payment can be released. Where documents are not received by the scheduled payment date, the payment schedule is amended for payment at a later stage once all compliance documents are received.
Claim certificate not submitted timely to allow for release of funds in line with the approved payment schedule. This results in many in year changes to the payment schedule.
Timelines for submission of claim forms have been communicated to provincial CFOs through the Department’s CFO forum.
The conditional grant allocations in the ENE includes an amount of R2,1 million made available for administration of the grant by provincial DSDs. The administration portion is not earmarked and can be taken from the subsidy or maintenance allocation. This means that the ENE targets are not final.
The Business Plan templates requires that provincial DSDs allocate funds to administration from the subsidy and maintenance portion. Targets for subsidy can be amended depending on the amount remaining after reducing the subsidy amount by the administration budget.

29. DISABILITY CONSIDERATIONS
The department had undertaken to do research on cost of disability.
This will enable us to provide an accurate guidance on costing of disability
There were delays in the procurement processes that hampered the implementation of the research
The service provider that qualified to do the research inflated the cost to double the amount that the Branch could not afford.
Within the 2018/19 financial year, the Branch - RPD will be working with the Branch- Welfare Services providing technical support in the costing of services to Children with disabilities

30. PROGRESS IN IMPLEMENTATION: 2018/19

31. PROVINCIAL ALLOCATIONS SUBSIDY & MAINTENANCE
The below table reflects the subsidy and maintenance allocations per province for the 2018/19 financial year.

32. IMPLEMENTATION OF THE GRANT FOR 2018/19
The 2018/19 Conditional Grant Framework was developed and consulted with provinces.
It was finalised and signed off by the Acting DG and submitted to National Treasury in February 2018.
Provinces have submitted their signed off Business Plans to National Department.
The Plans were then signed off by the Acting DG and submitted to National Treasury on 12 April 2018.
Meeting with provinces to prepare for quarter 1 implementation was held on 1 March 2018.
Schedule for transfer of funds has been developed.
Funds have been transferred to 5 provinces; funds will be transferred to the remaining provinces during May 2018

33. RECOMMENDATIONS It is recommended that the committee:
Note the presentation in respect of the performance of the grant in 2017/18, the reasons for under-performance and the strategies to be employed to address this; and
The progress on the implementation of the grant in 2018/19.

34. #ECD IS EVERYBODY ‘S BUSINESS THANK YOU