1. SELECT COMMITTEE ON EDUCATION AND RECREATION
POVERTY RANKING OF SCHOOLS (Quintiles)
29 November 2017

2. PRESENTATION OUTLINE Purpose Background Current school funding system
Characteristics of system for the poverty ranking of schools
The changing poverty profile of schools
Addressing the shortcomings of the present system for allocating funds to schools
Improving the adequacy of the school allocation
Provincial compliance to the National Norms and Standards for School Funding
Recommendation 2

3. PURPOSE
To present to the Select Committee on Education and Recreation a report on the review of the poverty ranking of schools (quintile) for discussion. 3

4. BACKGROUND
Section 35(1) of South African Schools Act (SASA) requires the Minister to determine national quintiles for public schools.
The National Norms and Standards for School Funding (NNSSF) (Pars. 100 to 107) consequently provides criteria for a system in terms of which all public schools as well as all learners at these schools can be placed into quintiles, according to financial means. 4

5. BACKGROUND
The National poverty ranking of schools (quintiles) for public schools and learners:
One of five groups into which all public ordinary schools and their learners are placed.
Quintile 1 is the most poor quintile, while Quintile 5 is the least poor.
The national poverty distribution table ('poverty table') provides a guide to Provincial Education Departments (PEDs) on the distribution of learners across the different quintiles with the respective provinces.

6. National Poverty Distribution Table
BACKGROUND
National Poverty Distribution Table
Quintiles %
1 poorest 2 3 4 5
Total EC
27.3
24.7
19.6 17
11.4
100% FS
20.5
20.9
22.4
20.8
15.4 GP
14.1
14.7
17.9
21.9
31.4
KZN
22.1
23.2
20.2
18.7
15.8 LP
28.2
24.6
24.2
14.9 8 MP
23.1
24.1
21.5
17.7
13.5 NC
19.3
20.7
21.4
17.1 NW
25.6
22.3
17.6
13.7 WC
8.6
13.3
18.4 28
31.7 SA 20

7. Current school funding system
Funding receivable by a school is determined by:
The national targets for the school allocation. This is determined by the DBE annually.
The poverty ranking of the school. Poverty scores are assigned to school by PEDs and is based on the relative poverty of the community surrounding school.
Challenges experienced regarding the current funding system include:
Challenges with regards to the adequacy of the school allocation.
Challenges regarding the ability of the current system to accurately rank some schools in terms of their relative poverty. 7

8. 2017 PER-LEARNER ALLOCATIONS
PED
Q (No Fee schools) Q4 Q5
National threshold
R1 243
R623
R215 EC
R1 177
R590
R204 FS
R240 GT
KZN
R955
R522
R179 LP
R1 241
R621
R205 MP
R1 059
R530
R183 NC
R736
R346 NW WC
R993
R369
EC, KZN, LP, MP are funding all schools below the national threshold amounts.
NC is funding schools in Q1-3 below the no fee threshold. 8

9. 2017 NO FEE SCHOOLS AND NO FEE LEARNERS
PED
No Fee Schools
% No Fee Schools
No Fee Learners
% No Fee Learners EC
5 205
95.17%
83.12% FS
1 004
82.70%
85.69% GT
1 396
67.02%
71.45%
KZN
4 964
84.21%
73.33% LP
3 726
96.35%
96.41% MP
1 592
92.29%
86.28% NC
407
74.68%
70.63% NW
1 318
89.60%
88.83% WC
866
59.72%
59.82% SA
20 478
86.34%
79.28%
Approximately 86% of all public ordinary schools nationally are no fee schools.
Approximately 79% of all learners are accommodated in no fee schools nationally. 9

10. ACTUAL EXPANSION OF NO FEE LEARNERS versus POLICY TARGETS
PED
% Learners in Q1, 2 and 3
Additional learners (%)
Additional learners
(Number)
National Poverty Table
Actual EC
71.6%
83.1%
11.52% FS
63.7%
85.7%
21.99%
GT*
46.7%
71.5%
24.75%
KZN
65.5%
73.3%
7.83% LP
77.0%
96.4%
19.41% MP
68.7%
86.3%
17.58% NC
61.5%
70.6%
9.13%
26 353 NW
88.8%
20.13%
WC*
40.3%
59.8%
19.52%
* GT and WC figures include voluntary learners in voluntary no fee schools in Q4 and 5
All PEDs have exceeded the policy targets for learners (no fee) in quintiles 1,2 and 3. 10

11. No Fee versus Fee Paying
NO FEE LEARNERS
FEE PAYING
PED
Q1 learners
Q2 learners
Q3 learners
Voluntary Q4 learners
Voluntary Q5 learners
Q4 learners
Q5 learners EC -
55 044
77 618 FS
36 046
70 023 GT
77 285
KZN LP
20 115
48 165
MPU
82 750
51 564
39 967 NC
65 479
66 986
71 325
49 658
36 185 NW
87 947
9 536 WC
39 081
TOTAL 11

12. Review of the use of the poverty ranking of schools (quintiles)
Characteristics of current system for determining the poverty ranking of schools:
PEDs responsible to assign poverty scores to schools.
The poverty score assigned to a school is based on relative poverty of community surrounding school.
The following three indicators of poverty are used:
Income levels of households in community around school;
Unemployment rate in community; and
Levels of education (literacy rate) of community.
Schools in quintiles 1, 2 and 3 have been declared no fee schools. 12

13. Review of the use of the poverty ranking of schools (quintiles)
The changing poverty profile of schools:
A number of learners do not attend the closest public school.
Schools in less-poor communities increasingly accommodates learners from a different (usually poorer) socio-economic background.
Data on surrounding households becoming a less reliable indicator of the socio-economic status of learners in many schools.
Unemployment rates dramatically increased recently and not taken into account when determining poverty scores for schools.
Some fee paying schools in Q4 & 5 experience a level of funding that is below the no fee threshold. 13

14. Fee paying schools with income below no fee threshold14

15. Review of the use of the poverty ranking of schools (quintiles)
Recommendation to address shortcomings of the present system for allocating funds to schools:
De-link a school’s allocation from its quintile ranking, distinguish between only two broad categories of schools i.e. no fee schools and fee paying schools
Proposals for de-linking allocation from quintile ranking:
Equalise the school allocation for all no fee schools (Q1-3).
The voluntary reclassification of certain Quintile 4 and 5 schools as no fee schools.
The introduction of a ‘fee-sensitive’ funding system for determining level of school allocation to fee paying schools. 15

16. Review of the use of the poverty ranking of schools (quintiles)
Progress with proposals on de-linking school allocation from quintile ranking:
Equalising of the school allocation for all no fee schools has already been achieved. All PEDs have, since 2014, equalised their allocations to all their no fee schools
A funding bid (for R2.63b over the 2017 MTEF) was made in 2016 for the voluntary reclassification of selected quintile 4 and 5 schools as no-fee schools and & introducing the use of the ‘effective fee’ in determining the school allocation for fee paying schools
Given the present budgetary constraints experienced by provinces currently, most PEDs will probably not be able to find the additional funding required within their existing budgets. 16

17. Improving adequacy of the school allocation
Education CPI compared with headline CPI 17

18. Actual allocation v Projected allocation using Education CPI18

19. PROPOSALS FOR IMPROVING ADEQUACY OF THE SCHOOL ALLOCATION
Improving efficiency/utilisation of the school allocation:
Procurement processes at national, provincial and school level;
Efficient use of water and electricity;
Effective retrieval of text books; and
Accuracy of learner enrolment data.
Addressing the ‘underfunding’ of the school allocation by certain PEDs:
A strategy to be developed to ensure that all provinces will be able to meet the current allocation targets; and
This will need the cooperation of the respective PEDs, their Provincial Treasuries, National Treasury and DBE.
Increasing the national targets for the school allocation (and solicit funding for PEDs to be able to fund at these levels):
A funding bid (for R8.7b over the 2018 MTEF) in this regard has been submitted to National Treasury. 19

20. Provincial Compliance to National Norms and Standards for School Funding (NNSSF)20

21. 2018 PER-LEARNER ALLOCATIONS
PED
Q (No Fee schools) Q4 Q5
National threshold
R1 243
R623
R215 EC
1 316
660
228 FS
240 GT
KZN
955
522
179 LP MP
1 285
650
226 NC
1 243
778*
366* NW WC
1055*
390*
* Average allocation
KZN and MP will fund all schools below the national threshold
NC will fund schools in Q1-3 below the no fee threshold. 21

22. NORMS AND STANDARDS (N&S) TRANSFER TO PUBLIC ORDINARY SCHOOLS
PED
Date of transfer (due 15 May 2017):
Challenges EC
12 May 2017 (only Q1,2 and3) and 15 June 2017
Technical problem with BAS caused delays in transfers.
Learners without ID numbers not funded. FS
15 June 2017
Cash flow challenges. Matter is under constant discussion with Provincial Treasury to come up with a long-term solution. GT
15 May 2017
There were no challenges.
KZN
31 May 2017
Serious cash-flow problems. LP
19 May 2017
Late submission of compliance documents by schools. MP
Between 05 and 29 June 2017
Labour unrests during the 1st quarter of the financial year NC
Between 18 April 2017 and 10 May 2017
No challenges NW
Between 02 and 05 May 2017
Schools change their banking details without notifying the Department. WC
Between 15 March 2017 and 12 May 2017
Four schools did not receive transfer payments due to non-compliance.
EC (for Q1,2,3); GT; NC; NW and WC made transfers before the due date.
EC (Q4 and 5); FS; KZN; LP and MP transferred funds after the due date.
FS and KZN are experiencing cash flow problems affecting ability to transfer by due date. 22

23. TRANSFER: SUBSIDIES TO INDEPENDENT SCHOOLS
PED
2016/17 4th Quarter transfer (due 1 April 2017)
2017/18 1st Quarter transfer (due 31 May 2017):
Challenges EC
Transfers May/June and October each year.
31 May and 14 June 2017.
Late payment due to technical problem. FS
02 May 2017
15 June 2017
cash flow challenges. GT
23 June 2017.
Budget constraints delayed the payments.
KZN
February 2017
31 May 3017
None indicated. LP
15 January 2017
19 and 30 May 2017
1% was outstanding due to non-compliance. MP
31 December 2016.
30 June 2017 to 21 July 2017
None indicated NC
Subsidies are paid in line with public schools.
21 April 2017.
No challenges NW
10 March 2017
19 June 2017 WC
30 November 2016
10 May 2017
Late financial reports by schools delays payments
KZN; LP; NC; and WC have made transfers for both quarters before the due date.
FS and GT could not meet the due date for any of the above-mentioned quarters. 23

24. SUBSIDIES FOR SGB ASSOCIATION SUBSCRIPTION FEES
PED
2017 Budget
Date of transfer -due 15 May
Challenges EC R0
No transfer made
Evaluating applications for formal recognition; Budget will be made available for the next financial year. FS R
Payment still awaiting disbursement.
N/a GT
n/a
Subsidy is included in schools’ Norms and Standards allocations.
KZN
Unavailability of funds; will be considered if funds are available. LP
No associations currently meet the qualifying criteria for subsidy. Planning to make provision during the 2017/18 budget adjustment. MP
Due to budget constraints no allocation for SGB subscription, Will review possible allocation during the adjustment period. NC R
12 May 2017 NW
Yes
Transfer not yet made
None indicated WC
R1 652 000
12 July 2017.
None.
EC; KZN; LP and MP: No budget made available.
LP and MP will consider budget during the 2017/18 budget adjustment process.
LP reports that none of the associations currently meet the qualifying criteria for subsidy. 24

25. COMPENSATION FOR FEE EXEMPTION
PED
2016/17 Transfer (due 15 Nov 2016)
Challenges
2017/18 Budget EC
25 Mar 2017.
Not all schools implementing
R4m
N/a FS
15 June 2017
Cash flow challenges;
R6m GT
8 Nov 2016
No challenges
R13.7m
KZN
1st week of August.
Processing delay experienced. Currently processing the 2015 payments as accruals for 2017.
R20m LP
No budget made available
The Department has budget constraints. R0
Budget constraints. Addressing the matter during 2017/18 budget adjustment. MP
05 Oct2016 – 14 Feb 2017
Late submission of invoices by schools
R2m NC
Before 15 November 2016
R10m NW
28 December 2016
Late applications
R 2m WC
October 2016.
R50.4m
GT; NC and WC made their 2016/17 transfers made before the due date.
LP has not made any budget available. May make budget available during budget adjustment 25

26. Recommendation  
It is recommended that the Select Committee on Education and Recreation discusses the report on the review of the poverty ranking of schools (quintiles). 26