1. 1st QUARTER CONDITIONAL GRANTS SPENDING
Education: 2010/11

2. Aggregated Budgets and Expenditure as at 30 June 2010 (Section 32)
Overview:
State of provincial conditional grants as at 30 June 2010
Implications of trends for the remainder of the financial year
Summary:
Provinces spent R11.4bn (18.4%) of main budgets (R61.9bn)
R96.9m (0.9%) more compared to the same period last year
Spending trends when compared to previous years’ first quarter spending
2007/08 – 15.1%
2008/09 – 23.4%
2009/10 – 22.9%
20010/11 – 18.4% 1 2

3. Conditional Grants Spending rates

4. Education - National School Nutrition Programme

5. National School Nutrition Spending against transfers received
Overall, of the R1 billion (or 27.5% of the budget) already transferred to provinces, R593 million (or 16.2% of the budget) was spent as at 30 June 2010.
One province (Eastern Cape) is already projecting to under-spend by over R101 million at the end of 2010/11.

6. National School Nutrition Programme
Eastern Cape: Spent R110m of R190m received, mainly due to the late approval of the tender for April to June feeding. This has also led to reduced spending for the first quarter, since many schools were forced to revert to cheaper bread based meals until the new tender was confirmed.
Gauteng: Spent R39m of R109m received. This is mainly due to the late submission of invoices by suppliers.
KwaZulu-Natal: Spent R133m of R235m received, mainly because a large number of claims had to be sent back to districts to be corrected and re-submitted. 
Mpumalanga: Spent R49m of R97m received, mainly because of delays in the system which is used to validate claims. 
North West: Spent R26m of R68m received, due to the delays caused by the process of migrating from the Walker System to the Basic Accounting System (BAS). 
Western Cape: Spent R31m of R49m received. This is mainly due to the late submission of invoices by suppliers.

7. Education – HIV and Aids (Lifes Skills Education)

8. HIV and Aids
Overall spending of 7.2 per cent of 23 per cent transferred, with slow spending by all provinces.
The slow spending is mainly because most of the grant activities took place over the June/July holidays. Payment for these activities will be effected in the second quarter.
It is nevertheless of concern that the cash-flow projections of provinces (as outlined in business plans) continues to be significantly out of line with spending capacity in the first quarter for this and a number of other grants.
Given that provinces typically know when grant activities are taking place, they and the national department should better align cash transfers to these activities.

9. Education – Technical Secondary Schools Recapitalisation

10. Technical Secondary Schools Recapitalisation
There has been no spending in any of the provinces.
An audit to determine the needs of technical secondary schools was done in 2009/10, but some provinces did not use these findings and re-audited their technical schools. Procurement has now started in all of these provinces. 
In the other provinces, goods and services were procured, but payment has not been effected. Procured services are still being delivered and invoices were not received in cases where they have been delivered.
The above reflects poor planning, but this is the first year of this grant and the national department will need to assist provinces to improve their planning.

11. Education – Further Education and Training

12. FET Colleges grant Overall spending of 25 per cent across provinces.
Spending is thus generally on track.

13. CONCLUSION
There has been an aggregate improvement in the spending rate for the National School Nutrition Programme (NSNP) grant. The spending rate is 12.5% higher than in the first quarter of 2009/10.
However, this is mostly because of improvements by certain provinces (Free State, Northern Cape and Limpopo) and not all of them.
3 provinces (Eastern Cape – 18.4%, Gauteng -8% and North-West -47%) are spending slower than at the same time in 2009/10.
A combination of supply chain challenges and invoicing is affecting payment rates for NSNP.
For a number of grants, a majority of provinces are still unable to match their spending performance with their own cash-flow projections, as submitted with the conditional grant business plans to the national department.
Ideally, in order to ensure efficient usage of fiscal resources, provinces should where possible match their plans and activities to the actual cash requirements or availability on a quarterly and monthly basis. The national department should also align as much as possible each grant payment schedule to the cash requirements and plans of each province.