1. 1 Provincial Budgets and Expenditure as at 31 December 2007 2007/08 Financial Year EDUCATION SCOF (NCOP) Hearings Presented by: Intergovernmental Relations National Treasury February 2008

2. 2 Broad Observations The presentation covers provincial spending as at 31 December 2007 –Based on Section 40(4) PFMA reports (IYM) submitted by PTs –Published in Government Gazette on 30 January 2008 –Provincial spending is on track with 71.6% or R153.9bn spent of their budgets Projected overspending of R1.4 billion in 6 provinces Includes adjusted budgets –National adjustments (R2.8bn) –Provincial adjustments (R1.6bn) –Total adjustments (R4.4bn) (health – R1.6bn, education – R1.2bn) –4 provinces projecting to overspend education budgets (NW and KZN significantly; GT to underspend) –R1.2 billion added to cover wage agreement – only R641.7m allocated by provinces –Capital – R1.2bn added, however only have capacity to spend close to main budget –Spending against budgets on conditional grants is lower than the total provincial spending average

3. 3 Challenges addressed through 2007 AENE NW was impacted more significantly by re- demarcation –the sheer magnitude of the “shock” combined with use of incorrect data (number of schools, learners, educators, etc.) resulting in extreme budgetary pressures on NW education –Once-off conditional allocation of R250 million allocated to NW Wage agreement is 1.5% higher than what prov budgeted –Costs associated with the higher than anticipated wage settlement was allocated to provinces (R1.2bn)

4. 4 Provincial Adjustments

5. 5 Key highlights Provinces show a slight decrease in the share of Social Services total budget from 73.8% in 2006/07 to 73.2% in 2007/08 –Education remains largest item of budget at 41.9% –Health at 28.3% –Social Welfare Services only 3.0% of budget Spending in social services sectors: –Education at R66.3bn (73.7%) –Health at R45.3bn (74.4%) –Social Welfare Services at R4.6bn (72.0%) Spending in non-social services sectors: –Agriculture at R3.9bn (63.4%) –Housing and Local Government at R7.6bn (61.8%) –Public Works, Roads and Transport at R16.3bn (66.6%) –Sport, Arts and Culture at R1.6bn (65.7%) Personnel spending is at R88.7bn (74.7%) Capital expenditure is at R11.7bn (61.4%)

6. 6 Provincial Aggregated Expenditure (1)

7. 7 Provincial Aggregated Expenditure (2)

8. 8 Provincial Social Services (2)

9. 9 Education (1) Spending at R66.3bn or 73.7% against R89.9bn adjusted budget, projecting to overspend by R710.1m in 4 provinces (mostly personnel) –Increase of R8.3bn or 14.3% compared to the previous year –Low rate of education spending in GP (70.9%) and MP (71.0%) –NW (78.3%) and NC (75.7%) reflects the highest rate of spending in education Education personnel spending at R52.5bn or 74.9% (R70.1bn adjusted budget) Goods and services (mostly LSM) at R6.0bn or 60.8% (R9.8bn adjusted budget) Capital spending somewhat low at R2.3bn or 58.9% –Spending reflects a R55.0m or 2.3% decrease compared to spending last year –Low rate of capital spending in MP (38.9%) and GP (52.0%) –LP (82.5%) and NC (72.6%) reflects the highest rate of capital spending in education

10. 10 Education (2)

11. 11 Education (3) Public Ordinary Schools

12. 12 Education (4) Personnel

13. 13 Education (6) Non-Personnel Non-Capital

14. 14 Payments for Capital Assets Trends (Capital expenditure)

15. 15 Payments for Capital Assets (3) Education Education capital spending low at R2.3bn or 58.9% –A decrease of R55.0m or 2.3% compared to spending last year –Low rate of education capital spending in MP (38.9%) and (52.0%) –LP (82.5%) and NC (72.6%) reflects the highest rate of capital spending in education

16. 16 Payments for Capital Assets (4) Education

17. 17 Conditional grants

18. 18 Conditional Grants (3)

19. 19 Conditional Grants (5) Spending Rates 5 or more provinces have spent less than 60% of their grant budget for the following grants: –Land Care Programme; –Community Library Services; –HIV and AIDS (Life Skills Education); –Forensic Pathology Services; –Integrated Housing and Human Settlement Development Although the rate of spending is encouraging and reflects an improvement over previous financial years, overall CG spending (60.4%) still lies below total provincial spending (71.6%)

20. 20 Conditional Grants (6) Spending Rates

21. 21 Education Grants (1) Further Education and Training College Sector Recapitalisation Grant Objective (Schedule 5 Grant): –To recapitalise the 50 public FET Colleges to improve their capacity to contribute to skills development training in the country First Nine Months Expenditure: –FET College Sector Recap grant reflects transfers to colleges –FET Colleges spent R587,4m or 91,9% of the R639.0m transferred to the colleges Service Delivery Outcome: –Department / Sector to respond

22. 22 Education Grants (2) HIV and Aids Grant (Life Skills Education) Objective (Schedule 5 Grant): –To coordinate and support the structured integration of life skills and HIV and Aids programmes across all learning areas in the school curriculum –To ensure access to an appropriate and effective. integrated system of prevention. care and support for children infected and affected by HIV and Aids –To deliver life skills, sexuality and HIV and Aids education programmes in primary and secondary schools First Nine Months Expenditure: –Education spent R87.3m or 52.5% of the R166.4m adjusted allocation –Transfers received amounted to 71.1% of national allocation –Highest spending: FS 81.1% and NC 77.6% –Lowest spending: KZN 25.5% and LP 47.1% Service Delivery Outcome: –Department / Sector to respond

23. 23 Education Grants (3) National School Nutrition Programme Grant Objective (Schedule 5 Grant): –To contribute to enhanced learning capacity through school feeding First Nine Months Expenditure: –Education spent R930.1m or 71.5% of the R1.3bn adjusted allocation –Transfers received amounted to 70.9% of national allocation –Highest spending: FS 100.0% and NW 81.0% –Lowest spending: KZN 61.6% and EC 64.7% Service Delivery Outcome: –Department / Sector to respond