SELECT COMMITTEE ON FINANCE PUBLIC HEARINGS 21 NOVEMBER 2006
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1
SELECT COMMITTEE ON FINANCE
PUBLIC HEARINGS
21 NOVEMBER 2006
2
INTRODUCTION
Objective of this report• Allocation and spending trends• 2006/07 expenditure as at 30 September 2006 [Section 32 of PFMA],• and related service delivery outcomes.
On Conditional Grant Spending, On Capital Expenditure
• Give Progress with regard to the implementation of infrastructure projects
• Challenges and remedial actions taken where problems were experienced.
• Monitoring arrangements within the FSDoE• Conditional Grants planning for 2007/08
3
Allocation trends: Conditional Grants
Conditional Grant 2002/03
R’000
2003/04
R’000
2004/05
R’000
2005/06
R’000
2006/07
R’000
2007/08
R’000
1. Early Childhood Development
3,616 4,836 1,000 - - -
2. HIV and Aids 10,083 9,958 7,337 7,947 8,424 8,845
3. NSNP - - - 53,817 64,784 68,023
4. FET Recapitalisation - - - - 30,000 36,000
5.Provincial Infrastructure 10,323 42,526 48,311 55,913 59,268 119,723
6. Own Infrastructure 24,877 - 65,315 73,360 76,881 80,725
TOTAL 48,899 57,320 121,963 191,037 239,357 313,316
4
Conditional Grants spending trends continues
01020304050607080
90100
2001/02 2002/03 2003/04 2004/05 2005/06 2006/07
% spending
projection
5
2005/06 SPENDING ON CONDITIONAL GRANTS
Budget Transfers Expenditure Balance Commit% Actual Spending
Grant R'000 R'000 R'000 R'000 R'000 03/06
HIV/AIDS 8,402 7,961 441 49 94.8%
National School Nutrition Prog 68,515 60,627 7,888 1,728 88.5%
Ow n Infrastructure Grant 80,017 66,734 66,297 13,720 722 82.9%
Provincial Infrastructure Grant 60,259 39,758 40,183 20,076 2,224 66.7%
Totals 217,193 106,492 175,068 42,125 4,723 80.6%
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Education Total Expenditure as at 30 September 2006
MAIN BUDGET
R’000
PROJECTED OUTCOME
R’000
ACTUAL
AS AT
30 SEPT 2006
R’000
ACTUAL AS % of
MAIN BUDGET
% (OVER) / UNDER OF
MAIN BUDGET
2005/06
as at
30 Sept 2005
R’000
Year –on- Year growth
(% Improve
ment from 05/06 to
06/07)
5,272,241 5,272,241 2,544,308 48,3% 1,7% 2,390,269 6,4%
7
2006/07 TOTAL SPENDING BY ECONOMIC CLASSIFICATION
Description Budget R'000
Spending 1st Quarter (Apr - Jun)
R'000
% Spending 2nd Quarter
(Jul - Sep) R'000
% Balance R'000
Current expenditure 4,660,357 1,034,975 22.21 2,196,159
47.12 2,464,198
Compensation 4,185,793 976,710 23.33 2,046,262
48.89 2,139,531
Goods and services 474,564 58,265 12.28 149,764
31.56 324,800
Financial transactions in assets & liabilities
-
- -
133
-
-133
Transfers and subsidies 556,718 238,919 42.92 334,643
60.11 222,075
Provincial and local governments 13,544 2,914 21.52 2,933
21.66 10,611
Departmental agencies 3,000 - -
- -
3,000
Non profit institutions 521,728 232,191 44.50 324,169
62.13 197,559
Households 18,446 3,814 20.68 7,541
40.88 10,905
Payments for capital assets 55,166 6,316 11.45 13,506
24.48 41,660
Buildings and fixed structures 39,312 4,074 10.36 8,036
20.44 31,276
Machinery and equipment 15,854 2,242 14.14 5,470
34.50 10,384
Totals 5,272,241 1,280,210 24.28 2,544,308
48.26 2,727,933
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2006/07 TOTAL SPENDING BY PROGRAMME
Programme Budget R'000
Spending 1st Quarter(Apr - June)
R'000
% Spending 2nd Quarter
(Jul - Sep) R'000
% Balance R'000
1. Administration 353,986 76,611 21.64 174,577
49.32 179,409
2. Public Ordinary School Education
4,107,436 938,377 22.85 1,965,088 47.84 2,142,348
3. Independent School Subsidies
31,684 7,054 22.26 14,936
47.14 16,748
4. Public Special School Education
159,803 37,912 23.72 80,275
50.23 79,528
5. Further Education and Training
155,784 57,284 36.77 89,698
57.58 66,086
6. Adult Basic Education and Training
106,304 14,863 13.98 28,069
26.40 78,235
7. Early Childhood Development
49,638 4,038 8.13 17,999
36.26 31,639
8. Auxiliary and Associated Services
307,606 144,071 46.85 173,666
56.46 133,940
TOTAL 5,272,241 1,280,210 24.28 2,544,308 48.26 2,727,933
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2006/07 CONDITIONAL GRANTS SPENDING
Description Budget Transferred Spending 1st Quarter (Apr - Jun)
Spending 2nd Quarter
(Jul - Sep)
Balance
R000 R’000 R’000 % R’000 % R’000
HIV/AIDS 8,424 - 1,037 12.31 4,811 57.12 3,612
NSNP 64,784 - 17,829 27.52 34,225 52.83 30,559
Own Infrastructure 76,881 62,177
29,844 21.92
33,432 43.49 43,449
Provincial Infrastructure
59,268 53,868 33,185 55.99 26,083
FET Recap 30,000 30,000 63 0.21 2,749 9.16 27,251
Total 239,357 115,045 48,773 20.38 108,403 45.29 130,954
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HIV AND AIDS 2nd Quarter 2006/07
Output Description Allocation Spending 1st Quarter
(Apr - Jun)
Spending 2nd Quarter
(Jul - Sep)
Spending 31-10-2006
Balance
R’000 R’000 % R’000 % R’000 R’000
Advocacy 674 143 21.20 643 5.40 643 31
Training – Master Trainers and educators
3,117 319 10.20 1,893 60.73 2,588 529
Care and Support 1,264 67 5.30 855 67.64 1,055 209
Peer Education 1,011 426 42.20 726 71.81 811 200
Learning Support Materials
1,432 53 3.70 462 32.26 708 724
Support, Monitoring and Evaluation
505 20 4.00 192 38.02 328 177
Management and Administration
421 9 2.40 40 9.50 121 300
Total 8,424 1,037 12.30 4,811 57.11 6,254 2,170
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NSNP Expenditure2nd Quarter 2006/07
Activity Allocation R'000
Spending 1st Quarter
R'000
% Spent
Spending 2nd
Quarter R'000
% Spent
Spending 31-10-2006
R’000
Balance R'000
Actual feeding expenditure
50,620 12,806 28.40 24,535 48.47 29,056 21,564
Transfer payments (cooked meals)
12,136 5,017 61.60 9,655 79.56 10,226 1,910
Administration 2,028 6 0.30 35 1.73 40 1,988
Total 64,784 17,829 27.50 34,225 52.83 39,322 25,462
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NSNP Progress report 2nd quarter 2006/07
Activity Target Outcome 1st Quarter
Outcome
2nd Quarter
•Number of feeding days•Number of learners fed•Number of food production projects to be set up•Number of cooked meals to be served•Number of uncooked meals to be served•Number of community based SMME’s to be contracted
47
246 857
100
15 981
246 857
13
44
234 534
126
134 043
234 534
13
44
234 534
126
134 043
234 534
13
•Number of scheduled monitoring visits per month•Number of food preparation areas found to be inadequate•Number of food preparation areas fount to be unhygienic
252
-
-
1 420
100
20
1 320
7
2
•Number of deviations from prescribed menus•Number of food items past its expiry date•Number of defaulting service providers – non-delivery•Number of defaulting service providers – food quality•Number of community members contracted
-
-
-
-
1
1
1
1
1 666
0
0
0
0
1 666
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NSNP – Corrective measures
Inadequate food preparation areas:• Schools are advised to change food preparation area and these
cases are followed up• Number of cases reduced from 100 in 1st quarter to 7 in 2nd quarterUnhygienic food preparation areas:• No storage facilities in most schools• Training of food handlers in all affected schools• Number of cases reduced from 20 to 2Deviations by service providers:• Service provider is called to order• Service provider is not paid for the deviations• No cases reported during 2nd quarterMonitoring• Quarterly meetings with principals• Regular monitoring reports• Feedback from monitors to head office
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FET RECAP EXPENDITURE2nd QUARTER 2006/07
College Amount Transferred
R'000
Spending 30 Sep 06
R'000
Balance R'000
% Spending 31 Oct 06
R'000
% Committed 31 Oct 06
R'000
Total%
(Comm and
Spent)
Flavius Mareka 6,000
927 5,073 15
2,108 35
3,155 88
Goldfields 10,000
209 9,791 2 4,130 41
4,953 91
Maluti 5,000
1,563 3,437 31
1,563 31
3,268 97
Motheo 9,000
50 8,950 1
731 8
1,344 23
Total 30,000
2,749 27,251 9 8,532 28
12,720 71
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Challenges and the Intervention Strategy to improve expenditure on Recap
Challenges• Staff shortage to handle
the project as well as finances
• Low levels of expenditure
• Procurement of goods and services
• Monitoring and support systems
Interventions• Appointment of finance
officers at Colleges
• Funds have been committed through approved tenders and signed contracts
• Monthly reporting is done by responsible managers
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CAPITAL EXPENDITURE 2ND QUARTER 2006/07
*R117,7 million of capital transfers was transferred to PWRT forcapital projects of which an amount of R66,617 million was actually spent by30 September 2006. Currently in process of transferring the funds back toeducation to ensure correct reporting on infrastructure spending. Amount hasalready been corrected in Adjustment Budget.
Description Capital Transfers Capital Assets Total Capital
Budget R'000
Spending 30 Sep 06
R'000
Budget R'000
Spending 30 Sep 06
R'000
Budget R'000
Spending 30 Sep 06
R'000
% Spent
1. Buildings and fixed structures 126,499
66,617* 39,312
8,036
165,811
74,653 45.02
2. Machinery & equipment
-
- 15,854
5,470
15,854
5,470 34.50
Total 126,499
76,263 55,166
13,506
181,665
80,123 44.10
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INFRASTRUCTURE 2nd Quarter 2006/07
Project Implementing Agency (PIA)
2006/07 Allocations
R'000
2006/07 Transfers
R'000
Exp as at 30 June 06
R'000
Exp as at 30 Sep 06
R'000
Own Infrastructure Grant 76,881 62,177New schools PWR&T 52,300Additional facilities PWR&T 13,830Various final & fee accounts, planning, etcPWR&T 3,851Renovations & Rehabilitations Education 6,900
Provincial Infrastructure Grant 59,268 53,868New schools PWR&T 34,600Additional facilities PWR&T 15,315Various final & fee accounts, planning, etcPWR&T 3,953Renovations & Rehabilitations Education 3,000PPP Education 1,400Completion of sportfields Education 1,000
Equitable Share - Capital 29,662 1,650 3,755 7,352Renovations & Rehabilitations Education 28,012Renovations & Rehabilitations PWR&T 1,650
Equitable Share - Current 8,500 684 2,294 Letsema Education 1,500Day-to-day maintenance ( All districts)Education 7,000
GRAND TOTAL 174,311 117,695 34,602 76,263
30,163
PROGRAMME
33,432
33,185
18
MAJOR CAPITAL PROJECTS FOR 2006/07
CapitalInfrastructureProjects
New schools ExpectedCompletion date
Allocation2006/7
To commence 2006/7 Kopanong (Bloemfontein)Mautse Primary (Mautse)
Sites handed over 4 October2006
R10 millionR7,3 million
Ongoing fromprevious financialyears (multi-year projects)
Marematlou, Kgotso-Uxolo, Hlaboloha,
Mokgwabong,
J C Motumi,
Dr. Mngoma, EE Monese
November 2006June 20071st phase completed2nd phase December 20061st phase completed2nd phase December 20071st phase completed2nd phase December 2007June 2007June 2007
R6,3 millionR8,1 millionR9,7 million
R9,7 million
R12,8 million
R12 millionR11 million
19
MAJOR CAPITAL PROJECTS FOR 2006/07 (Continue)
CapitalInfrastructureProjects
Additionalfacilities atschools
Expected Completion date
Allocation2006/7
To commence 2006/7 (14 Projects)LK Ntlhabathi,Kgutliso,Nteboheng,Motsekuwa, Marobe,Kagisano,Moso,Reiketseditse, Hlolohelo,Bahale,Lehutso,St. Lawrence,Ikanyegeng, Zama
December 2006November 2006December 2006December 2006October 2006October 2006October 2006October 2006October 2006September 2006November 2006October 2006October 2006October 2006
(R 26,85 million)R3,7 millionR2,08 millionR3,17 millionR3,1 millionR1,6 millionR1,3 millionR1,2 millionR2,06 millionR1,3 millionR0,63 millionR1,33 millionR2,2 millionR0,88 millionR2,3 million
Ongoing fromprevious financialyears (multi-year projects)
Qhubeka Completed R2,3 million
20
MINOR CAPITAL PROJECTS FOR 2006/07
Category No of schools
Budget Progress Expected completion date
Major renovations 5 R2,720 15% 31 March 2007
Fences 20 R4,000 15% 31 Jan 2007
Conversion for disabled 10 R5,015 10% 31 Jan 2007
Provisioning of strong rooms 16 R1,470 20% 31 Jan 2007
Provisioning of water 75 R2,830 40% 31 Jan 2007
Sanitation VIP 24 R3,293 20% 31 Jan 2007
Conversion of pit toilets 5 R1,100 10% 31 Jan 2007
Septic tanks 5 R0,957 15% 31 Jan 2007
Provision of electricity* 15 - 5% 31 Dec 2007
New toilet blocks 13 R6,875 30% 28 Feb 2007
Toilet blocks for educators 12 R3,778 20% 28 Feb 2007
Letsema 100 R1,500 10% 31 Jan 2007
Mobiles (unacceptable structures) 15 R2,000 15% 31 Jan 2007
* Executed by ESKOM
21
PPP PROJECTS FOR 2006/07
• Stages of feasibility study completed:– Needs analysis– Solutions Options Analysis– Due Diligence– Economic Evaluations– Value Assessment (presented to Project Team on 19 October
2006)– Procurement Plan
• Presentation of feasibility study to Executive Management• Submission of feasibility study to National Treasury• Procurement to start immediately after TA1
22
CHALLENGES ON INFRASTRUCTURE
Capital (Public Works)• Capital expenditure on track, except for allocations made for
2006/07 for two new schools (Kopanong & Mautse).• Under expenditure on these two projects to be used to fast-track
school fencing programme (projects earmarked for 2007/08 brought forward to be completed before March 2007.
Minor Capital (Education)• Expenditure to date below target, but improving since majority of
sites handed over.• Mechanisms to expedite payments – dedicated staff.• Assisting contractors’ cash flow challenges through cessions.• More frequent site visits by inspectors – more regular payments.
23
MONITORING MECHANISMSGrant Reporting framework
FET Recapitalisation • FET Colleges submit individual monthly progress reports to provincial department• Provincial progress reports (expenditure and non-financial performance information) are submitted quarterly to national department• Monthly expenditure report, as required by section 40(4)(c) of PFMA, submitted to provincial treasury and national department
HIV/AIDS
NSNP
• Monthly expenditure report, as required by section 40(4)(c) of PFMA, submitted to provincial treasury and national department• Progress reports (expenditure and non-financial performance information) are submitted monthly and quarterly to national department
Provincial Infrastructure Grant
Own Infrastructure Grant
• Monthly expenditure report, as required by section 40(4)(c) of PFMA, submitted to provincial treasury• Monthly Infrastructure Reports giving full details on each project submitted to provincial treasury
24
CONDITIONAL GRANTS PLANNING for 2007/08
Grant Progress
FET Recapitalisation •Inter-provincial meeting held 12 – 14 September 2006 where development of business plans and format were discussed
•Colleges busy drafting business plans
•Officials from National Education to visit province 9 October to assist with finalisation of business plans
•Due date for submission of business plans is 25 November 2006
HIV and AIDS
NSNP
• Draft business plans submitted to national department
Provincial Infrastructure Grant
Own Infrastructure Grant
• Draft infrastructure plan submitted to provincial treasury
25
CONCLUSIONMonitoring of and reporting on expenditure againstBudgets is done through:
Monthly Executive Reports on spending against budget Bilateral with National and Provincial Treasury 26
September 2006 Finance Committee meetings were held on 27 and 31
October Meeting with National Education on 7 November 2006 Quarterly review for second quarter held 16 and 17 November 2006
26
Education Budget-means to quality education
27
THANK YOU
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