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PRESENTATION TO PORTFOLIO COMMITTEE ON HIGHER EDUCATION AND TRAINING

PRESENTATION TO PORTFOLIO COMMITTEE ON HIGHER EDUCATION AND TRAINING. 17 February 2010 Committee Room V454, 4 th Floor Old Assembly. REQUEST TO DHET AND STRUCTURE OF PRESENTATION. Overview and mandate of the National Skills Authority (NSA) Overview and mandate of the SETAs

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PRESENTATION TO PORTFOLIO COMMITTEE ON HIGHER EDUCATION AND TRAINING

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  1. PRESENTATION TO PORTFOLIO COMMITTEE ON HIGHER EDUCATION AND TRAINING 17 February 2010 Committee Room V454, 4th Floor Old Assembly

  2. REQUEST TO DHET AND STRUCTURE OF PRESENTATION • Overview and mandate of the National Skills Authority (NSA) • Overview and mandate of the SETAs • Analysis of financial performance of all SETAs for the 2008/09 financial year • Efficiency challenges in the National Skills Fund (NSF)

  3. 1. Overview and mandate of the National Skills authority

  4. NSA COMPOSITION: • Chairperson (Appointed by the Minister) • 5 members each nominated through NEDLAC from: • Labour, • Business • Community (women, youth, people with disabilities, urban and rural: civic). • 5 State (DoL, DTI, DoE, DPSA and DPLG) • 5 Education & Skills Development providers • Public • Private • FET • HESA • BET) • 5 Ministerial discretionary appointments (SAQA, 2 Employment Services & 2 People with special knowledge)

  5. Skills Development Act (1998) as amended 2008 (Act 37 of 2008) Functions, Administration, Support and Financing

  6. Functions of National Skills Authority (1): (a)    to advise the Minister on –(i)     a national skills development policy; (ii)    a national skills development strategy;(iii)   guidelines on the implementation of the national skills strategy; (iv)  the strategic framework and criteria for allocation of subsidies funds from the National Skills Fund; and(v)     any regulations to be made; (b)     to liaise with SETAs on –(i)             the national skills development policy;(ii)           the national skills development strategy; and(iii)          sector skills plans;

  7. Functions of National Skills Authority (2): (c) to report to the Minister on the progress made in the implementation of the national skills development strategy; (d)  to conduct investigations on any matter arising out of the application of this Act; (d) to liaise with the QCTO on occupational standards and qualifications; and (e) to exercise any other powers and perform any other duties conferred or imposed on the Authority by this Act. (2)           For the purposes of investigations referred to in subsection (1) (d), the Authority has the prescribed powers of entry and to question and inspect. (3)           The Authority must perform its functions in accordance with this Act and its constitution.

  8. Skills Development Planning Unit (in original legislation, later amended) (1)          Subject to the laws governing the public service, the Director-General must – (a) establish a Skills Development Planning Unit in the Department; and (b) provide the Unit with the personnel and financial resources necessary for the performance of its functions. (2)           The functions of the Skills Development Planning Unit are – (a) to research and analyse the labour market in order to determine skills development needs for – (i)         South Africa as a whole; (ii)        each sector of the economy; and (iii)      organs of state; (b) to assist in the formulation of – (i)         the national skills development strategy; and (ii)        sector skills development plans; and (c)  to provide information on skills to– (i)         the Minister; (ii)        the National Skills Authority; (iii)      SETAs; (iv)      education and training providers; and (v)       organs of state.

  9. Summary of NSA Functions • Advising the Minister (policy, strategy, implementation, NSF allocations) • Liaising with SETA (policy, strategy, sector skills plans) • Reporting to Minister on progress in the implementation of the national skills development strategy • Review Accounts and Balance Sheet of NSF annually • Receive and utilising information from the Skills Development Planning Unit

  10. Key Outcomes of NSA Strategic Planning, December 2009 • Strengthening the NSA to perform its advisory functions • Process to align HRDSA and NSDS: • Content • Reporting/ communication between HRDSA and NSA • New NSA Chair to be appointed before February NSA Meeting • Job description for NSA EO to be approved at the February NSA meeting after which the post will be advertised and filled

  11. 2. Overview and mandate of SETAs

  12. LEGAL FUNCTIONS OF SETAS A SETA must, in accordance with any requirements that may be prescribed – (a) develop a sector skills plan within the framework of the national skills development strategy; (b) implement its sector skills plan by- • establishing learning programmes; • approving workplace skills plans and annual training reports; • allocating grants in the prescribed manner and in accordance with any prescribed standards and criteria to employers, education and skills development providers and workers; and • monitoring education and skills development provision in the sector by the QCTO;

  13. (C) promote learning programmes by – • identifying workplaces for practical work experience; • supporting the development of learning materials; • improving the facilitation of learning; and • assisting in the conclusion of agreements for learning programmes, to the extent that it is required;

  14. (g) liaise with the National Skills Authority on – • the national skills development policy; • the national skills development strategy; and • its sector skills plan; (h) submit to the Director-General– • any budgets, reports and financial statements on its income and expenditure that it is required to prepare in terms of the Public Finance Management Act; and • strategic plans and reports on the implementation of its service level agreement;

  15. Establishment of SETAs • SETAs were established in terms of section 9 of the Act for a period of five years and must perform all the functions as require in the relevant legislation and national strategies which includes the National Skills Development Strategy (NSDS). • 20 SETAs were established on 31 March 2005 in Government Gazette No. 27445 and three SETAs that were affected by the amalgamation process on 1 July 2005 in Government Gazette No.27757. These SETAs were established for a five-year period up to March 2010.

  16. The current period of establishment of all SETAs was extended from 31 March 2010 to 31 March 2011 in Government Gazette No. 32916 of 5 February 2010 to inter alia enable the Minister to consult with all stakeholders regarding the SETA landscape and to align the NSDS II to Government’s strategies. • The Minister has also extended the current NSDS II for the same period. • The Department and the SETAs will have to continue with the re-establishment processes in order to ensure that there will be compliance with all requirements to be re-established by the Minister on 1April 2011

  17. Key Responsibilities: SETAs • 23 SETA's that cover all economic sectors by allocated standard industrial classification codes • Responsibilities • Manage stakeholder relations and skills demand needs in the sector • Develop sector skills plans and signal sector skills demand and priorities • Disburse mandatory grants against employer workplace skills plans and annual training reports • Disburse discretionary grants for national and sector skills development activities (projects, learnerships, apprenticeships, bursaries, workplace experience, internships, skills programmes, ABET) 17

  18. Improve quality of learning in the workplace through learning development planning (qualifications and learning programmes, curriculum development support), assessment and certification • Quality assure learning achievements (currently as SAQA accredited ETQAs accredit providers, approve learning programmes and certificate successful achievements, register assessors) • Manage learnership agreements and apprenticeship contracts for employed (18.1) and unemployed (18.2) learners • Support development of Institutes of Sectoral and Occupational Excellence

  19. Service Level AgreementsSection 10A of the Skills Development Act • For each financial year, every SETA must conclude with the Director-General a service level agreement concerning – (a) the SETA’s performance of its functions in terms of this Act and the national skills development strategy; (b) the SETA’s annual business plan; and (c)  any assistance that the Director-General is to provide to the SETA in order to enable it to perform its functions. If the Director-General and a SETA cannot agree on the contents of a service level agreement within the prescribed period, the Minister must determine the contents of the service level agreement after consulting the National Skills Authority. The determination by the Minister in respect of a service level agreement is final and binding.

  20. 2010/11 SETA SLA PROCESS • The Department embarked on a process to ensure that there will be compliance with all legislative requirements to conclude the 2010/11 SLAs. • SETAs were required to align the 2010/11 SLA success indicators/targets to Government priorities • All the SETAs have submitted their 2010/11 SLAs to the Department for approval and these are in process of being considered

  21. 3. Analysis of financial performance of all SETAs for the 2008/09 financial year

  22. Section 14A of Skills Development Act The Minister may issue a written instruction to a SETA if – (a) the SETA is not performing any of its functions or not complying with its service level agreement; (b) the SETA is not managing its finances in accordance with this Act; (c)  the SETA’s membership is not representative of the constituencies contemplated in section 11; or (d) the SETA has not prepared and implemented an employment equity plan as contemplated in section 20 of the Employment Equity Act, 1998 (Act No.55 of 1998). An instruction issued under subsection (1) must set out – (a) the reason for issuing the instruction; (b) any provision of the Act that the SETA has not complied with; and (c)  the steps that the SETA is required to take and the period within which such steps must be taken.

  23. Performance of SETAs: 2008/09 Financial Year • For the 2008/09 financial year all of the SETAs have in general met the approved criteria in terms of their SLAs. However, some SETAs under performed on some aspects of the criteria e.g. Governance and funds management. • The Programme (SETA Co-ordination) is managing the underperformance/non compliance in terms of the relevant requirements

  24. ANALYSIS OF FINANCIAL PERFORMANCE OF SETAs • The AG has audited the financial performance of the SETAs for the 2008/09 financial year and the findings of the AG are reflected in the SETAs’ Annual Reports that were tabled in Parliament. • SETAs have indicated in their financial statements submitted to the Department that funds have been allocated to projects within the sector as well as surplus funds that should be “rolled over “to the next financial year, if approved by National Treasury (NT). • The Department and NT raised concerns about the funds allocated to projects and not spent in the next financial year on the projects as well as the surplus funds that seem to increase and not be utilized by SETAs to address the training and education needs within their sectors.

  25. ANALYSIS OF FINANCIAL PERFORMANCE OF SETAs (2) • NT has indicated that consideration should be given to amend relevant legislation to ensure that funds will be utilized to address education and training needs within all sectors. • The Department is in a process to determine the most appropriate action to be taken to ensure compliance with relevant legislation as well as to address this

  26. Performance of SETAs: 2008/09 Financial year (3) • The following SETAs received either a disclaimer or a qualification from the Auditor General (AG) on their financial management for the 2008/09 financial year and didn’t meet all the requirements in terms of the relevant legislation/SLAs. • ESETA: Disclaimer • PSETA: Disclaimer • CETA: Qualification • MAPPP: Qualification

  27. ESETA: Disclaimer • The SETA failed to submit their annual report by the required date • The AG issued a disclaimer for the 2008/09 financial year • AG was unable to determine the occurrence, accuracy, completeness and classification of the monies used • Letters requesting a response/programme of action regarding the non compliance with the relevant legislation were sent to the SETA’s Chairperson

  28. PSETA: Disclaimer • The PSETA has had governance and leadership problems since inception. • The Minister issued a section 14A instruction and requested the SETA to address a number of governance issues in order to ensure compliance with legislative requirements • SETA failed to submit their annual report by the required date • The AG issued a disclaimer for the 2008/09 financial year • Letters requesting a response/programme of action regarding the non compliance with the relevant legislation were sent to the SETA’s Chairperson • This SETA is under discussion between the 2 departments

  29. CETA: Qualification • The AG issued a qualification for the 2008/09 financial year • Areas identified by AG were basis of accounting, significant uncertainties, unauthorized, irregular or fruitless and wasteful expenditure • Letter requesting a response/programme of action regarding the non compliance with the relevant legislation were sent to the SETA’s Chairperson • The SETA appointed a new Governing Board in March and they are in a process to address the problems identified by DHET and the AG

  30. MAPPP: Qualification • The board suspended chairperson on 30/07/2009 following a string of allegations leveled against him. • DHET is conducting an investigation into these allegations • The AG issued a qualification for the 2008/09 financial year • The SETA has exceeded its 10% administration budget for the year 2008/9 • MAPPP-SETA has failed to remain below the prescribed 10% administration budget since its re-establishment in 2005. • The SETA board indicated that they are confident that there will be no over-expenditure in the 2009/10 financial year. • A letter requesting a response regarding the non compliance with the relevant legislation has been sent to the SETA’s acting Chairperson

  31. AUDIT PERFORMANCE 2005/6 – 2008/9

  32. ACTIONS COMTEMPLATED TO ADDRESS NON-PERFORMING SETAS • After the necessary investigations currently underway are concluded, the Minister will be advised to act in terms of the following options available in the legislation • Section 9A- The Minister may amalgamate two or more SETA’s after consulting with the NSA and may dissolve a SETA is it is unable to perform its functions • Section 14A – The Minister may issue a written instruction to a SETA if it is not performing or complying with the SLA/not managing its finances accordingly. Should the SETA not comply with the instruction the Minister may direct the DG to withhold all or a part of their levy for such a period and on such conditions as the DG may determine/invoke section 15 of the SDA • Section 15 – The Minister may after consultation with the NSA and the SETA in question direct the DG to appoint an Administrator to perform the functions of the SETA

  33. The NSA Subcommittee has considered the report of the DHET on SETA performance and its recommendation to the February NSA meeting is that the NSA should advise the Minister to take action with regard to poorly performing SETAs

  34. 4. Efficiency challenges in the National Skills Fund (NSF)

  35. Efficiency challenges in the NSF: OUTLINE • INTRODUCTION • LEGAL OBLIGATIONS • HISTORICAL OVERVIEW& CURRENT STATUS • KEY CHALLENGES • PROPOSALS

  36. INTRODUCTION • Established in 1998 through the Skills Development Act,1998 • Took over Training of Unemployed Persons (TUP Fund) operations in 1999 • Received 1st levy in 2000 • Received mandate through NSDS1(2001) and then NSDS2 (2005) • The Fund is just a decade old

  37. LEGAL OBLIGATIONS • Skills Development Act (1998) as amended 2008 (Act 37 of 2008) identifies the following key obligations • Use of the money in the fund • Control & administration of the fund • Role of the NSA & PFMA requirements

  38. Use of the Fund • Fund Projects identified in the National Skills Development Strategy (NSDS) as National Priorities or • Fund other projects related to the achievement of the purpose of the Act as the DG determines • Administration of the NSF within prescribed limit

  39. Control & Administration of the NSF Director-General: DHET is the accounting authority of the NSF and must 1.Control the fund 2. keep proper records (financial, assets & liabilities) 3. prepare annual financial statements 4. Appoint executive officer who is in the public service

  40. Other legal obligations • NSF to be managed in accordance with PFMA • The NSA to advise Minister on the strategic framework and criteria for the allocation of funds from the NSF • Investment of surpluses • DG to submit annual financial statements to NSA for information • Unexpended balances can be carried over to next financial year

  41. KEY CHALLENGES FOR THE NSF • Alignment with priorities of DHET • Improving institutional mechanisms and capacity • Establishing provincial capacity after NMOS

  42. ALIGNMENT WITH PRIORITIES OF DHET • The NSF will forge greater alignment with DHET Priorities by: • Responding to capacity challenges within the FET System (including through the COSI project) • Seek opportunities for high impact delivery around job creation

  43. INSTITUTIONAL MECHANISM NSF must address institutional limitations to effective delivery by • Reviewing grant allocation mechanisms in line with DHET priorities • Review grant support systems of the NSF

  44. CAPACITY OF THE NSF Address the capacity of the fund by • Appoint CEO • Increase capacity • Improve and modernise systems • Deal with under-spending (through partnerships, grant intermediaries)

  45. THANK YOU

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