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Social Grants 2007/08 CD: Health & Social Development Issue

This issue brief examines the appropriation and overspending of social grants in the Department of Social Development (DSD) for the year 2007/08, with a focus on the Comprehensive Social Security Programme. It discusses the reasons for overspending and provides recommendations for future budgeting.

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Social Grants 2007/08 CD: Health & Social Development Issue

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  1. Standing Committee on Public Accounts (SCOPA) : Social Grants 2007/08 CD: Health & Social Development

  2. Issue Brief Table 1: APPROPRIATION PER PROGRAMMEfor the year ended 31 March 2008 • In 2007/08 DSD under-spent by R 37.7 m. However, there was over-spending against the Comprehensive Social Security Programme of R24.1m • This was driven by over spending on social grants. DSD over-spent their social assistance budget  (R62.45 billion) by R26 million in 2007/08. This amounts to 0.04%.

  3. Issue Brief Contd. • Due to under-spending in other sub-programmes in Programme 2, the total under-spending amounts to R24.1m • In 2007/08, the Social Assistance Transfers allocation was specifically and exclusively appropriated through the Appropriation Act 2007/08. • Due to this classification, virement rules could not be applied to reduce the social grant overspending. • Therefore, even though there was a overall under-spending against the vote budget, and an over-spending of R24.12mn against the Programme 2 budget, the amount classified as unauthorised expenditure for 2007/08 is R26.17mn. DETAIL PER PROGRAMME 2: COMPREHENSIVE SECURITYfor the year ended 31 March 2008

  4. Issue Brief Contd. (Social Assistance Budget) • Overspending in the social assistance budget was under the Old Age, Foster Care, Care Dependency and the Child Support Grant. • Of these, the main driver of over-spending was the Child Support Grant (CSG). • This can be attributed to CSG’s age extension policy. • In 2005/06, the CSG age-eligibility was extended from 11 year olds up until 14 years old. • Hence, between 2004/05 and 2005/06, the CSG eligible population grew by 2.9 million. • This led to large fluctuations and unpredictability in CSG beneficiary numbers. • 2.2 mn additional CSG beneficiaries came onto the system over the course of 2005/06 and 2006/07.

  5. Issue Brief Contd. (Social Assistance Budget) • In 2007/08, an additional 360 thousand CSG beneficiaries came onto the system. • The CSG take-up rate in 2007/08 was 82%; highest since 2004/05 till 2012/13. • The CSG take-up rate in the previous year, 2006/07, was 78.6% and in the subsequent year, 2008/09, declined to 80.1%. • Thus, in terms of CSG take-up, 2007/08 was an anomaly of a year. • Further, there were large fluctuations in reported CSG beneficiaries (Source Feb 2008 IYM), leading to uncertainty on year-end CSG numbers. • Additionally, R166million was back-paid to Eastern Cape and Free State in April 2007.

  6. Issue Brief Contd. • The social grants programme is demand driven. • Behavioural aspect of the programme makes it unpredictable. • Apart from behaviour related to take up of social grants, accumulation of back pay, application complexities and external risks all need to be factored into projections. • Variation of 1% in such a model is generally acceptable. • Over-spending of R26 million against a budget of R63 billion in 2007/08 is a 0.04% variation.

  7. Recommendation: • This overspend cannot directly be related to any negligence or lack of oversight and thus cannot be recovered from any person. • Approval be granted in terms of section 34 (1) of the PFMA to authorise the over expenditure as a direct charge against the National Revenue Fund (NRF). • This be approved with funding Additional systems now in place: • The three main stakeholders; SASSA, DSD and NT, each run their own independent projections to monitor social grants expenditure. • Quarterly projection meetings held between SASSA, DSD and NT. • Monthly model updates • Quarterly Expenditure Reports • Adjustment factor incorporated into model, to try and accommodate non-demographic driven factors such as back pay and other administrative complexities.

  8. Thank You

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