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DEPARTMENT OF HEALTH FREE STATE Submission to the Select Committee on Finance Public Hearings on Conditional Grants 07

DEPARTMENT OF HEALTH FREE STATE Submission to the Select Committee on Finance Public Hearings on Conditional Grants 07 June 2005. Overview . Introduction Background Preliminary outcomes for the 2004/05 Final Report and Actual Performance 31 May 05 Data analysis and Spending Trends

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DEPARTMENT OF HEALTH FREE STATE Submission to the Select Committee on Finance Public Hearings on Conditional Grants 07

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  1. DEPARTMENT OF HEALTHFREE STATESubmission to the Select Committee on Finance Public Hearings on Conditional Grants07 June 2005

  2. Overview • Introduction • Background • Preliminary outcomes for the 2004/05 • Final Report and Actual Performance 31 May 05 • Data analysis and Spending Trends • Performance on Conditional Grants • Assessment of monitoring capacity • Progress on Business Plans • Challenges • Conclusion

  3. The Team • Mr. Sakhiwo Belot : MEC : Health • In Support • Mr. Mosioua Shuping : Acting Head: Health • Dr. Arrie Schoonwinkel: Chief Financial Officer • Dr. Ron Chapman : Executive Manager : Health Support • Ms Sylvia Khokho : General Manager: Acting Executive Manager:- Clinical Health Services • Dr. Sipho Kabane : General Manager : Academic Health Services

  4. Introduction • On 29 April 2005, National Treasury (NT) published the 4th Quarter provincial budget statement of revenue and expenditure. • This was the 1st estimate of spending outcomes for the 2004/05 (1st April 2004 - 31 March 2005) • These figures to be revised as the Departments submit the reconciled financial statements to AG by 31 May 2005. • 17 May 2005 : National Treasury released a “ Detailed Analysis of the Preliminary Outcomes for 2004/05 Provincial Budgets” • This submission seeks to present final update of the Free State Health Department as on 31March 2005

  5. Background • According to the “Detailed Analysis of Preliminary Outcomes for 2004/05 Provincial Budgets” on Health • The 9 provincial health departments spent R40,3B or 98,6% of the combined adjusted budget of R40,8B. • The Free State DOH spent 1.4% more on its adjusted budget. (101.4%) • This preliminary outcome indicates that the FS DOH will overspend its budget by R39 776m. • The actual expenditure for the FSDOH as reflected in the Financial statements that were signed off to the AG (31 May 2005) will be analysed against the Preliminary Outcomes as reported on 17 May 2005

  6. Preliminary Outcome • According to the “Detailed Analysis of Preliminary Outcomes for 2004/05 Provincial Budgets” on Health • The Free State DOH spent 1.4% more on adjusted budget. (101.4%) • FS DOH overspent its budget by R39,776m. (1.4% overspending) • The health personnel expenditure spent 92.9% • The health personnel is under by R128,709m ( 7.1% under) • The Health Capital Expenditure spent 84.4% • This is R32,345 under ( 15.6 % underspending) • The non-personnel, non-capital expenditure 27.3% more than adjusted budget ( 127.3%) • This is R200,830m overspending ( 27.3% overspending)

  7. Preliminary Outcome • According to the “Detailed Analysis of Preliminary Outcomes for 2004/05 Provincial Budgets” on Health • The FSDOH has recorded the highest share pent (101.4%) • While most provinces recorded overspending in health personnel, the FSDOH recorded underspending of R128,709 m (7.1% under) • Significant underspending is recorded in capital budgets of the PDsOH and the FSDOH only spend 84.4% ( R32,345m or 15.6% under) • Non-personnel non-capital items include medicines, consumables and current expenditure reflects an overspending trend in most provinces and the FSDOH has pent 127.3% ( R200,830m or 27.3% over)

  8. Preliminary Outcome • According to the “Detailed Analysis of Preliminary Outcomes for 2004/05 Provincial Budgets” on Health Conditional Grants • Comprehensive HIV and AIDS – more than 90% spent • Hospital management and Quality Improvement – Between 70% and 90% • Hospital Revitilisation – Between 70% and 90% • Integrated Nutrition Programme – Between 70% and 90% • Malaria and Cholera prevention – Less than 70%

  9. Final Reports – Actual Performance 31 May 2005 • The final figures as reflected in the Financial Statements submitted on 31 May 2005 • The Free State DOH spent 1.4% more on adjusted budget. (101.4%) • FS DOH overspent its budget by R37,644m. (1.4% overspending) • The health personnel expenditure spent 96.2% • The health personnel is under by R66,466m ( 3.8% under) • The Health Capital Expenditure spent 82.42% • This is R37,708 under ( 17.58 % underspending) • The non-personnel, non-capital expenditure 27.3% more than adjusted budget ( 117.8%) • This is R141,818m overspending ( 17.8% overspending)

  10. Spending Trends • The overspending of health is mainly due to • Medicine and consumables remained under pressure and the overspending on Goods and Services amounted to R116,703m • The underspending on Health Personnel expenditure of R66,466mis due to saving on vacant posts that were not filled to offset the over expenditure on Goods and Services • The Overspending on Financial Transactions in Assets and Liabilities of R6,5mdue to losses which are not budgeted for. • Underspending of R32,3m on Capital Projects due to capital work in progress that will continue in 2005/06 and roll over of these funds has been requested.

  11. Spending Trends • Actions to prevent overspending trend in 2005/06 • The Total Budget allocated in 2005/06 is R 3, 076,013 000 (R3,076 B) • The total amount of R37,6moverspend in 2004/05 will be deducted by the Treasury from the 2005/06 budget • All the Departments within the Clusters have to contribute through savings in order to fund the overspending of the previous year. • Overall a saving of 2% per Cluster must be achieved • The revenue target for the 2004/05 was R64,989m. • The FSDOH was able to collect R75,114 m • This is 16% above the target

  12. Conditional Grants

  13. Conditional Grants

  14. General Trends in Health Expenditure • Data Analysis ( Refer to slides that follow) • Health Expenditure as a % of total provincial budget ( 2002 – 2008) • Trends is Conditional Grants ( 2002 – 2004) • Expenditure trends of conditional grants • 2002/2003 • 2003/2004 • 2004/2005

  15. General Trends in Conditional Grants • Reflecting over the past three years the big challenges are with • Integrated Nutrition • Provincial Infrastructure • Hospital Revitilisation • The implementation of the Basic Accounting System in 2004/5 provided a challenge to manage expenditure • It is hoped that this year the BAS will be used to empower managers to manage budgets and control expenditure better.

  16. Assessment of Monitoring Capacity • During the past financial year implementation of the BAS made it difficult to monitor expenditure. • Budgets were decentralised and the journals/reconciliation of expenditure was always lagging behind because of system problem • The approval of Roll Over on capital was approved in November which is a bit late • Some Business Plans were not properly aligned • The role of Department of Public Works and Local Municipalities ( Tender processes and capacity to deliver with Municipalities)

  17. Assessment of Monitoring Capacity • The following Mechanisms are now in place • All conditional Grants to be spend based on approved Business Plans • A Programme Manager has been allocated to manage each Conditional Grant supported by a Managerial accountant to support the monitoring of spending trends • The Executive Management to present a full progress report to the MEC: Health once a month • A Provincial Steering Committee meets monthly to monitor implementation especially of Capital Projects • Full report to be presented at the Quarterly Review meeting • Work closely with National Departments

  18. Progress on Business Plans for 2005/06 • The status of Business Plans for the 2005/06 on conditional grants is as follows • National Tertiary Services – Service Level Agreement submitted • Health Professions Training and Development – Business Plans submitted • Hospital Management and Quality Improvement- Business Plans submitted • Hospital Revitilisation : - Project Implementation Plan submitted • Integrated Nutrition Programme -Business Plans submitted • Infrastructure – Infrastructure Plan approved • HIV and AIDS Health - Business Plans submitted

  19. Challenges • To monitor the spending trends and be proactive • To ensure that the department of Public Works and Local Municipalities can deliver on their part ( Signing of Service Level Agreement is proposed) • Some Capital Projects extends over MTEF years; expenditure reflects a trend over multi years which is often not captured in reporting • Coordination of reports from receiving departments • Logis on Line and BAS Implementation

  20. Conclusion • The FSDOH will improve on the monitoring of the expenditure on Conditional Grants in 2005/06 as indicated. • The expenditure on Capital Projects to be monitored as a progress on a Managed Project rather that quarterly projected expenditure . • The support of the Select Committee on Finance is appreciated

  21. Thank you

  22. FOR MORE INFORMATION PLEASE CONTACT Mr. Mosioua Shadrack Shuping Acting Head: Health Free State Department of Health P O Box 227 Bloemfontein 9300 Tel : 051 405 4488 Fax ; 051 409 8008 Shups@doh.ofs.gov.za

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