SELECT COMMITTEE ON EDUCATION AND RECREATION

1. SELECT COMMITTEE ON EDUCATION AND RECREATION POVERTY RANKING OF SCHOOLS (Quintiles) 29 November 2017

2. PRESENTATION OUTLINE • Purpose • Background • Current school funding system • Characteristics of system for the poverty ranking of schools • The changing poverty profile of schools • Addressing the shortcomings of the present system for allocating funds to schools • Improving the adequacy of the school allocation • Provincial compliance to the National Norms and Standards for School Funding • Recommendation 2

3. PURPOSE To present to the Select Committee on Education and Recreation a report on the review of the poverty ranking of schools (quintile) for discussion. 3

4. BACKGROUND • Section 35(1) of South African Schools Act (SASA)requires the Minister to determine national quintiles for public schools. • The National Norms and Standards for School Funding (NNSSF) (Pars. 100 to 107) consequently provides criteria for a system in terms of which all public schools as well as all learners at these schools can be placed into quintiles, according to financial means. 4

5. BACKGROUND • The National poverty ranking of schools (quintiles) for public schools and learners: • One of five groups into which all public ordinary schools and their learners are placed. • Quintile 1is the most poor quintile, while Quintile 5 is the least poor. • The national poverty distribution table ('poverty table')provides a guide to Provincial Education Departments (PEDs) on the distribution of learners across the different quintiles with the respective provinces.

6. BACKGROUND

7. Current school funding system • Funding receivable by a school is determined by: • The national targets for the school allocation. This is determined by the DBE annually. • The poverty ranking of the school. Poverty scores are assigned to school by PEDs and is based on the relative poverty of the community surrounding school. • Challenges experienced regarding the current funding system include: • Challenges with regards to the adequacy of the school allocation. • Challenges regarding the ability of the current system to accurately rank some schools in terms of their relative poverty. 7

8. 2017 PER-LEARNER ALLOCATIONS • EC, KZN, LP, MP are funding all schools below the national threshold amounts. • NC is funding schools in Q1-3 below the no fee threshold. 8

9. 2017 NO FEE SCHOOLS AND NO FEE LEARNERS • Approximately 86% of all public ordinary schools nationally are no fee schools. • Approximately 79% of all learners are accommodated in no fee schools nationally. 9

10. ACTUAL EXPANSION OF NO FEE LEARNERS versus POLICY TARGETS • All PEDs have exceeded the policy targets for learners (no fee) in quintiles 1,2 and 3. 10

11. No Fee versus Fee Paying 11

12. Review of the use of the poverty ranking of schools (quintiles) • Characteristics of current system for determining the poverty ranking of schools: • PEDs responsible to assign poverty scores to schools. • The poverty score assigned to a school is based on relative poverty of community surrounding school. • The following three indicators of poverty are used: • Income levels of households in community around school; • Unemployment rate in community; and • Levels of education (literacy rate) of community. • Schools in quintiles 1, 2 and 3 have been declared no fee schools. 12

13. Review of the use of the poverty ranking of schools (quintiles) • The changing poverty profile of schools: • A number of learners do not attend the closest public school. • Schools in less-poor communitiesincreasingly accommodates learners from a different (usually poorer) socio-economic background. • Data on surrounding households becoming a less reliable indicator of the socio-economic status of learners in many schools. • Unemployment rates dramatically increased recently and not taken into account when determining poverty scores for schools. • Some fee paying schools in Q4 & 5 experience a level of funding that is below the no fee threshold. 13

14. Fee paying schools with income below no fee threshold 14

15. Review of the use of the poverty ranking of schools (quintiles) • Recommendation to address shortcomings of the present system for allocating funds to schools: • De-link a school’s allocation from its quintile ranking, distinguish between only two broad categories of schools i.e. no fee schools and fee paying schools • Proposals for de-linking allocation from quintile ranking: • Equalise the school allocation for all no fee schools (Q1-3). • The voluntary reclassification of certain Quintile 4 and 5 schools as no fee schools. • The introduction of a ‘fee-sensitive’ funding system for determining level of school allocation to fee paying schools. 15

16. Review of the use of the poverty ranking of schools (quintiles) • Progress with proposals on de-linking school allocation from quintile ranking: • Equalising of the school allocation for all no fee schools has already been achieved. All PEDs have, since 2014, equalised their allocations to all their no fee schools • A funding bid (for R2.63b over the 2017 MTEF) was made in 2016 for the voluntary reclassification of selected quintile 4 and 5 schools as no-fee schools and & introducing the use of the ‘effective fee’ in determining the school allocation for fee paying schools • Given the present budgetary constraints experienced by provinces currently, most PEDs will probably not be able to find the additional funding required within their existing budgets. 16

17. Improving adequacy of the school allocation Education CPI compared with headline CPI 17

18. Actual allocation v Projected allocation using Education CPI 18

19. PROPOSALS FOR IMPROVING ADEQUACY OF THE SCHOOL ALLOCATION • Improving efficiency/utilisation of the school allocation: • Procurement processes at national, provincial and school level; • Efficient use of water and electricity; • Effective retrieval of text books; and • Accuracy of learner enrolment data. • Addressing the ‘underfunding’ of the school allocation by certain PEDs: • A strategy to be developed to ensure that all provinces will be able to meet the current allocation targets; and • This will need the cooperation of the respective PEDs, their Provincial Treasuries, National Treasury and DBE. • Increasing the national targets for the school allocation (and solicit funding for PEDs to be able to fund at these levels): • A funding bid (for R8.7b over the 2018 MTEF) in this regard has been submitted to National Treasury. 19

20. Provincial Compliance to National Norms and Standards for School Funding (NNSSF) 20

21. 2018 PER-LEARNER ALLOCATIONS • KZNand MP will fund all schools below the national threshold • NC will fund schools in Q1-3 below the no fee threshold. 21

22. NORMS AND STANDARDS (N&S) TRANSFER TO PUBLIC ORDINARY SCHOOLS • EC (for Q1,2,3); GT; NC; NW and WC made transfers before the due date. • EC (Q4 and 5); FS; KZN; LP and MP transferred funds after the due date. • FS and KZN are experiencing cash flow problems affecting ability to transfer by due date. 22

23. TRANSFER: SUBSIDIES TO INDEPENDENT SCHOOLS • KZN; LP; NC; and WC have made transfers for both quarters before the due date. • FS and GT could not meet the due date for any of the above-mentioned quarters. 23

24. SUBSIDIES FOR SGB ASSOCIATION SUBSCRIPTION FEES • EC; KZN; LP and MP: No budget made available. • LP and MP will consider budget during the 2017/18 budget adjustment process. • LP reports that none of the associations currently meet the qualifying criteria for subsidy. 24

25. COMPENSATION FOR FEE EXEMPTION • GT; NC and WC made their 2016/17 transfers made before the due date. • LP has not made any budget available. May make budget available during budget adjustment 25

26. Recommendation It is recommended that the Select Committee on Education and Recreation discusses the report on the review of the poverty ranking of schools (quintiles). 26