THE SCHOOL FUNDING NORMS Key elements and latest developments Department of Education

1. THE SCHOOL FUNDING NORMS Key elements and latest developments Department of Education November 2005

2. Presentation outline • The funding of public education • School fees and exemptions • The policy trajectory • Cost implications • Key implementation challenges

3. Personnel the only non-progressive spending element. Situation is improving, however. “School allocation” the most progressive funding element. Less progressive when viewed nationally. > The funding of public education Spending on each public ordinary school learner: the national picture in 2005

4. NW the closest to the 7:1 spread specified by existing norms. But level of funding is low. > The funding of public education School allocation per learner in 2005

5. > School fees Except for quintile 5, school fees are marginal relative to public funding. Public and private funding: the national picture in 2005

6. Fees in the two poorest quintiles are nearly all below R150 per annum. > School fees Annual school fees: the national picture in 2005

7. After many years of having an exemptions system, the poor are still disempowered in terms of their actual knowledge about this right. > School fees Fee exemption data collected through special Household Survey 2004

8. > The policy trajectory • Original 1998 National Norms and Standards for School Funding: • First explicitly pro-poor operational policy for education funding. Provides for within-province 7:1 pro-poor funding gradient for ‘NPNC’. • Criteria for provincial quintiles laid down. • Funding modalities for SASAsection 21 and non-section 21 schools established. • Fee exemptions framework: full exemption if fees greater than 1/10th of income; partial exemption if greater than 1/30th of fees.

9. > The policy trajectory • 2003 ‘Plan of Action’ followed in-depth analysis into school funding issues: • School allocation amounts too low – need for national targets. • Too much inter-provincial inequality – need for national quintiles. • Lack of clarity around what a basic schooling package costs – need for a ‘adequacy benchmark’. • Fees in poor schools low, but nonetheless a hindrance – need to limit fee-charging in poor schools. • Pressures experienced by poor parents with learners in non-poor schools – better protection from the state needed. • A three-year planning cycle needed in line with MTEF.

10. > The policy trajectory • 2004 new draft Norms and Standards: • Monetary targets and an explicit adequacy benchmark with respect to the school allocation. THE TARGETS TABLE

11. > The policy trajectory • Inter-provincial poverty distribution to determine pro-poor funding per province. THE POVERTY TABLE

12. > The policy trajectory • New poverty measures focussing on poverty of the community around the school, but with provincial discretion to adjust. • Better medium-term planning promoted through three-year framework for the school allocations.

13. Fee exemptions • Legislation to provide for certain schools to be determined as ‘no fee schools’, where public funding is adequate. • National criteria for determining the poorest schools. • Minister to determine the percentage of schools from time to time, based on affordability. • ‘No fee grades’ in fee-charging schools also a possibility. • ‘Automatic exemptions’ for special categories, including recipients of social grants. • Easier access to exemptions. • Stronger imperatives around Departmental monitoring of exemptions.

14. > Cost implications • In 2005 provinces spent around R3.7bn on the school allocation. • Realising a ‘full cost’ scenario (703-625-527-352-117) in 2006 would cost R5.8bn. • A much more modest ‘one quintile adequate’ scenario (527-484-395-264-88) scenario would cost R4.4bn. • The cost of maintaining historical levels of expenditure per school in the face of new national quintiles implies an additional 4% over the above figures. This is the ‘no reductions criterion’.

15. > Cost implications • Programme 2 NPNC is R6.3bn in 2005/06, and rises to R7.9bn in 2007/08. This is an above inflation increase, but sufficient only for a limited implementation of the new Norms and Standards. It should be noted that programme 2 NPNC covers key inputs outside the school allocation, in particular scholar transport, hostels, school nutrition and teacher training programmes. • To achieve the ‘one quintile adequate’ scenario in school year 2006, we project a net shortfall in 2006/07 of R870m. • An equitable distribution that does not punish better spending provinces would cost up to R1.8bn. • The political value of eliminating compulory fees in some of our poorest schools is an important first step. The state is in a position to compensate them for the fees they would have collected.

16. > Key implementation challenges • A better balance between school control and PED control with respect to procurement and utilisation of school allocation. • Planned improvements in the poverty ranking system must be well managed – the planned presence of many poor learners in ‘rich’ schools can and must be favourably considered in the poverty ranking process. • Better information is required on what non-personnel items make a critical impact on quality and learning outcomes, and such inputs should be actively promoted in the planning cycles. • Exemptions procedures need to be better enforced and monitored – the task will become easier as fewer fee-charging schools remain.

17. THANK YOU

18. Summary 1 • Determination of basic minimum package cost of goods and services and minor capital items. • Alignment of section 21 functions, differentiation of consumable and non-consumable items, chart of accounts and budget statement two. To assist monitoring and tracking. • Inclusion of routine and day to day maintenance in the allocation to cater for schools who will be exempt from school fees. • Exclusion of backlogs and large capital items from allocation. • Re-imbursement of schools that utilize their own funding or recurrent funding for urgent maintenance to facilities. • Community of poverty nearest the school the only determinant of poverty. Conditions at school excluded. • Proxies for poverty will include income, dependency ratio and level of education of parents. • Extention of community around the school by PED transparently to cater for pressures at school level or where major portion of learners at school not from local community.

19. Summary 2 • Q1, 2 and 3 becomes less progressive from 35, 25, 20 to 30, 27.5, 22.5 • Three year targets and phasing in of basic minimum. • Minister may amend targets and basic minimum after consultation with the Minister of Finance and the FFC. • A national poverty distribution table prescribed. Data to be provided by National Treasury. Minister may alter table in consultation with Minister of Finance and FFC. • The Equitable Share formula will have to be adjusted to cater for the National poverty distribution table. • DOE and NT monitoring of targets and intervention if necessary. • Provisional school allocations to be communicated to schools by 30 September of previous school year and the final allocations by 31 March of the school year. The DOE should also be provided with the aggregated information. • PED must maintain a list of schools indicating which section 21 function has been assigned the school. (21 a-e) • Transfers to section 21 schools will be according to the separate section 21 functions and further classified in terms of the educational and non-educational and according to the chart of accounts

20. Summary 3 • Tighter support for non-section 21 schools, PED’s called to make use of bulk buying, delegations to schools, phased provision of small capital items, adequate information to schools. • Serious engagement needs to take place between Provincial Treasuries and PED’s to deal with under-expenditure in non-section 21 schools. This does not preclude fully motivated roll-overs, special accounts or embargoed transfers to school accounts. • Where section 21 schools are not complying with conditions to transfers, then these functions should be removed using section 22 of SASA • Exemption of all learners in quintile 1 and 2 linked to PED providing targeted amount. Quintiles subjected to exemption may be extended or reduced. • Automatic exemptions to orphans and children linked to state grants: child care, dependency grant, foster care grant – all grants linked to the child and to a means test.

21. Summary 4 • Fees paid for learners from the same family in the same or another public school will be considered for determining exemptions. This will be limited to households with low income and the school fees will be limited to the amount of the basic minimum package. See table on page 47 • While a campaign needs to be undertaken that no child should be required to pay pay additional amounts or be required to bring additional materials to schools above the school fee, where this does happen parents may add the costs to the school fee when they apply for exemption. This includes the cost of the school uniform. • Even though parents may not apply for exemption, if they are in default their status regarding exemption MUST be determined before any action can be taken. • Awareness of exemptions, assistance of social development and CBO’s in assisting parents. • Action against SGB’s, school and departmental officials who are negligent in applying themselves to the rights of learners to schooling and parents to be considered for exemptions.