Department of Basic Education Expenditure Trends & Projections

1. Basic Education Supplementary Presentation: National &Provincial Education Expenditure Trends and Projections Presentation by Dept of Basic Education to the Joint Sitting of the HET & Basic Education Portfolio Committees Parliament, 13 October 2010

2. Department of Basic Education Expenditure Trends & Projections

3. 2010/11 Allocation vs Expenditure per programme

4. Spending trends per economic classification

5. Allocation per Programme over the 2010 MTEF

6. Allocation Summary over the 2010 MTEF

7. Conditional grants over the 2010 MTEF

8. Total Provincial Education Expenditure Trends and Budget Pressures

9. The table below reflects a summary of the budget and expenditure figures obtained from In-year monitoring reports

10. The total average expenditure by PEDs for the reporting period is R54,469 billion (39,6%) of the adjusted budget of R137,438 billion. The spending rate is lower compared to 41,8 per cent in 2009/10 due to cost containment measures introduced by the PEDs in 2010/11 financial year. • The PEDs are projecting an over-expenditure of R2,413 billion at the end of the financial year, but the current expenditure does not support that, clear picture will be realised once the annual increases have been finalised. • Compensation of employees • The PEDs incurred an expenditure of R43,682 billion (41,7%) of R104,643 billion on compensation of employees. The projected expenditure for the remaining months is R65,258 billion, resulting in over-expenditure of R4,297 billion at the end of the financial year. The current projected over expenditure is expected to increase after the conclusion of the improvement of conditions of services (ICS). The PEDs budgeted 5,3 per cent and the current percentage on the table is 7,5 excluding the expected increase in housing allowance of R300,00. Compensation of employees remains a cost pressure in the education sector and compromises service delivery regarding the shortage of other resources. • Goods and services • The actual expenditure on goods and services is very low at R3,841 billion, representing 26,4 per cent of R14,524 billion. Little improvement is expected in the course of the financial year, but this item is a target for cost containment measures as most of PEDs have already indicated during the first quarter visits.

11. Capital Assets • The actual expenditure on capital assets is still low at R1,511 billion, representing 21,1 per cent of R7,159 billion. Northern Cape reflects the highest spending rate of 38,4 per cent followed by KZN (36,6%) and Western Cape (31,9%), mainly on buildings and other fixed structures. The lowest expenditure is realised in Free State at 8,3 per cent. The expenditure on machinery and equipment has been slow, the highest being in Gauteng at 38,6 per cent and the lowest being North West at 1,6 per cent. Most of the PEDs indicated that this items will also suffer because of the cost cutting measured introduced. • Conditional Grants • The average spending for all conditional grants is less than 30,9 per cent except for new conditional grants Technical Schools which is low at 4,9 per cent. Only two PEDs, namely, Eastern Cape (35.0%) and Gauteng (3.1%) has spent on its budget for Technical Schools Recapitalisation. The Department continues to check readiness of the PEDs, in implementing the said conditional grant.

12. Personnel Expenditure Trends and Budget Pressures

13. Oversight : Planning & budget projections Projections for the 2010/2011 MTEF Budget trends Reasons for over expenditure Recommendations

14. Projected cost : 2010/2011

15. Budget Trends

16. Reasons for shortfall • Filling of unfunded posts • Excess educators not placed which is costing Education an estimated R2.9 billion • Incorrect grading of posts in offices by some PEDs

17. RECOMMENDATIONS 1. Vacant teaching posts be frozen in cases whereby the curriculum is not compromised 2. Vacant teaching posts be filled if excess educators/bursars fit the profile of the post 3. Office based posts be frozen in 2010/11 if they are not critical 4. Clear criteria on what is “critical” must be determined 5. Staff establishments on PERSAL must be aligned with approved staff establishment 6. The Task Team established on filling of teaching posts must conclude their work and provide :- Guidelines on how educator posts at schools are to be filled in provinces in line with existing policy and collective agreements with preference given to excess educators and bursars. An exit strategy when placement is not possible.

18. School Infrastructure With a focus on the Accelerated School Infrastructure Development Initiative (ASIDI)

19. BASIC SERVICES AND IN-APPROPRIATE STRUCTURES

20. Projected Financial Requirements

21. ASIDI FOCUS 2010-2014 Strategic Planning Period: Schools without water, sanitation, electricity and or fencing Schools constructed from inappropriate material and are a danger to learners and educators and overcrowded schools In addition, prioritised critical teaching and learning spaces in those identified schools will be provided. Phase delivered in an accelerated mode

22. ASIDI FOCUS 2015-2020 Strategic Plan Expand the provision of critical teaching and learning spaces that are essential to enhance teaching and learning outcomes. 2020-2025 Strategic Plan period By 2025 schools and their teaching and learning environments will be at new and relevant international best practice level of provision and functionality.

23. ASIDI FOCUS 2010-2025 Strategic Planning Period: Strategic Asset Management plan to be put in place and maintenance plans designed, budgeted for and implemented for each school; Develop and roll out an innovative strategy to incorporate E-Learning, mobile laboratories and libraries to enhance the learning and teaching environment; Future planning and backlogs arising from new space requirements which present new challenges to be timeously addressed.

24. STATUS QUO Developed ASIDI Initiative; Current funding in the 2010 MTEF amounts to R26b; Bid amounting to R40b submitted to National Treasury (includes capacity to DBE and provinces) but unlikely to receive given budget pressures; Service provider appointed for development of standard school designs, specifications and a cost model; Exploring the use of experienced programme/project management supportfrom the private sector to manage the programme for DBE; Exploring the use of implementing agents to provide programme management support.

25. Way Forward Develop Model, funding arrangements, procedures, monitoring and reporting Consultations with affected provinces and stakeholders Develop Implementation Plan and submit to Senior Management, HEDCOM & CEM for approval Implement Plan and monitor

26. Overall Conclusion • Provincial budgets are projected to remain under serious pressure • This is largely due to pressure on personnel expenditure and need for additional funding for school infrastructure • Improving the credibility of Provincial Education Budgets is a very important priority • There is scope to improve efficiencies especially (but not only) in personnel expenditure • DBE will focus on monitoring and support – including a detailed expenditure review to be done in collaboration with Treasuries and PEDs