ANNUAL PERFORMANCE PLAN AND BUDGET FOR 2014/15

Presentation to the Portfolio Committee on Higher Education and Training 2 July 2014 ANNUAL PERFORMANCE PLAN AND BUDGET FOR 2014/15

Presentation Outline • Strategic Overview • Budget Programmes and Financial Information • Programme Plans and Targets for 2014/15 • Administration • Human Resource Development, Planning and Monitoring Coordination • University Education • Vocational and Continuing Education and Training • Skills Development

Strategic Overview • The Department of Higher Education and Training was established in May 2009 and is responsible for all post-school education and training • Its areas of responsibility were previously located in the former Department of Education, the Department of Labour and the Provincial Departments of Education • The Department is responsible for Outcome 5 of government’s 12 outcomes “A skilled and capable workforce to support an inclusive growth path”

Strategic Overview Vision A South Africa in which we have a differentiated and fully inclusive post-school system that allows all South Africans to access and succeed in relevant post-school education and training, in order to fulfil the economic and social goals of participation in an inclusive economy and society

Strategic Overview Mission To develop capable, well educated and skilled citizens that are able to compete in a sustainable, diversified and knowledge intensive international economy, which meets the developmental goals of our country. The Department will undertake this by: • reducing the skills bottlenecks, especially in priority and scarce skills areas • improving low participation rates in the post-school system • correcting distortions in the shape, size and distribution of access to post-school education and training • improving the quality and efficiency in the system, its sub-systems and institutions

2014/15 Strategic Goals • Strategic Goal 1: Increase the number of skilled youth by expanding access to education and training for the youth • Strategic Goal 2: Adequately capacitated individual institutions for effective provision or facilitation of all learning • Strategic Goal 3: Increase the number of students successfully entering the labour market upon completion of training • Strategic Goal 4: Expand research, development and innovation capacity for economic growth and social development

2014/15 Strategic Goals • Strategic Goal 5: A college curriculum that is responsive to the demands of the market place and can transform and adapt quickly and effectively to changing skills needs, with a special emphasis on artisan training • Strategic Goal 6: A credible institutional mechanism for skills planning to support an inclusive economic growth path • Strategic Goal 7: A highly effective, professional, efficient administration informed by good corporate governance practices

Financial Information and Budget Programmes • The financial information of the Department is presented as follows: - An explanation of the Department’s structure, budget and expenditure trends - A summary of the allocations per programme over the 2014 MTEF - A summary per economic classification that covers the key expenditure items - Key budget pressures that are facing the Department - Financial Performance

Structure, Budget and Expenditure Trends • The Department’s budget structure is based on its organisational structure and consist of 5 programmes that represents the Branches in the Department. The programmes are as follows: • Administration • Overall management and administration 2) Human Resource Development, Planning and Monitoring Coordination Provide strategic direction in development, implementation and monitoring of departmental policies and the HRD strategy

Structure, Budget and Expenditure Trends 3) University Education Develop and coordinate policy and regulatory frameworks for an effective and efficient university education system. The branch also provides financial support to universities, NSFAS and National Institutes • Vocational and Continuing Education and Training Plan, develop, evaluate, monitor and maintain national policy, programmes, assessment practices and systems for vocational and continuing education and training including TVET Colleges post-literacy adult education and training 5) Skills Development Promote and monitor the national skills development strategy. Develop a skills development policy and regulatory framework for an effective skills development system

Structure, Budget and Expenditure Trends • The budget also includes “direct charges” which are amounts reflected that constitute a direct commitment from the National Revenue Fund in terms of specific legislative requirements and are not defined as Voted funds such as for the above 5 programmes. The “direct charge” for the Department is the Skills Levy revenue collected by SARS for the SETAs and the NSF • For the 2014 MTEF the Department’s budget (excluding direct charges) increases at an annual average rate of 6.8 %, from R34.3 billion in 2013/14 to R42 billion in 2016/17 • The amount of R36.9 billion for 2014/15 is an increase of R2.5 billion (nominal increase of 7.4%) on the 2013/14 allocation, excluding direct charges

Structure, Budget and Expenditure Trends • Direct charges (the Skills Levies for SETAs and the NSF), increases at an annual average rate of 9.5% from R12.3 billion in 2013/14 to R16.1 billion in 2016/17 • The Department’s budget is dominated by Programme 3: University Education, which represents 83% of the budget in 2014/15. As a result, transfer payments also dominate the budget in terms of the economic classification of expenditure • Normal Departmental services (excluding university transfers, transfers to public entities and other organisations, conditional grants and earmarked funds) represents only 1.5% of the budget

Structure, budget and expenditure trends • The transfer payments that the Department is responsible for are as follows:

Structure, Budget and Expenditure Trends • The department received additional allocations over the MTEF period of R76.3 million, R153.3 million and R730.2 million. These additional funds are mainly for the following purposes: - The improvement of conditions of service for staff in the Department and at TVET Colleges (salary increases) the biggest portion of the increase is for the conditions of service at TVET Colleges (R31.1 million in 2014/15, R60 million in 2015/16 and R69 million in 2016/17) - The piloting and roll out of the new student-centred loan administration model at NSFAS

Structure, Budget and Expenditure Trends • NSFAS remains one of the biggest growth items in the budget. The 2014 MTEF allocation reflects an increase from R6.139 billion in 2014/15 to R6.449 billion in 2015/16 and reaches R6.811 billion in 2016/17 • While the function shift is still in process, the funding of TVET Colleges consist of two portions namely the direct subsidies to colleges and the conditional grant that is mainly for compensation of employees

Structure, Budget and Expenditure Trends • The funding of TVET Colleges are as follows:

Financial Information

Key Budget Pressures Facing the Department • Department acknowledges the current fiscal constraints of Government • This has numerous challenges in itself, but also has a serious impact on the service delivery requirements of the Department • Department is unable to attain the growth requirements within the PSET system in terms of enrolments, infrastructure development, increased operations and student support • Limitations are placed on Departmental operations due to the capping of compensation of employees and the inability to roll out the new staff establishment as well as regional presence • Institutional monitoring and evaluation is limited to critical areas • Reliance on NSF project and donor support such as the funding of the activities of the National Artisan Moderation Body • An immediate pressure is the management of the TVET and AET function shift as well as cost implications for examination services and the development of the Central Application Service

Financial Performance • The Department managed to remain within its budget since being in operation from 1 April 2010 • Underspending on voted funds were as follows: 2010/11: R 23.848 million 2011/12: R 17.817 million 2012/13: R 3.751 million 2013/14: R 1.931 million • Unspent amounts were committed for specific goods or services and including outstanding claims for examiners and moderators • The Department received unqualified audits to date

Programme 1: Administration • Priorities for 2014/15 • Finalisation of the Department’s Communication strategy and profiling of DHET programmes/projects in the public domain through the communication strategy • Reducing the vacancy rate on funded posts to 10% • Ensuring good governance through institutionalization and implementation of Risk Management strategies by: • - Providing awareness and training sessions on Risk Management • - Developing Risk Management strategy, approve it for implementation • Complete the website improvement project aimed at improving the current look, feel and user-friendliness

Programme 1: Administration

Programme 2: Human Resource Development, Planning and Monitoring Coordination Priorities for 2014/15 • Provide accurate data on skills supply and demand in the country by establishing and maintaining an integrated higher education and training management information system, linking all providers of education and training, and integrating all institutional data into a single system by 2014/15 • Manage and maintain credible planning and budgeting processes for the Department by developing an Annual Performance Plan and performance indicators, and producing quarterly performance progress reports on the implementation of the Department’s strategic and performance plans

Programme 2: Human Resource Development, Planning and Monitoring Coordination • Monitor and support actions needed to implement the statutory functions assigned to the Minister, Director-General and quality councils by the National Qualifications Framework Act (2008) by producing a monitoring and evaluation report, developing a Annual Ministerial Policy Guideline and answering all requests for advice from the South African Qualifications Authority

Programme 2: Human Resource Development, Planning and Monitoring Coordination

Programme 2: HRD, Planning and Monitoring Coordination

Programme 3: University Education

Programme 3: University Education Strategic Objective1: Expand the higher education sector in order to increase equitable access with success

Programme 3: University Education Strategic Objective 2: Improve success rates in higher education studies at public institutions and therefore increase graduate outputs by 2014

Programme 3: University Education Strategic Objective 4: To develop and enhance the research capacity and productivity of universities

Programme 3: University Education Strategic Objective 5: To maintain and enhance the Higher Education Management Information System (HEMIS)

Programme 4: Vocational and Continuing Education and Training

Programme 4: Vocational and Continuing Education and Training Strategic Objective: Increase access to and improve success in programmes leading to intermediate and high-level learning by 2014

Programme 4: Vocational and Continuing Education and Training

Programme 4: Vocational and Continuing Education and Training Strategic Objective: Strengthen the institutional capacity of TVET institutions to improve their performance and efficiency

ANNUAL PERFORMANCE PLAN AND BUDGET FOR 2014/15