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Restructuring Grant

Restructuring Grant. Select Committee on Finance (SCoF) National Treasury 10 October 2007. Restructuring Grant. Aim Support large municipalities with restructuring initiatives Conditions Municipality develop own restructuring plans Contractual obligations on plans

urielle-jenkins
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Restructuring Grant

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  1. Restructuring Grant Select Committee on Finance (SCoF) National Treasury 10 October 2007

  2. Restructuring Grant Aim • Support large municipalities with restructuring initiatives Conditions • Municipality develop own restructuring plans • Contractual obligations on plans • Adopt resolution committing to implementing plans • Show progress in quarterly reports • Transfers will depend upon the progressive implementation and achievements of agreed milestones • Grant agreements end in 2008 • Continue to monitor the grant beyond its projected life

  3. 2006/07 transfers

  4. Withholding for 2006/07 • Withheld R180 million for the 2006/07 financial year for C ape Town (R80 m), Tshwane (R50 m) and Nelson Mandela Bay (R50 m) • Reason for withholding: • City of Cape Town – Slow organisational transformation, inconsistent reporting, significant and persistent under expenditure on the grant (39%) • City of Tshwane – Slow spending (41%), inconsistent reporting, slow implementation of institutional conditions and slow execution of capital budget (25%) • Nelson Mandela Bay – Non compliance in meeting obligations to creditors, slow organisational transformation, slow spending on capital budget (14.7%) and slow spending on grant (52%)

  5. Issues addressed • Feedback on evaluation of performance - quarterly basis • Visits undertaken: • City of Tshwane; Nelson Mandela Bay; City of Cape Town and Emfuleni • Issues addressed: • Grant conditions and non compliance with reporting • Improvement in the submission, quality and content of reports • Confirmation of commitment • Low levels of expenditure • Continue to follow up outstanding matters during this quarter • Improvements in commitment and ownership to achieving grant conditions • Regular meetings with some municipalities to resolve the above issues

  6. Expenditure levels: April - June 2007

  7. 2007/08 Budget

  8. Expenditure levels as at Aug 2007

  9. Financial Management Grant

  10. Conditions • Councils and Municipal Managers’ commitment to promote all aspects of the financial management reforms • Establishment of a budget and treasury office with positions filled by appropriately skilled staff • Establishment of SCM and Internal Audit units in all municipalities • The Employment of an appropriately skilled CFO • Ongoing review, revision, and submission of implementation plans to address weakness in financial management • Acquisition of a financial management system that can produce multi-year budgets, in-year reports, SDBIP, annual reports,etc. • Expansion of the financial management graduate internship programme to all municipalities

  11. 2006/07 OUTCOMES • Grant transferred to all 283 municipalities • Transfers made in July 06, September 06, November 06 and March 07 due to challenges to obtain resolutions and commitment • Grant for certain municipalities initially withheld due to inconsistent reporting and slow spending

  12. Status of reports submitted and spending patterns of 283 municipalities as at June 2007

  13. Status of reports submitted and spending patterns of 283 municipalities as at August 2007

  14. Transfers for 2007/08 F/y

  15. Outcomes 2007/08 • Municipalities not complying with the conditions of the grant at 30 June 07 were sent letters requesting written representations indicating reasons for slow spending and inconsistent reporting • Allocations temporarily withheld for July and August • Follow up procedures instituted resulting in 28 positive responses • No responses from 29 municipalities without CFO’s, new officials being appointed, promises not kept

  16. General findings Slow spending and inconsistent reporting • Interns resigned or were permanently retained by municipality • Vacant posts not filled • Allocations received later than anticipated • Funds set aside for: • capacity building and training for the 2007/08 financial year • the establishment and re-organisation of B.T.O. • conversion of AFS • skills development programmes • HR information system upgrade • Assets valuation, asset registers and cleaning of billing systems • interns salaries, IT requirements and systems enhancement with financial software

  17. Monitoring and Reporting • Letters sent to munis clarifying channel and method of reporting • Follow-ups being made to ensure compliance by all munis and subsequent payment of outstanding FMG transfers • Ongoing review and analysis of reports and monitoring of outcomes assisting to refocus Financial Management support initiatives

  18. Thank You

  19. MFMA - Outputs • Improved and sustained graduate internship programme on financial management reforms • Upgrading of IT systems to deliver reports required for financial reforms thus ensuring compliance with the MFMA • Preparation and implementation of multi-year budgets meeting uniform norms and standards • The implementation of SCM reforms, accounting reforms, producing quality and timely financial statements as reflected by improved audit opinions • Improvements to internal and external reporting on budgets, finances, SDBIP, etc. • Implementation of the MFMA

  20. MFMA - 2006/07 outcomes • Report on performance against reform objectives by capacity category for those that have responded

  21. MFMA - AVERAGE FMG SPENDING BY CAPACITY CATEGORY

  22. Restructuring Grant Indicators • Institutional and Organisational • Optimal staff complement • Frequency of meetings • Structure of organisation • Service delivery mechanisms and service levels • Economic Development • Innovative programmes • Job creation activities • Financial • Credit ratings • Debt ratios • Revenue collection ratios • Infrastructure spending levels • Budget implementation

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