Wednesday, 30 July 2014 Cape Town

1. Section 100(1)(b) Intervention – Presentation to the Joint Select CommitteesLimpopo Department of Education Wednesday, 30 July 2014 Cape Town

2. Presentation Outline • Diagnostic analysis (key findings) • Scope of the intervention • Measurable benefits • Budget allocation & analysis • Responses to the Joint Select Committees’ recommendations (13 November 2013) • Achievements • Risks and challenges • Mitigation / Way forward

3. Diagnostic analysis;Scope of the intervention; andMeasurable benefits

4. Diagnostic analysis(key findings) • There was an inability by the provincial education department to fund key strategic educational priorities, thus resulting in essential national standards or the established minimum standards for the provisioning of quality basic education in Limpopo not being met. For instance – • there was lack of preparedness for the introduction of the Curriculum and Assessment Policy Statements (CAPS) in Grades 1-3 and 10 in 2012 because educators were not trained and the CAPS-aligned textbooks were not procured and delivered to schools; • there was lack of proper planning and funding for the procurement and delivery of learning and teaching support materials, especially CAPS-aligned textbooks for Grades 1-3 and 10 before the end of the 2011/12;

5. Diagnostic analysis (cont) • funds were inadequate to the roll-out of the learner transport programme;  • noncompliance with contractual stipulations in the infrastructure programme; • there was limited funding for transfers to schools in terms of the Norms and Standards for the Funding of Schools; • inadequate funding to implement remedial programmes for Grades 10-12; • there was uncertainty whether trouble-free Annual National Assessments (ANA) for Grades 1-6 and 9, and the National Senior Certificate (NCS) examinations for Grade 12 could be coordinated and administered;

6. Diagnostic analysis (cont) • there was uncertainty whether markers and moderators for the 2011 NSC examinations could be paid, and whether funding was adequate for the 2012 supplementary NSC examinations; • the data integrity was questionable and unreliable, which led to risky and misinformed management decisions, planning and resourcing; and • critical vacancies for cash management, budgeting and public finance monitoring were not filled.

7. Diagnostic analysis (cont) • The existing system of financial, supply chain, contract, asset, records and cash flow management and controls was not effective, efficient and accountable to an extent that – • 2010/11 & 2011/12 adverse audit opinions were not adequately addressed; • the department continually overspent on its personnel budget between the 2007/08 and 2012/13 financial years. Funds allocated for priority education programmes were moved to augment the CoE budget; and • cashflow management challenges led to the delayed payment of invoices, thus creating huge accruals.

8. Diagnostic analysis (cont) • The Compensation of Employees (CoE) budget was bloated. Therefore an effective and sound human resource management strategy must be developed and implemented. The focus areas of the strategy should include, but not limited to – • applying the post provisioning norms; • PERSAL clean-up; • aligning the PERSAL delegations with human resource delegations; • aligning the organisational structure with the sector generic structure approved by the CEM; and • addressing the high vacancy rates of support staff at schools, districts and head office.

9. Scope of the intervention • The scope of the intervention is geared towards achieving the outcomes envisaged by Cabinet, namely – • normality and stability in the delivery of improved quality education in all its material facets; • addressing decisively the operational, management, administrative and systemic challenges facing the Limpopo Department of Education in the provisioning of quality education; and • ensuring that measures implemented during this intervention, guarantee the sustainable provisioning of quality basic education in schools after the intervention.

10. Measurable benefits • The measurable benefits for the section 100(1)(b) intervention in the Limpopo Department of Education, include but not limited to the – • compensation of employees budget will be under control; • schools will be functional and safe environments conducive to effective learning and teaching; and • Department will practise Batho Pele principles, sound human resource planning and management, financial management, control, accountability, supply chain and contract management, and will comply will legal prescripts and strategic planning processes and cycles.

11. Budget allocation & analysis

12. 15-year actual & projected budget trends

13. Budget trends – Observations • The CoE has been increasing at a higher rate than the budget for “service delivery” budget items. • The CoE has been increasing despite “constant” employee numbers (no substantial number of new posts filled – all unfunded posts on PERSAL have been abolished). • The unstable CoE can be attributed to (a) less than the approved 6.5% CPI was provided; (b) the reinstatement of the rural allowance; etc. • The “service delivery” budget is still lower than the 2010/2011 budget. • The trend is still continuing, though there is a slight upward gradient in the service delivery budget emerging between 2012/13 to 2014/15 financial year.

14. Economic Classification

15. Economic Classification

16. CoE vs service delivery budget allocations • The objective over the past three financial years, was to fully fund the allocations for the CoE, national and provincial priorities, examination projects, contractual obligations, and CAPS training. • The ideal ratio of the CoE is to the “service delivery” budget items is 80:20. However, for the 2014/15, this ratio stood at 82:18 • Since the CoE and the Conditional Grant allocations are “ring-fenced” and cannot be tampered with, any budget shortfall can only be funded from the “service delivery” budget items. • The LPT could consider incentivising Departments that realise savings from their equitable share budget allocations. The effective implementation of austerity measures, results in savings. These savings could be returned to Departments that realised such savings.

17. Responses to the recommendations of the Joint Select Committees(13 November 2013)

18. Responses to the Joint Select Committee’s recommendations • Recommendation 4.2:The DPSA and the LDoE should review the salary scales paid to educators in relation to other provinces– • The salary scales of educators and adjustments to salary scales and packages are centrally determined. The high salary scales paid, result from decisions taken in the Department; • Adding to this irregularity, is a new phenomenon (nationally) where educators resign or take severance packages from the department, and later re-enter the system at higher salary scales (as per PSCBC agreements reached); • Another irregularity involves schools enrolling higher learner numbers than the school’s capacity. This is done to get the schools classified highly, resulting in a higher salary package for the principal, additional promotional posts, and additional educators required; and

19. Responses to the Joint Select Committees’ recommendations (cont) • Exacerbating the immediate phenomenon above, are schools introducing subject streams and/or appointing educators without the prior approval from the relevant authority. • Effects and possible solutions – The CoE will continue to be bloated for as long as these educators are in the system. Reversing the decisions already implemented, will definitely result in a stream of litigations for unfair labour practices. It must be remembered that these educators where placed in these higher scales by the Department. It was the Department’s decisions that resulted in the State being committed financially. Where practicably possible – • investigations, followed by disciplinary action must be instituted; • stringent systemic control measures must be implemented;

20. Responses to the Joint Select Committees’ recommendations (cont) • a national policy framework must be developed as a matter of extreme urgency to decisively deal with the exit and re-entry of educators in the system; in most cases, without following due process; • directives must be communicated to schools about learner enrolments schools are allowed to admit annually. Unavoidable deviations to prescribed learner enrolments, must be first approved by the relevant authority; and • no school should be allowed to introduce subject streams, especially Grades 10-12, without prior approval by the relevant authority. Accountability must be made a norm right through the system.

21. Responses to the Joint Select Committees’ recommendations (cont) • Recommendations 4.3: The DPSA should ensure the disciplinary processes were fast-tracked so as to ensure that all those implicated should have been removed from the PERSAL system by the time the intervention exited – • 7 RWOPS cases have been finalised, though the sanctions by the chairperson are dissatisfactory; and • 14 alleged fraud and corruption cases are lagging behind. For the majority of the cases, chairpersons and initiators have not been appointed. Solutions, will be the same as in other Departments; • Recommendations 4.4 & 4.5: The next four months should be treated as a transition phase to implement the exit strategy; & the 5 systemic challenges should be prioritised and remedies implemented within the next four months – • The focus in the last four months of the 2013/14 financial year, was on implementing departmental and intervention programmes, including the implementation of sustainability projects, preparations for the 2013/14 Annual Financial Statements and audit processes, etc.;

22. Responses to the Joint Select Committees’ recommendations (cont) • Recommendation 4.6:The ACTT should fast-track the processing of fraud and corruption cases – • Similarly to DC processes, dealing with alleged fraud and corruption cases has been slow; and • The Department is in the process of defending itself against companies which believe they have been unfairly treated; and • Recommendation 4.7:The Limpopo Provincial Administration should ensure compliance with the PFMA, No. 01 of 1999 – • With the assistance of the National and Provincial Treasuries, the DBE and committed officials in the Department, compliance and accountability are becoming a norm; and • The tight monitoring by Treasuries and the DBE is bearing fruit.

23. Responses to the Joint Select Committees’ observations (cont) • Observations 3.7 & 3.9 – • 3.7 – DPSA is assisting in finalisation of the realigned organisational structure; • Back-office services pertaining to HR and financial management, are considered to respond to the AGSA queries endemic at the District level; and • 3.9 – The consolidation of the physical headcount conducted by Stats-SA, with the education management information systems (EMIS, SA-SAMS, LURITS – for learners) and PERSAL (specifically for educators) is being finalised.

24. Achievements, Risks and challenges, as well asWay forward

25. Achievements • An innovative LTSM procurement and delivery strategy implemented. • Budget (especially for the CoE) has been stabilized. There was no overspending at the end of 2013/14; and substantial savings were realised, mainly arising from austerity measures. • Funding of schools in terms of the National Norms and Standards for the Funding of Schools has been improved from 62% in 2012 to 90% in 2014. • The organisational structure has been realigned, but is currently being refined to meet the directives from the DPSA in relation to the education sector generic structure. • PERSAL clean-up was completed, and unfunded posts abolished; • Head-count verification completed by Stats-SA, and is in the process of being consolidated with the EMIS and PERSAL. • As at present, only 6 out of 2 544 temporary educators yet to be fully placed permanently.

26. Achievements (cont) • The post baskets of ordinary public schools has been established and published. • An audit rectification project team has been appointed by the Treasury, and deployed to the Limpopo Departments of Education and Health. • 20 736 learners are benefiting from scholar transport; and 1.6 million learners receiving meals daily through the NSNP. The development of new delivery models for scholar transport has been finalised and a tender is in the process of being published; and that for the NSNP is underway. The LDoE is assisted by the DBE as well as National and Provincial Treasuries (especially the Office of the Central Procurement Office in collaboration with SARS). • Marked improvement in infrastructure planning, delivery and spending. The prioritisation of water and sanitation was strategic.

27. Risks and challenges • Potential relapse, if interventions are not sustained.  • No consequences for wrong-doing; and ineffective disciplinary processes. • Contract and record management. • Skills profiles for specialised line functions, especially in the CFO’s Branch. • Performance management and development.  • Ownership of sustainability projects, especially those dealing with AGSA audit queries. • Learner data (though there is noted marked improvement of the EMIS processes).

28. Risks and challenges (cont) • Constant challenges arising from the procurement and delivery of CAPS-aligned textbooks, inspite of the structured LTSM procurement and delivery strategy (surprisingly, challenges do not exist in the stationery procurement and delivery processes; nor transfers in terms of the Norms and Standards; nor the NSNP – all of which, are based on the same datasets). • Irregular appointment of educators by schools, and well as the unstructured changes of subject streams without following due processes and priori approvals by relevant authorities. • Failure by schools to retrieve CAPS-aligned textbooks at the end of the school calendar year; and report textbook shortages timeously. • The salary scales paid to educators when compared with the other provinces.

29. Risks and challenges (cont) • A new phenomenon (nationally) where educators resign or take severance packages from the department, and later re-enter the system at higher salary scales as per PSCBC agreements. • Schools enrolling higher learner numbers than the school‘s capacity in order to be classified differently, resulting in a higher salaries for principals, additional promotional posts, and additional educators required. • Ineffective merging and closure of small schools which are not educationally and/or economically viable. • Contingent liability arising from litigations.

30. Mitigation / Way forward • A focused approach / strategy for HR management and development is unavoidable. The realignment of the organisational structure of the Department must be finalised. Appointments must be skills and competency-based. The implementation of legally determined post baskets is not negotiable. Compliance and accountability imperatives must be made a norm across the system. • IT systems solutions (SITA services) must be prioritised – the migration to LOGIS to substitute the FINEST system; BAUD for movable asset register and do away with the Excel Spreadsheet; and PROMAN (information management system) implemented at the LDPW. • The skills audit being undertaken to focus on essential requisite skills, particularly in the CFO’s Branch, must be accelerated and outcomes implemented.

31. Mitigation / Way forward (cont) • With the assistance of the National and Provincial Treasuries, particularly the national and provincial Accountant-General’s offices, legacy / historic challenges relating to receivables, movables and immovables (especially where there is no available documentation) must be conclusively dealt with. • All officials must play a pivotal role in dealing and finalising the 2013/14 AFS, and the 2013/14 audit processes (the assistance by the PWC-Rakoma Consortium has been crucial in this regard). • The transfers of completed infrastructure projects to the LDPW in terms of section 42 of the PFMA, 1999 must be accelerated. • The condition assessment of the education infrastructure as well as the geo-spatial analysis (both to be conducted by the CSIR) must be conducted and finalised. These projects will ensure proper and focused infrastructure planning, delivery, maintenance, upgrades and refurbishments / construction.

32. Mitigation / Way forward (cont) • CAPS-aligned textbook retrieval mechanism / strategy must developed. • Participation in the contract and records management project, led by the Provincial Treasury must be at high levels of management. • All officials must be responsible for ensuring the sustainability of the intervention, prioritising the identified sustainability projects (focusing on infrastructure delivery; competitive procurement; asset management; contract, data and records management for financial records; CFO support programmes; as well as compliance, interpretation and enforcement).

33. Mitigation / Way forward (cont) • Finalisation of the electronic verification counts of the departmental movable asset register using the BAUD electronic system; as well as the immovable asset register under the leadership of the LDPW. • Adherence to the CPO guidelines in the procurement processes, especially the finalisation of the NSNP costing model and implementation of the costing model for the scholar transport programme. • Consolidation of the EMIS database (for learners) and the PERSAL system (specifically educators) with the outcome of the 2013 physical headcount conducted by Stats-SA.

34. Conclusion – What can be done? • We still have to move from point A to point B. The critical issue is “how” • Non-“business critical” issues must be trimmed. • The Provincial Treasury Instruction Note No. 01 of 2012, & the National Treasury Instruction Note No. 01 of 2013/14 are non-negotiables. • We need to think of ways to improve productivity….