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Mangaung Metro Budget Performance Overview

Engage with finance committee on budget development, MFMA compliance, grants performance, intergovernmental relations, service delivery, and capacity constraints in Mangaung Metro. Includes council structure and alignment of IDP with PGDS.

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Mangaung Metro Budget Performance Overview

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  1. CITY OF MANGAUNG PRESENTATION TO THE SELECT COMMITTEE ON FINANCE AND APPROPRIATIONS Sandile Msibi CITY MANAGER 8 September 2011

  2. Outline of the Presentation • Purpose of the Presentation • Municipal Overview • Alignment of IDP and PGDS • Performance of Grants • Budget Performance • Compliance with the MFMA • Service Delivery and Capacity Constraints • Intergovernmental Relations

  3. Purpose of the Presentation • To engage with the Committee on the following issues: • Development and Implementation of Mangaung Budget • Compliance with MFMA • Spending and Performance with Regards to Conditional Grants • The Relations Between the MMM and Various National and Provincial Departments. • Service Delivery and Capacity Constraints. • Alignment of MMM’s IDP with the Provincial Growth and Development Strategy(PGDS)

  4. Purpose of the Presentation • To engage with the Committee on the following issues: • Development and Implementation of Mangaung Budget • Compliance with MFMA • Spending and Performance with Regards to Conditional Grants • The Relations Between the MMM and Various National and Provincial Departments. • Service Delivery and Capacity Constraints. • Alignment of MMM’s IDP with the Provincial Growth and Development Strategy(PGDS)

  5. OVERVIEW OF MANGAUNG METRO • Covers three towns, with rural surroundings • Bloemfontein • Botshabelo (55km east of Bloemfontein), and • Thaba Nchu (12km east of Botshabelo) • Dec 2000, led to formation of Mangaung Local Municipality, Category B • May 2011, elevated from category “B” municipality to a category “A” metropolitan municipality • Mangaung covers 6 863 km² 55

  6. OVERVIEW OF MANGAUNG METRO • Provincial Capital of Free State • Gateway to Central Region • Judicial Capital of South Africa • Bloemfontein is the sixth largest city in South Africa 66

  7. OVERVIEW OF MANGAUNG METRO THABA NCHU CITY OF BLOEMFONTEIN BOTSHABELO Mangaung 6 604 square kms

  8. UNEMPLOYMENT LEVEL • More than 50% of the people earning less than R1000 per month. • Botshabelo, Thaba-Nchu and Mangaung township residents are the worst affected. • Mangaung economy driven by service industry 88

  9. COUNCIL STRUCTURE • MMM consists of 97 Councilors: • 49 ward councilors; • 48 councilors representing political parties appointed on a proportional basis • 1 Executive Mayor (full-time) • Councilor Thabo Manyoni • 1 Deputy Executive Mayor (full-time) • Councilor Mxolisi Siyonzana 99

  10. COUNCIL STRUCTURE • 1 Speaker (full-time) • Councilor Connie Rampai • 10 Members of the Mayoral Committee (full-time) 1010

  11. COUNCIL STRUCTURE • There are 10 Portfolio Committees each chaired by a Mayoral Committee member: • Infrastructure & Services • Rural Development & Environment • Finance • Planning • Transport, Security & Emergency 1111

  12. COUNCIL STRUCTURE • Economic Development & Tourism • Human Settlement • Corporate Governance • Health & Social Development • Community participation and IDP 1212

  13. Alignment of IDP and PGDS • Planning and budgeting in the Municipality takes place within the framework of a number of strategies • These include the IDP which plays a critical role in informing the Municipality’s medium-term planning and the PGDS informing the municipality and the province’s long range planning • The Municipality’s Spatial Development Framework is also crucial in providing a spatial context within which IDP programmes and projects are contextualized

  14. Alignment of IDP and PGDS (2) • While the PGDS charts the long-term strategic course and makes overarching decisions about what emphasize if the Municipality is to accelerate growth and development, the IDP defines where we want to be after five years, and how we intend to get there • The PGDS is consciously aligned to the Municipality’s IDP (medium-term plan) • This practice will remain ensuring that the PGDS is translated effectively into medium-term pragmatic operational planning and budgeting

  15. Grants Performance

  16. Grants Performance (2)

  17. Grants Performance (3)

  18. Reasons for Variance • Infrastructure • MIG Capacity Building - R242 468,48 • MIG Grant - R62 689 011,12 • Prov. Grant: Operation Hlasela - R26 423 366,74 • Prov. Grant: Du Plessis & Muller Intersection - R554 639,58 • Prov. Administration Grant - R7 845 754,58 • Motheo Grant: Upgrading Roads - R1 259 252,19

  19. Reasons for Variance (2) • Economic Development & Planning • PTIS - R100 115 219,01 • Prov. Grant: Planning & Survey - R493 143,56 • Urban Renewal Grant - R280 553,14 • Prov. Grant: Township establishment Caleb Motshabi - R147 238,87 • Prov. Grant Transfer: Grasslands - R4 500 000,00

  20. Reasons for Variance (3) • Housing • Housing Accreditation Subsidy - R3 422 275,42 • White City Hostels - R 42 208,12 • Prov. Grant: Batho Project – Housing - R1 749 275,48 • Urban Settlement Development Grant - R6 505 054,35

  21. Reasons for Variance (4) • Community & Social Development • Provincial Grant: CCTV BFN CBD, Stadium & Naval Hill - R130 850,75 • Motheo District Municipality Grant Environmental Health - R10 680 300,94 • COGTA Fire Suppression - R82 816,58 Centlec • National Electrification Programme - R1 959 038,99 • Demand Site Management - R1 578 868,90

  22. Achievements • Financial Management Grant • Support of five (5) Finance Interns • Caseware support for Accounting and Compliance Division • Budget and Treasury Office Support: • Credit Rating • Budget Reforms

  23. Achievements (2) • Municipal Systems Improvement Grant • Asset Management Division ( R685 144,86) • Training for the ASM personnel • Created twenty (20) temporary jobs for unemployed matriculates for a period of 6 months as asset counters • Facilitated out movable asset project count

  24. Achievements (3) • Supply Chain Management (R750 000) • These funds were used for the implementation of the e-filing system • The system was commissioned to address the problem of lost documents during Auditor General audits • In terms of the system all documentation is scanned and stored electronically • Original documents are stored outside the municipality

  25. Budget Performance • Revenue per Source (actual versus budgeted revenue) • Operating Expenditure per Type (actual versus budgeted expenditure) • Growth in Budget and Factors contributing to growth • Capital Budget by funding Source • Grant Dependency - Capital • Grant Dependency - Operating • Revenue Collection - Rates and Debtors • Salaries Percentage • Repairs and Maintenance

  26. Revenue Per Source

  27. Operating Expenditure per Type

  28. Growth in Budget

  29. Growth in Budget • Notes on the increase of the operating expenditure: • Personnel costs increase is based on an 8% salary increase and include salaries of ninety (90) staff members from the former Motheo District Municipality • Clr remuneration includes an increase in the number of clrs • Repairs and maintenance has increased by a massive 36% in order to address the ageing roads and infrastructure • R5m has been provided to cover outstanding commitments of the former Motheo e.g auditing costs and building lease

  30. Growth in Budget

  31. Growth in Budget • The revenue is based on the following: • Tariff increases: water 10%, Electricity 26%, Rates 12% and General tariffs 10% • Fuel levy of R175m. First time inclusion as a result of our status as a metro • Grants and subsidies of more than R1 billion • Rates Levy constitutes 65% of total revenue

  32. Capital Budget by Funding Source

  33. Grant Dependancy - Revenue

  34. Grant Dependency - Capital

  35. Revenue Collection - Rates and Debtors

  36. Revenue Collection - Rates and Debtors

  37. Government Debt

  38. Revenue Collection - Rates and Debtors • Measures employed to reduce debt • Government debt • On-going reconciliation are being effected monthly for payments made to the municipality and how they were allocated on the system. • Currently, when the Department of Public Works effects a lump sum payment to the municipality they also send through an allocation in order to ensure that the amounts are allocated accordingly to the correct accounts. There is a continuous reconciliation of records conducted frequently. • Also, there has been an engagement between the Department of Education and the municipality to address the debt owing by schools.

  39. Revenue Collection - Rates and Debtors • Other Debt • Audits of households and businesses are being performed to verify existance of meters and readings. • Indigents are identified and registered as they become identified during the audits. • Disconnections of electricity supplies are actively implemented. • We are introducing the installation of pre-paid water meters. These have already been installed in municipality owned properties.

  40. Salaries Percentage

  41. Repairs and Maintenance

  42. Repairs and Maintenance (2)

  43. Compliance with MFMA • Supply Chain - All bid committees are in place and functioning properly • Each directorate have a specification and evaluation committee. The bid adjudication committee is centralized and is comprised of Executive directors as members and is chaired by the CFO • SCM policy is in place and was approved in 2005 and amended in 2010. The policy complies with the regulations in terms of sec 68 of the MFMA

  44. Compliance with MFMA (2) • Reporting • Sec 71 reports have been submitted regularly to National Treasury • Quarterly sec 52 reports and SCM quarterly reports have been submitted to Council meetings • Budget was approved before the beginning of new financial year and Annual Financial Statements have been submitted on time for the past five years

  45. Compliance with MFMA (3) • All executive positions have been filled. Finance directorate consists of the following sub-directorates; Financial Management, Supply Chain Management, Revenue Management, Asset Management and Compliance Division. • Audit committee is in place and functioning. • Challenges • MFMA compliance deadlines are not met. • Oversight committee not sitting. • Past three years receiving disclaimers opinion mainly as a result of lack of compliant asset register. Service provider has been appointed to compile the register.

  46. Service Delivery and Capacity Constraints • Electricity • Water and Sanitation • Refuse Removal • Roads • Indigents • Targeted Backlog vs Actual Achieved per Area

  47. ELECTRICITY • Electricity is supplied by Centlec, a wholly owned entity of the Mangaung Metropolitan Municipality. • Challenges faced by the entity are: • Maintenance backlogs and the rising refurbishment costs • Annual growing Eskom account. The entity will not be sustainable in the long term. For example • 2006- Bulk purchases accounted for 55% of opex • 2011- bulk purchase account for 70% of opex • 2016-Bulk purchases will account for more than 95% • Entity loosing money as a result of high number of Illegal bridging and poor management

  48. Water and Sanitation • Water and sanitation bulk services need to be extended beside the connection backlogs as follows: • There are 14 reservoirs in the Botshabelo area of which 4 are owned by Bloem Water. Six of MMM reservoirs have a storage shortfall of 15ML • There are 5 reservoirs in the Thaba Nchu area of which 4 are owned by Bloem Water. The 4 Bloem Water reservoirs has a total shortfall of 23.2Ml but will be augmented by an internal MMM reservoir – currently with a shortage of 24,5 ML • MMM has 9 Waste Water Treatrement Works (and 1 at the Air Force Base owned and operated by Public Works) of which 5 are Activated Sludge (AS) type, 3 are Bio Filter (BF) type and one an Oxidation Pond (OP) type. Bloemspruit and Sterkwater are overloaded to the equivalent of 17 740 and 23 220 (17 480 + 5740) stands respectively

  49. Refuse Removal • Challenges that are experienced with refuse removal: • Unreliability of older compaction vehicles and heating problems with new compaction vehicles that results in an average availability of less than 50% of the compaction vehicle fleet • Long turn-around times for repair of solid waste management fleet at Mechanical Workshop • Number of vacancies amongst solid waste staff (both operational and supervisory staff) • Low % of vehicle availability and high level of vacant posts leads to increased overtime which increases costs of prescribed level of service delivery

  50. Refuse Removal (2) • Number of compaction vehicles and staff have not increased equally in relation to increase in households that needs to be serviced placing additional pressure on already over-stretched resources • Volatile labour environment which is characterized by wildcat strikes and go-slows • Ageing workforce that finds physical work more demanding • Continued focus on waste collection due to lack of resources leaves little room for focus on other legislative issues such as separation at source and recycling

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