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Presentation by Koko Mashigo Chairperson – PSETA Board

Portfolio Committee: Higher Education and Training 31 October 2012. Presentation by Koko Mashigo Chairperson – PSETA Board. Outline. Mandate.

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Presentation by Koko Mashigo Chairperson – PSETA Board

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  1. Portfolio Committee: Higher Education and Training 31 October 2012 Presentation by Koko Mashigo Chairperson – PSETA Board

  2. Outline

  3. Mandate • PSETA is established in terms of the Skills Development Act (SDA) and listed as a Schedule 3A public entity reporting to the Minister of Higher Education and Training (MHET), as the Executing Authority • Legislative mandate derived from the SDA, Skills Development Levies Act (SDLA) and Public Finance Management Act (PFMA) and National Skills Development Strategy (NSDS III) • Mandate: To identify skills shortages, facilitate education & training, encourage the investment in skills development to increase competence and capacity in the PS sector to improve service delivery • This includes development of the SSP, quality assurance functions, occupational qualifications and accreditation of training providers e.g PALAMA and Sectoral/Provincial Academies

  4. Strategic Objectives • Ensure that the public service sector skills needs are well documented • Facilitate the implementation of PIVOTAL programmes in the public service sector in partnership with FETs and HEIs • Facilitate the development and provision of demand led skills programmes and upgrading of existing skills for sector employees for improved delivery of the business of government • Raising the bar for the underqualified • Ensure continuous monitoring and evaluation towards improved service delivery • Ensure quality of learning • Ensure the public service sector capacity for service delivery is improved

  5. Strategic Objectives …… • Empowerment of economically marginalised groups: youth, women, the disabled in rural and peri-urban communities– against the 7 key developmental and transformational imperatives in NSDS III • To equip and empower public FET colleges for greater contribution to skills development in the country • Partner with knowledge generation entities for credible data and information to enhance planning, decision making and service delivery • Development, review and implementation of appropriate policies, processes and procedures • Effective communication and marketing of PSETA business • Ensure that PSETA has a sustainable funding model

  6. Highlights and Achievements • Securing of National Skills Fund (NSF) funding for core business projects; • Evidence-based Sector Skills Plan (SSP) and Sector Career Guide (SCG) updated and the latter distributed; • Launch of a Shared Services Mobile Career Guidance Campaign in rural areas; • Capacity building among Skills Development Facilitators and within Training Committees; • Engaging with Further Education and Training (FET) Colleges and Higher Education Institutions (HEIs) and registering two learnerships; • Establishing an in-house Trades and Artisan Unit staffed by a Trades and Artisan Specialist and partnering with the National Artisan Moderating Body, DPSA, GSETA Forum, Premiers’ Offices and other SETAs in joint skills development initiatives; and

  7. Highlights and Achievements • Initiating a training provider accreditation and capacity building project as well as research projects on Trades and Artisans and the Recognition of Prior Learning (RPL); • Key strategic policies were developed and are being implemented.

  8. Funding • PSETA depends on the Treasury Allocation for operations – R21 million for 2011/12; The allocation is channeled via the DPSA through quarterly draw-downs; • MHET and MPSA established an Inter-Ministerial Task Team in 2010 to develop a viable funding model for PSETA, consisting of representatives from DHET, DPSA and National Treasury; • We are awaiting the finalisation of the funding model – Impacts on implementation of strategic plan; • DHET is finalising a cabinet memo based on the work of the IMTT;

  9. The Proposed Funding Model • Funding proposal is that government departments utilise the 1% of training budget as follows: • 30% of 1%to SETAs (10% of 30% for operations, 20% for discretionary grants) • 20% for initiatives for unemployed youth • 50% for serving employees

  10. Report of the Auditor General Background • In the prior year the Auditor General issued a disclaimer of opinion in their report of the financial affairs of the PSETA. • This was due to the NSF funds that were received in the 2004/5 financial year. • In 2004/5, the PSETA undertook to run Learnership project funded by the NSF with a budget of R107 million • The actual monies transferred to the PSETA for this project was R97 million

  11. Report of the Auditor General… • This project was characterized by fraudulent activities, lack of proper records, non-cooperation with the audits and gross negligence • The NSF could only verify expenditure to an amount of R60 million, hence the liability of R30,7 million in the prior year’s annual report. • In the 2011/12 financial year, management implemented a plan to address the disclaimer issue by searching for the relevant supporting documentation in 5 provincial departments where this project was implemented. • Management’s plan proved to be successful as the NSF-deferred income liability was reduced from R30,7 million to R6,1 million to the satisfaction of the Auditor General.

  12. Report of the Auditor General… • As a result of the movement in the NSF liability mentioned above, PSETA was able to move from a DISCLAIMER OF OPINION into a QUALIFICATION in the 2011/12 financial year. • The report of the Auditor General also indicated a number of other areas of improvement relating to procurement and expenditure management, risk management, IT governance and reporting on predetermined objectives. • The Special Investigations Unit has been tasked by PSETA to investigate matters relating to the 2005/06 financial years fraudulent activities that occurred as a result of the misappropriation of NSF funds.

  13. Annual Financial Statements Revenue • The PSETA does not receive levy payments from the constituent government departments • Getting instead, an operational allocation from National Treasury via the DPSA for the MTEF period as follows:

  14. Annual Financial Statements… • Due to re-establishment during 2011/12, the PSETA expenditure exceeded its R21,108 million allocation by R2.6 million which the DPSA graciously funded • The current baseline allocations increased by 4.6% in the 2012/13 and will increase by 4.5% in the 2013/14 financial years. • While expenditure is expected to increase by 5.7% in 2012/13 and 5.9% in 2013/14 as per National Treasury guidelines. • This is an indication that the current baseline allocation is not adequate to fund the PSETA operations • PSETA received minimal amount levies from some parastatals and public entities, including National Nuclear Regulator, Gauteng Partnership to mention but a few amounting to R1.355 million

  15. Annual Financial Statements… Expenditure • Employer grants and projects expenses amounting R427 000, which includes Mandatory grants (R132 000) & Discretionary grants (R295 000) • PSETA was able to experience a surplus of R1.174 million as a result of the additional funding of R2.6 million received from DPSA which was committed at year end, but spent in the new financial year • The 18% increase in the cash & cash equivalents was due to the NSF funds transferred to the PSETA from NSF to fund for NSF projects.

  16. Annual Financial Statements… • The administration expenses are used up as follows:

  17. The Challenges • PSETA is financially depressed as it receives no levy payments from government departments • Financial transgressions during 2005 – 2010 have been referred to the SIU for investigation ; Presidential proclamation has been issued • A Lease Agreement was entered into in July 2010 by previous Board, without following proper SCM procedures – irregular expenditure of R5 million per annum. Building too big and expensive, not disability friendly – process to negotiations to exit agreement in an amicable way.

  18. Action Plan to Address Audit Findings • QUALIFICATION ISSUE • PSETA is qualified on the closing balance of deferred income liability amounting to R6.1 million to resolve this issue, we will continue searching for the outstanding information • Since SIU has indicated that the proclamation has also been approved by the President, we will also engage with them to prioritise supporting documentation relating to the R6.1 million • A strategic support plan has been developed to address all the issues that were raised by the Auditor General in their 2011/12 financial year audit. • The plan is available on request and it indicates the deadlines and actions done or to be done to address the issues raised by the Auditor General.

  19. Conclusion • All the PSETA projects are of strategic importance and are addressing NSDS III objectives; • Significant progress was made in repositioning a restructured organisation to regain relevance and stakeholder confidence; • Board exercised its oversight role in the implementation of policies and processes to address the PSETA’s internal control weaknesses and aligned the organisation with its statutory requirements; • This is a step in the right direction: much can still be achieved hence the significance of a sound funding model for the entity

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