National School Nutrition Programme Conditional Grant spending: National Treasury and provincial departments of Basic Education reports

Meeting report

National Schools Nutrition Programme (NSNP) Conditional Grant spending
National Treasury Presentation
Ms Julinda Gantana, Chief Director, National Treasury, presented the figures for the spending on the National Schools Nutrition Programme (NSNP). She said that overall expenditure for the Eastern Cape, as at 30 June 2010, stood at 15.7%, although it was projecting to under-spend by R101 million. This province had also noted a year-on-year decrease in spending of 18%. Expenditure by the Free State stood at 25.5% and year-on-year spend had grown by 72.3%. Gauteng had also noted a decline in year-on-year spending by 8%. The Northern Cape had spent 24.7% and had noted a year-on-year growth in expenditure of 106%. The North West province had spent 10.3% of its actual budget, and noted a decline in its year-on-year expenditure, of 47%. The Western Cape had spent 17.7% of its budget, while increasing its expenditure by 9% over the same period in the previous year.

On aggregate the provinces had spent R593 million of their total budget of R3.663 billion. Reasons for under-expenditure by the provinces included late approval of tenders (Eastern Cape), the late submission of invoices by suppliers (Gauteng and Western Cape), a large number of claims having to be sent back to districts in order to be corrected and re-submitted (KwaZulu-Natal), delays in the system used to validate claims (Mpumalanga) and delays arising as a result of migrating to the Basic Accounting System (North West).

Gauteng Provincial Department of Basic Education Presentation    
Mr Boy Ngobeni, Head of Department, Gauteng Department of Basic Education, said that his Department was currently providing nutrition to a total of 533 644 learners in Quintiles 1 to 3 primary schools, 85 305 learners in Quintile 4 to 5 primary schools, as well as 176 836 learners in Quintile 1 and 2 secondary schools. It had thus provided nutrition to a total of 795 785 learners, and exceeded its targets. School feeding days had been affected by the World Cup. The Department was projecting to spend R388 million in this financial year. The Department submitted monthly financial reports to the Executive Management team, which was chaired by the MEC. It also submitted these reports to the Senior Management team, which was chaired by the Head of Department. This was in addition to the monthly Matltlo Budget Review meetings held with the Chief Directorates to discuss actual expenditure.

Provincial and District officials monitored 200 schools in 15 districts. Cooperatives were also being established to better assist with the monitoring of this programme. Challenges included pressure on the overall cash resources of the Department, and late payments resulting from service providers sending their claims in late. To address these challenges, the Department and National Treasury, had worked on a plan to ring-fence the cash allocated for conditional grants and infrastructure budgets, and there was success in this, as shown by the improvement in July expenditure. It was also agreed, with the service providers, that internal measures must be put in place in order to rectify the problems. Processing of payments would be made in the second week of each month.

Discussion
Mr M Makhubela (COPE – Limpopo) asked when the interventions to address the late submission of invoices by suppliers were put in place, and how effective the Department’s internal controls had been.
 
Mr Ngobeni answered that the Department had spoken to its suppliers to discuss the issue of submission of invoices. Its finance team had also implemented control measures that would ensure that it could track the process on invoicing. 

Mr C De Beer (ANC – Northern Cape) asked whether the Department had problems around a shortage of funds, and, if so, asked what it was doing with National Treasury to address the problems.

Mr Ngobeni answered that this problem had affected all departments in the province and was therefore not specific to his Department.

Mr B Mashile (ANC – Mpumalanga) asked whether the programme had resulted in an increased enrolment at lower grade level.

Mr Ngobeni answered that the drop-out rates at schools had fallen, largely as a result of this programme. The Department was looking at extending this programme to include school holidays.
 
The Chairperson asked what the total meal cost was, per student per day. He also asked what the meal comprised. He wondered what the impact on the budget was of the Department exceeding its targets.

Mr Ngobeni answered that the cost was R1.85 per primary school learner per day, and R2.40 per secondary school learner per day. The menu varied, and consisted of cereals, vegetables and fish. The targets would not impact on the Department’s budget, which was being managed very carefully.
KwaZulu-Natal Provincial Department of Basic Education Presentation
Dr Cassius (R) Lubisi, Superintendant-General, KwaZulu-Natal Provincial Department of Education,  said that this Department had spent 16% of its budgeted allocation. The under-expenditure had resulted from many invoices either not being captured or having arrived late, as a result of the early closure of schools in June. The programme’s growth had not been matched by a growth in the administrative capacity, largely due to cost-cutting measures. The Department had employed contract workers, in order to increase the programme’s ability to process payments to service providers. The payment process was also being reviewed, in order to reduce bottlenecks.

He reported that personnel at both provincial and district levels monitored operations at school level and dealt with the processing of claims. On-site physical inspections were also conducted. Claims were also examined in order to ensure compliance with the programme specifications, and to check that claims were in line with budget allocations and were for the approved schools. Challenges included the increased volume of claims, high food costs (especially of vegetables), lack of or inadequate kitchens and/or food storage spaces, making cooking problematic on rainy days, a shortage of water in rural districts and the late or non-submission of claims by suppliers.

Discussion
Mr Makhubela asked how effective the department’s internal controls were. He asked what the Department was doing to train service providers to avoid the submission of inadequate invoices. He wondered what was being done to address cooking problems on rainy days.

Dr Lubisi answered that his Department’s internal controls were strong. The Department was training service providers around the invoice issues, so the extent of the problem was being reduced. Problems, however, arose with the introduction of new, untrained service providers. School Governing Bodies were also being trained in this regard. Feeding was done on rainy days, but with difficulty. Though infrastructure backlogs had exacerbated this problem, some schools used unused classrooms to prepare meals on rainy days, while others were provided with mobile kitchens.

Mr De Beer asked how the lack of growth in administrative capacity affected service delivery. He asked what the Department was doing, together with other relevant departments, to address the challenge of water scarcity in rural districts.
 
Dr Lubisi answered that this issue was not limited to his Department, but was a provincial issue. Though were definitely knock-on effects for the delivery of services, the Department tried to limit these. Some schools in the province had successfully employed creative means of addressing water scarcity. Rain harvesting systems at schools had helped alleviate this problem, though the success of this method was still dependent on the amount of rainfall.

Mr Mashile asked whether the programme had resulted in an increase in enrolment at lower grade level. He also wondered if the employment of contract workers was in line with Government objectives of providing decent work.

Dr Lubisi answered that he could not answer this with any certainty, but it seemed that attendance figures had been boosted as a result of this programme. The contract workers employed were not supplied by labour brokers. The Department was adhering to the principles of decent work when filling these temporary posts.

The Chairperson asked what the total meal cost was per student per day, what was the menu, how many learners were benefitting from the programme, and to what extent the increase in the number of learners being fed would impact on its budget.
 
Dr Lubisi answered that the unit cost per learner per day was R2.90 at primary school and R3.25 at secondary school. The menu consisted of a starch, vegetables, soya (limited to twice a week), canned fish and soup. The programme was benefitting 1 801 343 learners. As the budget was ring-fenced, there would be no problem of budget.

Western Cape Provincial Department of Basic Education Presentation
Mr Donald Grant, MEC for Education, Western Cape, said that the NSNP was currently benefitting 350 079 learners across 998 primary and secondary schools in the Western Cape. The province’s budget allocation for this grant was R173.3 million. It had spent 17.67% of its allocated budget. This under-expenditure was due to the reduced number of school days in June, as a result of the World Cup, as well as the late submission of invoices by suppliers. Although the Provincial Department of Basic Education had adequate expenditure monitoring capacity, additional field workers would be required to increase the monitoring capacity of implementation. 95% of its budget was used for feeding learners, with the balance being used to cover administrative costs. The quality of meals had increased, with learners receiving cooked meals every day, which included vegetables and tinned fish. There was a concern around the public servants’ strike affecting the number of school feeding days.

Discussion   
Mr Makhubela asked for the names of the targeted schools.

Mr Grant answered that this information could be provided to the Committee in writing.
 
Mr Mashile asked whether the programme had resulted in an increase in enrolment at lower grade level.

Mr Grant answered that his Department’s research had found that there had been an increase in enrolments as a result of the programme.

The Chairperson asked what the total meal cost was per student per day.

Mr Grant answered that this cost was R2.30 at primary school and R3.25 at secondary school level.
 
Northern Cape Provincial Department of Basic Education Presentation
Ms G Cjiekella, MEC for Education, Northern Cape, said that her provincial Department had spent 25% of its allocated budget in the first quarter. The targeted number of learners reached and school gardens had been exceeded. The total meal cost per learner per day was R1.90 at primary school and R2.50 at secondary school level. Garden caretakers were not employed, as their documentation had not been provided. This issue was being addressed. In terms of monitoring, quarterly meeting were held. Schools were also provided with cell phones in order to better assist in communication.
 
Discussion
Mr Makhubela asked what was being done to address the moratorium on the filling of vacancies. He also asked whether service providers were not screened to ascertain their skills, prior to them being awarded contracts.
 
Ms Cjiekella answered that the moratorium was placed on the filling of vacancies as a result of financial challenges that the Provincial Department had inherited. This impacted negatively on service delivery. The vacancies were currently in the process of being filled. Provincial Treasury had also assisted the Department to deal with this challenge.
 
Mr De Beer asked where the Department stood in terms of its previous over-expenditure, the Auditor-General’s report, and what had been the interaction with the Department of Agriculture around the issue of gardening equipment.

A representative of the provincial Department answered that the two departments were collaborating with each other under the Food Security Programme and the provision of equipment for the development of food gardens at clinics and schools.

Mr T Harris (DA – Western Cape) asked why there had been such a dramatic variance in year-on-year spending.

A Departmental representative answered that the Department had been allocated an additional R29 million from the baseline budget.

North West Provincial Department of Basic Education Province 
Mr M Seakamela, Head of Department, North West Provincial Department of Education, said that the total meal cost per learner per day was R2.30 at primary school level and R3.25 at secondary school level. Procurement in the province had been decentralised so as to improve the quality of services provided. Funds were transferred to schools in advance. Guidelines were set for the use of these funds and the usage was also monitored closely by the support staff provided. Currently, 746 000 learners were being fed through the programme. This Province had spent 10.6% of the actual budget, and under-expenditure was due to its migration to the Basic Accounting System (BAS). Monitoring was done by designated officials, and expenditure reports were submitted monthly. Reporting on progress of the programme’s implementation was a standing item during Senior Management meetings.

Discussion
Mr D Beer asked whether National Treasury could assist in with the challenges around BAS. He also asked what was being used currently in schools where there were no cooking utensils.
 
Mr Seakamela answered that this problem had been overcome, with the assistance of the Provincial Treasury, and arrangements had been made in respect of the timing in the financial year, so that by the time schools became part of the programme, their utensils were in place. At the moment, these schools were not part of the programme.

Mr Mashile asked how payments of financial allocations were made to schools.

Mr Seakamela answered that monies were transferred on a monthly basis.

Mr Harris asked how it was possible that there could still be under-expenditure if the money was transferred to schools. He asked about the cost implications of the decentralisation of procurement.
 
Mr Seakamela answered that the Department had, by April 2010, transferred all the monies to the relevant schools as required by the Provincial Treasury. This money was taken from funds outside of those set aside for the grant.
 
Eastern Cape Provincial Department of Basic Education Presentation
Ms Philiswa (M) Mdikane, Chief Financial Officer, Eastern Cape Provincial Department of Basic Education, said that there had been a growth in the number of learners reached through this programme. Expenditure stood at 15.7%. Reasons for under-expenditure included the loading of conditional grant only in April (due to conditional grant codes), which allowed for payments to be made only in the last week of April, the slow and late submission of 1401 BAS entity forms by schools and the non-awarding of the NSNP tender. Capacity problems in the programme were being addressed through assistance from the Payment Directorate. An audit team had also been appointed to deal with payment backlogs. The Memorandum of Understanding signed with the King Hintsa Further Education and Training (FET) College had been extended to provide Quintile 3 and primary schools with mobile kitchens and feeding utensils in the current quarter. Monthly monitoring reports were submitted to FinComm. Compliance with menus and supplier performance was monitored by district and Head Office staff, and action was taken against non-performing suppliers. In addition, regular monitoring visits were undertaken by district staff. Challenges included the non-awarding of previous years’ rollovers in paying backlogs, unauthorised spending as a result of continuous feeding of learners in Quintile 4 and 5 schools, delays in the awarding of tenders, weaknesses in monitoring, and staff shortages in the NSNP Directorate. This Provincial Department would be making application for a rollover, or additional funding. Feeding of learners in Quintile 4 schools would end in October 2010, and these schools would be included in the 2011/12 Business Plan for the programme. The NSNP tender would be awarded in the first week of September 2010. Monitoring of the programme would be improved.

Discussion   
Mr Makhubela asked how big the backlog was, and how often there had been labour unrest.
 
Mr Mahlubandile Qwase, MEC for Education, Eastern Cape, answered that an audit team had been appointed to ascertain the exact extent of this backlog. This had happened frequently enough for the department to have to interdict these workers.
 
Mr Mashile asked how the employment of contract workers spoke to Government’s objective of decent work, and how the continuous extension of contracts affected service delivery.
A Departmental representative answered that this assistance came through the Department of Education, who would assist with monitoring.
 
Mr Qwase conceded that this was a reflection of poor supply chain management on the part of the Provincial Department. However, this was being addressed by the recent appointment of a Chief Director.

The Chairperson asked what the reasons were for the rollover application being declined.

Mr Mdikane answered that this was a result of the Department’s poor spending on the programme, which had resulted from disruptions caused by challenges with the service providers.
 
The meeting was adjourned.