1. Technical Secondary Schools Recapitalisation Grant Framework – 2011/12 Conditional Grant, Division of Revenue Act, 2011, as amended Select Committee on Appropriation 29 May 2012

2. Technical Secondary Schools Recapitalisation Grant Framework Strategic goal To improve conditions of technical schools and modernise them to meet the teaching requirements of learners in the technical fields and increase the number of suitably qualified and technically skilled graduates from these schools Grant purpose To recapitalise up to 200 technical schools to improve the capacity to contribute to skills development and training in the country by: –building workshops at technical schools to support the technical subject offerings; –refurbishing or re-designing workshops in technical schools to comply with safety laws and regulations and to meet minimum industry standards; –buying and installing new machinery and equipment consistent with the technical subjects that are offered in technical schools; and –training and up-skilling teachers at technical schools to acquire new trends, practical skills, and developments in their technical subjects

3. Purpose of the Technology Subjects The four technology subjects of the curriculum (Civil Technology, Electrical Technology, Mechanical Technology and Engineering Graphics and Design) are intended to offer learners elementary engineering and technological skills, which are suitable for (1) the world of work, (2) higher and or further education and training and (3) self employment. _______________________________________________________________ Delivery of Technology Subjects within the Education Landscape According to the Education Management Information System (EMIS) database of 2010, there are 960 public secondary schools offering one or more technology subjects. The grant has identified 200 of the 960 schools for recapitalisation during the period 2010/11 - 2014/15.

4. The profile of the 200 selected Technical High Schools per Province 4 Table 1: Profile of the 200 Identified Technical Schools according to the Audit Results Province Number of Technical Schools per Province Average Number of Technical Subjects Offered per Province Number of Learners enrolled in Technical Schools in Gr’s 10-12 Number of Learners enrolled for Technical Subjects per Province Number of Teachers involved in Technical Subjects Number of new workshops required per Province Number of Workshop Refurbishmen t required per Province Number of teachers identified for Training Number of Workshops to receive Equipment, Tools and Machinery Eastern Cape313.020,2918,948302404130293 Free State183.916,8508,07135832335870 Gauteng423.544,73615,195642744642137 KwaZulu- Natal323.534,13013,6544612550461112 Limpopo243.018,7954,794247272224772 Mpumalanga152.713,2413,344144113214441 Northern Cape103.27,9883,13013231213270 North West193.718,1888,21433511933537 Western Cape93.47,5363,49912812312831 TOTALS2003.3181,75568,8492,7491182662,749663

5. Allocation of Funding for the Grant 5 The Department of Basic Education (the Department) was initially allocated R80 million (2010/11), R200 million (2011/12), R210 million (2012/13 to implement the grant through provinces respectively. During the budget review period of 2011/12 the financial allocations were revised as follows: R210 million: 2011/12 (approval of a roll-over of R10,5 million for EC, MP & LP), R209 million: 2012/13, R221 million: 2013/14 and R233 million: 2014/15. NB: Funds were reduced for the MTEF period (2012/13- 2014/15)

6. Relevance of the Grant to the Department’s Goals 6 The Conditional Grant aims to contribute to the achievement of the following goals and outputs of the Action Plan 2014: Teachers Goal 16: Improve the professionalism, teaching skills, subject knowledge and computer literacy of teachers throughout their entire careers. (GRANT OUTPUT 4) Learner resources Goal 20: Increase access amongst learners to a wide range of media, including computers, which enrich their education. (GRANT OUTPUT 3) School infrastructure and support services Goal 24: Ensure that the physical infrastructure and environment of every school inspires learners to want to come to school and learn, and teachers to teach. (GRANT OUTPUT 1 & 2)

7. Financial Performance over the period 2010/11-2011/12 7 Table 22010/11 2011/12 Variance Province Annual Allocation/ Adjusted Budget Amount Transferred Amount Spent (Excluding Commitmen ts) % Spent on total Allocations Annual Allocation/ Adjusted Budget Amount Transferre d Amount Spent (Excluding Commitme nts) % Spent on total Allocation s % Increase/ Decrease EC9,5493,3426,03063%40,272 34,49286%22% FS7,477 6,75890%14,428 100%10% GP17,944 14,24779%30,596 10,64935%-45% KZN15,275 15,03898%38,563 35,27691%-7% LP8,4792,9682,50029%31,894 11,04335%5% MP5,8692,0541,73830%21,464 21,780101%72% NC3,423 2,68979%7,667 7,829102%24% NW8,6968,6977,59587%17,015 7,66245%-42% WC3,288 3,10394%8,619 8,610100%6% TOTAL80,00064,46859,69875% 210,518 151,76972% -3%

8. Detail Financial Performance for the period 2011/12 8 Province Annual Allocation AmountTransferred Amount Spent perProvince % Spent on ActualPayments/Allocation AmountCommitted toGoods andServices Total AmountSpent (inclCommitments) % Total Spent onTransfers (Incl.Comms) Balance to covercommitmt Total AmountWitheld to date Total AmountRetained/Unspent EC40,272 34,49286%8,75043,242107%5,7800-2,970 FS14,428 100%014,428100%000 GP30,596 10,64935%19,94730,596100%19,94700 KZN38,563 35,27691%3,83239,108101%3,2870-545 LP31,894 11,04335%9,40020,44364%20,851011,451 MP21,464 21,780101%021,780101%-3160 NC7,667 7,829102%07,829102%-1620 NW17,015 7,66245%7658,42750%9,35308,588 WC8,619 8,610100%98,619100%900 TOTAL210,518 151,76972%42,703194,47292%58,749016,046

9. 9 The financial expenditure has declined by 3% compared to the previous period (R60 million of R80 million, 75% in 2010/11 and R151 million of R210 million 72% in 2011/12); The overall expenditure (when financial commitments at the end of the financial period are taken into consideration) is 92%, which is similar to the previous period; The following provinces have recorded expenditure lower than the national average of 70%: Gauteng (35%), (Limpopo (35%), and North West (45%); Limpopo was also part of the under-performing provinces in the previous period; and The following provinces recorded the highest expenditure: Eastern Cape (86%), Free State (100%), KwaZulu-Natal (91%), Mpumalanga (101%), Northern Cape (102%) and Western Cape (100%). It should be noted that three of the six provinces transfer funds directly to schools for implementation. Analysis of Financial Performance for the period 2011/12

10. Non-Financial Performance for the period (2011/12) 10 Table 4: Performance Outputs Projected and Completed for the period (2011/12) Performance OutputECFSGPKZNLPMPNCNWWCTOTAL Projected Actual Projected Actual Projected Actual Projected Actual Projected Actual Projected Actual Projected Actual Projected Actual Projected Actual Projected Actual Target Output 1: New Workshops 2014 008060880030114223 Target Output 2: Refurbishment of Workshops 8264 24443257316 56 1028 247198 Target Output 3: New Equipment 21 442803610242315 56 31728 215174 Target Output 4: Teacher Training 31 55 28 5059140 120 48 100551618588554 Total Targets Projected and Completed 6254137 803213794177166159 160 1077273751,092949 % Completed (Targets)87%100%40%69%94%100% 67%103%87%

11. Non-Financial Performance for the periods (2010/11 - 2011/12) 11 Table 6: Summary Comparison of Non-Financial Performance for the periods 2010/11 - 2011/12 ELEMENTECFSGPKZNLPMPNCNWWC TOTAL S Total Targets Projected 2011/126213780137177159160107731,092 Total Targets Completed (2011/12)5413732941661591607275949 % Completed (Targets) 2011/1287%100%40%69%94%100% 67%103%87% Total Targets Projected (2010/11)151521516717467105342731 Total Targets Completed (2010/11)955214167899104733516 % Completed (Targets) 2010/1163%100%93%100%51%13%100%89%79%71% Variance in Targets Projected (2011/12-2010/11)-898565-303921505431361 Variance in Targets Completed (2011/12-2010/11)-418518-7377150 2542433 % Increase/Decrease in Performance24%0%-53%-31%43%87%0%-21%24%16%

12. The EC achieved 87% of its targets by refurbishing 2 of 8 workshops, supplied equipment for EGD and electrical technology to 21 workshops and trained 31 teachers. The building of new workshops is currently under construction; The Free State, Mpumalanga, Northern Cape and Western Cape completed all their targets for the year. Western Cape trained 2 teachers more than the target. Gauteng is the worst performing province in terms of delivery of outputs because all payment to suppliers were withheld from February 2012 therefore all suppliers could not complete the work at 28 schools. Limpopo and Northern Cape have the highest number of outputs with Limpopo having the lowest expenditure. The lowest expenditure is due to infrastructure costs paid for by the infrastructure budget not the grant within the province. 12 Analysis of Non-Financial Performance

13. Additional Analysis of Annual Performance (Cont.) The following provinces recorded over-expenditure (MP: 1% and NC: 2%). These deviations will be dealt with by provincial treasuries and provincial equitable shares will also be considered to supplement where necessary. Financial commitments for incomplete projects or unpaid invoices (accruals) amounted to R42 million. The most completed output is teacher training (94%), followed by supply of equipment (81%), followed by refurbishment of workshops (80) and the least completed being the building of new workshops (55%). In financial terms, the performance has declined by 3% compared to the previous period (2010/11) at 72% expenditure, however, in non-financial terms, the output performance has significantly improved from 71% to 87% achievement of targets. 13

14. Academic Performance (Learner Participation and Success) 14 Civil TechnologyElectrical Technology Engineering Graphics and Design Mechanical Technology Provinc e Total Wrote Total Passs % Pass Total Wrote Total Passs % Pass Total Wrote Total Passs % Pass Total Wrote Total Passs % Pass EASTERN CAPE6325929448438379189717019052748191 FREE STATE7257149837736095160915799848547598 GAUTENG2184210296128611539067996370941729159092 KWAZULU- NATAL1303127298119810919159995691951287121694 LIMPOPO4023979939735690147514459825424797 MPUMALANGA4494469933131796145314079736234696 NORTH WEST6726559735233495164715939750148497 NORTHERN CAPE15715397132121924454369815815799 WESTERN CAPE170316389627924789250024619852851297 Total822779699748364362902382422683955831550894 The four technology subjects pass rate is satisfactory averaged at 90% but the major concern is the decline in learner numbers over the years for all provinces in all the four subjects, which is not illustrated in the table.

15. Interventions to Improve Learner Participation and Success 15 TABLE 8: REASONS FOR DECLINE OF ENROLMENTSIMPROVEMENT STRATEGY The NCS curriculum has combined 18 subjects into four (4) subjects taking away the specialization component as a result most learners cannot cope with the demand of the subjects; Lack of specialisation does not offer learners sufficient skills for employment; Some learners might have gone to the FET college sector. Negative perceptions around attending vocational school. Most technology teachers leaving the schooling system because they have only specialised in one or two subjects and cannot cope with the demand of the subjects. The design of the subject in the GET phase does not prepare learners for the Technology subjects in FET.  The current review of CAPS to introduce specialisation in the technical/technology subjects will have a positive effect in the content and delivery of the three subjects;  The proposal to introduce technical mathematics and technical science will attract more learners into the technical stream while bringing direct relevance between the content of mathematics and physical science and the technology subjects.  The impact of the ongoing recapitalisation process will provide resources, facilities and assist teachers in the practical teaching methodologies of the subjects; this will further improve the pass rate while attracting more learners into the stream.  The development of a clear articulation model/policy between technical schools and FET colleges will also assist in retaining the learners within the system

16. Challenges and Mitigating factors for the Grant Implementation 16 Table 9: ChallengeAffected ProvincesMitigating Strategy Delays in the development and approval of tender specifications for building and refurbishment of workshops resulted in the annual targets not being met Gauteng, Eastern Cape, KwaZulu-Natal, Limpopo and North West Standard templates for procurement and uniform architectural plans for buildings have been developed at provincial levels. Irregular monitoring, collection of data and reporting resulted in the absence of information to detect early warning signals for underperformance especially Limpopo, Gauteng and Eastern Cape Monthly visits are being undertaken Implementing agencies (e.g. COEGA for EC have dual reporting) Schools also report on a monthly basis to the project manager where necessary The late development of provincial and schools’ business plans delayed the implementation of the grant KwaZulu-Natal Business planning process improved to be completed earlier than previous periods (Jan –cut off date) Unrealistic projections in the business plans and the lack of skills to coordinate the project resulted in the province not meeting its performance targets Eastern Cape Business plans reviewed in partnership with provincial departments such treasury and public works and other implementing agents. The failure to consult other departments and directorates such as Public Works and Infrastructure continue to delay the implementation of building of workshops by the other Departments Eastern Cape, North West and GautengBusiness plans developed and reviewed in consultation with provincial departments such public works and infrastructure directorates.

17. Compliance with the conditions of the Division of Revenue Act, as amended Compliance with section 10(5) of the Act (submission of monthly reports by the transferring department) was met. Compliance with section 12(2) (submission of monthly and quarterly reports by the receiving departments) was met by four provinces (monthly reports) and by all nine provinces (quarterly reports). A concern was however raised with regards to late submission and unapproved/unsigned reports. The application of Section (16)(1)(c) of the Act (withholding of funds for under- expenditure) was effected once and funds were released in January 2012 after significant improvements were recorded. The fulfillment of Section 10(6) of the Act (evaluation of the grant) is currently underway, and will be completed at the end of June 2012. Thirty (30) schools in eight provinces were visited by the project manager as part of the monitoring and support process during the period under review (KZN has not been visited). 17

18. Conclusion The gradual increase in funding between the previous period had a positive effect in the increase of the projected outputs. Overall expenditure has declined by 3%, but the increase in the outputs achieved is a sign that operational systems at provincial and school level are maturing and significant improvements in coordination can now be identified. In order to ensure that improvements are made and sustained, A DEDICATED UNIT TO DRIVE THE IMPLEMENTATION OF THE GRANT HAS BEEN PROPOSED. 18

19. Responses to the Specific Parliamentary Committee Questions Meeting of the Select Committee on Appropriations held on 09 May 2012 19

20. a)What accelerated the expenditure during March in KwaZulu- Natal and Eastern Cape? Expenditure at KwaZulu-Natal and Eastern Cape was accelerated within the last quarter of 2011/12 because both provinces completed their procurement processes late in the year (October 2011). The provinces managed to complete and pay for the minor outputs and the building of new workshops has not been completed at both provinces. b)What guides the implementation of the grant? The conditional grant is guided by the grant framework, which stipulates all the required conditions and responsibilities of each stakeholder, in accordance with the provisions of the Division of Revenue Act, 2011, as amended. 20

21. c)What informs the expenditure at school level? The amount of expenditure at each school is informed by the needs analysis, which was derived from an audit conducted by an external service provider in 2009. The school’s operational plan indicates the requirements according to the minimum specifications developed by the Department. And the school’s information feeds into the provincial business plan. d)Has the grant experienced price escalations and does the Department has control over price escalations? The Department provides allocation of funds to the provinces based on average costs per item but does not have an influence on the final tendered/contracted price at provincial or school level. It has been noticed that price escalations do happen at different provinces such as Eastern Cape and Mpumalanga. 21

22. e)What causes the over-expenditure in other provinces and why provinces must use their equitable share allocations to cover the over-expenditure? Over-expenditure is caused by price escalations, over-allocation of space in architectural plans and professional fees (implementing agency costs). Provinces are mandated to ensure that the grant allocation is not exceeded, and in the case where it has been exceeded, equitable share allocations are used to cover the difference. 22

23. End of Presentation 23