1. Province of the Eastern Cape Department of Health Report on Conditional Grants Presented by the Hon MEC for Health on May 3, 2006 to the Select Committee on Finance National Parliament Cape Town

2. Outline of Presentation
Conditional Grants managed by the department and their brief purpose in terms of the Division of Revenue Act.
Statistics on Conditional Grants for the financial years 2003/04 – 2005/06
Highlights of 2005/06 Expenditure
Management & monitoring of Conditional Grants
Challenges faced in the management of the grants
Service Level Agreements

3. Conditional Grants Managed by the Department
The department manages the following Conditional Grants:
Health Professions Training & Development Grant
Comprehensive HIV/AIDS Grant
Hospital Management & Quality Improvement Grant
Hospital Revitalization Grant
Integrated Nutrition Programme Grant
National Tertiary Services Grant
Forensic Pathology Grant

4. Trend in Conditional Grants Funding
2004/05
R’000
2005/06
% Increase (Decrease)
National tertiary services
272,036
353,022
29.77
Health Prof Tr & Develop
97,464
127,566
30.88
HIV/AIDS
98,970
159,005
60.65
Hospital Revitalization
116,354
157,732
35.56
Integ Nutrition Prog
23,933
26,313
9.94
Hospital Magt
19,529
24,531
25.61

5. Conditional Grants – Allocation, Transfer & Expenditure – 2004/05

6. Graphical Presentation of the Allocation, Transfer & Expenditure of Conditional Grants– 2004/05

7. Conditional Grants - Allocation, Transfer & Expenditure – 2005/06
Variance
% of Variance over Allocation
Health Prof Training
137,566
127,566
131,958
5,608
4.07
HIV/AIDS
159,005
161,489
-2,484
-1.56
Hospital Management
24,531
18,399
23,402
1,129
4.6
Hospital Revitalization
147,732
153,864
120,476
27,256
18.5
Nutrition
26,316
24,655
1,661
6.31
Tertiary Services
384071
353,022
365,093
18,978
4,94
Forensic Pathology
8,866
965
7,901
89.01

8. Graphical Presentation of the - Allocation, Transfer & Expenditure - 2005/06

9. Capital Expenditure – 2005/06
Funding Source
Allocation
2005/06
(R’000)
Expenditure 2005/06
Variance %
Conditional Grant
(Transfer from NDoH)
147,732
120,478
27,254
18.5
Equitable Share
390,964
308,467
82,497
21.1
Total Capex
538,596
428,965
109,631
20.3

10. Highlights of 2005/06 Conditional Grants Expenditure
Expenditure on Health Professionals Grants was under-spent by 4.7% of the budget allocation
Expenditure on HIV?AIDS was % of allocation. The grant was overspent 1.56%.
Hospital Management grant was also over-spent by 31.17%
Hospital Revitalization was under-spent by 18.5%
Nutrition was under-spent by 6.31%
Tertiary Services was under-spent by 4.94%. Subsequent journals passed in late March 2006 will put the expenditure to 100%.
Forensic Pathology was under-spent by 93.1%. Transfer of the grant from National Treasury to Provincial Treasury only took place in December Thus the appointment of a project manager and procurement of vehicles and equipment could not be done before the financial year ended.

11. Management & Monitoring of Conditional Grants
All Conditional Grants are managed and the expenditure monitored in the following ways:
Analysis of monthly expenditure reports – the In Year Monitoring (IYM) reports that are submitted to Provincial Treasury in terms of the PFMA. The IYM reports give good indications of the level of expenditure on each grants every month. Programme managers use the reports as tools to revise their expenditure plans for the rest of the financial year.
The department again uses the Budget & Expenditure Committee meetings that are held fortnightly to discuss issues regarding the expenditure of both equitable share of the budget and conditional grants. Programme managers submit reports on the activities they engaged in during the past weeks and plans for the following week. Challenges in meeting monthly or quarterly targets are discussed and solutions found in the meetings.

12. Management & Monitoring of Conditional Grants (Cont’d)
Quarterly performance reports are prepared in respect of non-financial data and submitted to National Treasury via Provincial Treasury. These reports highlight the actual performance achieved with the grants - in line with what they were meant for. For example, the number of nurses or doctors under training; progress on hospitals and other health facilities renovations or construction; the number of mothers and babies that received nutritional supplements during a particular month; the number of a target group (eg taxi drivers) that received brochures or information pamphlets on HIV&AIDS.
Site Visits. For example health facilities under renovation or construction are frequently visited to make sure that the projects are proceeding according to plans. The site visits also reveal all the challenges that may have to be dealt to ensure the completion of the projects on time.
A Monitoring and Evaluation Unit has been established in the Office of the Head of Department to collect data on the performance of all programmes, including Conditional Grants, and report on to the Executive Management Committee meeting.

13. Management & Monitoring of Conditional Grants (Cont’d)
A Functionality and Effectiveness Assessment Team has been established to evaluate the performance reports and assess the effectiveness of the interventions funded by both equitable share and conditional grants. For example the effectiveness of the nutritional supplements given to mothers and their babies are assessed in terms of the well-being of the mothers and their babies.
Ad hoc Visits to sites where both Equitable Share and Conditional Grants projects are being carried out, especially in the Walter Sisulu University where the department has a service level agreement with the institution on many areas of health professionals training and development.
Planned Audit Reviews by the Internal Audit Unit also take place.

14. Management & Monitoring of Conditional Grants (Cont’d)
In some programmes, Project Managers have been employed to manage the projects funded by Conditional Grants. The roles and responsibilities of these project managers are defined to include:
Planning
Monitoring implementation
Reporting and
Evaluation of performance

15. Challenges Faced in 2005/06
Hospital Revitalization and Capital Expenditure
The Conditional Grant for Hospital Revitalization was under-spent by R27.3 million ie 18.5%. Reasons are as follows:
Construction of 3 major projects stalled because of litigation over the contracts by some of the bidders.
The Department planned to use Independent Development Trust (IDT) and Coega Development Corporation’s Rapid Infrastructure Development Agency (RIDA) as its infrastructure development implementing agents because of the capacity problems with the Department of Public Works. Unfortunately Service Level Agreements could not be entered on time with these agents and as a result the projects could not take off.
New policies were issued after tenders had been issued out, such as the Expanded Public Works Programme, the new formula for awarding contracts etc. This necessitated the re-tendering of some contracts thus causing undue delays.
Many SMMEs have challenges regarding the raising of initial finance and managing cash flows. This impacted on the completion of certain projects.

16. Challenges Faced in 2005/06
Hospital Professionals Training & Development
Grant was under-spent by R5.6m or 4.1%
Reasons are as follows:
Transfer of the funds from National was delayed by two months. It was received in June 2005 and this impacted on the expenditure plans.
Invoices in March 2006 for some equipment – IT equipment and Video-Conferencing could not be processed prior to the end of the financial year in March 2006.

17. Challenges Faced in 2005/06 Tertiary Services
This grant was under-spent by R18.9m or 4.94%.
- The challenge with this grant is that expenditure is most often misallocated to Equitable Share in BAS because of its nature.
- The misallocations that occurred in March 2006 have been corrected by means of journals and the final March IYM report will show an under-expenditure of less than 1%.

18. Challenges Faced in 2005/06 HIV/AIDS
This grant was over-spent by R2.5m or 1.56%
Services happen at LSA levels and therefore it is sometimes difficult to control expenditure. Late capture of some LSAs expenditure for March 2006 put the expenditure above the budget.
New policies always come out with regard to the management of HIV/AIDS and these pose challenges with the way the programme responds to them.

19. Challenges Faced in 2005/06 Forensic and Pathological Services
The Grant was under-spent by R8.3m or 93.1%
The funds from National Treasury was received by Provincial Treasury in December 2005 and this made it impractical for the appointment of a project manager and acquisition of vehicles and equipment.
The department is taking over the services completely from the SAPS with effect from April 2006.

20. Challenges Faced in 2005/06
Hospital Management and Quality Improvement
Expenditure was 100% of the budget allocated.

21. Challenges Faced in 2005/06 Integrated Nutrition Programme
Grant was under-spent by R1.7m or 6.3%
- There is only one company in the country, based in the Western Cape, that manufactures and supplies the nutritional supplements given to mothers and babies. The February and March 2006 supplies were seriously affected as a result of the power outages in the province.

22. SERVICE LEVEL AGREEMENTS
As part of the management of the Health Professionals Training & Development Grant, a Service Level Agreement has been signed with Walter Sisulu University in the Eastern Cape and some of the services being performed on behalf of the Department in terms of the agreement are the following:
Training and development of health professionals - under-graduates and post-graduates pursuing health related studies.
Providing infrastructure for the training of health professionals;
Training health professionals in the areas of laboratory skills and research.

23. SERVICE LEVEL AGREEMENT (Cont’d)
Joint establishment agreements– academic medical experts on the staff of the University assist with clinical work in some hospitals.
Management of Health Resource Centres in the province – providing library materials, internet services, venue for health related and academic meetings.
Administration of e-learning centres in institutions to assist health professionals who are pursuing further studies and training.

24. SERVICE LEVEL AGREEMENTS (Cont’d)
The department again has service level agreements with the Community Care Givers - non-governmental organizations that are contracted to pay stipends to care givers caring for HIV/AIDS Patients at Home-Based Care facilities.