1. Idasa Budget Information Service
Analysing the health budget IDASA Budget Information Service Alex Vennekens-Poane Alison Hickey Nhlanhla Ndlovu 10 March, 2003
Handouts: Division of Revenue Bill (pgs ) National Health Budget chapter (from Estimates of National Expenditure 2003/4) Budget Review (pgs. 128, 155, &166) Idasa Budget Dictionary selected Idasa handouts on PFMA
“Preparing for Committee Hearings” handout
Idasa Budget Information Service

2. Idasa Budget Information Service
Presentation 1. Intro to the budget process and division of revenue 2. Division of responsibilities between natl & prov health depts 3. What can we learn by looking at the budget? 4. Structure and format of budget documents 5. How do policy developments impact on health budgets? 6. Questions to ask on the health budget 7. HIV/AIDS in Budget 2003/4
Idasa Budget Information Service

3. Idasa Budget Information Service
1. Introduction to the budget process and intergovernmental fiscal relations
Revenue sources for different spheres of government
Division of Revenue
vertical and horizontal splits
equitable share and conditional grants
Legal framework for budgeting
Steps of the budget process
Idasa Budget Information Service

4. Intergovernmental Fiscal Relations….
Each sphere of government is allowed to raise different types of revenue.
Provincial revenue: 4% own revenue, 10% conditional grants, 86% equitable share
Local government revenue: 83% own revenue, 17% transfers
Constitution assigns specific functions for each sphere of government.
Social spending over 80% of provincial budgets
social spending
Education:40% Health: 24% Welfare:19%
Provincial revenue
3% own revenue
11% conditional grants
86% equitable share
Local governments 92% themselves
Social spending 82% of prov budgets
Educ 40% Health 24% Welfare 19%
Vertical division
excluding top slice:
41% national
56% provincial
3% local government
Idasa Budget Information Service

5. Idasa Budget Information Service
More IGFR….
Division of Revenue
Top slice (executive/political decision)
Vertical split (executive/political decision)
Excluding top slice:
39% national
57% provincial
4% local government
Horizontal split between provinces (determined by formula)
Two ways national government sends money to the provinces:
Provincial revenue
3% own revenue
11% conditional grants
86% equitable share
Local governments 92% themselves
Social spending 82% of prov budgets
Educ 40% Health 24% Welfare 19%
Vertical division
excluding top slice:
41% national
56% provincial
3% local government
Equitable share (block grant to each province. Size is determined in horizontal split.)
Conditional grants (earmarked funds from national to provinces)
Idasa Budget Information Service

6. Idasa Budget Information Service
Four stages of the budget process:
1. Drafting phase
2. Legislative phase
3. Implementation
4. Auditing
3 year rolling budget
Medium Term Expenditure Framework
Idasa Budget Information Service

7. Idasa Budget Information Service
2.Division of responsibilities between national and provincial health departments
Division of roles and responsibilities
Budget Implications
Idasa Budget Information Service

8. Roles and responsibilities of health departments
Idasa Budget Information Service

9. Idasa Budget Information Service
Budget Implications of Division of Roles and Responsibilities i.r.o. of Health
Total National health expenditure in 2003/04
= 8.4 billion
National health expenditure excl. transfers in 2003/0
= 602 million
Projected consolidated total provincial health expenditure in 2003/04 = 36.6 billion
Consolidated Health conditional grants to provinces amount to 7.4 billion
Idasa Budget Information Service

10. Idasa Budget Information Service
Budget Implications of Division of Roles and Responsibilities i.r.o. of Health
93.3% of natl DoH budget is transfers, mainly to provincial departments (conditional grants)
88% of natl health expenditure goes to provinces as cgs
National health expenditure is less than 2% of consolidated provincial and national health expenditure
98+% is spent on service delivery in the provinces (through conditional grants and equitable share allocations).
Cgs about 20% of consolidated provincial health expenditure
Idasa Budget Information Service

11. 3. What can we learn by looking at the budget?
How does budget analysis fit in the oversight role of committees?
What can we learn by looking at the budget
Idasa Budget Information Service

12. How does budget analysis fit in the oversight role of committees?
Structures and institutions for implementation
Impact of programme or policy
Service Delivery
Policy
Budget
budget inputs: funds, resources
Indicators? How do we measure inputs, outputs and outcomes?
budget outputs: medicine, vaccinations, HIV tests
Think of these as same information organised into different categories
Divide the people in this room by gender
by hair color
by profession
budget outcomes: improved child health
Idasa Budget Information Service

13. Idasa Budget Information Service

14. Idasa Budget Information Service

15. 4. Structure and format of budget
Budget documents: handout
(National Estimates of expenditure
Budget Review
Division of Revenue Bill
Provincial Budgets)
Walk through National Estimates
Idasa Budget Information Service

16. National / Provincial budget
National Budget
Departmental budgets
National
Vote 16. Health
Programme budgets
National
Vote 16. Health
Programme 2: Strategic Health Programmes
Divided into separate line-items
National
Vote 16. Health
Programme 2: Strategic Health Programmes
Sub-Programme 2.1: District Health Systems
Idasa Budget Information Service

17. National / Provincial budgets
Each department has its own budget.
Each budget (national, provincial, department, programme) can be presented using the 3 different classifications:
1. by programme
2. by economic classification
3. by standard item
We are primarily concerned with the programme classification.
Budget documents can provide more/less text on policies,
achievements, goals, programme purpose.
Open your budgets: find the Summary of the amounts to be voted
or Provincial Expenditure Summary
or Budget Aggregates
or Summary of Expenditure by Policy Area
Western Cape pg 23
KZN pg 15
Northern Cape pg 24
Gauteng pg 18
North West pg 20
Northern Province pg 26
THEN Find the Education Department vote
Each department PRESENTED budget in 3 ways
Do all of you have provincial budgets listed in 3 ways?
In the Provincial Health budgets, standard items are important in order to assess the mix of inputs used for service delivery
Idasa Budget Information Service

18. Idasa Budget Information Service
Government budgets can have the same information listed in 3 different ways:
budget classification systems
Each programme is divided into sub-programmes
1. Listed by programme
Which is further divided into sub sub programmes or line-items
Think of these as same information organised into different categories
Divide the people in this room by gender
by hair color
by profession
Idasa Budget Information Service

19. 3 different budget classifications (cont.)
Two main sections:
Current expenditure
Capital expenditure
2. Listed by economic classification
Also known as Government Financial Statistics (GFS) classification
Idasa Budget Information Service

20. 3 different budget classifications (cont.)
3. Listed by standard item classification
Personnel expenditure
Administrative expenditure
Stores and livestock
Equipment
Land and buildings etc.
I mainly use the programme budgets, and that is what we’ll be focusing on today.
Where standard item is useful is to figure out share going to personnel.
Or in economic classification: amount to capital expenditure
Idasa Budget Information Service

21. 5. How do policy developments impact on health budgets?
Examples
Idasa Budget Information Service

22. Examples of health policy developments impacting on budget allocations
PHC: Need for new and upgraded clinics => Infrastructure Conditional Grants
PHC: Negotiations around the division of responsibility around PHC => Transfer payments
Nutrition Programme: Adoption of PSNP Review recommendations => Integrated Nutrition Programme Conditional Grant
Hospital Services: Infrastructure backlogs => Hospital Revitalisation Grant
Hospital Services: management improvement => Hospital Management and Quality Improvement Grant
Idasa Budget Information Service

23. Idasa Budget Information Service
Examples of key health policy developments impacting on budget allocations
Personnel: distribution and scarcity of health personnel => provincial health budgets: personnel item
Non-personnel inputs: increased prices of medical equipment and consumables => provincial health budgets: machinery and equipment item, stores and livestock item
Legislation: Mental Health Care Act => provincial budgets: specialised hospitals sub-programme
Legislation: New National Health Bill => Act => implications for national, provincial and local government responsibilities and budgets
Free medical care for people with disabilities => provincial health budgets
Other???
Idasa Budget Information Service

24. 6. Questions to ask on the health budget
Consolidated provincial health budgets
Other questions in relation to health budgets
(These are examples; same principles can be applied to any budget programme / item)
Example of the Integrated Nutrition Programme conditional grant
Example of the Hospital Management Improvement Conditional Grant
Idasa Budget Information Service

25. Consolidated Provincial Health Budgets
Will real growth of 3.9% be sufficient to cater for:
- Population growth
- Additional AIDS patients
- Increased cost of equipment & medical consumables (medical inflation about 3% above normal inflation - ASSA)
- Free medical care for people with disabilities above age 6 (impacts only on hospital services, not on PHC since PHC was already for free)
- Personnel
Idasa Budget Information Service

26. Consolidated Provincial Health Budgets (contd)
Look at health budget programmes / items in provincial budgets and see to what extent these reflect National policy priorities, and whether allocations grow in line with objectives.
Which provinces will be able to spend the increased funds?
Compare actual health expenditure YTD 2002/03 by province
Major increases in capital budgets are anticipated but, despite improvement since 2001/02, consolidated Health Capital expenditure in provinces, YTD Q3 2002/03: 51%
Idasa Budget Information Service

27. Consolidated Provincial Health Budgets (contd)
Idasa Budget Information Service

28. Consolidated Provincial Health Budgets (contd)
Per capita health expenditure:
- Comparison of per capita health discretionary expenditure in provinces (excluding conditional grants from national)
- Real growth in discretionary per capita expenditure
Idasa Budget Information Service

29. Consolidated Provincial Health Budgets (contd)
Idasa Budget Information Service

30. Examples of other questions in relation to the health budget
- Equity considerations with regard to conditional grants and provincial health budgets
- What proportion do the extra allocations for rural medical personnel / scarce skills constitute of the total personnel budget? How much on average is the increase per capita (currently employed personnel & vacancies)?
- Do increases in equipment expenditure keep up with medical inflation? If there are major equipment backlogs, can these be addressed within the current budget framework?
- For each policy / programme it is important to look whether real growth is sufficient to cater for: expansion of the programme (additional recipients of services, improved quality) and increased target levels, does it take into account higher inflation on particular items?
Idasa Budget Information Service

31. Idasa Budget Information Service
INP Conditional Grant
How has this been costed? I.e. cost per learner * learners?
Will growth in real terms be sufficient in order to cater for:
- Increased frequency of feeding
- Standardisation of menu’s
- Including grade R pupils
- Impact of escalating food prices
- HIV/AIDS (National Estimates p.328)
Idasa Budget Information Service

32. INP Conditional Grant (continued)
Additional health districts until all are included (2004)?
(I.e. how many extra learners? National Estimates p. 338)
83% spent YTD in Dec. previous financial year. This implies provinces likely to overspend on this grant. What are the reasons for this?
Idasa Budget Information Service

33. Hospital Management Improvement Conditional Grant
YTD Dec indicates that provinces are likely to under-spend on this grant.
- Which provinces are most likely to under-spend?
- What are the reasons for this?
- How will this be addressed?
Idasa Budget Information Service