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2005/06 Fourth Quarter Report on Conditional grants and CAPEX

2005/06 Fourth Quarter Report on Conditional grants and CAPEX. Select Committee on Finance Gauteng Treasury 02 May 2006. Content of Presentation. Total spending for 2005/06 FY Conditional grants spending CAPEX spending Challenges moving forward Provincial Treasury’s Intervention.

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2005/06 Fourth Quarter Report on Conditional grants and CAPEX

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  1. 2005/06 Fourth Quarter Report on Conditional grants and CAPEX Select Committee on Finance Gauteng Treasury 02 May 2006

  2. Content of Presentation • Total spending for 2005/06 FY • Conditional grants spending • CAPEX spending • Challenges moving forward • Provincial Treasury’s Intervention

  3. 2005/06 total spending

  4. Provincial summary for 2005/06 Provincial aggregate • Total spending equals R33,4b which translates to 97% of the adjusted budget • Net underspending amounts to R885m and represents 3% of adjusted budget • Depts. contributing to underspending incl. • Education – R395m • Social Development – R424m • Housing – R91m • Finance – R71m • Dept showing significant overspending • Health - R132m

  5. Provincial summary for 2005/06 • Depts. contributing to underspending incl. • Education R395m • Vacant public servants posts not filled • Delays in the implementation Integrated Quality Management System due to current disputes i.e salary progression and incentives • Social Development (R424m) • Saving due to less intake of beneficiaries • Housing (R91m) • Goods delivered late in the financial year. • Finance (R78m) • Claims received late from depts. for GPG Precinct • Unfilled posts due to late approval of the structure • Dept showing significant overspending • Health (R132m) • Early delivery of equipment expected in 06/07

  6. 2005/06 total conditional grants

  7. 2005/06 total conditional grants

  8. Provincial summary for 2005/06 Total conditional grants expenditure • Adjusted budget amounts to R11,4b • Includes provincial rollover R32,7m • Total expenditure amounts to R10,7b and translates to 94% of the adjusted budget • Total amount received equals R10,766b instead of R11,340b • Reduced transfers (R297m) due to revised payment schedule for social assistance grant; low number of beneficiaries • Stopping of 3 infrastructure installments (R277m) due to low level of spending on infrastructure, late submission of infrastructure reports and plans and submission of incomplete/inaccurate reports • Province reflects an underspending of R606m or 6% of the adjusted budget

  9. Conditional grants spending per dept. • Agriculture, Conservation & Environment • Dept manages Land Care and Comprehensive Agricultural Support programme (CASP) • Land Care – prevention of degradation of natural resources • Adjusted budget – R2,2m; • Includes provincial rollover of R185,000 • Total received from National – R2m • Expenditure amounts to R2,m or 93% of the budget • Reason for underspending • delays in processing the quotations packages by the implementing agents due to noncompliance with specifications

  10. Conditional grants spending per dept. • CASP – assisting beneficiaries with land reform program • Total Adjusted Budget - R5,7m • Full allocation received as per payment schedule • Spending amounts to R4,5m and translates to 80% of the budget • Reasons for underspending • service providers were too slow in implementing the projectsdue to lack of service level agreements

  11. Conditional grants spending per dept cont. • Education • Dept administers two cond. grants i.e HIV/AIDS & School nutrition • HIV/AIDS • Adjusted budget – R21,7m & includes the provincial rollover of 2,8m • Total received from National – R18,90m • Actual spending amounts to R22,2m or 102% of the budget • Reason for overspending • Incorrect allocation to be corrected before financial year closure

  12. Conditional grants spending per dept cont. • NationalSchool Nutrition • Adjusted budget – R101,7m • Includes the provincial rollover of R581 000 • Total amount received from National – R101,1m • Expenditure incurred until March amounts to R91,6m or 90% of the budget • Reason for underspending • Delays in the delivery materials such as containers and kitchen equipment

  13. Conditional grants spending per dept cont. • Social Development • Manages four cond. grants i.e HIV/AIDS, Integrated Social Development, Social Assistance Administration and Social Assistance Transfer • HIV/AIDS • Adjusted budget – R20,3m • Total budget received as per payment schedule • Total expenditure R20,3m or 100% of the budget

  14. Conditional grants spending per dept cont. • Integrated Social Development • Adjusted budget – R27,9m • Full allocation received • Actual spending amounts to R22,2m & translates to 79% of the budget • Underspending attributed to • Business plan approved in August 2005 • Transfers to service providers was reduced due to non-compliance • Social Assistance Administration • Adjusted budget – R350m • Full allocation received • R293m spent as at end of March or 84% of the budget • Reason for underspending • Administration less due to low take up rate of beneficiaries

  15. Conditional grants spending per dept cont. • Social Assistance Transfer • Adjusted budget – R6,5b • R6,2b received & less by R297m at year end • Due to revised payment schedule during the year • Total expenditure R6b or 93,9% of the budget or 98% funds received • Reasons for recording a saving • Decrease in the number of applications for grants • Indemnity campaign by national dept • Clean up exercise by province

  16. Conditional grants spending per dept cont. • Sports, Recreation, Arts and Culture • Mass Sport and Recreation programme • Adjusted budget – R2,7m • Total received – R2,7m • Total expenditure R2,1m or 80% of the budget • Reason for underspending • Computers and printers in Hubs not delivered on time

  17. Conditional grants spending per dept cont. • Health • Responsible for HIV/AIDS, Hospital Management & Quality Improvement, Integrated Nutrition Programme, Hospital Revitalisation, Forensic Pathology Services • HIV/AIDS • Adjusted budget – R185m • Total budget received • Actual expenditure amounts to R207m or 112% of the budget • Overspending due to • Increase in the number of patients requiring ARV’s (target was 25000 and they reached 38000).

  18. Conditional grants spending per dept cont. • Hospital Management & Quality Improvement • Adjusted budget – R18,5m • Full allocation received • R4,3m spent & translates to 23% of the budget • Reason for underspending • Business plan approved in November 2005 • Revised business plan submitted later but not all projects were approved • Integrated Nutrition Programme • Adjusted budget – R11,3m • Full budget transferred to the province • Spending to date R9,8m or 87% of the budget • Underspending due to • Nutritional supplements ordered and delivered was not according to specifications

  19. Conditional grants spending per dept cont. • Hospital Revitalisation • Adjusted budget – R88,9m • Full budget transferred to the province • Full allocation spent i.e 100% of the budget • Forensic Pathology • Adjusted budget – R16,9m • Full budget transferred to the province • Total amount spent R1,5m or 8,6% of the budget • Reason for underspending • Full allocation received during the adjustment • Equipment orders placed but not yet delivered • Process of transferring staff & assets from SAPS has not been finalized

  20. Conditional grants spending per dept cont. • Housing • Manages 3 conditional grants, i.e Integrated Housing & Human settlement, Human Settlement and Alexandra Urban Renewal • Integrated Housing & Human settlement • Adjusted budget – R1,3b & includes provincial rollover of R9m • Total received – R1,3b • Total expenditure R1,3b or 100% of the budget

  21. Conditional grants spending per dept cont. • Human Settlement • Adjusted budget – R7,3m & includes provincial rollover of R3,2m • Total received – R4,1m • Total expenditure R4,5m or 81% of the budget • Reasons for underspending • Misallocation of expenditure. Pre-final IYM will reflect the corrections (which will translate to 100% expend) • Alexandra Urban Renewal • Adjusted budget – R14,2m & includes provincial rollover of R6,2m • Funds transferred – R8m • Total expenditure R14,2m and translates to 100% of the budget

  22. Conditional grants spending per dept cont. • Provincial Infrastructure grant • Receiving depts. are Health, Education and Transport • Adjusted budget amounts to R369m • Only first installment received R92m; last three installments withheld • Total expenditure R250m or 65% of the budget • Health - R73m spent • Education – R38m spent • Transport – R139m spent • Reasons for not receiving the full allocation • low spending on infrastructure, late submission of infrastructure reports and plans and submission of incomplete/inaccurate reports

  23. 2005/06 total capital spending

  24. Provincial summary for 2005/06 Total capital expenditure • Total spending amounts to R2,4b and represents 116% of the adjusted budget • Report shows an overspending of R334m • Depts. contributing to overspending incl. • Health – R122m • Transport – R344m • Depts. showing an underspending incl. • Education – R69m • Housing – R39m • Finance – R27m

  25. Capital spending per dept • Health • Adjusted Budget R847m • Expenditure to date amounts to R969m i.e or 114% of the budget • Reason for overspending • Early delivery of equipment expected in 06/07 FY

  26. Capital spending per dept • Education • Total adjusted budget amounts to R585m • Total spending R516m & represents 88% of the budget • Spending during the year was slow due to procurement challenges, but picked up in the last quarter • Increase in spending due • Money transferred to IDT in Feb to build 23 schools • Mobile schools purchased in January • Appointed a project management company to facilitate the process of ensuring that projects are delivered on time • Reasons for underspending • Incorrect allocation of GautengOnline payments under current objective.

  27. Capital spending per dept • Transport and Public Works • Adjusted budget – R407m • Spending – R756m or 185% of adjusted budget • Overspending occurred due to • Misallocation of goods and services under capital which is being rectified.

  28. Capital spending per dept • Housing • Adjusted budget - R42,6m • Actual expenditure – R3m or 7% of the budget • Reasons for underspending • Misallocation of capitalised compensation under current objective. • Late purchasing of new furniture

  29. Capital spending per dept • Social Development • Adjusted budget amounts to R13m • Expenditure at the end of March equals to R10,6m and represents 80% of the budget • Reasons for underspending • Delays in ordering equipment - this is due to lack of proper planning

  30. Challenges moving forward • Submission of quarterly reports i.e conditional grant and infrastructure report • most times either late/ partial submission/ not submitted • Submissions are in most instances incomplete and inaccurate • makes comparison between IYM & performance achievements difficult/ impossible • Credibility of departmental projections in IYM • Strengthening of monitoring and evaluation of performance by depts. • Misallocations of expenditure. Depts. Currently passing journals • CFO’s offices not properly capacitated

  31. Provincial Treasury’s Intervention • Continue to hold individual meetings with departments showing significant underspending and overspending • Conduct training and address identified gaps • Create a public finance unit that will specifically focus on • monitoring the departments spending and evaluating their performance • Ensuring value for money and efficiency • Detailed analysis & interrogate depts. expenditure • Providing guidance and advise depts. on any issues relating to budgets, spending and delivery • Identify training needs and provide it where necessary • Financially assist departments to capacitate their CFO’s offices • Introduction of non-compliance strategy

  32. THANK YOU!!!

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