Further Education and Training Colleges Act, 2006 (Act No. 16 of 2006)

National Norms and Standards for Funding Further Education and Training Colleges (NSF-FET Colleges)

H. The annual PED-College planning process
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Basic elements

 

93)For the purposes of the paragraphs that follow, the 'medium term' means the coming three college years for which planning must occur. This is partially in accordance with the Medium Term Expenditure Framework (MTEF) of the Public Finance Management Act, the difference being that the college year begins in January, whilst the government's financial year begins in April. The term 'first MTEF year' refers to the first college year within the medium term. The term 'current year' refers to the college year immediately prior to the medium term. And 'previous year' refers to the college year prior to the current year.

 

94)Section 10 of the Further Education and Training Act, 2006 requires public FET Colleges to develop strategic plans. This requirement is being fulfilled across all colleges, though the PED-college planning process described here has wide-ranging implications for the formats and contents of the college strategic plans, and the annual processes that lead to the finalisation of strategic plans. For example, the formula funding grid in Annexure A of this policy should form part of the strategic plan of each college.

 

95)It is vital that various stakeholders apart from the PEDs and colleges should comment on the annual PED-college planning process. Each PED must hence ensure that a minimum level of broad consultation occurs with a range of stakeholders, which should include, as a minimum, employers, employees, and private providers of FET training. At least one provincial consultation and at least one college-specific consultation per college should occur in each year. These consultations should be strongly guided by the national strategic priorities referred to in paragraph 91 and 92.

 

96)It is crucial for the annual PED-college planning process to be informed by reliable and timely data. This implies major improvements to information systems which, as indicated in paragraph 20 require national funding. In particular, existing unit record systems that house data on individual college students would need to be enhanced, partly to deal adequately with student-level data relating to socio-economic status and with the aggregation of part-time students to full-time equivalent students.

 

97)The annual PED-college planning process is partly about learning from experience, and thereby improving the capacity of provinces and colleges to deliver quality training efficiently and equitably. It is therefore important that this process should be characterised by honest and informed assessments of past performance. Such assessments should include analyses based on the available financial and non-financial data, as well as the consideration of the qualitative inputs of the various FET College stakeholders. There should be a strong focus on building relationships of trust and mutual respect between stakeholders for this process to be successful.

 

98)Below, the annual PED-college planning process is described with reference to, firstly, capital investment planning, secondly, a review of past formula funding and, thirdly, the forward planning of formula funding. All these activities should be scheduled in such a way that strategic plans, with finalised funding components approved by the PED, are ready by 30 October of each year. The resultant plans must cover, as a minimum, the medium term.

 

Capital and Human Resource Investment Planning

 

99)This planning links strongly to earmarked capital and recurrent funding described in paragraphs 63 and 67. This investment planning should in other words focus strongly on the physical capital needed to address infrastructure backlogs and expansion, and also on investment in systems and the college staff.

 

100)This should start with an assessment of the adequacy of the physical and human capital to deliver on government training requirements in the past. This assessment should include an analysis of how the college balances the offering of publicly funded and privately funded training programmes. If infrastructure inadequacies with respect to the offering of publicly funded programmes can be resolved through a reduction in the level of private services offered, then such a reduction should be regarded as optimal.

 

101)The assessment should lead to college-specific proposals, which will be prioritised by the PED in accordance with the earlier paragraphs on earmarked funding. The result will be an updating of provincial plans for the capitalisation of the public FET College sector.

 

Review of past formula funding

 

102)The planning of the formula funding for the new medium term must begin with a review of past years, and developments in the current year. The specifications relating to the formula funding grid, and described in Section 0 of this policy, should inform the review process. This process will be coordinated and supported by the DoE.

 

103)The review should include an assessment of the deviation between the economic category breakdown of previous allocations, and the economic category breakdown reflected in accounts of actual expenditure. It is not a requirement that colleges must comply with the economic category breakdown of the allocation calculated in the formula funding grid. However, a substantial deviation should be analysed to assess whether the funding weights in the register of nationally approved FET College programmes are inappropriate, or whether a college is allocating funds inefficiently across the three economic categories. In particular, the review must assess whether the college is investing sufficient funds from the formula funding stream into the maintenance and replacement of capital equipment and facilities, given that the funding weights cover this cost.

 

104)Though not explicitly linked to the formula funding grid, representatively of students in terms of gender, race and disability must be considered in terms of the redress principles described in paragraph 23. The level of compliance with past targets should receive attention, and reasons for non-compliance should be assessed.

 

105)A clawback mechanism must be applied where the following has occurred: Less training took place in the previous year, in terms of FTE students, than was planned for in the formula funding grid applicable to the previous year. In this case, under-enrolment in certain programmes can be compensated for by over-enrolment in certain other programmes.

 

However, under-enrolment where actual enrolment is less than 97% of the planned enrolment averaged over the previous three years of the current MTEF, in terms of full-time equivalent students, must lead to the enforcement of the clawback mechanism. The PED, with the college, should calculate the clawback amount applicable to the current year, and should deduct this amount from the funding of the first year of the next MTEF.

 

106)PEDs must assess prices to determine fee-for-service income of colleges and determine whether there is evidence of cross-subsidisation of privately offered services through the use of funds intended for public services. Financial accounts with a separation between public and private services, as specified in paragraph 85, should also be scrutinised to assess whether cross-subsidisation has occurred. If this has occurred, plans for the future should correct this and continual and deliberate cross-subsidisation by a college can result in a financial clawback using the mechanism referred to in paragraph 105.

 

Forward planning of formula funding

 

107)Planning for the three years of the medium term should pay particular attention to bringing enrolments in nationally approved FET programmes (as described in paragraph 37) in line with provincial and national strategies and targets in this regard. Moreover, the planning process should deal with the labour market segment focus, and the representativity of students. Future targets for the representativity of the student population must be set, in particular where it is clear that student groups are under-represented.

 

108)The enrolment targets per programme must be consulted, but ultimately the PED approves of the programmes and enrolments that are subject to formula funding. The process may involve reprioritising the emphasis placed on private services. For example, the need to increase the utilisation of college infrastructure for the offering of nationally approved FET programmes may require a college to reduce private training. Planning in this regard should occur with care, taking cognisance of contracts between the college and private clients.

 

Reporting requirements

 

109)In terms of section 25(3) of the Further Education and Training Colleges Act, public FET Colleges are required to produce annual financial reports, and to comply with any reasonable additional reporting requirement established by the MEC. Moreover, section 42 of the Act requires the Director-General of the DoE to produce an annual report on the quality of further education and training in the country. This would include both Public and Private FET Colleges which have been respectively declared or registered in terms of Act 16 of 2006. The DoE must ensure that the core national set of service delivery indicators and reporting requirements developed with National Treasury in terms of the Public Finance Management Act, and partly applicable to the FET College sector, are applied at the province and college level in order to advance an integrated quality monitoring system embracing financial and non-financial data.

 

The annual cycle of public resourcing

 

110)The following paragraphs establish the reporting and planning obligations of the DoE, PEDs and FET Colleges in terms of the annual cycle.

 

111)By the last day of September of each year, final annual reports of FET Colleges must be submitted to the PED. These reports, which are referred to in section 25(3) of the Further Education and Training Colleges Act, 2006 must include audited financial statements and any additional information required by the MEC in terms of the Act.

 

112)By 31 March of each year, the DoE must release agreed upon national targets and priorities relating to number of students and types of training required in future years, in terms of paragraph 90. This step may involve the confirmation of targets set in previous years, as opposed to the setting of new targets.

 

113)By 30 April of each year, PEDs and FET Colleges must have begun the annual PED-college planning process, described elsewhere in this policy. This process always begins with a review of past trends, in particular as regards formula funding, enrolments, representativity and capital investments.

 

114)By 31 July of each year, the DoE must have finalised the national funding base rate applicable for the next college year, as described in paragraph 88. Moreover, funding weights and the assumed fee levels for new programmes, if any, on the register of nationally approved FET College programmes should be confirmed by this date.

 

115)Also by 31 July of each year, means test data collected during the current year on the socioeconomic status of students must have been processed by the DoE to determine the bursary needs for each college.

 

116)By 31 August of each year, PEDs must have finalised their applied funding base rate, as described in paragraph 57.

 

117)By 31 October of each year, the annual PED-college planning process must have been completed. By this date, medium to long term strategic plans of colleges, which must include the formula funding grids for the following three years, agreed to in accordance with paragraph 109, must be submitted to the PED by colleges.

 

118)By 30 November of each year, the PED must provide colleges with a schedule of payments to be made to colleges for services to be rendered during the following college year. This schedule must agree with the budgets and plans applicable to the following year. Payments to colleges should occur in line with this schedule, except where corrective measures such as clawback must be applied.

 

The schedule must be compiled based on the use of the tranches of payment of academic year. The first tranche must not exceed 50% due to FET Colleges and payable in the first month of the financial year. The second tranche must be paid not later than October in the same financial year. Any correction or adjustments such as c1awback must be made from the second tranche at this time. Any clawback action must be made after due consultation with the affected college.

 

Academic performance

 

119)A student may be funded for a maximum of two years at the same NQF Level in a nationally approved qualification unless a motivation is made by means of a special request to the PED for an extension for funding.