Notice No. 294

16 March 2009

Department of Education

I, Grace Naledi Mandisa Pandor, Minister of Education, after consultation with the Council of Education Ministers and with the concurrence of the Minister of Finance hereby publish the National Norms and Standards for Funding FET Colleges, in terms of section 23 of the FET Colleges Act, 2006 (Act No. 16 of 2006), as set out in the Schedule. The effective date for implementation of the norms will be 01 April 2010.

G N M Pandor, MP

Minister of Education

Date: 10-03·2009

ABBREVIATIONS AND ACRONYMS

HISTORICAL OVERVIEW OF THE FET COLLEGE SECTOR FUNDING

This section summarises the key differences between the old and new funding systems. Some of this is a restatement of earlier policy, in particular White Paper 4, but some details are the outcome of new work undertaken to develop this policy.

What services are funded

Currently, the programme 5 budgets of PEDs are spent under a programme objective (captured in the chart of accounts) that states that funds should be used to provide FET at public FET Colleges in accordance with the FET Colleges Act, 2006. However, there are no further specifications, and the Act provides no details on what services should be funded. White Paper 4 provides important general guidelines, but this is not translated into detailed funding and management imperatives. Over the years, colleges have provided education and training programmes largely on the basis of historical practices, with a strong emphasis on the NATED Report 191 programmes.

The funding norms, whilst steering clear of an overly detailed and impractical 'manpower planning' approach, take the White Paper 4 guidelines on what services should be offered and link them to the new funding, planning and reporting systems. The emphasis is on a shift towards training that tackles skills and unemployment problems more aggressively through, for instance, more relevant training content and the cost effective use of college facilities and resources. The funding norms specify how Government, in collaboration with industry stakeholders, should determine what programmes should be offered where and to what extent, and how colleges must receive funding to respond to these needs.

Equity and redress

Although there has been a relatively strong emphasis on increasing the enrolment of historically disadvantaged students across all campuses, partly as a response to White Paper 4, mechanisms for sustaining this trend, and for ensuring that in particular college fees do not present an obstacle for transformation, are weak.

The funding norms emphasise the importance of concentrating public funds on training that is 110t being adequately financed by the private sector, and this would to a large extent be training for the historically disadvantaged. Colleges are required to incorporate targets relating to race, gender and special needs representativity within the three-year strategic plans that they draw up in collaboration with PEDs. A bursary provided by the state will enable poorer (but academically capable) students to pay college fees.

The size of the FET College sector

By international standards, the size of the FET College sector is too small for the size and level of development of our economy. The 15 to 19 age cohort, which should comprise an important target for this sector, has a mere 2% enrolment rate in technical and vocational further education and training.

Industrialised countries have over 6% of the youth cohort in vocational education and so it can be argued that the college sector should increase fivefold.

Improved management of the sector flowing from the merger process, in conjunction with the new funding norms and an injection of new public funds into the sector will work together to bring about the necessary expansion, not just because more training is supplied, but also because transformation within the sector leads to stronger demand on the part of youth, employees, employers and the unemployed.

Governance at the national and provincial levels

Currently, DoE and PED strategic plans guide what happens in the public FET Colleges sector. However, these mechanisms are inadequate to ensure that the quality and quantity of services offered by the colleges respond to.social and economic needs.

The funding norms assign specific planning responsibilities and powers to the national, provincial and college levels. At all levels, collaboration with relevant government organs as well the private sector is emphasised. Specifically, dedicated research into the cost of delivering programmes and into the optimal service delivery targets of the college sector as a whole is the responsibility of the DoE. PEDs are enjoined to work closely with colleges to develop and implement three-year strategic and performance plans for each college. Through this mechanism, national and provincial priorities are to be translated into funded activities run by the colleges.

The funding formula

The bulk of Government's funding of colleges occurs through the Post Provisioning Model, which distributes educator posts from a central pool in each province to individual colleges on the basis of FTE students weighted by one of three weights, where the weight depends on the type of Report 191 programmes. In addition, non-personnel funds are allocated to colleges according to simple FTE-based formulas that vary from one province to another.

In terms of these funding norms and standards, the bulk of PED funding of colleges is in the form of formula funding of programmes, where the formula takes into account a range of service delivery issues, including type of programme being offered (the NC (V) programmes as approved in a national register), FTE students, cost of delivery including staff, need for capital infrastructure, and the ability of colleges to utilise resources efficiently. The funding formula introduces a system of resourcing that is more sensitive to the actual cost of service delivery and takes into consideration outputs and quality. The norms allow for the addition of the private FET College sector to address training needs identified by government which cannot be met immediately by the public colleges.

Capital investment in colleges

The capital stock of colleges has reportedly been depreciating, and readiness for new challenges clearly hinges on more capital investment.

Capital expenditure needs for the replacement of existing stock is dealt with by the new funding formula. However, especially during the initial growth period, additional capital funding is required. As early as 2005, National Treasury earmarked funds for this purpose, representing a many-fold increase to existing capital investment levels. The funding norms establish a framework for capital expenditure above the replacement level, as well as for college access to capital loans and participation in PPPs.

College fees and affordability

Indications are that college fees could be seven times as high as fees in ordinary FET schools. Unlike schools, colleges have no system of fee exemptions for poorer students. This partly explains why colleges are particularly inaccessible for poorer households.

Three measures in the funding norms tackle the problem of excessive private cost for poorer students. Firstly, the funding formula and the new college planning frameworks makes a clear link between the public funding that is available and services that must be offered. Better public funding of public priority programmes is thus envisaged. Secondly, fees are to be capped at levels that are in tune with the level of public funding and the estimated total cost of service delivery. Thirdly, a bursary will be allocated to colleges to cover college fees for academically capable students who cannot afford to pay college fees. This policy makes it the responsibility of the Department of Education to determine the bursary across colleges and allocate bursary funds accordingly.

Services to other clients

Colleges currently charge a variety of organisations, both public and private, for training services provided. There is currently no legal framework dealing specifically with college income from organisations other than the PED. The use of PED-funded capital infrastructure to cross-subsidise services for other clients has been a concern.

Responsiveness of colleges to other clients parallel to the delivery of programmes covered by the funding formula will continue to be encouraged. However, this should support economic development and should not conflict with the core business of colleges to provide training according agreements concluded with the PED. This policy outlines what existing financial management and reporting regulations should be applied in this regard, and new requirements will be established where gaps exist.

Planning and reporting cycles

Although the programme 5 budgets of PEDs are determined for the three years of the MTEF, medium range planning with respect to enrolments and programme diversification occurs in a manner which is piecemeal, and not sufficiently linked to budgets.

In terms of this policy, clear steps tor planning and reporting in the sector are established. Moreover, the explicit linking of plans, budgets and service delivery through three-year performance agreements following a basic national format is intended to assist in a more transparent planning process that will involve a greater range of stakeholders.