Finance
With reference to the Public Finance Management Act, 1999 (Act 1 of 1999) and in particular the Minister’s and the provincial Treasury’s legislative obligations in terms thereof:
(1)
Whether the provincial budget tabled in March 2024 was compliant with Section 27(3)(b) of the PFMA with respect to the estimates of current expenditure for the Western Cape Education Department (WCED) vote in respect of Cost of Employment; if not, why not;
(2)
given the provincial Treasury's legal duty under Section 18(1) of the PFMA, how did a multi-billion-rand gap in the WCED’s Cost of Employment emerge within just four months;
(3)
whether she has initiated any formal inquiry or investigation to determine whether the Education Department’s accounting officer committed financial misconduct in the light of the R3,8 billion shortfall, as required by Section 81(1)(a) of the PFMA; if not, why not; if so, what are the relevant details?
1. As stipulated in section 27(3)(b) of the PFMA; “An annual budget must be in
accordance with a format as may be prescribed and must at least contain estimates
of current expenditure for that financial year per vote and per main division within
the vote”. In this regard, it can be confirmed that the Western Cape 2024 budget was
tabled in accordance with the format as prescribed by National Treasury and
contained the estimates of current expenditure particularly in respect of Cost of
employment as compensation of employees in terms of the economic classification.
2. The province’s 2024 budget allocation was subjected to fiscal consolidation, a
reduction, of R6.4 billion over the 2024 MTEF. This reduction was proportioned to
all departments including the Western Cape Education Department (WCED), which
infers that all departments would have had to put measures in place to manage
expenditure within their reduced allocations. Given that the WCED’s budget is
driven by Compensation of Employees (CoE) constituting almost 72 per cent of its
total budget in 2024/25, a large proportion of the fiscal consolidation was absorbed
by Compensation of Employees.
To mitigate the risks associated by fiscal consolidation, the Western Cape Education
Department put in place a Human Resource (HR) plan. The rate of slowdown on
compensation of employees’ expenditure during the initial implementation of the
HR plan, was slower than anticipated. This resulted in a projected pressure on the
compensation of employees’ budget in the 2024/25 financial year, carried through
to the outer years of the 2024 MTEF. This projected pressure was communicated by
WCED to PT as per the in-year monitoring reporting, an early warning reporting
system, in July 2024 in terms of section 40(4)(c) of the PFMA. After various
consultations with the WCED and analysis undertaken, the projected overspending
risk was addressed as part of the 2024 Adjustment Budget process.
3. In terms of section 81(1)(a) of the PFMA, it is deemed financial misconduct if an
accounting officer wilfully or negligently fails to comply with a requirement of
section 38, 39, 40, 41 or 42 of the PFMA.
In the context of financial misconduct as per the PFMA, there are no grounds for a
formal inquiry or investigation.
