Annual Report 2011/12

Presentation to the Portfolio Committee on Social Development

Presentation Outline

• Purpose

• Programme Performance Information - Achievements against 2011/12 Strategic Priorities;

• Budget and Expenditure for 2011/12; and

• Summary of Audit Outcomes

Purpose of the Presentation

• The purpose of this presentation is to present to the Portfolio Committee on Social Development

– the 2011/12 Annual Report for the Agency.

SASSA Strategic Priorities

• SASSA’s key priorities areas for the year under review were:

– Customer Care -centered Benefits Administration and Management System;

– Systems Integrity

– Increased access to social security services

Key Areas of Focus

• Given these key challenges, the Agency has identified the following as key priority projects:

– Service Delivery Improvement

– Automation of Grant Management and Administration

– Improvement of the Payment Method

a) Implementation of Current Payment Reforms including Re-registration of all beneficiaries and children

b) Development of New Payment System

– Improved Audit Report – Towards Clean Audit

Key highlights

• The period under review was characterised by various positive developments that informed the strategic and operational direction of the Agency to a large extent.

• The appointment of the Chief Executive Officer (CEO) brought about stability in the top leadership of Agency.

• SASSA remains one the major delivery network for government with more 2500 service delivery points; including 335 local offices; 902 Service points; and 9935 pay-points

Key highlights (cont…)

• At the end of the financial year, approximately 10.3m recipients were benefiting from the social assistance programme and the number of benefits stood at 15 595 705;

• approximately 1.2m social grants were processed

• A new service provider was appointed in January 2012 to pay social grants on behalf of the Agency for the next five years. SASSA embarked on preparatory process to facilitate migration of beneficiaries from old contractors to new payment providers.

PERFORMANCE INFORMATION

Achievements against the 2011/12 Agency’s priorities

PRIORITY 1

Customer Care-centred Benefits and Administration and Management System

Implementation of the Social Assistance programme

Target Achievements

15 774 162 projected number of grants in payment

• 15 595 705 social assistance benefits are in payment

11 579 471 are children’s grants;

2 750 857 are older person’s grants;

1 198 131 are people with disabilities grants;

753 are war veteran grants; and

66 493 are grant-in aid recipients

• Overall the number of social grants benefits in payment was 15 595 705 at the end of financial year

• Grants increased by 659 873 which represents overall growth of 4.4% from previous financial year.

• Processed approximately 1.2 million new applications and more than 500 000 grants were lapsed

• It is important to note that there has been 25.5% growth in the number of Acts in payment over the past 5 years.

Number of grant benefits and percentage growth over a five year period by grant type

Grant type 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12

Old Age Grant 2 195 018 2 229 550 2 390 543 2 546 657 2 678 554 2 750 857

War Veteran Grant

2 340 1 924 1 500 1 216 958 753

Disability Grant 1 422 808 1 408 456 1 286 883 1 264 477 1 200 898 1 198 131

Grant-in-Aid 31 918 37 343 46 069 53 237 58 413 66 493

Foster Child Grant 400 503 454 199 474 759 510 760 512 874 536 747

Care Dependency Grant

98 631 102 292 107 065 110 731 112 185 114 993

Child Support Grant

7 863 841 8 189 975 8 765 354 9 570 287 10 371 950 10 927 731

Total 12 015 059 12 423 739 13 072 173 14 057 365

14 93 832 15 595 705

Annual growth   3.4% 5.2% 7.5% 6.2% 4.42%

Number of grant benefits by grant type and region as at 31 March 2012

Region OAG WVG DG GIA FCG CDG CSG Total

Eastern Cape 492 248 101 190 620 8 488 116 826 18 235 1 837 801 2 664 319

Free State 165 328 14 95 760 1 035 43 311 5 419 617 311 928 178

Gauteng 368 316 171 120 838 1 297 56 451 14 170 1 387 159 1 948 402

KwaZulu-Natal573 040 109 325 459 28 077 142 114 34 969 2 726 635 3 830 403

Limpopo 379 783 59 88 040 8 895 56 066 11 318 1 497 044 2 041 205

Mpumalanga 219 920 34 82 084 2 185 32 886 7 950 1 008 223 1 353 282

North West 234 505 26 89 784 3 376 45 634 8 736 793 189 1 175 250

Northern Cape71 721 26 47 920 4 092 14 456 4 236 262 488 404 939

Western Cape 245 996 213 157 626 9 048 29 003 9 960 797 881 1 249 727

Total 2 750 857 753 1 198 131 66 493 536 747 114 993 10 927 731 15 595 705

Implementation of the Social Assistance programme

Impact of CSG Extension to children (16 – 17 years)

•The target was to reach 510 069 due to CSG extension.

•99% achievement – The number of grants in payments for children aged between 16 and 17 years is 506 924.

Social Relief of Distress

•Target was to disburse 95% of allocated funds in accordance with approved guidelines.

•There was over-expenditure of 2%. Total expenditure on social relief was R189m out of the allocated R185m.

•The money was spent largely on families experiencing undue hardships, individuals awaiting grants; and assisting families where the breadwinner died

Implementation of the Social Assistance programme

Internal Reconsideration Mechanism (IRM): Target was to develop and implement IR mechanisms

• Developed the IRM guidelines• Received 12 393 IRM requests and 6 420 requests were adjudicated within

90 days (this figure represents 52% of the received cases)

Disability management: The focus with regard to disability management was on improving disability assessment processes and ensuring quality assurance of medical assessments.

• Improvements in assessment quality led to the purging of ineligible beneficiaries during medical reviews and a general decline in inclusion errors.

• There was a net decrease of 20 789 in the number of disability-related grants.

Service Delivery improvements

Objective: streamlining business processes for optimal value for money; ensuring a shift in manual processes; and improving services rendered

Improvement of the application process:•89% of all new applications were processed within 21 days

Approximately 1.2m new applications were processed1.06 were processed within 21 days

Standardisation of Business Processes•Grant application forms have been reviewed and reduced, to eliminate the obtaining of information which does not add value to the processes.

Service Delivery improvements

Standardisation of Business Processes: The objective is to ensure that every SASSA customer experiences the same business processes, regardless of where he or she chooses to apply or transact with SASSA. The major focus during this period was the standardisation of business processes at local offices.

Uniformity of services at the local office level.

•Business processes have been mapped and 4 154 front line staff were trained on the improved processes, which seek to eliminate duplication in functions, while at the same time ensuring quality,

•All provinces standardised on a 4 step process, while Eastern Cape and Free State (which already have a partially automated management system in place) have standardised on a 3 step process.

•Introduced the quality assurance function in the grants value chain at local offices level.

Service Delivery improvements

Standardisation of Business Processes: The objective is to ensure that every SASSA customer experiences the same business processes, regardless of where he or she chooses to apply or transact with SASSA.

Improvements in local offices infrastructure

•75 local offices were upgraded to suit the new standardised application process.

•Improvements in this regard included changing the office layout, installation of ICT infrastructure, branding and provision of adequate sitting space for applicants and beneficiaries.

Effective and Efficient Payment System

Objective: Improving the payment system; enhance payment services to beneficiaries and address the current payment challenges.

Improvement of pay-point infrastructure : The target was to upgrade at least 300 Pay-points•The agency achieved its target and improved 366 pay points. The total expenditure as at 31 March 2012 was 13,820,692.77 (89% of the budget)

•Some of the improvements implemented included repairs to and/or upgrading of existing shelters, the erection of shelters (tents), the purchase and/or upgrading of ablution facilities, the provision of chairs, the construction of access ramps and the erection of fencing

Management of Dormant Accounts: The target was to recover R50 million from dormant accounts.

•At least R34.8 m was recovered from dormant accounts. (achieved only 69% recovery achieved due to legislative impediments)

Effective and Efficient Payment System

Objective: Improving the payment system; enhance payment services to beneficiaries and address the current payment challenges.

• A new service provider was contracted in January 2012 to implement the new payment solution; The contract formally commenced in April 2012.

• Agency had to undertake preparatory work prior to commencement of the contract which included: System conversions and trials Preliminary re-registration of beneficiaries who were previously paid by

other contractors Card swaps In March 2012, the first phase of the new payment solution was

implemented for new grant applicants in all nine regions

Effective Management of Beneficiaries

Notification for reviews and life certification. The following targets were set:•900 000 reviews•700 000 life certification

• 797 011 were notified of administrative decisions and reviewed

• 1369 424 beneficiaries were life certified

• 598 580 grants were lapsed

Beneficiary Records Management: This involves the updating beneficiary records both backlogs and new exceptions

•32% of beneficiary records with backlogs updated.

•395 769 beneficiary records with exceptions resolved. This included incorrect ID (7 279); incorrect addresses (279 008); incorrect banking details (1 511); undeclared means (7947)

PRIORITY 2

Improved System Integrity

Human Capital Management• Total number of posts of SASSA establishment is 19 051

• Only 9137 of these posts are funded

• Total Number of employees as at March 2012: 8437

Filling of funded posts: Target was to fill 1 496 posts

•A total of 1 489 posts were filled: 1 384 targeted 105 Additional posts filled for special projects (EPWP, MIS, grants

review, debt management)

Employee wellness programme •In an attempt to control absenteeism due to ill health, the Agency ensured that wellness education was promoted through its Employee Wellness Programme;•2 487 employees participated in health-screening exercises to evaluate their health status

Internal Audit and Risk Management

• The main priority for the Agency was the implementation of an integrity model to ensure a culture of commitment, professionalism and discipline; and to reduce fraud and corruption and ensure good governance

• Developed and implemented the Integrity policy

• Developed the Ethics Programme.

• An Integrated Fraud Prevention Strategy has been developed, which will enhance the efficiency and effectiveness of fraud prevention, detection, investigation and resolution within the Agency;

A total of 2 509 fraud cases were referred to law enforcement agencies, including the Special Investigating Unit (SIU) for further investigation and prosecution;

1 048 internal fraud investigations were conducted by the Agency’s fraud and compliance staff and 40 469 beneficiaries were verified for eligibility and existence throughout the Agency;

A total of 2 488 persons were brought before the courts in the year under review. Of this number, 2 258 were convicted; and

5 414 people signed acknowledgements of debt valued at R43.7m for the repayment of fraudulent grants.

Legal ServicesThe objective is to provide efficient and effective legal services to the Agency.

• Through the implementation of the legal services frameworks, the Agency was able to:

Decrease the number of in particular social grant related litigation cases per annum from 15 224 in 2008/09 to 249 in 2011/12; and this figure represents a 98.36% reduction in litigations over a period of four years.

Prepare contracts, which incorporated terms that are favourable to the Agency; and

Conduct four major training sessions on the Promotion of Administrative Justice Act (PAJA) for targeted employees of the Agency in collaboration with the Department of Justice and Constitutional Development in order to promote awareness of the right of the public to be given reasons for an administrative decision that affects their rights.

PRIORITY 3

Increased access to Social Security

Community Outreach Programmes

Objective: Improve accessibility of SASSA programmes and maintain a good relationship with customers.

Target 44 rural wards having access to social assistance through ICROP

• The target of 44 rural wards was surpassed as 495 rural wards were reached through ICROP

• 98 472 beneficiaries in the rural wards were reached and serviced through the ICROP. The target of 65 500 beneficiaries for the period under review was exceeded.

Customer relationship Management

•99% of enquiries were attended to. (255 509 out of 258 809 enquiries were attended to)

•88% of the complaints were resolved within 5 days (14 885 of 16 806 complaints received)

BUDGET AND EXPENDITURE FOR 2011/12

Financial Performance

SASSA 2011/12 Audited Financial Outcome

32

ItemBudget Allocation

Audited Actual Expenditure Variance % Spent

Compensation of employees 1,851,572 1,781,596 69,976 96%Goods & services 4,178,189 3,369,098 809,091 81%Of which:

Cash handling Fees 2,474,619 2,203,692 270,927 89%Communication 107,094 90,685 16,409 85%External Compt. Services 384,231 202,177 182,053 53%Medical services 87,946 78,096 9,850 89%Leases 321,588 199,679 121,910 62%Travel & subsistence 83,232 57,615 25,617 69%Property payments excl.rental 252,846 226,626 26,220 90%Others 466,632 310,528 156,104 67%

Transfers & Subsidies 21,300 10,213 11,087 48%Payments for Capital Expenditure 92,595 101,339 (8,744) 109%Total 6,143,656 5,262,246 881,410 86%

Economic ClassificationSpending against budgetNote: Cash Handling fees are reflected separate from Goods & Services

The Agency’s revenue and expenditure cont…

• Total expenditure for the period under review amounted to R5,2 billion (86% of the allocated budget)

• The Agency had a saving of about R881 million;

• The bulk of expenditure on the Administration Budget (about 30%) went to the payment of contractors contracted to disburse grants to beneficiaries;

• This is followed by expenditure on personnel, while the remaining balance covers other operational expenses and projects;

Reasons for Variances on Expenditure

Compensation of Employees

•A saving on personnel expenditure is mainly attributable to delays in the filling of critical and replacement posts which was only concluded during the last quarter of the 2011/12 financial year.

Goods & services

•A significant part of the financial year’s surplus is attributed to the saving on cash handling fees (R270,927 million)

This was due to the lower tariffs charged by the contractors after renegotiation of the contracts This resulted in SASSA paying less cash handling fees, thus achieving efficiencies on the cost of disbursing grants.

•The spending on a number of other strategic projects including improvements of local offices and pay-points was also delayed due to the delayed commencement of most of these projects

Reasons for Variances on Expenditure

Transfers & Subsidies

•A significant amount of transfers and subsidies is allocated to skills levy as per Skills Development Act. The Agency apportioned 1% of the total compensation of employees budget to skills levy.

•Due to delays in the filling of posts, the allocated budget for skills development levy was partially spent.

Payment for Capital Assets

•SASSA overspent on Capital expenditure, particularly ICT equipment:

– procurement of computers and printers for the newly appointed employees.

– part of the budget was utilised on ICT infrastructure development ( Cabling of offices)

Auditor-General Report and Comments

Audit Outcomes

• SASSA received an unqualified audit opinion

• AGSA’s opinion

– The financial statements present fairly, in all material respects, the financial position of the Agency as at 31 March 2012 in accordance with SA Standards of GRAP and the requirements of the PFMA and the South African Social Security Agency Act, 2004 (Act No.9 of 2004).

• Emphasis of matter

Significant uncertainty regarding the Payment Tender and according to the AG, the outcome of this lawsuit may determine whether there was any non compliance in the procurement process.

Audit Outcomes - DSD

• The AGSA audit for 2010/11 identified exceptions in grants administration, which led to an audit qualification of the Department of Social Development;

– Audit exceptions included, among other things, a significant number of missing files, correspondence that still had to be filed and captured on the MIS, missing critical documents, files that still needed to be transferred between regions, and old inactive files that needed to be destroyed;

• Significant progress has been made in addressing the AGSA’s findings and exceptions were reduced.

• DSD received also received an unqualified audit opinion

Recommendations

• It is recommended that the Portfolio Committee on Social Development note SASSA’s Annual Report for 2011/12.

Thank You