Overview of the the New Funding Framework

Presented by Prof Emile Horak

Thanks and recognition to Prof Pieter Vermeulen who supplied the

information

Latest Initiative of the Government

• New acrynom: Asgisa

• Yahoo Search results in :

• Check your spelling, Try more generic words, Try different words that mean the same

Accelerated and shared growth initiative for SA (Asgisa)

Mlambo-Ngcuka to focus on skills shortage Business Report 11 May 2006

• MLambo- Ngcuka is the political head of the government ‘s accelerated and shared growth initiative for SA (Asgisa)

• To address the critical shortage of skills and spread wealth more evenly

• Skills , infrastructure and logistics are the key priorities of Asgisa

• The government is planning to spend R 370 billion on infrastructure development , but the shortage of key skills to run these projects is threatening their roll-out.

• Will speed up the issuing of work permits to foreigners

Mlambo-Ngcuka to focus on skills shortage Business Report 11 May 2006

• Government has also launched the joint Initiative on Priority Skills Acquisition (Jipsa) to attract much needed skills back to the country to help achieve 6 percent economic growth.

• Mlambo-Ngcuka is worried that companies could not accommodate new graduates who were looking for opportunities

• “ We are going to put some of these graduates in sanitation programmes- to to give them an opportunity”

GDP, Total State Finance and State Finance on Education for 2003/2004

(estimate)

1 GDP R1 234 600 million

2 Total State Budget R 333 965 million

= 27,5% of GDP

3 Total Education Budget R 68 781 million

= 20,6% of State Budget

= 5,57% of GDP

3.1 Dept of Education R 312 million = 0,45% of Educ Budget

3.2 Higher Education Sector R 8 381 million = 12,2% of Educ Budget

3.3 College/School Sector R 58 898 million = 85,6% of Educ Budget

3.4 Other Educational functions R 645 million = 0,94% of Educ Budget

3.5 NSFAS (Higher Education) R545 million = 0,79% of Educ Budget

National Student Financial Aid Scheme

The MTEF Process• Medium Term Expenditure Framework – 3 year

rolling estimates

• Department of Education (DoE) interacts with Higher Education (HE) Institutions (3 year rolling plans) and educational environment

• DoE interacts with national Treasury

• Treasury make allocation to HE, taking into account national policy and fiscal conditions

• DoE divides allocation amongst HE institutions

Distribution of Budget Totals for 2004/05, 2005/06 and 2006/07

Provisional distribution of MTEF budgets

2004/05

(R’million)

2005/06

(R’million)

2006/07

(R’million)

1 Block grants 8 568 86,7% 9 144 86,7% 9 716 86,6%

1.1 Teaching inputs 5 496 55,6% 5 866 55,6% 6 233 55,5%

1.2 Teaching outputs 1 374 13,9% 1 466 13,9% 1 558 13,9%

1.3 Research outputs 1 125 11,4% 1 200 11,4% 1 276 11,4%

1.4 Institutional factors 573 5,8% 611 5,8% 649 5,8%

2 Earmarked grants 809 8,2% 860 8,1% 938 8,4%

2.1 NSFAS 578 5,8% 638 6,0% 726 6,5%

2.2 Interest & redemption on loans 146 1,5% 131 1,2% 115 1,0%

2.3 Teaching development

Foundation programms 85 0,8% 91 0,86% 97 0,86%

2.6 New capital projects 0 0% 0 0% 0%

TOTAL: BLOCK & EARMARKED 9 879 100% 10 554 100% 11 222 100%

3 Special allocation for institutional restructuring

502 5,1% 550 5,2% 568 5,1%

This total allocation was about R9 385 million in 2003/4

Example of Division of Government Budget between Grant Categories

(2005/06)

National budget for higher education

institutions

100% [R10 554m]

Earmarked

13,3% [R1 410m]

NSFAS

6% [R638m]

Institutional restructuring

5,2% [R550m]

Foundation Year Interest & Redemption

2% [R231m]

Block grants

86,6% [R9 144m]

TeachingInput grants

55,6% [R5 866m]

Approved FTEstudent places

Non-research graduates &

diplomates

Research masters & doctorates & publications

(a) Enrolment size (b) Disadvantaged

students

Teaching output grants13,9% [R1 466m]

Research outputgrants

11,4% [R1200m]

Institutional factor grants

5,8% [R611m]

generated by generated by generated by generated by

Ministerial prerogative

• The division of funds between the grant categories is determined by the Minister of Education

• The division may vary between years, subject to the MTEF three year projections

Teaching Input Grants

Based on approved FTE student places as determined in the Programme and Qualification Mix (PQM) process:

(a) Four funding groups

(b) Four study levels

(c) Weighted according to funding group and study level

Previously this was only two groups/levels

Four Funding GroupsFunding group CESM categories included in funding group

1

07 education

13 law

14 librarianship

20 psychology

21 social services/public administration

2

04 business/commerce

05 communication

06 computer science

12 languages

18 philosophy/religion

22 social sciences

3

02 architecture/planning

08 engineering

10 home economics

11 industrial arts

16 mathematical sciences

19 physical education

4

01 argriculture

03 fine and performing arts

09 health sciences

15 life and physical sciences

Weightings according to Funding Group and Study Level

Level

Funding groupUndergraduate

& equivalentHonours & equivalent

Masters & equivalent

Doctoral & equivalent

1 1.0 (0.5) 2.0 (1.0) 3.0 (3.0) 4.0 (4.0)

2 1.5 (0.75) 3.0 (1.5) 4.5 (4.5) 6.0 (6.0)

3 2.5 (1.25) 5.0 (2.5) 7.5 (7.5) 10.0 (10.0)

4 3.5 (1.75) 7.0 (3.5) 10.5(10.5) 14.0 (14.0)

(i) Contact Students (Distance Students)

Determining Teaching Input ‘price’

• Passing institution’s adjusted FTE enrolled student total through funding grid weighted teaching input

• Equivalent figure for sector

• Available funds for teaching input

• Institution’s portions

• Proportionate allocation; not ‘price’ in the economic sense.

Estimated TI Unit “price” ±R6 600

Example of Teaching Input Grid

University of PretoriaLevel

TotalWeighted

TotalFunding group 1 2 3 4

1 4 826 810 323 178 6 138 8 129

2 7 520 1 403 410 194 9 526 18 498

3 3 219 1 063 243 63 4 587 15 813

4 3 713 1 268 580 178 5 740 30 465

Total 19 278 4 544 1 556 613 25 991 72 905

Weighted Total

37 150 20 008 10 741 5 006 72 905

(Contact)

Teaching Output Grant

(a) Non-research output measured by non-research graduates and diplomates and weighted

And

(b) Measured against output norms (benchmarks)

(a) Weighting factors for teaching outputs: universities & technikons

1st certificates and diplomas of 2 years or less 0.5

1st diplomas and bachelors degrees: 3 years 1.0

Professional 1st bachelors degrees: 4 years and more 1.5

Postgraduate and postdiploma diplomas 0.5

Postgraduate bachelors degrees 1.0

Honours degrees/higher diplomas 0.5

Non-research masters degrees 0.5

Teaching Output Grant (continued)

Contact Distance

2004/05 2004/05

Undergraduate: up to three years 22.5% 13.5%

Undergraduate: four years and more 18% 9%

Postgraduate: up to honours 54% 27%

Postgraduate: up to masters (non-Research) 30% 22.5%

(b) Graduation benchmarks for contact and distance programmes (Graduates as % of head count enrolments)

Teaching output allocation

• Calculate institution’s actual weighted total graduates/diplomates

• Actual weighted total teaching output for system

• Normative total teaching output for the institution (using benchmarks)

• Normative total teaching output for system

• Available funds for teaching outputs

• Institutional allocation,

Estimated TO Unit “price” ±R11 700

Research Outputs(a) Research outputs measured by publications in accredited journals, research masters and doctoral graduates (weighted)

And

(b) Measured against a research output norm benchmark

3Doctoral graduates

1Research masters graduates

1Publication units

(a) Weightings for research outputs

0.5Technikons

1.25Universities

(b) Ratios of weighted research output units to permanently appointed instruction/research staff

Research Output Allocation

• Determine institution’s actual total weighted research output

• Calculate the institution’s normative total weighted research output (applying the benchmarks)

• Normative weighted total research output for system

• Available funds for research output

• Proportional Institution’s research output allocation,

Estimated RO Unit “price” ±R77 000

Institutional Factor Grants2.1 Measured by the proportion of disadvantaged students [Contact

African & Coloured students who are SA citizens]

IFG (DS) = % X TIG

0.00%

2.50%

5.00%

7.50%

10.00%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

% OF DISADVANTAGED CONTACT FTE STUDENTS

PE

RC

EN

TA

GE

Institutional Factor Grants3.2 Size of the institution

IFG (Size) = % X TIG

0.00%

2.50%

5.00%

7.50%

10.00%

12.50%

15.00%

40

00

80

00

12

000

16

000

20

000

25

000

NUMBER OF FTE CONTACT AND DISTANCE STUDENTS

PE

RC

EN

TA

GE

Earmarked funding

• National Student Financial Aid Scheme (NSFAS)

• Interest and redemption on loans approved before 1999

• New capital projects

• Institutional restructuring

INTERVENTION

Discussion Document of DoE “Student Enrolment Planning: March 2005”

Ministerial Statement of Higher Education Funding: 2005/06 to 2007/08 (July 2005)

Teaching Input CappingInstitution Actual 2003 Capped for 2005/06 Capped for 2006 – 2009

Cape Peninsula 4.52% 4.49% 4.49%

Cape Town 5.07% 5.24% 5.24%

Central 1.67% 1.64% 1.64%

Durban Institute 3.71% 3.83% 3.83%

Fort Hare 1.19% 1.15% 1.15%

Free State 4.38% 4.45% 4.45%

Johannesburg 7.03% 6.91% 6.91%

Kwazulu Natal 7.88% 7.70% 7.70%

Limpopo 3.47% 3.41% 3.41%

Mangosuthu 1.34% 1.17% 1.17%

Nelson Mandela 3.67% 3.80% 3.80%

North West 5.28% 5.01% 5.01%

Pretoria 8.89% 9.19% 9.19%

Rhodes 1.14% 1.18% 1.18%

South Africa 9.63% 9.96% 9.96%

Stellenbosch 4.93% 5.09% 5.09%

Tshwane 8.45% 8.57% 8.57%

Vaal Triangle 2.36% 2.44% 2.44%

Venda 1.55% 1.34% 1.34%

Walter Sisulu 3.38% 3.04% 3.04%

Western Cape 2.87% 2.86% 2.86%

Witwatersrand 6.07% 6.09% 6.09%

Zululand 1.54% 1.45% 1.45%

Internal wrangles

Protected Species

Star

Dog Cash cow

Low High

FTE/ Staff member

High

Low

Research output per Staff member

Internal wrangles

Protected Species

Star

Dog Cash cow

Low High

FTE/ resources taken up

High

Low

Research output per resources required

FINIS