THE%20ROLE%20OF%20THE%20FFC%20IN%20THE%20BUDGET%20PROCESS

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THE ROLE OF THE FFC IN THE BUDGET PROCESS WITH
SPECIAL REFERENCE TO EDUCATION -------------------
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SENTATION TO THE PORTFOLIO COMMETTEE O3 APRIL
2001
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WHAT IS THE FINANCIAL AND FISCAL COMMISSION?

• The Financial and Fiscal Commission is
  established in terms of the 1996 Constitution
  through the Financial and Fiscal Commission Act.
• The role, function and powers of the
  Commission are determined by
• The Constitution,
• The Financial and Fiscal Commission Act, and
• The Intergovernmental Fiscal Relations Act.

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WHAT IS THE COMMISSIONS KEY FUNCTION?

• The Commission must consider
• The annual vertical division of revenue between
  the national, provincial and local spheres.
• The horizontal division of revenue between the
  provinces, and
• Any other
• - Conditional or
• - unconditional allocations to provinces or
  Local Government.

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FFC 2001 REC0MMENDATIONSResponse from Government

• The provincial equitable share should provide
  forconstitutionally mandated basic levels of
  social service provision and provinces should be
  held accountable forthe delivery of such
  services
• The FFC suggested that basic services be defined
  in terms of cost per beneficiary with allowances
  made for variations in the cost of delivery for
  different target groups and the inclusion of
  national (or provincial) policy parameters.

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Towards an Equitable share of National Revenue

• FFC approach to Equitable share
• (MATRIX)
• The provincial equitable share
• - With a particular emphasis on basic education,
  primary health care and social security (S)
• - The Basic Element (B),
• The Institutional Element (I).

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- The Costed Norms approach An Analytical Tool
for the PES

• For the next three-year MTEF cycle, starting in
  2001, the FFC proposes that constitutionally
  mandated basic social services be provided and be
  explicitly budgeted for.
• The FFC uses the costed norms approach as a
  method for recommending the indicative resources
  for the provision of CMBS. The rights of citizens
  to these CMBS are to be progressively realised.

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DEFINITION

• The costed norms approach is a formula based
  method for calculating the financial resources
  necessary for the provision of constitutionally
  mandated basic service levels, given nationally
  mandated norms and standards.

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THREE BROAD IMPLEMENTATION STEPS

• Constitutionally mandated basic level of social
  services should be determined nationally and
  should be expressed in terms of norms and
  standards for each programme area.
• Fiscal requirements should be determined by
  taking account of factors affecting provincial
  conditions and the macro-economic framework.
• Total costs of providing basic education may then
  be calculated for each province.

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THE FFC APPROACH AS APPLIED TO EDUCATION
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THE CURRENT FFC ALLOCATION FORMULA

• Is based on the distribution among the provinces
  of children between the ages of 7 and 18 and the
  current enrolment in primary and secondary
  education
• Each school age learner is counted as one learner
  and each over-and-under aged learner is
  considered the equivalent of ¾ of an appropriate
  age learner

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THE CURRENT FFC ALLOCATION FORMULA CONTINUED ..

• Aims to determine the minimum amount of money a
  province should spend in order to provide its
  learners with basic education
• Where
• Basic education is defined in terms of providing
  primary and secondary education to learners in
  ordinary and special schools

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TARGETING POOR LEARNERS

• Evidence has shown that the amount of money
  necessary to meet any given educational standard
  will vary both across and within provinces
• Learners with various disadvantages require extra
  resources to achieve any given educational
  standard.
• Costs are highest for poor, rural learners and
  lowest for non-poor urban learners
• Basic education Ordinary and Special school,
  rest in Basic (B)i.e. ABET, ECDP

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TARGETING POOR LEARNERS CONTINUED

• Cost per learner in a group is estimated using
  a series of weights multiplied by an average cost
  per province - taking account of differences.
• Total cost to a province is average cost per
  learner multiplied by the number of learners
  enrolled.
• A parameter is introduced to distinguish between
  funding appropriate and inappropriate age
  learners
• Learners divided into 9 groups distinguished by
  characteristics

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LEARNER GROUPS
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LEARNER WEIGHTS

• Non-poor urban 1.00
• Non-poor rural 1.06
• Poor urban 1.23
• Poor rural 1.29
• Inappropriate age 0.75
• Special learners 2.30

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RECENT RESEARCH FINDINGS BY THE FFC

• Indicators used to identify target groups differ
  from one province to another
• Wide variation in per capita non-personnel
  expenditure is noted
• Provinces differentiate per capita spending by
  income group more finely than the FFC but place
  less emphasis on the urban-rural distinction

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FFC RECOMMENDATION PROPOSAL FOR 2002 With Regard
to education

• To work with stakeholders to establish norms and
  standards that will be common to all provinces.
  This will help produce a common definition of
  basic education that will be acceptable to all
  provinces
• To include Early Childhood Development Programme
  and ABET in the PES model as a Constitutional
  Basic Mandated Service