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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 2 GDP Total State Budget R1 234 600 million 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% 85 0,8% 91 0,86% 97 0,86% 0 0% 0 0% 502 5,1% 550 5,2% 568 5,1% 9 879 100% 10 554 100% 11 222 100% 2.3 Teaching development Foundation programms 2.6 New capital projects 3 Special allocation for institutional restructuring TOTAL: BLOCK & EARMARKED 0% This total allocation was about R9 385 million in 2003/4 Example of Division of Government Budget between Grant Categories (2005/06) NSFAS Earmarked 6% [R638m] 13,3% [R1 410m] National budget for higher education institutions 100% [R10 554m] Institutional restructuring 5,2% [R550m] Foundation Year Interest & Redemption Block grants 2% [R231m] 86,6% [R9 144m] Teaching Input grants 55,6% [R5 866m] generated by Approved FTE student places Teaching output grants 13,9% [R1 466m] generated by Non-research graduates & diplomates Research output grants 11,4% [R1200m] generated by Research masters & doctorates & publications Institutional factor grants 5,8% [R611m] generated by (a) Enrolment size (b) Disadvantaged students 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: Previously this was only two groups/levels (a) Four funding groups (b) Four study levels (c) Weighted according to funding group and study level Four Funding Groups Funding group 1 2 3 4 CESM categories included in funding group 07 education 13 law 14 librarianship 20 psychology 21 social services/public administration 04 business/commerce 05 communication 06 computer science 12 languages 18 philosophy/religion 22 social sciences 02 architecture/planning 08 engineering 10 home economics 11 industrial arts 16 mathematical sciences 19 physical education 01 argriculture 03 fine and performing arts 09 health sciences 15 life and physical sciences Weightings according to Funding Group and Study Level (i) Contact Students (Distance Students) Level Funding group Undergraduate & equivalent Honours & 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) 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 Pretoria (Contact) Level Total Weighted Total Funding 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 Teaching Output Grant (a) Non-research output measured by non-research graduates and diplomates and weighted And (b) (a) Measured against output norms (benchmarks) 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) (b) Graduation benchmarks for contact and distance programmes (Graduates as % of head count enrolments) Contact Distance 2004/05 2004/05 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% Undergraduate: up to three years 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) (a) Measured against a research output norm benchmark Weightings for research outputs Publication units 1 Research masters graduates 1 Doctoral graduates 3 (b) Ratios of weighted research output units to permanently appointed instruction/research staff Universities 1.25 Technikons 0.5 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 Grants 2.1 Measured by the proportion of disadvantaged students [Contact African & Coloured students who are SA citizens] IFG (DS) = % X TIG 10.00% PERCENTAGE 7.50% 5.00% 2.50% 0.00% 0% 10% 20% 30% 40% 50% 60% 70% % OF DISADVANTAGED CONTACT FTE STUDENTS 80% 90% 100% Institutional Factor Grants 3.2 Size of the institution IFG (Size) = % X TIG 15.00% 12.50% 7.50% 5.00% NUMBER OF FTE CONTACT AND DISTANCE STUDENTS 25000 20000 16000 12000 0.00% 8000 2.50% 4000 PERCENTAGE 10.00% 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 Capping 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% Institution Internal wrangles High Protected Species Star Research output per Staff member Dog Cash cow Low Low High FTE/ Staff member Internal wrangles High Protected Species Star Research output per resources required Dog Cash cow Low Low High FTE/ resources taken up FINIS