budget review: municipal demarcation board select committee on local government and administration...

BUDGET REVIEW: MUNICIPAL DEMARCATION BOARD

SELECT COMMITTEE ON LOCAL GOVERNMENT AND ADMINISTRATION

Vuyo Mlokoti – Chairperson

Morongoa Letsoalo –Deputy Chairperson

Hillary Monare - CEO

Richard Somanje - CFO

08 May 2007

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REPRESENTATION AND DOCUMENTS

From the Board: Dr Vuyo Mlokoti – Chairperson: MDB; Ms Morongoa Letsoalo – Deputy Chairperson: MDB; Mr Hillary Monare – Chief Executive: MDB; Mr Richard Somanje – Chief Financial Officer

Document Tabled: Draft Annual Report 2006 – 2007 Strategic Plan 2007 - 2011

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Two Briefings – 14 March & 17 October 2006 At both briefings, the following issues were covered:

We confirmed our written explanations to the Select and Portfolio Committees of concerns and reservations raised previously by members of this and the Portfolio Committee with respect to:

Expenditure on Professional Fees, Office Expenses, Staff Remuneration, Board Members Remuneration, Travel and Accomodation, Consultants;

There had also been concerns raised about the Board possibly spending its money on things that are irrelevant in as far as its core mandate is concerned, and thus the financial difficulties it faced, which we explained.

We also reported to the Select Committee on the Board’s mandate, and how we had performed in pusuit of that mandate in 2005/06.

There was also a range of administrative and other financial issues that we addressed you on. In this regard, we submitted a report to the Portfolio Committee in March 2006 to substantiate under funding problems.

Furthermore, we presented to you our medium term strategy for the period 2006/07 to 2009/10.

PAST BRIEFINGS IN 2006

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OVERVIEW: TODAY’S PRESENTATION

Overview on mandates and performance (Hillary Monare)

In 2006/07 a number of Strategic Themes were identified around the board’s mandate, including:

re-determination of municipal and ward boundaries, declaration and withdrawal of DMA declarations; capacity assessments; alignment of service delivery boundaries; relationships with key stakeholders; good governance and organisational capacity.

Slides to follow will deal back to back with performance in

2006/2007, and the way forward 2007/8-2010/11.

Budget Review (Richard Somanje) The Budget review will cover, amongst others, budget trends, income

and expenditure, assets and other related financial matters.

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Mandate: Determine and re-determine municipal boundaries, and delimit wards for local elections

2006/2007 Changes to municipal boundaries on hold from 20 Feb 2004 to 2006

for ward delimitation and local elections on 1 March 2006 March 2006 process resumed - 119 outstanding cases. Some finalised/ some in process: some Provincial boundaries; some

affects boundaries of traditional areas; some in section 26, 21 or 21(5) process.

A total of 80 DEMS (61 plus 19 cross boundary DEMS) as well as any new DEMS are to be finalised by mid 2008.

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Mandate: Determine and re-determine municipal boundaries, and delimit wards for local elections (cont)2007/8 – 2010/11 Focus to shift to planning for the next national, provincial and local

elections Consultation with other stakeholders to commence and processes

to start to ensure successful elections Draft work plan to follow is based on the assumption that

legislation will not change, and that National and provincial elections will be held in April 2009 and local elections will be held in March 2011

Legislation not a mandate of Board but we can make contributions eg the criteria for ward delimitation or any other legislation affecting the Board etc

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Mandate: Determine and re-determine municipal boundaries, and delimit wards for local elections (cont)

Key performance area:

Finalise as many changes as possible to outer boundaries of municipalities by May 2008

Dec 2007 Board approve last sec 26 notices.

Jan 2008 Last section 26 notices published before the local elections in 2011

March 2008 Last section 21 notices published before the local elections

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Key performance area:Hand over of outer boundaries to IEC, and ensure that formula and the number of councillors are gazetted

April 2008 Closing date for sec 21 objections

May 2008 Last section 21(5) notices published before the elections and IEC informed

June 2008 IEC publishes all outstanding sec 23 notices

July 2008 MECs publish all outstanding section 23 notices

Aug 2008 Municipal boundaries provided to IEC

Aug/Sept 2008 IEC align VD boundaries to municipal boundaries

Sept/Oct/Nov 2008?

Registration of voters for national and provincial elections

Feb 2009? Certify national common voters roll and gazette it

Feb 2009? Divide national common voters roll into municipal segments

March 2009 Publish formula for the number of councillors (problem area)

March 2009 MECs determine and publish number of councillors for each municipality (problem area)

March 2009 MDB determines the number of wards and the norm for ward delimitation

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Key performance area:Ward delimitation and public consultation

Apr 2009? National and Provincial elections

Apr 2009 Formal consultation between MDB and IEC as required by Structures Act

Apr-Jun 2009 MDB prepares first set of draft ward boundaries

Jul/Aug 2009 Public consultation process commences (circular/media ads)

31 Aug 2009 Closing date for public comments

Sept/Oct 2009 Consider public comments and prepare map set 2 for public hearings

Nov/Dec2009 Maps and notices distributed and logistics finalised for public hearings

Jan/Feb 2010 Public hearings

March 2010 Finalise map set 3 and gazette ward maps in Provincial gazettes for objections

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Key performance area:Consider public objections and publish final ward boundaries

1 April 2010 Closing date for objections

Apr/May 2010 Consider public objections

Jun 2010 Final ward boundaries handed to IEC

Jun/July 2010 Alignment of VD boundaries to ward boundaries

Aug 2010 Gazette final ward boundaries

Aug 2010 Election date gazetted

Aug – Nov 2010

Registration of voters

Nov 2010 – Feb 2011

Preparations for elections

March 2011? Local elections

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Concerns It appears that provinces and municipalities still lack interest in

demarcation issues Towards the end of 2007 time for consultation will decrease

drastically Late/urgent applications may adversely affect already tight

timeframes New legislation (if any) may adversely affect timeframes and

preparations for the elections Previous delays pertaining to formula and number of councillors

may occur due to national and provincial elections.

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Mandate: Declare District Management areas (DMAs) and withdraw declarations

Legal provisions & history DMAs are not a fourth category of municipalities Structures Act: DMA to be established where it is not conducive to

establish category B municipalities. Original policy: Declare deserts and semi-arid areas and State

protected and conservation areas as DMAs Policy review: Only national parks/areas of international

significance Declaration of 6 DMAs withdrawn prior to local elctions Effect of changes to provincial boundaries on DMAs eg Kruger

Park – weight of councillors & performance of functions Legislation does not provide for the declaration of DMAs in

metropolitan areas. National Parks such as the Table Mountain National Park can therefore not be declared as a DMA as it falls within the area of a metropolitan municipality.

.

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Mandate: Declare District Management areas (DMAs) and withdraw declarations (cont)

2006/07 To determine the advisability to continue with a local government system

comprising of 3 categories AND DMAs The system has been cleaned up by removing cross-boundary

municipalities Shouldn’t the system also be cleaned up with respect to DMAs Further review of declarations to be investigated DMA Survey re performance of functions by DCs2007/08OPTIONS FOR INVESTIGATION Retain the status quo. Retain only national parks as DMAs Clean up the local government system and withdraw all DMA declarationsIf at all possible project to be finalised before changes to outer boundaries close – meaning that draft doc for consultation should be ready by mid 2007 for consultation in the second half and the legal process early 2008.

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Mandate: Alignment of service delivery boundaries, TA Boundaries and assessment of boundaries

Cabinet resolution2002 Alignment Survey2006/07 Alignment Survey June 2006 Intensive work with Justice and SAPS Review of magisterial districts and SAPS boundaries as a result of

changes to Provincial boundaries Commenced with 2 projects: Creating a credible set of TA

boundaries/Assessment of boundaries2007/08 Justice/SAPS project to be completed in Aug 20072007/08 – 2010/11 Assist other departments where necessary with alignment Ongoing work on 2 projects

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Mandate: Capacity Assessments

Purpose of assessments Advise to MEC to ensure equitable and sustainable service deliveryProcess Data collection, verification, analyses & reports Outsourced project but staff involved in data collection for internal capacity building2006/2007 100% return of questionnaires from 46 DCs & 231 Local munics 46 DC reports – Dec 2006 9 Provincial overview reports – Feb 2007 1 National overview report – March 2007Recommendation Recommend a special meeting with Portfolio Committee and Select Committee for a

briefing on 2006/2007 findings on the capacity of district and local munics to perform their function.

Data collection project MDB Annual collection in Aug Work with Treasury, StatsSA and others on data collection from

municipalities/standardisation of questions and reductions of questionnaires to municipalities.

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Relationships with key stakeholders2006/2007Key stake holders involved in committee, task teams and projects Joint Boundary/Powers and Functions Committee – All provinces, DPLG,

IEC, SALGA, DWAF and other departments TA boundary project – DPLG, DLA Provinces Alignment project – All departments – focus on SAPS and Justice2007/8 – 2010/11 Projects, where necessary to continue, but focus will shift to projects

related to elections and ongoing consultation with key stakeholders: IEC Minister/DPLG MECs/Provincial officials Municipalities SALGA

Plans are also underway to launch the Board National Report on the 2006/07 Municipal Capacity Assessments, during the course of May 2007.

Invitations to the launch will be forthcoming soon, and we hereby ask for the Select Committee’s support in this regard.

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MDB Organisational and Governance Issues

2006/2007General improvement of internal matters such as: Successfully implemented the following systems:-

Integrated Payroll and HR Management system Leave Control system linked to payroll Balanced Scorecard Performance Management System Human Resources oversight statistics.

Business Continuation Plan completed Various policies drafted or reviews and improved by the Board Recruitment and Selection carried out for the following positions:

GIS Analyst; Senior GIS Officer; Financial Officer and Head : GIS/IT

However, 34% positions still vacant due to funding problems

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MDB Organisational and Governance Issues (Cont)

2007/8 Interventions pertaining to allocation of a more reasonable

budget, Improve compliance with applicable financial laws and regulations Revise Finance organisational structure Implement the Business Continuity Plan to address all risks Refine and enforce Policies and Procedures governing

employment matters. Refine Performance Management System (Balance Scorecard) Improve on the training and development of staff (skills auditing

and monitoring). Finalise a suitable and generally acceptable way in which the staff

remuneration structure ensures fair remuneration to staff.

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BUDGET REVIEW

This part of the presentation deals with historic figures and estimates for the future.

The audited financial statements for 2006/2007 will be included in the in the final 2006/2007 Annual Report to be submitted to Parliament later this year.

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Financial Management: Objectives Manage the preparation of annual operational and capital budget Develops an expenditure forecast on a monthly and quarterly

basis Physical assets strategic plan Provides timely and accurate reports for strategic decision making Manage the preparation of monthly, quarterly and annual budget

reports Manages expenditure in terms of budget and funding constraints Control expenditure versus the budget

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OVERVIEW: EXPENDITURE TRENDS: 2001 - 2006

The income and expenditure trends for the previous financial years are illustrated as follows:Details

R'000 % R'000 % R'000 % R'000 % R'000 % R'000 %

Income 30,928 100% 19,267 100% 19,158 100% 17,976 100% 26,694 100% 25,609 100%DPLG 29,215 94.5% 15,842 82.2% 11,670 60.9% 14,311 79.6% 22,523 84.4% 24,959 97.5%Donor 1,156 3.7% 3,110 16.1% 3,738 19.5% 3,165 17.6% 3,970 14.9% 650 2.5%

Expenditure 33,335 100% 16,163 100% 20,465 100% 19,392 100% 28,638 100% 22,408 100%

Board remuneration 1,982 5.9% 1,537 9.5% 1,919 9.4% 1,456 7.5% 2,327 8.1% 2,745 12.3%Salaries and wages 2,737 8.2% 2,966 18.4% 4,719 23.1% 5,186 26.7% 5,193 18.1% 4,949 22.1%Insurances 177 0.5% 199 1.2% 288 1.4% 308 1.6% 392 1.4% 402 1.8%Professional Fees 15,206 45.6% 4,557 28.2% 8,181 40.0% 5,942 30.6% 6,071 21.2% 6,143 27.4%Auditors' remuneration 100 0.3% 51 0.3% 93 0.5% 268 1.4% 477 1.7% 578 2.6%Donor expenses 0 0.0% 0 0.0% 0 0.0% 3,165 16.3% 3,970 13.9% 647 2.9%Travel and accommodation 2,204 6.6% 1,302 8.1% 1,846 9.0% 1,665 8.6% 1,893 6.6% 1,423 6.4%Telephone 388 1.2% 387 2.4% 240 1.2% 291 1.5% 302 1.1% 297 1.3%

(Deficit)/ Surplus for the year -2,407 -7.8% 3,104 16.1% -4,356 -23% -1,416 -7.9% -1,944 -7.3% 3,465 13.5%

EXPENDITURE TRENDS 2001 - 2006

2005/62004/52000/1 2001/2 2002/3 2003/4

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OVERVIEW: BUDGET SUBMITTED VS ACTUAL RECEIPTS: 1999-2011

BUDGET REVIEW 1999/ 00 - 2010/ 11

199

9/00

200

0/01

200

1/02

200

2/03

200

3/04

200

4/05

200

5/06

200

6/07

200

7/08

200

8/09

200

9/10

201

0/11

Submitted 34,104 30,828 17,923 20,607 21,508 34,294 18,015 22,322 25,067 27,803 56,571 36,002

Received 33,584 29,215 15,842 11,670 14,311 22,523 24,959 16,827 20,664 22,043 30,260

% Received 98% 95% 88% 57% 67% 66% 139% 75% 82% 79% 53% 0%

Expenditure 25,518 33,335 16,163 20,465 16,227 24,864 21,761

Surplus/(Deficit) 8,066 -4,120 -321 -8,795 -1,916 -2,341 3,198 16,827 20,664 22,043 30,260 -

Donor Funds - 1,156 3,110 3,738

Net Surplus/(Deficit) 8,066 -2,964 2,789 -5,057 -1,916 -2,341 3,198 16,827 20,664 22,043 30,260 -

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OVERVIEW:1999 – 2013: BUDGET SUBMITTED vs RECEIVED

RECEVIED VS SUMITTED

0

10,000

20,000

30,000

40,000

50,000

60,000

1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13

YEARS

AM

OU

NT

(R

'000

)

Submitted Received

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OVERVIEW: BUDGET TRENDS 2000 - 2010

BUDGET REVIEW

0

10,000

20,000

30,000

40,000

50,000

60,000

1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13

YEARS

AM

OU

NT

S('

000)

Submitted Received

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EXPECTED OTHER INCOME

2007/8 2008/9 2009/10 2010/11

Sale of maps

60,500 66,550 73,205 65,880

SA Explorer

5,000 0 0 0

Interest received

99,000 103,950 114,345 102,910

Total 164,500 170,500 187,550 174,190

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CLUSTER BUDGET: MTEF

R’000 2007/8 2008/9 2009/10 2010/11

Finance 3,648 4,222 4,885 5,553

GIS 3,269 5,558 10,097 6,581

Research 6,651 8,198 21,791 19,295

Admin 3,376 3,880 4,489 5,190

Management 2,163 2,599 3,007 3,418

Members 1,558 1,767 2,053 2,327

Total 20,664 26,224 46,323 42,365

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CLUSTER CHART

CLUSTER BUDGET

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

2007/08 2008/09 2009/10 2010/11 2011/12 2012/13

YEARS

AM

OU

NT

Finance

GIS

Research

Admin

Management

Members

28

2007/8 CLUSTER CHART

2007/08 BUDGET

18%

16%

32%

16%

10%

8%

Finance

GIS

Research

Admin

Management

Members

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EXPENDITURE HIGHLIGHTS: 2007/8 – 1010/11(SELECTED ITEMS)

R’000 2007/8 2008/9 2009/10 2010/11

Members 1,312 1,508 1,755 2,009

Ward GIS 0 1,000 4,300 500

Cap Ass 4,410 4,836 5,280 6,425

WardNotice 0 0 9,000 5,000

PH Notice 0 0 5,000 5,000

Rent 1,084 1,106 1,226 1,348

Salaries 7,728 9,611 11,467 13,065

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ACQUISITION OF FIXED ASSETS

2007/8 2008/9 2009/10 2010/11

Desktops 87,500

Laptops 131,500 159,500 130,000

Server 100,000

Network upgrade 12,500 12,500

Computer Software

25,000

Printers/fax 39,500 26,500

Total 208,500 87,500 186,000 242,500

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MAINTENANCE OF FIXED ASSETS

2007/8 2008/9 2009/10 2010/11

Hardware maintance

10,000 10,000 10,000 10,000

Total 10,000 10,000 10,000 10,000

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RECEIPTS FOR THE YEAR 2006/07

MTEF Allocation (total allocation 16,827) (R’000) 16,827

Donor Funding 2,673

Map & Explorer Sales 70

Disposal of Assets 18

Other Income 145

TOTAL INCOME AT OUR DISPOSAL 2006/07 19,733

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ESTIMATED EXPENDITURE FOR THE YEAR 2006/07 (Audit still to be done)

Expenditure Item (R’000) Amount Percentage of Total Income

Administrative Expenses 4,063 20.6

Staff Costs 7,627 38.7

Audit Fees 1,012 5.1

Project Expenses 3,995 20.2

Payments from Donor Funding 2,674 13.6

Other operating expenses 496 2.5

Finance Costs 27 0.1

Depreciation and Amortisation 662 3.4

TOTAL EXPENDITURE 20,556 104.2

Surplus (deficit) for the year (823) -4.2

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BREAKDOWN OF EXPENDITURE: 2006/2007

ADMINISTRATIVE EXPENSES–Travel and Subsistence 996

–Rentals in respect of operating leasesBuildingsPlant, Machinery and Equipment

921

64General and Administrative Expenses

Cleaning Services 33Conferences and Seminars 67Courier Services 72Water & Electricity 94ISP and hosting services 220Postage Services 12

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BREAKDOWN OF EXPENDITURE: 2006/2007

General and Administrative Expenses

Internal audit fees 271

Publications, Notices and gazettes 402

Insurance 311

Printing and photocopying 57

Stationery 75

Subscription 70

Telephone expenses, etc 265

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Conclusion

Taking into consideration our limited staff, budget and infrastructure we are satisfied with our achievements during the 2006/7 financial year.

However, we are disappointed that no special research could be conducted during the past financial year due to financial constraints.

All queries raised by our internal auditors and the Auditor-General have been resolved, or are in process of being resolved, and we expect a clean report for 2006/2007.

Adequate funding remains a challenge that we have not been able to resolve. This not only adversely affected our statutory duties but also the filling of vacancies, and infrastructure.

We trust that our detailed Strategic Plan and interim annual report will give members some insight in the activities of the Municipal Demarcation Board.

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Thank you

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