presented on behalf of the mec for the limpopo department of health and social development

Limpopo - Health - April 2006 1

Report to the Select Committee on Finance

on the 4th Quarter Provincial Budget

Reportfor the 2005 / 2006 financial

year Conditional Grants and Capital

ExpenditurePresented on behalf of the MEC for the LimpopoDepartment of Health and Social Development

the Honorable MR. SC Sekoati by the Acting HOD Mr. M Mogane

On 3 May 2006


Capital Budget - MTEF allocationBudgeted over the MTEFin R' 000 Budget % of total Budget % of total Budget % of total

Buildings and other Fixed 355,110 88.6% 248,000 68.9% 301,451 71.0%Machinery and Equipment 141,579 11.4% 265,908 31.1% 277,268 28.9%Software and intangibles 9,400 0.0% 59,200 0.0% 11,000 0.0%Local and Foreign Aid assistance - 0.0% 0.0% - 0.1%Total Budget 506,089 100.0% 573,108 100.0% 589,719 100.0%Accumulative Budget 506,089 1,079,197 1,668,916

% of totalCapital Expenditure 2001/02 to 2004/05 4 years 1,414,088 45.9%Capital Budget 2005/06 to 2007/08 3 years 1,668,916 54.1%

Total period 3,083,004

2005/06 2006/07 2007/08


Capital Actual Expenditurefor the year 2005 / 06

Budgeted over the MTEF %in R' 000 Budget Spent Spent

Buildings and other Fixed 287,626 226,414 78.7%Machinery and Equipment 246,659 165,691 67.2%Software and intangibles 277 258 93.1%Total Budget 534,562 392,363 73.4%

2005/06


Capital Expenditure• The conditional grants have been the major source of the

capital expenditure of the department with an average of 53% of the funds used being provided from the conditional grants and 47 % from Equitable Share.

• The equitable share has provided only 20% of the funds for buildings with 80% being sourced from the conditional grants.

• The Hospital Revitalization grant together with the Provincial Infrastructure Grant has provided the bulk of the capital used for facilities upgrades, maintenance and provision of new clinics.

• This trend is continued with over the MTEF.


Conditional Grants - 2001/02 to 2004/05Actual expenditure versus Budget in R ' 000Limpopo Health - Vote 7 2001/02 2002/03 2003/04 2004/05Conditional Grants Budget Budget Budget BudgetHospital Man & Quality Imp 4,000 10,451 13,337 15,388 HIV&AIDS 7,458 23,905 28,962 77,430 Intergrated Nutrition Prog 124,331 129,919 158,155 20,320 National Tertiary Services 79,008 76,256 54,287 46,878 Health Prof Train & Dev 33,551 45,101 41,981 51,805 Hospital Rehabilitation 88,000 126,821 96,239 106,463 Provincial Infrastructure Grant 38,993 58,888 83,066 Medico Legal 1,000 Drought Relief = Cholera / Malaria 6,100 Total Budget 336,348 451,446 452,849 407,450 Less - Roll overs -65,884 -71,831 -21,279 - Less - Adjustments -1,705 -39,268 -1,000 - Allocations = DORA 268,759 340,347 430,570 407,450 Actual Expenditure 262,684 431,006 392,950 373,105 % of Total Budget spent 78.1% 95.5% 86.8% 91.6%Unspent funds 73,664 20,440 59,899 34,345 Actual Transfers Received 336,348 451,446 452,849 392,076 % of funds received 100.0% 100.0% 100.0% 96.2%


Conditional Grants• Past Allocations• The Infrastructure Grant (R92.5m) is a Provincial Treasury

grant.• The conditional grants has shown a steady increase over the

past four years to grow by 68% or R242.7 million between 2001/02 and 2004/05, excluding the grant for Primary Schools Nutrition Programme that has been transferred to Education as from April 2004 onwards.

• The allocation again showed a sharp increase from the R407.45 million in 2005/06 to R645.9 million for the financial year under review.

• This is mainly due to the increase for HIV & AIDS (R48m), Forensic Pathology (R6.9m) as well as Hospital Revitalization (R106m) with all other grants also growing .

• A roll over of R34.345 million was also received in the current year to make a total of R 645 million available after surrendering R 10 million back to Treasury on the Hospital Revitalisation Grant


Conditional Grants

• Transfers• A full transfer was received for the budgeted amount

available for the period 2001/03 to 2003/04. • In the 2004/05 year the department did not receive R15.372

million of the R407.4 million allocated by receiving only R392.7 million or 96.2% from National Health via the Provincial Treasury.

• The transfers were stopped when expenditure for the third quarter was not according to the expected level.

• This resulted in the department surrendering an amount of R 15.372 million less than the actual under expenditure at year end, as these funds were not received and could thus not be paid back.

• The Provincial Treasury did roll over the funds to 2005/06


Health - Conditional Grants over the MTEF - Allocation per GFS 2005 / 06 to 2007/08

Budgeted over the MTEF in R '000Limpopo Health - Vote 7Conditional Grants DORA % Increase DORA % Increase DORA % Increase

above 04/05 above 05/06 above 06/07Hos Man & Quality Imp 17,457 13.4% 6.0% 5.0%HIV&AIDS 125,899 62.6% 175,861 39.7% 184,654 5.0%Intergrated Nutrition Prog 22,344 10.0% - -100.0% - 0.0%National Tertiary Services 71,182 51.8% 71,579 0.6% 71,648 0.1%Health Prof Train & Dev 72,411 39.8% 72,411 0.0% 76,032 5.0%Hospital Rehabilitation 212,918 100.0% 48,247 -41.9% 66,908 29.9%Forensic Pathology 6,858 100.0% 38,385 459.7% 41,930 9.2%Provincial Infrastructure 92,526 11.4% 102,125 10.4% 97,882 -4.2%Total Budget = DORA 621,595 53.2% 508,608 -18.2% 539,054 6.0%Roll over 34,345 5.6%Budget surrender -10,000 -1.6%TOTAL AVAILABLE 645,940 58.5%As from 2006 / 07 the Hospital Revitalisation Grant and HM&QI grant have been combiedThe Hospital Revitalisation Grant has been reduced as follows over the MTEF2005 / 06 Budget Statement 123,698 160,690 2006 / 07 Budget Statement 48,247 66,908

Reduction -75,451 -61.0% -93,782 -58.4%

2005/06 2006/07 2007/08


Conditional Grants

• Revised MTEF Allocations• The Budget Statement for 2005/06 included a MTEF allocation

that has reduced as follows in respect of the Hospital Revitalisation Grant that has been combined with the HMQI Grant as from April 2006 onwardsMTEF for 2005/06 2006/072006/07 R 123.698 m R 48.247 m includes R 18.5m 2007/08 R 160.690 m R 66.908 m includes R 19.43m 2008/09 not allocated R 55.487 m total inclusive

• As can be seen the current MTEF allocation does not allow for much Capital to be used for Revitalisation of our hospitals.


Conditional Grants (excluding the Infrastructure Grant) Actual expenditure for the financial year

2005 / 06Budgeted over the MTEF in R '000Limpopo Health - Vote 7 % ofConditional Grants DORA Roll over Total % Increase budget

Cut available above 04/05 Expenditure spentHospital Man & Quality Imp 17,457 4,387 21,844 13.4% 17,135 78.4%HIV&AIDS 125,899 8,103 134,002 62.6% 98,318 73.4%Intergrated Nutrition Prog 22,344 6,249 28,593 10.0% 27,023 94.5%National Tertiary Services 71,182 4,222 75,404 51.8% 45,759 60.7%Health Prof Train & Dev 72,411 72,411 39.8% 69,857 96.5%Cholera / Malaria - 2,718 2,718 0.0% 2,059 75.8%Forensic Pathology 6,858 6,858 100.0% 431 6.3%Hospital Rehabilitation 212,918 -1,334 211,584 100.0% 152,069 71.9%Total Budget = DORA 522,211 31,203 553,414 53.2% 412,651 74.6%Additional expenditure above previous year 39,546 8.3%

2005/06


Conditional GrantsCapacity Constraints - HIV & AIDS

• The business plan for HIV & AIDS was adjusted in an attempt to ensure that service delivery is speeded up, the revised plans were forwarded to National Health in November 2005.

• The in-ability to employ health professionals in posts catered for resulted in under spending of R11.5 = 8.6%.

• Identifying the cost of medicines used for the treatment of Aids Patients remains to be a challenge as all medicines are procured at a central point on the equitable share.

• Inability to procure an identified building for R 6 m, as it was sold, these funds are committed to the purchase of containers to provide much needed office space.

• There is a commitment of R 3.753 m for which invoices were received after 31 March 2006.

• Excluding PE a total of 84% of the budget was used.


Conditional Grants

Future interventions - HIV & AIDS – A fixed % (21.5%) of the NHLS costs to be allocated to

the HIV&AIDS grant– Funds to purchase a building for Resource Training

Centre as per the Comprehensive Plan has been set aside

– The comprehensive implementation plan has been submitted for approval

– Monthly comprehensive reporting will be enforced on progress and expenditure patterns to allow for early interventions via monitoring and evaluation


Conditional Grants

Capacity Constraints - I N P• The participation on the National Tender RT 289 has not

been available to the department.• Some 95 % of the grant utilsed and the balance due to

outstanding deliveries and invoices• The grant is discontinued and the budget is contained in

the Equitable Share allocation for the future MTEF


Conditional GrantsCapacity constraints and future interventions HPTD Grant – Expenditure on the HPTD Grant has been steady

throughout the year.– No major capacity constraints exist and 96.9 % of this

grant was expended in the financial year– The under spending of R 2.2 million was in respect of the

Machinery and Equipment budget and operational costs for the said equipment.

– Equipment is mostly imported and following the late awarding of the equipment tender delivery is expected in the current year.


Conditional GrantsCapacity constraints and future interventions HMQI

• Expenditure on this grant is largely dependant on progress made on the Hospital Revitalisation Grant .

• The training of management is ongoing but availability of management for training over extended periods are restrictive.

• Expenditure on Personnel costs amounted to 65.1 % of the budget due to vacant posts that could not be filled.

• Training costs expenditure of 71.9 % of the budget achieved due to lack of new staff appointed and availability of existing senior staff for training.


Conditional Grants Capacity constraints and future interventions - NTSG

• Purchase of equipment had been delayed due to the unavailability of a tender that was finalised in 2006 only.

• The under spending of R 22.6 m on equipment has been committed and delivery is awaited.

• Personnel costs for Specialists employed on the equitable share has been identified to be funded from this grant for the first three years of their employment and the Grant does carry these costs.

• There are not sufficient specialists employed annually to ensure utilising the total amount budgeted.

• Arrival of new specialists employed from Poland will arrive in the first quarter of 2006/07.

• Operational costs was expended at 84.6 % and the balance was to service the staff and equipment that was not employed and procured on time.


Conditional Grants

Capacity constraints and future interventions - Cholera / Malaria – The full amount of R 2.718 m received in January 2005

was rolled over to 2005/06– Pesticides for Malaria control was acquired– Vehicles for Vector control have been ordered– In response to the recent instances of reported Malaria

cases R1.2m has been committed against the grant and was utilised.

– 75.6 % of the grant was expended in the year leaving a balance of R 658 770.

– Delivery of invoices for vehicles still awaited.


Conditional GrantsHospital Revitalisation

• A roll over of R 8.7 m was received together with an additional once off allocation of R 106.5 m over the MTEF amount for the 2005/06 financial year. This was based on the ability of the department to utilise the grant in the past.

• During the Adjustment Estimates the department surrendered R10 m to National Health with a request to increase the allocation for the 2006/07 year with the same amount due to projects being completed in the following financial year.

• This grant is fully committed but expenditure is dependant on the progress made by contractors.

• The capacity of emerging contractors together with the availability of building materials especially Building Bricks has been a constraint that impacts on the timeous completion of the current contracts.


Conditional Grants Capacity constraints and future interventions – Hospital Revitalisation cont.

• It often occurs that contractors are late to take over sites due to delays beyond the control of the Dept of Health

• 72% of this grant was spent with R 59.5 m committed but no payment certificates received at year end.

• Upgrading of the filing system at Revitalised Hospitals to the value of R 4.6 m has been ordered and can only be delivered after completion of the buildings.

• The department is responsible for the planning of the hospital revitalisation projects while Dept of Public Works does the project implementation.

• The department managed to spend R 54 m (55%) more in this year than the previous financial year.

• The department has implemented the Planning Project initiated by National and projects are identified and ready to be implemented once funds are available.


Conditional GrantsCapacity constraints and future interventions – Hospital Revitalisation cont.

• The department has requested additional funds for the 2006/07 year as well as over the MTEF period as the current allocation does not allow for any progress to be made on Hospital Revitalisation.

• The current allocation includes the HM&QI allocation and is R 93.9 m less than the indicative MTEF for the year.

• Allocation for 2006/07 = R 48 247– Hospital Revitalisation R 29 742– H M & Q I R 18 505


Conditional GrantsForensic Pathology– The grant was only received in the adjustment estimates

and relates to the take over of the forensic services from SAPS

– 6 % was expended as the department was engaged in auditing the facilities and equipment available at SAPS

– SAPS was also given funds to procure loose tools and sundry equipment for transfer to the department.

– R 4.5 m has been committed on vehicles.– The department will only take over 4 mortuary of the

existing 7 from SAPS and is already busy with the construction of 12 mortuaries that replace the SAPS and ensure that forensic services are continued with by the department once SAPS is released from the function.

presented on behalf of the mec for the limpopo department of health and social development

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