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