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School Community Integration Pilot Project - Department of Education

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A comparative analysis <strong>of</strong> education expenditure in Eastern Cape schools – November 2004<br />

1. INTRODUCTION<br />

Since 2000/01 the Eastern Cape <strong>Department</strong> <strong>of</strong> <strong>Education</strong> has received<br />

progressively increasing budgets. A rapid review <strong>of</strong> education spending completed in<br />

March 2004 found that the <strong>Department</strong> has been able to devote increased funding to<br />

school education. The <strong>Department</strong> now wishes to conduct a detailed analysis <strong>of</strong><br />

education spending in schools examining the main factors driving and affecting<br />

education spending, especially personnel expenditure. This study is the main output<br />

from this analysis. The terms <strong>of</strong> reference for the study are given in Appendix 1.<br />

2. NATIONAL AND PROVINCIAL FUNDING FOR EDUCATION<br />

Before analysing public school education expenditure in the Eastern Cape it is<br />

important to place the province in the national and provincial context. This first<br />

section reviews three areas in education funding:<br />

• the national funding framework for education driven by the equitable share<br />

formula.<br />

• A comparison <strong>of</strong> education funding and expenditure between the provinces.<br />

• A comparison <strong>of</strong> the main education variables between the provinces.<br />

2.1. The national funding framework for education<br />

National revenue is shared each year in the state budget between the three spheres<br />

<strong>of</strong> government; national, provincial and local, with provincial government receiving<br />

the largest share reflecting its major role in service delivery. In 2004/05 provincial<br />

government is receiving R181,1 billion from national, 57,3% <strong>of</strong> total government<br />

expenditure. National funding to the provinces is channelled through two<br />

mechanisms:<br />

• The equitable share is divided between the nine provinces by formula. It is<br />

unconditional and provinces can allocate it at their own discretion. It is R160,0<br />

billion in 2004/05 (88,3% <strong>of</strong> national funding to provinces).<br />

• Conditional grants are allocated for directed purposes and functions with<br />

provinces having no discretion on their use. Conditional grant funding is R21,2<br />

billion in 2004/05 (11,7% <strong>of</strong> national funding to provinces).<br />

2.1.1. The Equitable Share Formula<br />

Most national funding to the provinces is therefore allocated through the equitable<br />

share, which is divided between the provinces by formula. The equitable share<br />

formula (ESF) currently comprises seven components as follows:<br />

• An education component (41 per cent) based on the size <strong>of</strong> the school-age<br />

population (ages 5-17) and the average number <strong>of</strong> learners enrolled in<br />

ordinary public schools for the past three years.<br />

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