Provincial budget blues
Sorting out provincial budgets is not as hard as we are led to believe
Over the past three years the Treatment Action Campaign (TAC) has trained many of its members to analyse budgets and monitor expenditure at the primary health care level. With assistance from the Centre for Economic Governance and Aids in Africa (CEGAA), SECTION27 and other organisations involved in the Budget and Expenditure Monitoring Forum (BEMF), TAC has not only managed to produce detailed budget analyses but also to meaningfully engage decision makers on complex budget issues.
Yet so much is wrong with the way in which health care services are budgeted for and how that money is spent that it becomes difficult to advocate for a few interventions that would significantly improve service delivery. All too often we speak about how the system is ‘broken’ and how ‘systemic’ difficulties prevent government from delivering on its constitutional obligations. But we do not offer practical solutions to these problems.
There may be many reasons why we avoid doing so. We may believe that it is government’s responsibility to find answers to these problems. Or we may not feel qualified to offer meaningful solutions. Very often we simply forget that our criticism, as far as possible, should be constructive.
It is mainly government’s responsibility to fix snafus in health care, but civil society has an important role to play in identifying what needs fixing and how to go about it.
Civil society participates in the health system in ways that few government officials do. Good activists talk to community members, patients, health care professionals and facility managers to find out about what they think is wrong with health services. As members of the public and as patients, activists often use these services themselves. They therefore have first-hand knowledge of what is and is not working – experience that decision makers sitting in air-conditioned offices may lack.
Members of civil society are often led to believe that they lack the technical expertise for constructive input on fixing ‘complex’ budget issues. But as we have seen in the fight for a comprehensive public sector response to HIV/AIDS, this is not true. With a little work to develop a solid grasp of the science of ARVs and the economics of universal access to treatment, ordinary members of society can become highly effective activists. In much the same way, the Treatment Action Campaign (TAC) is discovering through its Budget Monitoring and Expenditure Tracking (BMET) project that understanding the management of public finance is most certainly not too ‘complex’.
Building on the work of others
Even if we do not have the time or capacity to analyse what lies behind the problems that plague provincial health services, many independent bodies regularly investigate such issues. These bodies make findings and recommendations on what must be done to rectify the problems.
Every year the office of the Auditor-General of South Africa (AGSA) audits the financial statements and systems of provincial departments. AGSA then publishes a report on its findings complete with recommendations.
In addition, provincial departments can and do commission investigations into flaws within their own systems. These, too, yield reports containing key recommendations. The Integrated Support Team (IST) reports, commissioned by former Minister of Health Barbara Hogan, into the finances of all provincial health departments are an important example of this.
Both regular reports by bodies such as AGSA and special investigations by expert commissions established in times of crisis provide a wealth of vital information. We can combine this material with our own experience to generate recommendations, advocate for practical solutions and monitor government’s progress in fixing systemic faults.
Five common problems
The health budget crises in the Eastern Cape and Gauteng offer a good illustration of how we can harness our own knowledge to the outcome of formal investigations. By doing so we can generate more than enough information to campaign for solutions to the budget chaos. We know that both provincial health departments have overspent on their budgets. We can also see that this has compromised service delivery by forcing these departments to implement both planned and unplanned austerity measures. Importantly, we are also familiar with some causes of this overspending and what needs to be done to clean up the mess.
We have identified five of the most pressing flaws in provincial health systems that contribute to overspending and the inefficient use of resources. In each case, we have also identified potential solutions.
Problem 1: Every year provincial health departments overspend on their budgets for employee compensation.
Ballooning employee compensation is the single largest contributor to overspending in provincial health budgets. In order to pay staff, departments have been siphoning money away from budgets for infrastructure, medical equipment and medicines.
There are a number of reasons for this overshoot:
Firstly, in many provinces the allocations for employee compensation that are made at the beginning of the financial year do not adequately provide for salary increases or the employment of new staff.
Secondly, each year AGSA reports and others such as the IST, have found that provincial health Personnel and Salary (PERSAL) systems are in a shocking state. Departments do not actually know with certainty how many staff they are paying and if those remunerations are accurate. In some cases payments are made to staff who no longer work for the department. In other cases existing staff members are paid too much – often through corrupt processes.
Finally, a poorly planned and managed Occupation-Specific Dispensation (OSD) – intended to attract and retain health workers – means that more staff than expected receive payments under the dispensation. The impact of these higher-than-anticipated outlays continues to strain budgets more than five years after the introduction of OSD.
To a large extent dealing with two key issues could solve these problems.
The first issue is that most provincial departments do not have the Human Resource Plans that are required by the National Health Act. If they do, they are often outdated. Consequently there is no clear plan outlining staff requirements, making it impossible to plan and budget appropriately each year.
Counting warm bodies
The second issue is that PERSAL systems should be fully audited and amended so that they genuinely reflect how many warm bodies a department employs. The process would also ensure that all staff receive the remuneration to which they are entitled. These changes would not only save money but also allow departments to develop more accurate personnel budgets each year. They would, however, require the retraining of staff responsible for managing PERSAL systems.
Problem 2: Unfunded mandates place unsustainable pressure on provincial budgets
Unfunded mandates are programmes or interventions that are already underway but were not budgeted for. Examples include initial phases of the OSD, the introduction of dual therapy for prevention of mother-to-child transmission (PMTCT) of HIV, or promises made by MECs such as the building of a new clinic.
While there is little doubt that many of these programmes are essential, decisions to implement them are often made by a provincial executive more focused on political mandates than on the availability of resources.
Unfunded mandates contribute directly to overspending. They also compromise the delivery of services in other areas. Before executive or political decisions are put into action it is important that additional funds are allocated for that purpose. It does not make sense, for example, to commit to building a clinic in one area if you have not allocated funds for this construction, especially if it means that money will have to be shifted from another vital infrastructure project to pay for this.
So whenever a key political decision is made to expand services, we must always ask the question, ‘Where will the funds for this come from?’
Problem 3: The ‘provincialisation’ of basic administrative tasks is highly inefficient and ineffective.
‘Provincialisation’ of functions refers to centralising administrative responsibilities – such as the buying of basic goods and services (food, cleaning products, basic medical supplies, facility maintenance) and the hiring and firing of staff – away from facility or district management and onto the provincial administration.
This is being done in most provinces as a way to deal with administrative problems in districts and health facilities. It requires the establishment of new systems and additional layers of decision-making. Such bureaucracy makes basic administrative functions slow and inefficient.
The decision to centralise these functions is based less on the need to improve service delivery than on the fear of not achieving a clean audit from AGSA. Unfortunately, not only has centralisation failed to secure a clean audit, in most provinces it has compromised service delivery.
An example is furnished in a report by the Pillay Commission, which was established in 2005 to investigate public finance management in the Eastern Cape provincial government. The report found that due to centralisation it took up to three months for basic supplies such as cleaning materials and toilet paper to reach health facilities.
The decision to centralise certain functions has, for the most part, failed to improve accountability and shown few benefits for service delivery. That said, not all health facilities or even districts have the capacity to take control of their own administration. While this capacity is being developed in certain facilities and districts, provinces should fulfil these functions. Where there is sufficient local administrative capacity, provincial departments should only play an oversight and support role.
Problem 4: Corruption robs provincial health systems of millions of rand every year.
AGSA’s audits of provincial health financial statements, special audits by private accounting firms and investigations by government bodies such as the Special Investigations Unit (SIU), all reveal that massive corruption, particularly around tenders, continues to rob public health systems of millions of rand every year. For example, an investigative report by the SIU into the Eastern Cape Health Department, published in May 2012, found that the department lost more than R800 million to corruption between January 2009 and June 2010.
Despite the fact that provincial departments are well aware of rampant corruption within their ranks, few investigations take place to identify the culprits. Even where these investigations do occur, little or no action is taken against offenders. Few law-breakers are fully disciplined, let alone charged with a crime.
Fraud and corruption are criminal offences and should be treated as such. Many sound investigative techniques are available for rooting out corruption. Major accounting firms also have the capacity to undertake independent forensic audits of contracts and financial transactions. Where suspects are identified they must be charged with criminal offences.
The cost of such investigations is often given as the reason for their rarity. What is not taken into account, however, is the long-term cost of doing nothing.
Problem 5: Comprehensive Monitoring and Evaluation (M&E) systems are often not in place, or dysfunctional.
M&E is essential to the effective functioning of any health system. A well-oiled M&E system allows a department to:
• Track progress in achieving targets;
• Provide information on what is working well and what is not;
• Develop and adapt policy based on actual need rather than unfounded assumptions; and
• Use the information that the M&E provides to plan and budget effectively.
Despite the fact that government – including all provincial health departments – recognise M&E as an essential part of improving service delivery and accountability, few provincial departments have robust M&E systems in place.
The IST reports, for example, argue that even where M&E systems do exist and data are being collected for this purpose, the information gathered is seldom analysed properly or used at all.
As with full forensic audits, even though M&E systems are pricey the cost of doing without them is far greater. M&E should be a government priority in practice, not confined to the pages of well-meaning documents on strategic planning.
Lack of political will
All of the issues discussed above are widely documented in reports and analyses. Yet government has been slow to rectify them. This is not because answers are beyond its reach. Rather, it is because the will to make difficult decisions and take firm action is often absent.
This is where people who are interested in social justice, have a responsibility to act. We need to identify a set of fundamental issues facing the health system, which may or may not include those discussed above. We must use the knowledge and evidence we have generated as well as the many commissioned reports that enter the public domain each year. Using these, we can apply pressure on government to take action. If we employ solid evidence to succeed with a small set of fundamental issues, we can achieve great change in health service delivery. We must believe, however, that our voices in seemingly complex technical matters are just as important as those of any technocrats.Daygan Eagar is a researcher with SECTION27.