Cash crunch: KZN Education Dept raises risk of lawsuits by unpaid service providers

The KwaZulu-Natal Department of Education is warning of a potential lawsuit from unpaid suppliers and the potential disruption to examination preparations. The warning comes as the financial crisis within the department deepens. A report tabled before the Education Portfolio Committee revealed the depth and impact of the financial crisis.

The report stated that the budget cuts, and the shortage of funds are a threat to the department’s ability to ensure that pupils are being taught, as it is unable to conduct monitoring of districts and schools. Furthermore, the lack of funding could jeopardise examinations and matric intervention programmes. For the past few years, the department has faced budget cuts from the national government; it is estimated that close to R28 billion has been cut in the past few years.

The financial challenges have led the provincial Treasury to deploy a team to oversee the Education Department’s finances. The department’s report on its financial matters disclosed that budget cuts have left it unable to pay some of its suppliers, putting it at risk of legal action. “Insufficient cash resources result in non-payment to suppliers, which can lead to litigation, breach of contract, interest on overdue accounts, and closure of buildings where services required for operations, such as security, cleaning, electricity, and water, cannot be provided.

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“This results in offices being intolerable for human conduct, leading to interruptions in teaching and learning in classrooms as districts are affected.” The department noted that insufficient funding have led to enforced cuts, forcing a shift from non-personnel expenditure towards compensation, thereby limiting the performance of planned activities. Failure to pay schools their funds for normal operations and standards results in schools being unable to pay their domestic accounts. There is challenges with securing Learning and Teaching Support Materials (LTSM) and providing the transfer of funds to schools.

Substantive travel has also been limited, which affects the department’s ability to carry out monitoring of the curriculum in schools. Examinations and matric interventions are placed in jeopardy, it said. The education crisis continues to deepen, with the department revealing that it needs an additional R3 billion for its functions this year.

This comes as the department recently disclosed that it received a R2 billion advance against its budget for the next financial year from the national treasury to pay for schools norms and standards that are due this month. The allocation simply means that for the department, when they allocate their funding in the next financial year, R2 billion will be deducted from their allocation, putting extreme financial pressure on the department. It is not in a position to pay the norms and standards that are due in November.

The CFO of the department, Yali Joyi, briefed the committee members on the financial challenges. She said the balance of the operational funds is negative by nearly R400 million.

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