Treasury takes control of KZN Education's finances amid governance woes

The financial situation of the KwaZulu-Natal Department of Education has worsened, with the Provincial Treasury “taking over” the department’s financial affairs due to ongoing governance failures.

Carol Coetzee, the Head of Provincial Treasury, wrote to the department this month, informing it that the Treasury has imposed “enhanced intervention measures.” This suggests that the previous intervention was not successful.

The letter from Coetzee suggests a complete takeover of the department’s finances by the Treasury. The letter stated that the Provincial Accountant-General (PAG) has been permanently placed within the Department of Education with full authority to oversee all financial administration functions. The PAG has the authority to demand any financial information from department officials, and failure to comply will lead to disciplinary action.

The Treasury Head of Department (HOD) detailed the motivation for the intervention: “I write to you in terms of Section 18(2) of the Public Finance Management Act, Act No. 1 of 1999 (PFMA), to formally communicate the implementation of enhanced intervention measures in the Department of Education following a comprehensive assessment of the financial governance failures within your department.” The letter revealed that the enhanced Section 18 intervention has been necessitated by a complete breakdown of financial governance, control systems, and procurement integrity within the department.

The Provincial Treasury’s investigation identified the following critical failures:

• Chronic overspending and cash-flow insolvency, resulting in the inability to honour statutory and contractual obligations, and an inability to quantify accruals, leaving suppliers unpaid and essential services at risk.
• Extensive use of deviations and contract extensions outside legislative prescripts, coupled with weak or non-existent consequence management, creating an environment conducive to irregular expenditure and potential corruption.
• Systemic failures affecting critical service delivery areas, including learner transport, school allocations, and the National School Nutrition Programme.
• Other challenges included the impact on Learning and Teaching Support Materials and compensation of employees, and a lack of internal control systems.
• Mismanagement of Compensation of Employees (COE) – continued employment of educators despite not having the requisite budget, resulting in unauthorised expenditure.
• Mismanagement of payroll with ever-increasing staff debt on an annual basis.

“These material breaches of the PFMA pose a direct and immediate risk to learners and the sustainability of essential educational services in KwaZulu-Natal Province.”

“With immediate effect, the Provincial Accountant-General (PAG) is permanently placed within the Department of Education with full authority to oversee all financial administration functions.

“A review of the financial delegations, including the possible withdrawal of delegation currently exercised at the district level, will be centralised at Head Office, with an additional approval layer requiring written concurrence by designated Provincial Treasury officials for any financial commitment, procurement action, deviation, or contract extension following the sign-off of the Accounting Officer (i.e. Head of Department),” it said.

The PAG, it added, is granted full authority to demand any financial, procurement, payroll, or contract documentation, issue binding instructions to education officials, and enforce immediate consequence management where non-compliance is identified. All such instructions will be signed off by the Accounting Officer.

It was stated that a team will be appointed through the Treasury’s financial management panel to temporarily assume day-to-day financial oversight responsibilities under the direct supervision of the PAG.

“It is important to highlight that officials of the department are required to perform all their current duties; this is merely an additional control measure being introduced.” The letter warned that failure to comply will trigger consequences: “You are hereby directed to ensure full and immediate compliance with this Section 18 intervention. All officials within the Department of Education, at Head Office and district level, are required to cooperate fully with the Provincial Accountant-General and designated Treasury officials.

“This includes providing unrestricted access to all financial records, procurement documentation, payroll information, and contract files upon request. Any instructions issued by the PAG or designated Treasury officials in the execution of this intervention are binding and must be implemented without delay.

“The restoration of minimum standards of financial governance and the protection of learners are non-negotiable imperatives that require your personal oversight and commitment.” The letter said officials who fail to cooperate with the PAG or designated Treasury officials, or who obstruct the implementation of intervention measures, will be subject to formal disciplinary processes.

Material breaches of compliance, including unauthorised financial commitments, procurement actions outside approved frameworks, or failure to provide requested documentation, will trigger civil recovery proceedings to recover financial losses from responsible officials, it continued.

KZN Education department spokesperson Muzi Mahlambi said they are aware of the letter and it is being dealt with at relevant forums. The department did not comment on whether this was a takeover of the department by Treasury. Treasury did not respond to requests for comment.

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