Assessing the effectiveness of section 21 schools in public financial management (a case of circuit 13 in King William’s Town district in the Eastern Cape)

The transformation in the education system of South Africa has led to a series of changes in the manner in which schools function and the manner in which they are managed. The transformation process saw the promotion and devolution of powers to schools and self management whilst at the same time ensuring equal access to education. The South African Schools Act spelt out the regulations that need to be followed towards the achievement of the envisaged goal, coupled with the other regulatory framework such as National Norms and Standards for School Funding. The new dispensation saw schools being classified into two categories: Section 20 and Section 21 with stipulated functions. The Section 21 schools experienced an added responsibility of being expected to manage their funds, allocated by the Department of Education through a paper budget, a function they are not formally trained for. The principals and School Governing Bodies had to ensure that they comply with the framework that governs public financial management so as to ensure that financial resources are managed in an effective, efficient and economic manner. This function prompted schools to acquaint themselves with the laws and regulations such as the Public Finance Management Act and the Treasury Regulations in order to ensure that their financial management practices are compliant with the prescribed framework. Their activities need to be conducted in a manner that promotes transparency, responsibility, equity and accountability, all of which are principles of good governance. To ensure effective financial management, schools have to acquire new knowledge and skills in basic financial management. The aim of the study was to assess whether the schools have the skills needed to render effective public financial management in order to be able to account on their financial activities. The study further attempted to establish the role played by the Department of Education towards facilitating empowerment strategies and the role played by the auditors in terms of the assessment of the school’s financial records. A case study of three schools was conducted, all of which are section 21 schools but differ in terms of their socio-economic backgrounds, location and conditions. The socio-economic backgrounds are described in terms of the quintile system and the location in terms of urban, rural and sub-urban schools. The information was gathered through interviews with the principals of the three schools, chairperson and treasurer of the School Governing Body and the school finance officer or bursar. Other interviews were conducted with the Education Development Officer, who is a representative of the Department of Education at schools and an auditor who conducts the auditing function for schools in terms of financial control. It emerged from the findings that the urban schools are well equipped and capable of managing school finances in an effective manner, whilst the sub-urban and rural schools do not have the necessary skills and knowledge to manage school finances. As it turned out, theirs is a functioning for compliance without proper understanding of the financial processes which include budgeting, funds and income management, expenditure management and financial reporting. Although the Department of Education is employing all means possible to empower stakeholders on financial management it has emerged that the strategies are inadequate to address the problems experienced by these schools. The auditor has identified a series of discrepancies and challenges in terms of financial reporting although they also try to mentor and support schools