Ministry of Education, Science and Technology

State and Local Government Education Sector Planning, Budgeting & Reporting Guidelines for Fiscal Year 2014/15 Ministry of Education, Science and Technology Republic of South Sudan June 2014

Contents Foreword...2 I. Introduction...3 Purpose of the Guidelines...3 II. Roles and Responsibilities in the Education Sector...5 III. Responsibilities of State & Local Governments in the Education Sector...5 Roles & Responsibilities of State Ministries and County Departments in the Budget Process...5 Roles & Responsibilities of State Ministries and County Departments in the Budget Execution and Reporting Process...7 Overview of transfers...9 Purpose of transfers...9 Structure of transfers & overview of eligible uses...9 Allocation principles...11 Eligibility/minimum access conditions...12 IV. State-level Sector Budgeting & Reporting...14 Budget Preparation...14 PART 1: Agency Mission and Budget Highlights...14 PART 2: Agency/Directorate Narrative and Item Budget Proposal...14 Budgeting for County Transfers in Ministry Budget Proposals...16 Budget execution...16 Reporting...17 Budget reporting...17 Managing County Transfers...18 V. Local Government Budgeting & Reporting...19 Budgeting preparation...19 Budget execution...20 Reporting...21 Budget Reporting...21 Annex A: Summary of Transfers by State...22 Annex B: Details of Basic Education Transfer by County...23 Annex D: State Agency Transfers Narrative Formats...25 1

Foreword The National Government is committed to improving the delivery of basic services to the people of South Sudan, as set out in the South Sudan Development Plan. The responsibility for delivering these services lies primarily with the local governments, under the supervision and guidance of the states. The role of the national government is to set the policy, to provide technical support and supervision and to provide funding. A key priority is to increase funding to local governments. This is part of a wider set of actions, the Local Services Support Joint Plan of Action which covers reforms to sector service delivery, human resources, and transparency and accountability. These Guidelines therefore set out the policy for FY 2014/15 on how the transfers from national government should be used by States and Counties for service delivery. It is hoped the guidance in here will ensure that the funding provided by national government to lower levels of government is translated into improved services through more effective budgeting, spending and reporting. These guidelines set out budgeting and reporting guidance for States. As part of this, States must in turn provide transfers to Counties, who then also prepare budgets. As set out in the Local Government Act, section 47(1), 71(2) and 83, local governments must prepare budgets for consideration by their Legislative Council. In addition to these Guidelines prepared for the Education sector, the Ministry of Finance and Local Government Board have also prepared more general Planning & Budget Guidelines for States, and for Counties. These Guidelines should be read in conjunction with them. All Directors General of State Ministries, and Executive Directors of Counties shall be responsible for ensuring the compliance with these guidelines among all staff involved in planning, budgeting, implementation and reporting. 2

I. Introduction Purpose of the Guidelines 1. Improving service delivery is one of the key priorities of the National Government, as set out in the South Sudan Development Plan. States and Counties play a key role in service delivery, and the Ministry of Education is committed to ensuring resources are transferred to these levels of government in order to ensure they have funding for service delivery. 2. National Government has initiated the Local Services Support reform agenda to strengthen the delivery of basic services. Reforms include: Increased funding for Counties through transfers: conditional transfers earmarked for Counties are now budgeted in the education, health and water sectors. A new discretionary block transfer for Counties is introduced, and the County Development Grant, for capital projects, is expanded. All these transfers are made to States, who must pass them on in full to Counties. New County Public Financial Management System: in order for Local Governments to effectively utilise the additional funding, they must have effective Public Financial Management (PFM) systems. Therefore the Ministry of Finance & Economic Planning and the Local Government Board have issued the Local Government PFM Manual which sets out standard PFM procedures for local governments. County Transfers Monitoring Committee: Local Governments must be held accountable for their use of funds. Each County must provide a quarterly Budget Performance Report to their State. The State should establish a County Transfers Monitoring Committee to coordinate monitoring of County performance and Counties use of transfers. State Transfers Monitoring Committee: State Governments must also be held accountable for their use of funds. The National Government has formed the State Transfers Monitoring Committee. This will monitor the State monthly financial reports, State performance and State used of transfers, particularly to ensure that sector State Ministries and Counties are receiving all the conditional transfers they have been allocated. Reporting to the legislature: States must provide half-year and annual budget performance reports to their State Legislative Assembly, and Counties must provide halfyear and annual budget performance reports to their County Legislative Council. 3. The Ministry of Education has prepared these guidelines to support State Ministries of Education and County Education Departments in effectively planning, budgeting and reporting on these resources transferred to them. 4. The remainder of these guidelines consists of four sections: Roles and responsibilities of State and Local Governments in the Education Sector, and the roles and responsibilities of State Ministries of Education and County Education Departments in State and County budgeting and reporting. Overview of transfers, setting out the purposes of transfers to States and Counties, and the acceptable uses of the transfers by States and Counties, and the formula for allocating transfers. State-level Sector Budgeting and Reporting, providing guidance to States on how to budget for and report on transfers. Local Government Budgeting and Reporting, providing guidance to Counties on how to budget for, and report on transfers. 5. These guidelines should be read together with the following guidelines and manuals: 3

Guidelines for State Planning & Budgeting for Fiscal Year 2014/15 issued by the Ministry of Finance Guidelines for County Planning and Budgeting for FY 2014/15 issued by the Ministry of Finance and the Local Government Board Local Government PFM Manual issued by the Ministry of Finance and the Local Government Board. Education Service Delivery Framework issued by the Ministry of Finance and the Ministry of Education 6. The budget is a translation of the government s policy priorities into monetary terms. As such it is the government s central policy instrument for setting priorities and allocating resources. The Budget shows you how to plan to utilise the financial resources you receive, and what you plan to achieve with them. 7. These guidelines are complementary to the existing laws and regulations governing the operations of States and Counties and do not replace them. 4

II. Roles and Responsibilities in the Education Sector Responsibilities of State & Local Governments in the Education Sector 8. The State Ministries of Education provide leadership for education delivery and management in their respective States, by: overseeing County delivery of pre-primary, primary and alternative education; directly managing the delivery of secondary education, teacher training and technical vocational education and training, where such institutes exist, and rolling out and managing the inspection system across the State and training school inspectors at county level. The State also supervises private schools. State Ministries of Education should also: coordinate in-service training for teachers and instructors, manage construction of secondary schools in the State, manage primary and secondary leaving examinations, and consolidate school statistics at State level. 9. County Education Departments are part of the broader county government, with the head of the department reporting to the County Executive Director. County Education Departments are responsible for: managing pre-primary and primary schools and alternative education centres within their County, directly managing the Payam Education Offices, which provide the day-to-day contact with schools, supervising construction of schools and other education infrastructure, compiling inspection reports and sending them to the State Ministry of Education administering examinations, and collecting and consolidating school statistics at County level. County Education Departments, including Payam Education Offices, are responsible for ensuring that each school has a functioning Parent-Teacher Association and School Management Committee that provides oversight of school management and approves school budgets and reports. Roles & Responsibilities of State Ministries and County Departments in the Budget Process 10. Budgets explain how States and Counties will allocate resources to fulfil their responsibilities in the management and delivery of services. Conditional transfers are made in the Education sector by the national Government to fund sub-national governments as a contribution to enable them to carry out these responsibilities, alongside the States and Counties other resources. Reporting on the implementation of the budget helps us understand whether funds are being received and spent properly and as planned. 5

11. The national Ministry of Education will monitor the budgets of State Ministries of Education and County Education Departments to check that transfers have been correctly budgeted for, and monitor the budget reports to ensure that transfers are being spent in accordance with this budget. If transfers are not correctly budgeted for they will not be released. If budget reports are not received, or show that funds have not been spent properly, future funds will be withheld until all money has been properly accounted for. 12. At each level of government, primary responsibility for coordinating the budget process lies with the finance unit (State Ministry of Finance at the State level and the County Planning & Finance Units within the County Administration Department at the County level). During the budget process, the State Ministry of Finance and County Planning & Finance Units have two key responsibilities: prepare the resource envelope for the State/County: the resource envelope is a forecast of the total funds that will be available for the State/County to spend in the coming year; prepare budget ceilings for each Ministry/Department: the budget ceiling is the share of the total funds that each Ministry/Department will receive. The total of the budget ceilings must be the same as the resource envelope (the state or county can only budget for funds it will receive). The Council of Ministers (in the State) or the County Executive Council is responsible for approving the budget ceilings. 13. In drawing up ceilings, it is important to understand the resources available: Conditional grants must be allocated to the correct agency. So Education grants must be allocated to the State Ministry of Education or County Education. There are also discretionary funds that the State or County can allocate to any Ministry/Department in line with their priorities. These include the State & County Block Grants, and own source revenues. It is important to note that even if an agency receives a conditional transfer, it can also receive a share of these discretionary funds. Counties have an additional source of revenue: the County Development Grant. This can only be used for capital expenditure. It is not earmarked to a sector, with the exception that a maximum of 50% can be spent on administrative infrastructure. The remainder must be spent on service delivery infrastructure, including Education infrastructure such as classrooms. 14. As set out above, a State Ministry/County Department can still receive a share of the block transfer, even if it receives a conditional transfer. Sector Ministries/Departments should develop a well-costed plan for how additional funds could be spent so they can make the case to the State Ministry of Finance/County Planning Unit for additional funding. The head of the Department should engage with the State Director of Budget/County Planner to make them aware of the Ministry or Department s needs, and the Minister or head of Department should also lobby the Council of Ministers or County Executive Council for funds when budget ceilings are set. However, once budget ceilings are set, these must be respected by the Department. 15. Once the State Ministry of Education and the County Education Department have been allocated a budget ceiling, it is responsibility of that unit to draw up a budget in line with that ceiling, and then to submit that draft budget to the State Ministry of Finance or County Planning Unit. Guidance on drawing up these budget is provided in: Section IV of these guidelines for State Ministries of Education Section V of these guidelines for County Education Departments 16. Once the budget has been submitted to the State Ministry of Finance or County Planning Unit, this unit will then compile all agencies submissions into the draft State or County Budget, which is then presented for approval to the executive branch (State Council of Ministers or County Executive Council), and finally to the legislative branch (State Legislative Assembly or County 6

Legislative Council). Only once the budget is approved by the legislative branch is there authority to spend the funds contained in the budget. Summary of roles and responsibilities in the budget process Agency Responsibilities Finance Estimate the resource envelope State Ministry of Finance Prepare draft budget ceilings County Planning & Finance Units Compile budget submissions into the draft budget Sector Ministries/Departments Prepare budgets in line with the budget Sector Ministries at State level ceiling and any other funds from state and Sector Departments local government level submit to the State Ministry of Finance or County Planning Unit State Ministries should budget for conditional transfers to Counties Executive Approve budget ceilings State Council of Ministers Approve draft budget for submission to County Executive Council Legislature Legislature Approve draft budget and pass State Legislative Assembly Appropriation Bill to put it into law County Legislative Council Roles & Responsibilities of State Ministries and County Departments in the Budget Execution and Reporting Process 17. Once the budget is passed, the budget is spent by the following process: Education State Ministry/County Department submits payment requests against a specific budget line to the Finance Unit. These must be signed off by the head of unit (DG in SMoE, head of department in the county). Supporting documentation, such as an invoice must also be included. Once approved by the Finance Unit (DG of Finance in SMoF, Executive Director in a County), the payment is made either to the unit (e.g. in the case of travel costs), or directly to the vendor (e.g. in the case of purchasing fuel). The Finance Unit has the responsibility of maintaining the financial records of that level of government. At the State level, this is done through the Integrated Financial Management Information System (FreeBalance). At the County level, procedures are laid out in the Local Government Public Financial Management Manual. If budget reports are not received or show that funds have not been spent properly, future funds will be withheld until all money has been properly accounted for. Additionally, any County that does not have adequate cash storage facilities such as a strong room/safe should ensure that one is installed with the first release of grants. Installing this is the responsibility of the County Administration Department. 7

Summary of roles and responsibilities in the budget execution Unit Responsibilities Sector Ministries/Departments Sector Ministries at State level Sector Departments local government level to the Finance unit Finance State Ministry of Finance County Finance Unit Submit payment requests in line with the budget, and with supporting documentation Maintain records of payment requests submitted, and whether payment made by Finance Unit Approve payment requests Make payments to vendors and units Maintain complete financial records for the State/County 18. Regular financial reports must be made both within governments, and to higher levels of government that provide transfers: 19. States must provide monthly financial reports to the national Ministry of Finance and to the State Council of Ministers, and half-year and annual budget performance reports. The latter should also be provided to the State Council of Ministers and State Legislative Assembly. More detail is provided in the document Guidelines for State Planning, Budgeting and Reporting. 20. Counties must provide quarterly budget performance reports to the County Executive Council and State Ministry of Local Government. The half-year and annual budget performance reports should also be provided to the County Legislative Council. 21. The following process should be followed to prepare these reports: Education State Ministry/County Department goes to finance unit to receive financial reports, and to confirm their accuracy; Education State Ministry/County Department submits a narrative of what has been achieved to date with the funds that have been spent; the State Ministry of Finance/County Planning Unit compiles the financial reports and narrative from State Ministries/County Departments into a single report for the whole government, and submits these to the executive (St ate Council of Ministers or County Executive Council) and to the higher level of government. 8

Summary of roles and responsibilities in the budget reporting Unit Responsibilities Sector Ministries/Departments Confirm accuracy of financial reports held by Sector Ministries at State level the finance unit Sector Departments local government level Provide narrative of actual activities carried out to Finance Unit Finance Compile narratives from sector State Ministry of Finance Ministries/Departments into a single County Finance Unit performance report Submit monthly and quarterly budget reports to the executive Submit quarterly budget performance reports to the State Government (for Counties) Submit monthly budget reports to the National Government (for States) State Council of Ministers Scrutinise monthly and quarterly budget County Executive Council reports Submit semi-annual and annual reports to the legislature State Legislative Assembly Receive semi-annual and annual budget County Legislative Council reports Scrutinise the use of public funds by the executive III. Overview of transfers This section provides an overview of transfers budgeted for States and Counties, setting out their purpose, how they can be utilised by states and counties, and how they are allocated. Purpose of transfers 22. The purpose of the post-primary education transfer is to enable State Ministries of Education to provide oversight, coordination and disseminate policy for education delivery at County level and facilitate delivery of secondary education, TVET and teacher training. The purpose of the basic education transfer is to enable the County Education Department to facilitate the day-today management of education delivery in early-childhood development, primary schools and alternative education centres, with special consideration for special needs and gender equity. 23. A summary of transfers by State is shown at Annex A. Structure of transfers & overview of eligible uses 24. The National Government provides conditional transfers to sub-national governments for the delivery of education services. State Ministries of Education receive conditional transfers for salary and operating, budgeted under the Post-Primary Education Programme. School capitation grants to secondary schools will be made through parallel financing channels, but under the management of SMoEs. County education departments receive conditional transfers for salary, operating and capital. They also have accounting officer responsibilities for funds for transfer to service delivery units (primary 9

schools), which are sent directly to school bank accounts by the State Ministry of Finance, budgeted under the Basic Education Programme. Conditional transfers to States should be used for the following: The salary grant should be used for salaries and allowances of classified staff at SMoEs, secondary schools, TVET centres and teacher training institutes. State Ministries of Education should staff the ministry according to the staffing structure issued by MoEST. The operating grant should be used for running costs of the SMoEs, TVET centres and TTIs, including utilities, office supplies, transportation costs, workshops and contracted services. The operating transfer cannot be used to finance staff costs such as salaries and allowances. Secondary school grants ( capitation grants ) were introduced in early 2014, with funding from the South Sudan Girls Education Programme, to finance basic running costs including stationary and school supplies, school maintenance and minor repairs, extracurricular activities, transport and incentives to volunteer teachers who are not on the government payroll. These grants cannot be used to pay top-ups to teachers on the government payroll and cannot be used for casual workers. These funds will be transferred separately from the government transfers, but responsibility for overseeing and reporting on these funds will lie with the State Ministry of Education. Detailed guidance is provided in the capitation grants manuals and training materials approved by MoEST. The Girls Education South Sudan programme State Anchor NGOs will work closely with the State Ministry of Education in the management of these grants. As set out above, just because the State Ministry of Education receives a conditional transfer, this does not mean it should not receive a share of the block transfer. State Ministry of Education should develop well-costed plans for how additional funds could be spent. At the civil service level, the DG of the State Ministry of Education should engage with the Ministry of Finance to make them aware of the Ministry of Education s needs. At the political level, the State Education Minister should be able to lobby the Council of Ministers for funds. However, once budget ceilings are set, these must be respected by the Ministry. Conditional transfers for Counties should be used for the following: The salary grant can be used for salaries and allowances for classified staff only in the County Education Department and Payam education offices, primary schools, pre-primary schools, alternative education centres and County Education Centres. County education departments should be staffed in accordance with the staffing structure issued by MoEST. In several States the County salary transfer exceeds the amount currently spent on classified staff at County level. Counties are expected to recruit additional teachers or other classified staff up to the level of their salary transfer, or else the transfer will be cut in 2015/16 to the level of current payments to classified staff. The operating grant should be used for running costs of the County Education Department, Payam education offices and County Education Centres, including utilities, office supplies, transportation costs, workshops and contracted services. In 2014/15 these funds should also be used to deepen M&E at county and payam level. At least 60% of these resources should be used on resources for the Payam Education Offices. Service delivery unit grants: School grants were introduced in South Sudan in early 2014. These are allocated to all non-profit schools in South Sudan and should be used to finance basic running costs including stationery and school supplies, school maintenance and minor repairs, extracurricular activities, transport and incentives to volunteer teachers who are not on the government payroll. These grants cannot be used to pay top-ups to teachers on the government payroll or for nonteaching staff. Funds will be released on the basis of school budgets prepared by the school 10

management and approved by the PTA/SMC and CED. Detailed guidance is provided in the capitation grants manuals and training materials approved by MoEST. As set out above, just because the County Education Department receives a conditional transfer, this does not mean it should not receive a share of the county block transfer and the County Development Grant. The Education Department should develop a well-costed plan for how additional funds could be spent. The head of the County Education Department should engage with the County Planning Officer to make them aware of the Department s needs. The head of the County Education Department should also lobby the County Executive Council for funds when budget ceilings are set. However, once budget ceilings are set, these must be respected by the Department. Shadow-aligned donor-provided grants: Donors may finance grants to schools for basic running costs, school construction and school improvements. Although many donors cannot currently provide these funds through the government s accounts, they should endeavour to shadow align to government systems by using the same planning and budgeting, monitoring and reporting structures as the government. This will reduce duplication and risk of confusion for actors faced with multiple parallel systems. In particular, donor grant design should take account of the following: Capitation grants must follow the government s capitation grant policy and operating manual. No major changes from 2014 to 2015 are foreseen. When the grant size is set by donors they must also consider the fiscal sustainability of the intervention to ensure that the government will with time afford to continue provision of the grants. School improvement grants intended for construction or renovation of schools must be designed to mirror the county and payam development grant system as closely as possible to ensure that government and donor funding is well aligned. Summary of uses of conditional salary transfers Payroll Category of staff State Ministry of Education Staff of the State Ministry of Education headquarters Secondary school teachers TVET instructors TTI instructors County Education Staff of the County Education Department Department Payam education inspectors Primary school, ECD teachers and AES teachers County Education Centre staff Allocation principles 25. The National Ministry of Education, Science and Technology allocates conditional transfers to states and counties using the most recent available data, following the rules set out below. States and counties must then decide how to allocate these transfers that they receive, and clearly lay out their allocation principles in their budgets. 26. Method for allocating State grants: Salary: Based on the current number of classified staff on the SSEPS payroll working at SMoEs, secondary schools, TTIs and TVETs. MoEST recognizes that the division between staff at State-level and staff at County-level may change in the course of 2014/15 as SSEPS II is rolled out and States and Counties review their nominal rolls. Operating: 60% of the operating transfer is allocated equally between the States and 40% will be allocated on the basis of the number of the number of schools in the State 11

(secondary and primary), based on the latest available data. Operating transfers to the States are 15% of the total operating grants to States and Counties. Method for allocating County grants: Salary: Retained at the same level as in the previous fiscal year. However, in 2015/16 the allocation will be cut unless Counties demonstrate that the amount spent on classified staff meets or exceeds the size of the transfer. Operating: 60% of the operating transfer is allocated in equal share to each county, and 40% allocated on the basis of the number of non-profit primary schools in the county, based on the latest available data. Operating transfers to the Counties are 85% of the total operating grants to States and Counties. Method for allocating transfers to service delivery units: School capitation grants were successfully introduced in 2014 for primary and secondary schools, and continue in FY2014-15. The method for calculating allocations remains the same in FY2014-15 as in FY2013-14: For primary schools, 5,000 SSP as a fixed amount, and 39 SSP per pupil, and for secondary schools, 10,000 SSP as a fixed amount, and 80 SSP per pupil. Overall expenditure on grants is expected to rise, as more schools access them, and more pupils come to and remain in school. Summary of roles and responsibilities in the budget reporting Program Level of Government Conditional transfers Post-primary education State Salary Operating Service delivery facility (secondary schools) Basic education County Salary Operating (by development partners) Operating Service delivery facility (primary schools) Service delivery facility Eligibility/minimum access conditions 27. To receive education conditional transfers, States and Counties must adhere to the general budgeting and reporting requirements detailed in the State and County Planning and Budgeting Guidelines 2014/15 and the LG PFM Manual. Conditions for receiving capitation grants: Grants are paid in two tranches each academic year (for these purposes, the academic year and calendar year are considered equivalent): a first tranche, at half the total rate based on best available enrolment information (for first tran ches in year n, PAR from 12

year n or year n-1 can be used; for second tranche, PAR for year n must be submitted and uploaded), a second tranche, correcting to give the right total funding for the year on the basis of the primary and secondary fixed and per pupil rates. All non-profit schools in South Sudan are eligible to apply for capitation grants, and must pass six hurdles to receive their grants. To receive a first tranche grant for the first time, the hurdles are: i. Pupil Attendance Register submitted and uploaded (for first tranches in year n, PAR from year n or year n-1 can be used; for second tranche, PAR for year n must be submitted and uploaded) ii. School reporting on South Sudan Schools Attendance Monitoring System/Ana Fii Inni (SSSAMS/AFI) iii. School Governance Body established iv. School Development Plan completed v. School Budget completed vi. School bank account opened. To receive a second tranche grant, the school must have submitted a ledger showing how the majority of the first tranche has been used. To receive a first tranche grant in a new academic year, the school must have submitted a ledger showing in full how the previous year s grants were used, and to submit a short report, using a standard tick-box template, on what has been achieved with the previous year s school capitation grants, against a set of standard categories. Scheduling of releases of capitation grant: GRSS wishes to release capitation grants to schools as early in the academic year as possible so that they offset the loss of income from the registration fees many schools formerly charged, and so that pupils, teachers and parents can see the benefit from them as early in the school year as possible. Performance against the hurdles is assessed at a monthly Approvals Meeting, attended by MoEST, MoFEP and partners, and held on the 10 th of each month. In certain circumstances e.g. for conflict-affected areas hurdles can be waived. Schools will be considered for approval at the monthly meeting based on information submitted by CoB on the 5 th of the month. Any material provided after that point will be taken to the following month s Approvals Meeting. For primary schools, grants are funded by GRSS, and disbursed, in monthly releases, on approval, from MoFEP to SMoFs, who must then pay the approved amounts in full to the school bank accounts. For secondary schools, they are funded by DFID, and disbursed direct to school bank accounts in monthly releases, again, once approved. As far as possible, GRSS encourages schools to target a schedule of getting their first tranches for an academic year in Jan-Mar, and second tranches in April-June. Recognising the difficulties of communications in the country, approvals for a given academic year can continue up to 30 th September. In the event that capitation grants approved in one financial year reach the total funds budgeted for capitation grants in that year, release of as many as have been approved but are beyond the funds budgeted will be deferred until the following financial year in which they will be the first call on the capitation grants budget. 13

IV. State-level Sector Budgeting & Reporting This section provides detailed guidance for State Ministries of Education on preparing the budget, budget execution and reporting, and managing transfers to Counties. Budget Preparation 29. State Agencies must budget according to budget ceilings set by the State Council of Ministers, which will include the State s own resources, the State block transfer and any sector conditional transfers. The State Ministry of Finance should ensure that conditional transfers are correctly reflected in these ceilings. If the ceiling for the Ministry is lower than the conditional transfers provided, you should immediately draw this error to the attention of your State Ministry of Finance and your Minister. Directors General should ensure that Ministers are briefed on the expected level of conditional transfers before the Minister attends the State Council of Ministers meeting where budget ceilings are discussed. State DGs should also maintain regular contact with the national Ministry to ensure they understand the level of conditional transfers. 30. Following the approval of budget ceilings by the State Council of Ministers, the State Ministry of Finance will issue a State Budget Call Circular and convene a State Budget Workshop. Your Ministry must prepare a budget within that ceiling, in accordance with the guidance and by the deadline specified by the State Ministry of Finance in the Budget Call Circular. 31. Spending Agencies budget submissions are prepared using the completion of the Agency/Directorate Budget Submission Template in excel to be prepared by each and every spending agency, in line with their budget ceilings. This consists of two parts: Part 1: Agency Mission and Budget Highlights Part 2: Agency/Directorate Narrative and Item Budget Proposal 32. Guidance on completing each part of this, including how county governments are to be budgeted for, is provided below. PART 1: Agency Mission and Budget Highlights 33. The first part of the budget submission sets out the: Ministry/Agency Mission Statement, which is a concise statement about the purpose of the spending agency. It is important that this elaborates on the Sector Outcome, explaining what the Spending Agency does to support the Sector Outcome. Ministry/Agency Budget Highlights, which provides a brief statement of the major budget allocations in the ministry, key planned activities, and any changes from previous years. Box: Example of State Ministry of Education Mission Statement To improve quality and access to general education as well as tackle the issue of illiteracy in the State PART 2: Agency/Directorate Narrative and Item Budget Proposal 34. The second part of the template sets out the Agency/Directorate Narrative and item budget. Most spending agencies will prepare a single narrative and line item budget, which means that they should only prepare one version of this form. However, a few ministries will have to budget for more directorates, which means they should complete the second set of narratives and item budgets. 35. This section starts with setting out the Agency/Directorate Description and Planned Activities: Agency/Directorate Roles and Responsibilities These are the tasks or groups of related tasks that Ministry/Directorate undertakes and should be a brief description of its functions. 14

This should be in line with the Ministry/Agency Mission Statement. It should be described briefly in no more than 2-3 sentences. Agency/Directorate Activity Outputs Planned Spending Agencies, through their Activities, deliver goods and services. These contribute to the delivery of the Ministry/Agency Mission, but also must be measurable so the Director General will be held accountable for the activities. Quantification of outputs is essential for performance monitoring. For example, if you plan to undertake inspection visits to counties, the narrative should set out the number of inspection visited planned in each quarter. The number actually carried out can then be compared to the planned figure. Where possible, amounts and location of the planned activities should be provided to be as specific as possible about the plans. 36. The budget narrative for the Ministry must set out the activities the Ministry plans to carry out using the funds in the budget, and the reason for these activities, including: Progress against main activities: Pre-primary education Primary education Alternative education Gender and special needs Construction activities Planned progress against key outcomes: Number of inspection visits to schools Number of schools receiving capitation grants Number and type of school infrastructure constructed and handed over to the communities (indicate the source of funding, GRSS/Donor) Number of meetings with School Management Committees Number of meetings with development partners 37. The budget submission should then set out the Actual Activities Achieved: Agency/Directorate Past Directorate Activities - Performance reporting is a key aspect of the planning and budgeting process. Spending agencies should report on performance for the first half of the 2013/14 Financial Year (July - December 2013). This should provide detail on the activities and outputs which have been carried out during the first six months of the year in relation to 2012-13 plans. Spending agencies will be expected to report on annual performance at the end of the year, and will fill this field in later in the year. 38. The final part involves the preparation of the item budget for the agency/directorate: Staffing Requirements - This section requires directorates to identify all of the staff positions that work on agency/directorate activities and are funded from the directorate budget. The tables require entry of (i) current staff on the payroll and (ii) proposed new staff to be added for the budget. Proposals for any new staff should be based on staffing norms recommended by MoEST where these are available, and where funds are available in the budget ceiling for this. Operating and capital inputs - This section requires directorates to describe the inputs that will be purchased using the operating and capital budget chapters. These should clearly reflect the inputs required to deliver the directorate activities, and where possible be quantified. 39. Where the budget is funded by conditional transfers, you must ensure that the budget follows the guidance on use of conditional transfers provided above. In particular, you must ensure that: the budget only contains eligible items, for example that the salary transfers is only spent on classified staff, and that the operating transfer is only spent on Chapter 22 Use of Goods and Services; 15

earmarked grants for Counties are correctly budgeted against 231 Transfers Conditional Salaries and 232 Transfers Operating and that the amounts allocated to each County are clearly shown in the budget, and are in accordance with the allocations set out in the Annexes to these guidelines. Budgeting for County Transfers in Ministry Budget Proposals 40. Where an agency budget includes a transfer to Counties, it is important that it provides a comprehensive narrative stating: The purpose of the transfer, a brief statement of what services the transfer is designed to fund Description of the transfer, including what activities and inputs are to be funded from the operating and capital transfers, and which staff can be paid from the salary transfer. how the transfer is allocated across Counties (e.g. 60% equal per county and 40% according to the number of non-profit primary schools in the county for operating grants) 41. The format for the transfers narrative is set out at Annex D. Guidance is provided in the box below on how this narrative should be completed. For those transfers which are earmarked at national level, the purpose, description and allocation principles can be taken from this box. For those transfers which are funded by the States own resources, further narrative may be required in addition. Box: Example Narratives for the County Education Department Grant Purpose: The County Education Operating Transfer is intended for the day-to-day coordination and management of pre-primary, primary and alternative education in the County. Description: The operating transfer should be used for the running costs of CEDs and Payam Education Offices, including utilities, office supplies, transportation and contracted services. Allocation: 60% of the total operating transfer is allocated equally between Counties and 40% on the basis of the number of primary schools in the County. 42. Once completed, State Line Ministries should submit their proposals to the State Ministry of Finance by the date stipulated in the Budget Call Circular. The State Ministry of Finance will then compile all budget submissions using the electronic Budget Preparation System. This will then be used to produce a draft Budget book. This is then submitted to the State Council of Ministers for review and approval. Once approved, the Ministry of Finance will make any changes required by the Council, and then submit the budget for approval to the State Legislative Assembly. Only once the budget is approved by the State Legislative Assembly is the spending contained in the budget legally authorised. 43. The Budget Preparation System will also produce a report providing details of the transfers to each County. As soon as the state budget has been compiled, this report should be generated and distributed to counties, to enable them to prepare their budgets. Budget execution 44. State Budget execution is based on the centralised payment processes and Treasury Single Account. This means that State Agencies make payment requests to the State Ministry of Finance, who then pays the beneficiary directly. The State Ministry of Education cannot ask to receive the conditional transfer in one lump sum. 45. Payment requests must: 16

use the payment request form identify the budget line against which the payment request is to be charged be accompanied by supporting documentation, such as an invoice be signed by the accounting officer, who is the Director General of Education. 46. Note that Transfers to Counties do not operate through this system and should be sent direct to the County bank account. More detail is provided in the section on managing county transfers below. Fund Flows in the Education Sector National Ministry of Finance National Ministry of Education State Ministry of Finance State Ministry of Education County Administration Department County Education Department Reporting Budget reporting 47. As set out in section II above, state budget and financial reports must be provided to the State Council of Ministers, the State Legislative Assembly, and to the National Government, through the STMC. These consist of: monthly financial reports produced by the State Ministry of Finance using the Integrated Financial Management Information System (IFMIS); half-year and annual budget performance reports which combine financial data with a narrative of performance, compiled by the State Ministry of Finance using the Budget Preparation System (BPS) based on submissions from line Ministries. 48. In the narratives submitted to the State Ministry of Finance for the semi-annual and annual budget performance reports, the State Ministry of Education should ensure that they report on the key outputs/performance measures set out in the guidance on Part 2 of the budget submission: Agency/Directorate Narrative and Item Budget Proposal above. 49. The monthly financial reports are sent to the national Ministry of Finance & Economic Planning, and should also be sent to each State Ministry and to the State Council of Ministers. These should be sent by the 5th of the following month (so reports for August should be sent by 5th September). The semi-annual budget performance reports should be produced by 30th January (one month after the end of the first half) and the annual performance report by the 30th July (one month after the end of the fiscal year). These reports should be sent to the State Council of Ministers, and once approved, to the State Legislative Assembly. They should also be sent to the national Ministry of Finance & Economic Planning. 17

50. Reports sent to the national Ministry of Finance & Economic Planning will be scrutinised by the State Transfers Monitoring Committee (STMC). Where the reports show evidence of transfers being misused (e.g. salary transfers being used to fund unclassified support staff rather than classified or service delivery staff) then STMC will take action, up to and including, recommending the suspension of the transfer to the affected State until remedial action is taken. 51. Where reports submitted by States show that transfers to Counties were not being reliably executed, or being made to counties which have not reported, then releases will be suspended. If budgeted funds are not transferred to Counties, they will not be able to perform the activities undertaken in their budgets, nor will they be able to deliver basic services. Managing County Transfers 52. One-twelfth of the budgeted salary and operating transfers to Counties should be sent direct to the County bank account (with Executive Director and Controller of Accounts as signatories) by the State Ministry of Finance each month, and charged to the State Ministry of Education budget, if Counties have complied with the reporting set out below. The funds should not pass through the State Ministry of Education bank account. 53. In exceptional circumstances States can transfer up to three months of grants to Counties which are not accessible during rainy season. This must be specifically authorised by the CTMC and the STMC. 54. Each State should establish a County Transfers Monitoring Committee (CTMC) to coordinate monitoring of County performance and their use of transfers. The CTMC should be chaired by the State Ministry of Finance and the State Ministry of Local Government. Any line Ministry making conditional transfers to Counties should be a member. 55. Counties should make the following reports to the CTMC: Draft Budget submitted so CTMC can ensure that Counties have followed this guidance on budgeting. quarterly budget performance reports, due by 30 th of the month following the quarter 56. The CTMC should meet each month to review a report from the State Ministry of Finance setting out the transfers that have been made to each County in the state, and the reports set out above from the Counties. On the basis of these reports, the CTMC should authorise the release of transfers to local governments for the next month. 57. If Counties are not sending reports transfers should be suspended. If the reports show evidence of Counties misusing transfers and not spending them in line with this guidance, the CTMC should recommend action, up to and including suspension of the transfer until remedial action is taken by the County. Where this is the case, the DG of Education should put this in writing to the DG of Finance. The DG of Finance should then ensure that it only releases those funds to Counties authorised by the County Transfers Monitoring Committee. The CTMC should ensure that it enforces the rule no report, no transfers. 18

V. Local Government Budgeting & Reporting Budgeting preparation 58. County Departments must budget according to budget ceilings set by the County Executive Council (the Commissioner, the Executive Director and the head of each Department). Budget ceilings are drawn up according to the County s own resources, the county block transfer and sector conditional transfers. The County Planning Unit should ensure that conditional transfers are correctly reflected in these ceilings. If the ceiling for the County Education Department is lower than the transfers provided, you should immediately draw this error to the attention of your Planning Officer and your Executive Director. 59. Heads of County Education Departments should be in touch with the State Ministry of Education to ensure they are aware of the expected level of conditional transfers before they attend the County Executive Council where budget ceilings are discussed. 60. Following the approval of budget ceilings by the County Executive Council, the County Planning Unit will issue a Budget Call Circular setting out the ceilings for each Department. It is the responsibility of each Department Head to ensure his/her Department draws up a budget in line with the guidance in the Budget Call Circular and the budget ceiling, and by the deadline set. 61. County Departments must prepare a budget within that ceiling, and by the deadline specified by the County Planning Unit. The budget should be drawn up according to the guidance and formats set out in the Local Government PFM Manual and Guidelines for County Planning and Budgeting for FY 2014/15. In particular, the budget must include: Detailed estimates by item for the department Details of capital projects Narrative of current year performance (what results the Department has achieved with the funds it has spent in the past year) Narrative of plans for the coming year (what results the department plans to achieve with the funds allocated to it in the budget for the coming year) 62. In drawing up the budget, the guidance in section II above must be followed, so that conditional transfers are only allocated to permissible uses. The budget narrative should set out what the Department will achieve with the allocated funds over the fiscal year in line with its roles and responsibilities in the management and delivery of services. This narrative should include the activities the County Education Department plans to carry out and the reason for these activities, and in particular clearly set out: Main activities to be carried out with respect to: Pre-primary education Primary education Alternative education Gender and special needs Construction activities Planned progress against key outcomes: Number of planned inspection visits to schools Number of planned to schools to receive capitation grant support Number and type of school infrastructure to be constructed Number of planned meetings with School Management Committees Number of planned meetings with development partners 63. In the narrative, you should be careful to ensure it is as quantified as possible. Quantification of outputs is essential for performance monitoring. 19