'Failed' NSFAS needs a complete overhaul, administrator tells MPs

The National Student Financial Aid Scheme (NSFAS) requires nothing less than a “complete re-imagination" of its operating model and governance structure.

This is according to Randall Carolissen, the administrator appointed by the government to turn around the national funding scheme for disadvantaged tertiary students.

Carolissen told the National Assembly's portfolio committee on higher education, science and technology that previous models implemented by NSFAS had all failed.

“The only reason we have reasonable success is because it's placed under administration. If you are going to impose the same model onto NSFAS, my personal belief is you will have an administrator again in two years' time - or the place might well be shut down,” he said.

Carolissen was leading a NSFAS delegation to account to the committee for the 2018/19 financial year. The auditor-general gave the scheme a qualified audit for the year under review.

NSFAS declared accumulative irregular expenditure of R7.58bn - a huge jump from the R284.7m it declared in the previous financial year.

In his report, the auditor-general noted that the irregular expenditure at NSFAS was not complete, as management was still in the process of quantifying its full extent.

Reasons for the qualified opinion included that the auditor-general could not confirm the correctness of transactions due to institutions to the tune of R1.25bn. The AG could also not obtain sufficient appropriate audit evidence for bursary expenditure paid outside of the entity's normal disbursement process. The total bursary expenditure was R24.6bn for the year.

The AG also found that contingency liabilities were understated by R6.3bn.

Carolissen explained that some of the irregular expenditure was not a loss, but resulted from cases of erroneous disbursements where earmarked funds were shifted. These included funds paid from wrong accounts, payments made to wrong institutions, and overpayments to students.

In some cases, students would be contracted for “ridiculously low” amounts like R5, R10 or R1,000, but NSFAS would make the correct payment. However, because the payment differed with the contracted amount, it becomes an irregular payment according to the Public Finance Management Act.

“This speaks to the irregular records that we found when we came into NSFAS,” he said.

Carolissen was appointed as the administrator of the crisis-ridden scheme in August 2018 for a period of one year. He was re-appointed for a second term due to the many issues that still needed to be resolved.

The agency only achieved two out of 16 key performance indicators in the year under review.

Carolissen explained that they engaged the auditor-general and brought in an expert on their dismal performance in key performance areas (KPAs), who showed that the poor performance was a result of the KPAs being poorly formulated and “not smart”. To this end, he said they had submitted a new set of KPAs for consideration.

“As much as we wanted to measure against the set of KPAs as previously proposed, it was proved to be almost an impossible task,” he said.

MPs from across the political party spectrum suggested a complete overhaul of the scheme.

“There should be a complete overhaul of NSFAS' application process [and] how funds are disbursed,” said DA MP Baxolile Nodada.

"Regardless whether they go through the process of appointing new management … they need an overhaul."

Nodada's views were echoed by other MPs, who put Carolissen on the spot by asking him if he agreed.

“Yes, the models that have been implemented have failed. A complete re-imagination of NSFAS is required,” admitted Carolissen.