1
WEST RAND
DISTRICT MUNICIPALITY
OFFICE
OF THE
MUNICIPAL MANAGER
MEMORANDUM
TO
:
EXECUTIVE MAYOR
FROM
:
MUNICIPAL MANAGER
DATE
:
20 JANUARY 2012
REF NO.
:
5/1/1-2011/12
MID-YEAR BUDGET AND PERFORMANCE ASSESSMENT: 2011/12
In terms of section 72 of the MFMA an assessment must be done on the performance of
the WRDM during the first half of the financial year.
This report deals specifically with sections 72(1)(a)(i) and 72(3) of the MFMA in which
the financial performance is assessed and recommendations are made whether an
adjustments budget is necessary or not.
ATTACHED AS ANNEXURE 1, is the financial report for the period 1 July 2011 to
31 December 2011 indicating the actual financial performance against the budget for
2011/2012. According to the report for the first six months of the financial year, the
performance of the WRDM is as follows:
1.1 CAPITAL EXPENDITURE PER VOTE
Budget (R’000)
Corporate Services
R 400
Public Safety
R 600
Total
R1 000
Actual (R’000)
R1 534
R 81
R1 616
% Spent
383
14
162
1.2 SOURCES OF FINANCING: CAPEX
Budget (R’000)
Internal funds
R1 000
Total
R1 000
Actual (R’000)
R1 616
R1 616
% Received
162
162
Private Bag X033, RANDFONTEIN 1760
Cnr 6th & Park Street, RANDFONTEIN
Tel: (011) 411-5000/412-2701 Fax: (011) 412-3663
2
1.3 OPERATING REVENUE PER VOTE
Budget (R’000)
Executive and Council
R 29 020
Budget and Treasury
R143 988
Corporate Services
R 3 331
Community and Social
R
0
Sport and Recreation
R
195
Public Safety
R 14 714
Health
R 50 748
Planning and Development
R 15 651
Road Transport
R
0
Total
R257 647
Actual (R’000)
R
67
R102 762
R 1 875
R
0
R
85
R 9 338
R 18 961
R 1 623
R 500
R135 211
% Received
0
71
56
1.4 OPERATING EXPENDITURE PER VOTE
Budget (R’000)
Executive and Council
R 37 305
Budget and Treasury
R 12 454
Corporate Services
R 37 218
Community and Social
R 20 527
Sport and Recreation
R 1 350
Public Safety
R 57 830
Health
R 55 375
Planning and Development
R 30 163
Road Transport
R 5 425
Total
R257 647
Actual (R’000)
R 13 901
R 6 051
R 17 142
R 8 227
R
271
R 27 757
R 20 797
R 18 988
R 3 043
R116 177
% Spent
37
49
46
40
20
48
38
63
56
45
1.5 OPERATING REVENUE BY CATEGORY
Budget (R’000)
Service charges
R 4 653
Rent facilities/equipment
R 1 525
Interest: External investments
R 4 200
Interest: Debtors
R
8
Licenses and Permits
R 116
Grants and Subsidies (Opex)
R206 171
Grants and Subsidies (Capex)
R 5 000
Other revenue
R 6 974
Sub-total
R228 647
Accumulated funds
R 29 000
Total
R257 647
Actual (R’000)
R 1 158
R
767
R 3 280
R
32
R
78
R128 620
R
0
R 1 276
R135 211
R
0
R135 211
% Received
25
50
78
400
67
62
0
18
60
0
52
Private Bag X033, RANDFONTEIN 1760
Cnr 6th & Park Street, RANDFONTEIN
Tel: (011) 411-5000/412-2701 Fax: (011) 412-3663
44
63
37
10
52
3
1.6 OPERATING EXPENDITURE BY CATEGORY
Budget (R’000)
Employee related costs
R 145 207
Councillors remuneration
R 7 761
Bad debt
R 2 980
Depreciation
R 7 316
Finance charges
R 3 696
Other materials
R 2 759
Transfers and grants: Capex
R 1 000
Transfer and grants: LM’s
R
0
Subsidy: WRDA
R 5 514
Repairs and maintenance
R 5 306
Other general expenditure
R 76 107
Total
R257 647
Actual (R’000)
R 66 483
R 3 563
R 2 900
R 3 952
R 1 848
R
566
R
0
R 10 402
R 1 379
R
985
R 24 099
R116 177
% Spent
46
46
97
54
50
21
0
25
19
32
45
1.7 CAPITAL EXPENDITURE
For the first six months of the financial year a total of R1 615 901 (162%) has been spent.
Corrections are however needed on the capital budget due to various resolutions by
Council regarding roll-overs from the previous financial year on un-completed projects.
More information is given under the discussion on the projected capital expenditure for
the 2011/2012 financial year.
Expenditure has already been incurred on the approved roll-overs hence the expenditure
percentage of 162% compared to the approved budget.
1.8 OPERATING REVENUE AND EXPENDITURE
As at 31 December 2011, revenue is at 52% and expenditure at 45% compared to the
approved budget. The main reasons for the over-collection and under-expenditure, is as
follows:
a. Advanced payments received from National Treasury regarding the replacement grant
and equitable share. Additional grants were also received from Gauteng Province which
were not included in the original budget. The second quarter payment of the EMS subsidy
is however still outstanding.
b. The Neighbourhood Development Grant of R5 million has been reverted back to
National Treasury as per Government Gazette no. 34880 dated 20 December 2011. This
will be rectified in the adjustment budget for 2011/2012.
c. Increase in cash, resulting in interest on short-term investments being higher than
anticipated.
Private Bag X033, RANDFONTEIN 1760
Cnr 6th & Park Street, RANDFONTEIN
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4
d. Other revenue is at 18% compared to the approved budget. Of concern is the sale of
refuse bags at the Plastic Recycling Plant at 2% , sale of plants at Merafong Flora at 29%
and the non-receipt of the Industrial Development Corporation grant of R3 500 000 as at
31 December 2011.
e. Service charges are at 25% compared to the approved budget and consist mainly of
Emergency Medical Services and Fire Services accounts. Adjustments will be necessary
for the remainder of the 2011/2012 financial year on both anticipated revenue and
working capital requirements.
f. Employee related costs are at 46% mainly as a result of resignations during the year
which were not filled immediately and the non/late filling of the budgeted vacant posts.
g. Depreciation is at 54% as at 31 December 2011 and needs to be adjusted as insufficient
provision was made during the compilation of the original budget for the 2011/2012
financial year.
h. Transfers and grants amount to R10 million as at 31 December 2011. Approval for the
mentioned expenditure is via various Council resolutions to deal with roll-overs from the
previous financial year. No provision was made on the original budget for 2011/2012 for
this expenditure and will thus have to be adjusted in the adjustment budget.
i. Other general expenditure, at 32%, is also below the average of 50%. All items
associated with other general expenditure, the normal day-to-day running of the WRDM,
will be scrutinised and adjusted, if necessary, during the adjustment budget process.
ATTACHED AS ANNEXURE 2, is the projected performance for the 2011/2012
financial year by using the actual performance as guideline, Council resolutions and the
original budget as basis. The projected performance for the 2011/2012 financial year is as
follows:
2.1 PROJECTED CAPITAL EXPENDITURE PER VOTE
Budget (R’000) Projection (R’000) Diff (R’000)
Executive and Council
R 0
R 200
R 200
Corporate Services
R 400
R2 754
R2 354
Planning and Development
R 0
R3 631
R3 631
Public Safety
R 600
R 600
R 0
Total
R1 000
R7 185
R6 185
Private Bag X033, RANDFONTEIN 1760
Cnr 6th & Park Street, RANDFONTEIN
Tel: (011) 411-5000/412-2701 Fax: (011) 412-3663
5
2.2 SOURCES OF FINANCING: CAPEX
Budget (R’000)
National/Provincial
R 0
Internal funds
R1 000
Total
R1 000
Projection (R’000) Diff (R’000)
R3 631
R3 631
R3 554
R2 554
R7 185
R6 185
2.3 PROJECTED OPERATING REVENUE PER VOTE
Budget (R’000) Projection (R’000) Diff (R’000)
Executive and Council
R 29 020
R 29 487
R 467
Budget and Treasury
R143 988
R 146 526
R 2 538
Corporate Services
R 3 331
R 3 384
R
53
Sport and Recreation
R 195
R
171
(R 24)
Public Safety
R 14 714
R 15 187
R 473
Health
R 50 748
R 51 261
R 513
Planning and Development
R 15 651
R 38 367
R22 716
Road Transport
R
0
R 5 133
R 5 133
Total
R257 647
R289 516
R31 869
2.4 PROJECTED OPERATING EXPENDITURE PER VOTE
Budget (R’000) Projection (R’000) Diff (R’000)
Executive and Council
R 37 305
R 40 807
R 3 502
Budget and Treasury
R 12 454
R 13 512
R 1 058
Corporate Services
R 37 218
R 36 079
(R1 140)
Community and Social
R 20 527
R 19 094
(R1 433)
Sport and Recreation
R 1 350
R 1 142
(R 208)
Public Safety
R 57 830
R 58 407
R 577
Health
R 55 375
R 55 940
R 566
Planning and Development
R 30 163
R 52 931
R22 767
Road Transport
R 5 425
R 10 005
R 4 581
Total
R257 647
R287 917
R30 270
2.5 PROJECTED OPERATING REVENUE BY CATEGORY
Budget (R’000) Projection (R’000) Diff (R’000)
Service charges
R 4 653
R 3 979
(R 674)
Rent facilities/equipment
R 1 525
R 1 520
(R 5)
Interest: External investments
R 4 200
R 6 200
R 2 000
Interest: Debtors
R
8
R
45
R 38
Licenses and Permits
R 116
R
130
R 15
Operating grants and subsidies
R206 171
R 209 250
R 3 078
Capital grants and subsidies
R 5 000
R
0
(R5 000)
Other revenue
R 6 974
R 3 474
(R3 501)
Accumulated funds
R 29 000
R 64 918
R35 918
Total
R257 647
R289 516
R31 869
Private Bag X033, RANDFONTEIN 1760
Cnr 6th & Park Street, RANDFONTEIN
Tel: (011) 411-5000/412-2701 Fax: (011) 412-3663
6
2.6 PROJECTED OPERATING EXPENDITURE BY CATEGORY
Budget (R’000) Projection (R’000) Diff (R’000)
Employee related costs
R145 207
R143 646
(R1 561)
Councillors remuneration
R 7 761
R 8 161
R 400
Bad debt
R 2 980
R 2 700
(R 280)
Depreciation
R 7 316
R 8 454
R 1 138
Finance charges
R 3 696
R 3 696
R
0
Other materials
R 2 759
R 2 181
(R 578)
Transfers and grants LM’s
R
0
R 15 509
R15 509
Transfers and grants WRDA
R 5 514
R 8 592
R 3 078
Capex contribution
R 1 000
R 1 100
R 100
Other general expenditure
R 76 107
R 88 376
R12 268
Repairs and maintenance
R 5 306
R 5 502
R 196
Total
R257 647
R287 917
R30 270
2.7 PROJECTED CAPITAL EXPENDITURE
Capital expenditure is projected to increase by 618% (R6 185 000) and is due to:
- Furniture for dining room and foyer to the amount of R320 000 as per Council
resolution 40 dated 27 July 2011 (roll-over).
- Furniture for Mayoral parlour to the amount of R327 400 as per the above Council
resolution.
- Security system at Council Centre to the amount of R1 500 000 as per Council
resolution 52(58) dated 13 September 2011 (roll-over).
- Furniture and equipment for Political Offices to the amount of R200 000 as per
Council resolution 58(62) dated 27 October 2011.
- Purchase of an e-mail server to the amount of R307 000. Virement approved by the
Municipal Manager on 6 October 2011.
- Machinery, equipment and buy-back centres at the Plastic Recycling Plant to the
amount of R3 631 000 which were not included in the approved budget for
2011/2012.
- Transfer of an amount of R100 000 from the capital budget to the operating budget
to go for the option of leasing instead of purchasing computer related equipment
(desk tops, lap tops, etc.).
2.8 PROJECTED OPERATING REVENUE AND EXPENDITURE
2.8.1 OPERATING REVENUE
Operating revenue (inclusive of contributions to/from provisions) for the 2011/2012
financial year projects to an amount of R289 515 500 which is an increase of R31 868 800
(12,4%) in relation to the original estimates for 2011/2012. This increase in revenue is
mainly due to the following reasons:
Private Bag X033, RANDFONTEIN 1760
Cnr 6th & Park Street, RANDFONTEIN
Tel: (011) 411-5000/412-2701 Fax: (011) 412-3663
7
1. A projected increase of R2 000 000 on interest earned on short-term external
investments. Advance payments of the replacement grant and equitable share, lower than
expected expenditure on roll-over funds and the slow progress on capital expenditure
contributed to the higher than expected interest on investments.
2. Operating transfers and grants projects to a increase of R3 078 100 which represents the
subsidy payment to the West Rand Development Agency (WRDA). More information on
the WRDA will be given in the report.
3. Capital transfers and grants is to be reduced by R5 million as per Government Gazette
no. 34880, dated 20 December 2011. This amount refers to the neighbourhood
development partnership grant. Subsequently expenditure is also reduced with the same
amount.
4. Accumulated funds increases by R35 918 300 (124%) to an amount of R64 918 300 for
the 2011/2012 financial year. This is the result of:
- Roll-overs of un-completed projects and programmes from the previous financial year in
the cost units of Project Management and Infrastructure, Local Economic Development,
Transport and Land Use, HIV/Aids Programmes, Environmental Health Services,
Municipal Manager, Internal Audit and Information Communication Technology. Various
Council resolutions were taken in this regard and more information will be given under
the heading Operating Expenditure.
5. Other revenue projects to decrease with an amount of R3 500 500 with the following
main elements:
- Projected decrease in the sale of refuse bags by R400 000.
- Projected decrease in the sale of plants at Merafong Flora to the amount of R225 000.
- Scrapping of the Industrial Development Corporation grant of R3 500 000.
- Other revenue already received and not included in the approved budget for 2011/2012.
6. The decrease in service charges is due to corrections to the approved budget, based on
actuals levied for the first six months of the financial year, specifically regarding Fire
Services and the Sale of Electricity to the tenants of Council Centre.
2.8.2 OPERATING EXPENDITURE
Operating expenditure for the 2011/2012 financial year projects to an amount of
R287 917 300 which is an increase of R30 270 600 (11,8%) in relation to the original
estimates for 2011/2012. The net result is a projected surplus of R1 598 200. The increase
in operating expenditure is mainly due to the following:
1. Employee related costs project to a decrease of R1 561 200 (1%), from R145 207 300
to R143 646 100, as a result of:
Private Bag X033, RANDFONTEIN 1760
Cnr 6th & Park Street, RANDFONTEIN
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8
- The non or late filling of vacant/new budgeted posts and the non or late filling of
resignations during the first half of the financial year.
- Savings that realised between the budgeted increase in salaries and allowances of 7%
and the actual increase approved of 6,05%.
- Transfer of the disaster management function from Merafong City LM as approved by
Council under item 76(80).
- Provision is made for the following posts which were advertised and not included in the
approve budget for 2011/2012:
Disability Co-ordinator, Gender Co-ordinator, Secretaries (4), VIP Protection (2),
Personal Assistant, Administrative Officer, Transformation Manager.
2. Provision is made under Councillor Allowances for the payment of a full-time
Chairperson of the Municipal Public Accounts Committee.
3. Depreciation and asset impairment projects to an increase of R1 138 300. This is based
on actuals for the first six months of the financial year and also caters for final corrections
and adjustments as per GRAP 17.
4. The increase in transfers and grants to Municipalities projects to an adjusted amount of
R15 508 800 and is a direct result of the increase in accumulated funds (roll-overs) as
approved by Council, item 53(59) dated 13 September 2011. Projected expenditure for
2011/2012 in this regard is as follows:
- Mogale City/Randfontein:
R6 086 000
- Randfontein:
R1 059 200
- Westonaria:
R2 000 000
- Merafong City:
R6 363 600
5. Other general expenses projects to a net increase of R12 268 200 (16%). The projected
net increase is mainly a result of:
a. Correction of the neighbourhood development grant, a decrease of R5 000 000.
b. Adjustment to professional fees amounting to an increase of R9 153 600 as per, inter
alia, Council resolutions 26(36) and 31(41) dated 27 July 2011; 48(54) and 53(59) dated
13 September 2011; 61(65), 69(73) and 85(89) dated 27 October 2011.
c. Adjustment to programs and projects amounting to R9 844 200 as per, inter alia,
Council resolutions 26(36) dated 27 July 2011; 43(49), 44(50) and 53(59) dated
13 September 2011; 61(65) and 71(75) dated 27 October 2011.
d. Transfer of the disaster management function from Merafong City LM as approved by
Council under item 76(80).
e. The inclusion of the Katlego Arts and Craft facility under the WRDA. Provision is
made for the full financial year and amounts to R2 024 500. This has an impact on the
subsidy payment from the WRDM to the WRDA.
f. A projected decrease of R3 200 500 regarding lease of vehicles and equipment mainly
due to corrections on VAT.
Private Bag X033, RANDFONTEIN 1760
Cnr 6th & Park Street, RANDFONTEIN
Tel: (011) 411-5000/412-2701 Fax: (011) 412-3663
9
g. Other minor projected adjustments and corrections to expenditure items such as office
operational costs, marketing and tourism, vehicle operating costs, conferences and
seminars, fees and levies, security services, etc.
3. WEST RAND DEVELOPMENT AGENCY
The projected operational and capital
revenue/expenditure of the West Rand
Development Agency is as follows. Note should be taken that the amounts are included in
the projections of the West Rand District Municipality.
3.1 PROJECTED CAPITAL EXPENDITURE
Budget (R’000)
Plastic Recycling Plant
R 0
Total
R 0
Projection (R’000) Diff (R’000)
R3 631
R3 631
R3 631
R3 631
3.2 SOURCES OF FINANCING: CAPEX
Budget (R’000)
National/Provincial
R 0
Total
R 0
Projection (R’000) Diff (R’000)
R3 631
R3 631
R3 631
R3 631
2.5 PROJECTED OPERATING REVENUE BY CATEGORY
Budget (R’000) Projection (R’000) Diff (R’000)
Interest: External investments
R 200
R 200
R
0
Operating grants and subsidies
R 5 514
R8 593
R 3 079
Other revenue
R 4 496
R 572
(R3 924)
Total
R10 210
R9 365
(R 845)
2.6 PROJECTED OPERATING EXPENDITURE BY CATEGORY
Budget (R’000) Projection (R’000) Diff (R’000)
Employee related costs
R 3 286
R2 586
(R700)
Depreciation
R 990
R1 417
R 427
Other materials
R 670
R 340
(R330)
Other general expenditure
R 5 089
R4 557
(R532)
Repairs and maintenance
R 175
R 465
R 290
Total
R10 210
R9 365
(R845)
Private Bag X033, RANDFONTEIN 1760
Cnr 6th & Park Street, RANDFONTEIN
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10
3. SUMMARY: PROJECTED OPEX AND CAPEX
The following is a summary of the projected operating and capital expenditure for the
2011/2012 financial year:
DESCRIPTION
Capital expenditure
Capital funding
Operating revenue
Operating expenditure
Projected surplus
Total (capex and opex)
Budget (R’000)
R 1 000
R 1 000
R257 647
R257 647
R
0
R258 647
Projection (R’000) Diff (R’000)
R 7 185
R 6 185
R 7 185
R 6 185
R289 516
R31 869
R287 917
R30 270
R 1 598
R 1 598
R296 701
R38 054
Taking all the above into account it is recommended that an adjustments budget for the
2011/2012 financial year be compiled.
M.D. MOKOENA
MUNICIPAL MANAGER
Private Bag X033, RANDFONTEIN 1760
Cnr 6th & Park Street, RANDFONTEIN
Tel: (011) 411-5000/412-2701 Fax: (011) 412-3663