For discussion FCR(97-98)6
on 25 April 1997

ITEM FOR FINANCE COMMITTEE

CAPITAL WORKS RESERVE FUND
HEAD 710 - COMPUTERISATION
Student Financial Assistance Agency
New Subhead "Student Financial Assistance Management System"

HEAD 173 - STUDENT FINANCIAL ASSISTANCE AGENCY

Subhead 001 Salaries

Members are invited to approve -

  1. a commitment of $22,261,000 in a new subhead "Student Financial Assistance Management System" under Head 710 Computerisation for the Student Financial Assistance Agency to develop and implement an integrated computer system for the administration of student financial assistance schemes; and

  2. an increase in the ceiling placed on the total notional annual mid-point salary value of all non-directorate posts in the permanent establishment of the Student Financial Assistance Agency in 1997-98 from $45,193,000 by $2,251,980 to $47,444,980 for the creation of five non-directorate posts to develop and implement the system.



PROBLEM

We need additional resources to set up an integrated computer system to enhance the efficiency and capacity of the Student Financial Assistance Agency (SFAA) in the administration of student financial assistance schemes.

PROPOSAL

2. On the advice of the Director of Information Technology Services (DITS), the Controller, Student Financial Assistance Agency (C,SFAA) proposes to develop and implement an integrated computer system at a total non-recurrent commitment of $22,261,000 for the better administration of the Local Student Finance Scheme (LSFS), the Student Travel Subsidy Scheme, the School Textbook Assistance Scheme and the Senior Secondary Fee Remission Scheme.

JUSTIFICATION

Present mode of operation

3. At present, the SFAA handles some 504 000 applications under the LSFS, the Student Travel Subsidy Scheme, the School Textbook Assistance Scheme and the Senior Secondary Fee Remission Scheme, involving about $2,837 million altogether. The Agency has two computer systems, namely the Student Finance System and the Student Travel Subsidy System, to support partially the operation of the LSFS, the Student Travel Subsidy Scheme and the School Textbook Assistance Scheme. The operation of the Fee Remission Scheme remains basically manual, with very limited computerisation through micro-computers.

4. To administer the four schemes, the SFAA has to maintain over 500 000 paper records every year. The present mode of operation has the following problems -

  1. managing, updating and retrieval of a big volume of paper records requires substantial manpower and space;

  2. the manual mode of operation is prone to transcription errors and leads to ineffective communication of application information among user sections in the Agency, causing inconvenience to applicants, schools and operational staff;

  3. the two existing computer systems do not have sufficient capacity to support fully computerised operation or to store data of previous applications. There is no direct exchange of data between the systems. The SFAA can only match the relevant data or cross-check with historical data manually through paper records; and

  4. the existing systems do not maintain demographic data and family profiles of applicants while the current basic reporting functions for validating data and processing applications are inadequate for analysis, control, planning and auditing purposes.

Benefits of the proposed computer system

Automating various manual processes

5. The proposed integrated computer system will automate the various manual processes that do not come within the existing computer systems, and help save staff efforts. It would speed up the vetting process and payment of financial assistance to the students, and provide sufficient computer capacity to cope with the projected increase in caseload.

Relieving school teaching staff from non-teaching duties

6. The new system will interface, in due course, with the computer system in schools to streamline the operations of the Student Travel Subsidy Scheme, the Textbook Assistance Scheme and the Secondary Fee Remission Scheme. We will store applicants’ data in the computer system and pre-print them on application forms in subsequent application exercises. Teachers will no longer need to check the eligibility of students under the schemes and may devote more time to teaching duties. Parents will also benefit as they do not have to furnish detailed information every year.

Improvements to the existing system

7. Under the proposed system, we will capture application data under the LSFS upon receipt of the applications to form a centralised database. The system would allow an early screening of applications for simple or detailed vetting, cross-referencing with historical data in previous applications of the applicants or their siblings, and early identification of doubtful cases for further review. The proposed system will therefore improve vetting accuracy and shorten processing time.

Better interface between systems

8. The establishment of the integrated system linking up the various sections/units of SFAA will streamline the processing of applications under different financial assistance schemes by the same applicant. For instance, the proposed system will help speed up the time from 45 days to 21 days for processing applications from tertiary students under the Student Travel Subsidy Scheme. The new system will also enhance the communication between the payment section and the loan repayment section handling LSFS applications, and enable timely withholding of payment of financial assistance to those students against whom action to recover overpayments in the previous years is underway.

Improving customer service

9. The enhanced computer facilities, notably the on-line facilities, will enable SFAA to improve its services. C,SFAA envisages that the Agency will be able to -

  1. reduce the lead time for answering each telephone enquiry from 20 minutes to ten to five minutes for the LSFS and from 25 minutes to ten minutes for the other three schemes;

  2. reduce the queuing time for registering loan undertaking for acceptance of student loan from 20 minutes to ten to 15 minutes for each student;

  3. speed up the preliminary sorting of high level assistance cases and allocation of interview time for detailed vetting under the LSFS from six days to two to three days; and

  4. reduce the time for preparing correspondences with the applicants from two days to one day. C,SFAA expects to issue about 200 000 letters annually through the computer system.

Strengthening analytical functions for planning and decision-making

10. The proposed new system provides readily available data on the profile of students and their families, thereby facilitating future planning and policy-making. The Agency will need 30 minutes to compile a report on statistical information. This will be a significant improvement to the existing requirement of one whole day in compiling the same report manually.

FINANCIAL IMPLICATIONS

Non-recurrent expenditure

11. We estimate that the proposed system will give rise to a non-recurrent expenditure of $27,109,000 over a two-year period from 1997-98 to 1998-99. This comprises $22,261,000 for the purchase of computer hardware and software and the hiring of implementation services; and $4,848,000 for in-house development staff of SFAA and the Information Technology Services Department (ITSD). Details of the non-current expenditure are as follows -



1997-98

$’000

1998-99

$’000

Total

$’000

Non-recurrent expenditure



(a)

Computer hardware and software*

4,401

-

4,401

(b)

Implementation services

7,723

8,987

16,710

(c)

Site preparation

672

138

810

(d)

Miscellaneous

40
______

300
______

340
______


Sub-total

12,836
______

9,425
______

22,261
______

Non-recurrent staff cost




(e)

SFAA

2,367

592

2,959

(f)

ITSD

1,511
______

378
______

1,889
______


Sub-total

3,878
______

970
______

4,848
______


Total

16,714
______

10,395
______

27,109
______

* Including a 10% contingency.

12. As regards paragraph 11(a), the $4,401,000 is for the acquisition of computer hardware including one database server, one file server, 65 workstations, peripherals and data communication equipment and system software necessary for the development of the proposed system.

13. As regards paragraph 11(b), the $16,710,000 is for out-sourcing the development and implementation of the proposed system. It comprises 250.6 man-months of staff resources1 .

1 Including 15.5 man-months of Project Manager, 113.3 man-months of Systems Analyst and 121.8 man-months of Analyst/Programmer.

14. As regards paragraph 11(c), the $810,000 is for site preparation work including the installation of conduit facilities and power points for computer equipment.

15. As regards paragraph 11(d), the $340,000 is for training of staff and acquisition of initial consumable and miscellaneous items, such as printing paper, printer toner and stationary required during implementation.

16. As regards paragraph 11(e), the $2,959,000 represents SFAA’s staff costs of one man-month of Education Officer (Administration), 3.9 man-months of Senior Education Assistant, 9.8 man-months of Education Assistant, six man-months of Senior Executive Officer, 14.3 man-months of Executive Officer I, 14 man-months of Clerical Officer I and four man-months of Clerical Officer II etc. for undertaking project development work and user acceptance tests in the two-year period. C,SFAA will meet the staffing requirement of Education Officer (Administration) and Clerical Officer II by internal redeployment whereas the requirement of the other five posts will be met by creation of posts. It is therefore necessary to increase the total notional annual mid-point salary value of all non-directorate posts in the permanent establishment of the SFAA from $45,193,000 by $2,251,980 to $47,444,980.

17. As regards paragraph 11(f), the $1,889,000 represents ITSD’s staff costs of 10.6 man-months of Systems Manager and 20 man-months Analyst/Programmer I for the development and implementation of the system. We have included the necessary provision in the 1997-98 Estimates to meet this requirement.

Recurrent cost

18. We estimate that the additional annually recurrent cost of maintaining and supporting the proposed system after implementation will be $5,165,000 for the first year and $6,722,000 thereafter. The breakdown is as follows -



1998-99

$’000

1999-2000

onwards

$’000

Recurrent expenditure



(a)

Maintenance of computer hardware and software

351

351

(b)

Data preparation

260

324

(c)

Software support service

1,531

2,040

(d)

Miscellaneous

69

_____

69

_____


Sub-total

2,211

_____

2,784

_____

Recurrent staff costs



(e)

SFAA

2,707

3,608

(f)

ITSD

247

______

330

_____


Sub-total

2,954

______

3,938

_____


Total

5,165

_____

6,722

_____

19. As regards paragraph 18(a), the $351,000 is for the annual maintenance of computer hardware and software.

20. As regards paragraph 18(b), the $324,000 is for out-sourcing the data preparation services.

21. As regards paragraph 18(c), the $2,040,000 is for hiring service to perform on-going system maintenance and support. It comprises 22.6 man-months of staff resources2 for 1998-99 and 30.1 man-months of staff resources3 each year for 1999-2000 and onwards.

2.Including 1.4 man-months of Project Manager, 11.8 man-months of Systems Analyst and 9.4 man-months of Anaylst/Programmer.

3.Including 1.9 man-months of Project Manager, 15.7 man-months of Systems Analyst and 12.5 man-months of Analyst/Programmer.

22. As regards paragraph 18(d), the $69,000 is for the acquisition of consumables such as data tapes, printing materials and miscellaneous items and the rental of communication lines connecting SFAA and ITSD sites.

23. As regards paragraph 18(e), the $3,608,000 is the full annual staff costs of SFAA in undertaking the duties previously performed by school staff in relation to the Student Travel Subsidy Scheme, the Textbook Assistance Scheme and the Fee Remission Scheme, and in supporting the LSFS functions. It comprises 121.8 man-months of staff resources4 each year for 1999-2000 and onwards.

4. Including 0.2 man-month of Senior Education Assistant, 33.1 man-months of Education Assistant, 42 man-months of Clerical Officer II, 12 man-months of Clerical Officer I, 7 man-months of Executive Officer I, and 27.5 man-months of Temporary Clerical Assistant.

24. As regards paragraph 18(f), the $330,000 is the full annual staff cost of ITSD in providing on-going maintenance and support to the system. This comprises 1.5 man-months of Systems Manager and four man-months of Analyst/Programmer I each year for 1999-2000 and onwards.

Cost and Benefit Analysis

Savings

Realisable savings

25. On implementation of the proposed system, C,SFAA expects to realise savings of $3,105,000 a year. This includes annual staff savings of $2,705,000, being the annual staff costs of one Education Assistant, four Clerical Officers II, one Typist and 115 man-months of Temporary Clerical Assistant, and savings of $400,000 on maintenance fees and data preparation cost for the existing systems. DITS expects to realise annual staff savings of $574,000 in ITSD, being the staff resources for on-going support for the existing systems, including six man-months of Analyst/Programmer I and Contract Programmer respectively and bureau resources upon implementation of the proposed system.

Non-realisable savings

26. In addition to the qualitative improvements to the operations of the financial assistance schemes as set out in paragraphs 5 to 10, the proposed system would achieve an annual notional non-realisable savings of $10,214,000. It represents -

  1. SFAA’s annual staff savings of $308,000, being the annual staff costs of three man-months of Executive Officer I, 1.7 man-months of Clerical Officer I, 2.5 man-months of Clerical Assistant and 3.2 man-months of Typist; and

  2. annual teaching staff savings of $9,906,000, being 111.5 man-months of primary teachers and 233.4 man-months of secondary teachers in 1 400 schools.

27. A detailed cost-benefit analysis is at the Enclosure. We will be able to pay back the total cost of the proposed system by the year 2002-03.

Impact on Fees and Charges

28. The SFAA does not charge any fees on applications under the existing student financial assistance schemes. The present proposal has no implications for government fees and charges.

Implementation Plan

29. We plan to implement the proposed system according to the following timetable -


Activities

Target completion date

(a)

Student Travel Subsidy, School Textbook Assistance and Senior Secondary Fee Remission Schemes

Phase 1 - prior to interface with schools through the computer network in Education Department

Phase 2 - to interface with schools through the computer network in Education Department

July 1998

August 1999

(b)

LSFS

July 1998

BACKGROUND INFORMATION

30. SFAA administers several publicly-funded means-tested schemes which seek to ensure that we do not deny students access to education because of a lack of financial means.

31. In 1995, the Agency commissioned Consultants to study the feasibility of the wider use of computer application in the administration of the LSFS, the Student Travel Subsidy Scheme, the Textbook Assistance Scheme and the Secondary Fee Remission Scheme. The Consultants completed the study in 1996 and recommended improvements to the management of the database and co-ordination of the processing, vetting and financial controlling procedures for the various schemes. Moreover, the Consultants recommended improvements to the administration of the latter three schemes by interfacing in due course, with the computer network in schools.

32. Separately, the Agency commissioned another consultancy to review the efficiency and cost-effectiveness of the LSFS. The Joint Committee on Student Finance (JCSF), which advises the Government on the operation of the LSFS, is considering the consultants’ recommendations in the light of the public feedback. The Administration will consider JCSF’s recommendations when they are available. The possible changes to the LSFS should not have any significant impact on the scope of the proposed integrated computer system. In designing the system, we have taken into account the need to build in capacity to allow for expansion.

Education and Manpower Branch
April 1997


Enclosure to FCR(97-98)6

Cost and Benefit Analysis of the proposed Student Financial Assistance Management System (at 1996-97 prices)




($’000)




1997-1998

1998-1999

1999-2000

2000-2001

2001-2002

2002-2003

Costs







Non-recurrent







- expenditure

12,836

9,425

-

-

-

-

- staff cost

3,878

970

-

-

-

-

Sub-total

16,714

10,395

-

-

-

-

Recurrent







- expenditure

-

2,211

2,784

2,784

2,784

2,784

- staff cost

-

2,954

3,938

3,938

3,938

3,938

Sub-total

-

5,165

6,722

6,722

6,722

6,722

Total Costs

16,714

15,560

6,722

6,722

6,722

6,722

Benefits







Realisable Savings

-

2,759

3,679

3,679

3,679

3,679

Notional Savings

-

7,661

10,214

10,214

10,214

10,214

Total Benefits

-

10,420

13,893

13,893

13,893

13,893

Net Benefits

(16,714)

(5,140)

7,171

7,171

7,171

7,171

#







Net Cumulative Benefits

(16,714)

(21,854)

(14,683)

(7,512)

(341)

6,830

# The total cost of the proposed system will be paid back by the year 2002-2003.


Last Updated on 5 August 1999