Transcript Document

AoC CPD session for staff
College funding
Julian Gravatt, AoC Assistant Chief Executive
21 April 2015
@julian_gravatt
[email protected]
What you need to know
Three areas
1.
Where colleges get the money from government
2.
Key issues, main trends, what might happen next
3.
How AoC makes a difference
What you learnt last time
From CPD session in 2012
Colleges get funding to keep education and training free or low cost
We’ve had national funding formulae for 22 years
Governments use funding to influence behaviour
(eg right students taking the right courses at lowest cost)
It’s all about people. Who students are and what they do affects income
Vast data collection system makes it work
Total FE College Income
6,900
6,800
College
Forecast
£m
6,700
6,600
6,500
6,400
6,300
6,200
Sources: GFE Finance records 2008/09 to 2013/14 (adjusted); Financial plans 2014/15 to 2015/16
FE College staff restructuring costs
120,000
100,000
£'000
80,000
60,000
40,000
20,000
0
College
Forecasts
Financial health assessment
College financial health (EFA/ SFA assessment)
Cash based profitability
Net current assets
Levels of borrowing
Purpose of financial health assessment
Judgement by the regulator (EFA/SFA) on strength/vulnerability
Used to determine which colleges need external intervention
Sometimes used to assess % capital grant
Use to restrict access to apprenticeships, traineeships, 14-16 etc
20 year old system, last updated in 2008
Financial health scores
Scoring for 2013-14 from financial plans (FE colleges only
Approx numbers
Ratio
Borrowing
Solvency
Operations
“Outstanding”
60
140
85
60
“Good”
65
65
40
45
“Satisfactory”
75
15
45
45
“Inadequate”
30
10
60
80
Issues
Colleges with no borrowing can’t always get an overdraft
Deteriorating financial results since 2012
Wide range between different colleges
How colleges will improve their finances
Some or all of the following:
1.
Better government policy (funding properly matching the task)
2.
Cost reduction (to bring budgets back into balance)
3.
Property sales to release cash (only open to some colleges)
4.
Relentless focus on student/employer demand and need
5.
Outsmarting the competition
6.
Strong, positive, realistic leadership
College income
EFA
SFA
FE College income
2014-15 (£ millions)
233 Colleges
EFA
SFA
Other
Total
Surplus
2,823 (44%)
1,734 (28%)
1,756 (28%)
6,396
34
Colleges
Sixth form colleges
2014-15 (£ millions)
93 Colleges
EFA
Other
Total
Surplus
822 (95%)
42 (5%)
864
20
DFE’s funding for 16-18 year olds
£ bil
Schools budget
41.2
16-18
7.0
All other DFE
5.5
DFE RDEL
53.7
• DfE funds 4.3 mil primary and 2.7 mil secondary pupils via EFA and local authorities.
Money based on pupil numbers & characteristics
• EFA funds 1.3 mil 16-18 year olds via a national formula. £4,000 for a full-time student;
less for a part-timer; more for some courses (10%); extra for two types of disadvantage
(English/Maths + postcode); a deduction for withdrawals; extra for large programmes
Alison Wolf on college funding
“The current funding regime for 16-19 year olds (and indeed post-19)
is unique to this country in tying funding overwhelmingly to
qualifications rather than to the individuals who take them. The
system is completely opaque to the vast majority of the people
working within the system, let along to the public at large. It imposes
very large administrative costs on institutions and, as basic economic
and management theory tells us, opaque systems are intrinsically
inefficient and subject to extensive gaming.
There are a number of good (and some less good) reasons why the
system has evolved as it has….It is hard to believe that we alone
need to maintain a system of such complexity that senior college staff
need to attend annual fee-bearing courses so that they can
understand – partially – how they are being funded and how they can
game the system” (Wolf review, 2011, page 120)
(
The EFA 16-18 funding formula
Student
Numbers
National
Funding Rate
per student
Total
Programme
Funding
Retention
Factor
(less than 1)
Programme
Cost
Weighting
Disadvantage
Funding
)
Area
Cost
Allowance
(up to 20%)
Band
Hours
Total
5
540+
£4,000
Base
4 (*)
450+
£3,300
Medium
20%
3
360+
£2,700
High
30%
2
280+
£2,133
Specialist
60%
1
< 279
Land-based
75%
Disadvantage
1 (GCSE Maths / English)
2 (27% most deprived)
Programme
%
£480 per GCSE
8 to 33% extra
%
0%
……plus extras (if applicable)
(
Student Numbers
National Funding
Rate per student
Retention Factor
Programme Cost
Weighting
Disadvantage
Funding
)
Total
Programme
Funding
Large
programme
factor
Formula
Protection
Funding
High Needs
Students
Bursaries &
Free Meals
Area Cost
Allowance
16-18 students and funding (2014-15)
16,17
18 FT
PT
H/Needs
Students
Instit
Total
Average
Colleges
332
519
116
105
18
755
2,274
Schools
2,099
411
19
23
3
457
218
Special Schools
552
3
-
-
14
17
30
Comm & Charit
282
31
9
36
2
77
273
3,265
964
141
164
37
1,306
400
Total
£ millions
Prog
Of which
Disadv
H/N
Bursary
Free Meals
Total
Colleges
3,372
420
110
135
3,616
Schools
2,057
110
20
43
2,121
Special Schools
13
1
137
2
152
Comm & Charit
291
48
145
16
305
5,721
577
275
196
6,193
Total
BIS funding for 19+ FE/Skills
£ bil
HE & Science
7.9
19+ FE
2.9
All other BIS
2.4
BIS RDEL
13.2
• BIS funds 1 million undergraduates via the HE student loan scheme
(£40,000+ in student debt with a forecast 45% impairment) Student
loan outlays £14 billion a year and rising
• SFA funds 2 million adults over 19 and 0.8 million apprentices via a
several different national formulae.
SFA funding – where does it go?
£ millions
Total
£ millions
Total
19+ Apprenticeships
755
19+ further education
1,328
16-18 Apprenticeships
732
ESF funding via SFA
461
Apprenticeship grants for
employers
131
Community learning
210
Offender learning
128
19+ financial support
127
Apprenticeships
Colleges in 2014-15
1,487
Total
%
19+ FE
971
73
19+ Apps
284
38
16-18 Apps
277
36
Employer ownership (est)
70
ESOL mandation
50
Other SFA, 2014-15 A/Year
2,374
The SFA 19+ funding formula
For each
learning aim
Area
Cost
Allowance
(up to 20%)
Disadvantage
Funding
(8 to 33%)
Weighted
funding rate
Fee
assumption
(less 50%)
Achievement
element
(20% at end)
A
B
C
D
E
724
811
941
1,159
1,246
Certif (25+)
1,265
1,417
1,645
2,025
2,176
Diploma (37+) A-level
1,987
2,225
2,582
3,179
3,417
Diploma (49+)
2,573
2,882
3,345
4,117
4,425
Access course
3,022
3,384
3,926
4,825
5,197
Traineeships
Diploma (73+)
4,170
4,670
5,421
6,671
7,172
100+ hours
£500
Diploma (133+) ND
6,602
7,395
8,583
10,564
11,356
200+
£700
500+
£900
Band (£)
Certif (13+), GCSE
Apprenticeship
adjustments
%
16-18
+7%
Over 24
-20%
Large employer
-25%
Apprenticeship trailblazers
5
4
3
2
1
Maximum govt
contrib
2,000
3,000
6,000
8,000
18,000
Employer
contribution
1,000
1,500
3,000
4,000
9,000
Completion
element
500
500
900
1,200
2,700
16-18
element
600
900
1,800
2,400
5,400
Small business
element
500
500
900
1,200
2,700
Band (£)
BIS has approved 130 new trailblazers, some at Level 3, mainly at Level 4 +
c300 trailblazers likely to be ready by summer 2015
Funding via different set of rates and rules but recorded on ILR
Apprenticeship Vouchers
Employer
Registration
To get a Discount Code
New Employer
Database (SFA)
£ less a
discount
College or
Training Provider
ILR
£ The Discount
Funding System
(SFA)
Devolution
Strong push for local control of skills
LEPs have ESF & skills capital funding
#DevoManc
6 Metro areas + London (40% popul)
The 39 LEPs?
152 Counties, Unitaries & Boroughs
Scope of devolution unclear
All 16+ FE? 19+FE less Apprentices?
Could happen in stages
http://www.aoc.co.uk/news/devolution-skills-policy-andbudgets-some-practical-issues
Funding update – where are we right now?
EFA (16-18 education)
Little change but English and Maths are major issues
Average funding down by c3% (because student numbers down)
Apprenticeships
Budget ring-fenced but major reform programme underway
SFA (19+ further education)
24% cut in “other Adult Skills Budget”, slightly moderated
Significant impact in London because of position of colleges
Loan supported education
24+ advanced learning loans - money available to grow
No student number controls in higher education
What policies are on offer?
Education (“schools”)
Various promises on the DFE budget
Curriculum changes in next few years
Maths/English to 18, Tech Bacc (Lab)
500 more free schools (Cons)
RSCs –vs- Directors of school standards
Higher education (“universities”)
Labour promise a fee reduction to £6,000
Skills (“apprenticeships”)
Conservatives: 3 million apprentices. Labour: a guarantee at 18
Devolution
Conservatives: more devolution. Labour: an English Devolution Act
The bigger spending picture
Public finances (in £ billions, constant cash)
800
Government finances
Deficit to be closed this decade
… via tax income
.. plus spending cuts
Offsetting extra spending on
… pensions, debt interest (AME)
….NHS (protected DEL)
700
600
500
Taxes
400
PSCE
RAME
Politics & events have an influence
300
RDEL
Deficit
Depending on who gets in..
Unprotected DEL cuts after 2015
200
100
0
-100
The budget
Departmental spending plans (worst case!)
£ bil
2016 to 2019
Protected (NHS, Schools, DFID)
160
+5?
Too difficult to cut (Defence,rUK)
70
0
Post 16, Police, Local Govt, the rest
76
-30?
The 2015 spending review
£60 billion deficit & £90 bil public sector borrowing in 2015-16
Economic growth will narrow deficit
Chancellor estimates £30 bil in savings (£12 bil welfare, £5 bil interest)
Labour promises imply much smaller spending cuts
Conservatives and Labour now boxed in on Income tax, VAT and NI
Funding changes after the election
Area
My best guess
16-18 funding
Continuing slices from the budget
SFA funding
More cuts , apprentices & talk about devolution
Apprenticeships
300 new qualifications, work on vouchers
FE loans
FE loan extension but possibly not until 2017
HE
Depends on the election. £6k fees under Labour
Capital
LEP skills capital, possibly a re-capitalisation fund
What next?
Summer 2015
Election result (8 May 2015)
Formation of new government
Parliament returns (18 May 2015)
Queens speech (27 May 2015)
Budget (June/July 2015)
First legislation (eg a Labour bill on £6,000 fees)
Autumn 2015
HE recruitment with no student number controls
Spending review (by early December 2015 at the latest)
Ministerial decisions on big issues
Changes in agencies? Ofsted? FE commissioner?
College responses to the new climate/new funding
AoC approach to funding & finance
Representing and promoting colleges
AoC will get best deal by talking about what colleges do & could do
Money will follow if the public & policy-makers are inspired
Evidence-based arguments linked to national objectives
Papers, blogs, articles (http://www.aoc.co.uk/term/funding-finance)
Services to members
Aim for marginal gains (eg capital, mitigation, rule-changes etc)
Funding briefing every 2 weeks
1-to-1 advice
Support for College Finance Directors Group (CFDG)
Funding issues part of Policy, Regions, Comms etc work
What it’s useful to remember
Financial
£7 billion income
Down c5% in 2015-16
FE college £27 mil income (average)
Sixth form college £9 mil
College share of main funding streams varies
The future
Public spending squeezed for a generation
Colleges are resilient and part of the solution
Young people, employers, future workforce all
16-18s, Apprenticeships and Loans (for fees) are all in the mix
AoC active in all main areas to maximise opportunities