Transcript Document

Longer term funding issues
Julian Gravatt, 18 June 2014
Twenty years of funding, what we’ve learnt
Lots of activity - agencies, initiatives, acronyms etc
Periodic changes to the funding formula – 2003, 2008, 2013
Incessant fiddling with qualifications, prices and programmes
Funding used to nudge and control
Budgets that change every year despite multi year spending reviews
Desire to squeeze every ounce of value out of every pound spent
College income and expenditure (all types)
College accounts (FE & SFC)
1993-4
2012-3
FEFC,
2,364
5,627
+138%
Other
1,150
1,943
+68%
Income
3,508
7,570
+115%
Staff
2,390
4,806
+101%
Supplies
1,125
2,822
+151%
Expendit
3,515
7,628
+117%
Surplus
(7)
(58)
% Diversity
32%
26%
% Staff cost
68%
63%
GDP deflator up 51% in same period
%
Colleges have increased fully
funded student numbers at a
time when eligibility has
widened. Fees have been
harder to secure than external
contracts.
Colleges do more subcontracting and set aside 8%
of income on depreciation and
interest but spending on staff
predominates
Average College income
£7 mil in 1993, £22 mil in 2012
Fewer colleges, different students
1993
2014
Change
Adults in
Colleges
1996
2004
2013
FECs
302
218
-84
SFCs
120
93
-27
AHCs
37
15
-21
Adult learning
ADC
13
3
-10
The decline of the evening class?
SDIs
16
10
-6
Total
488
339
-149
Numbers
16-18
All sectors
2,585
1994
3,091
2012
1,879
Change
Full-time
926
1,327
+43%
Merger waves (eg 1998 to 2002)
WBL
179
110
-45%
Some transfers to HE sector
Other
162
197
+19%
A few new SFCs
Sub-total
1,266
1,635
+29%
Work
219
149
-32%
NEET
136
190
+39%
Total
1,624
1,973
+21%
Colleges
16-18 year olds
Colleges have held share of students
Sixth form college finances now
Sixth Form College Finances (2012-13 accounts)
£9 mil income on average (£4 to £20 mil range)
Overall surplus £13 mil on £873 mil income (1.5%)
Several deficits in 2012-13 (19 reported deficits, 9 cash based deficit)
Staff costs 69% of income (62% in FE colleges)
89% income from EFA
Debt repayment (20% of income in 2011 -> 12% by 2013)
Only 1 SFC assessed to have inadequate financial health in Jan 2014
Some big concerns about the immediate future
Revenue funding 2014-15
Outcomes
Things to note
EFA 16-18
FPG helps some colleges
18 y/o mitigation helps others
Colleges advance funding Full-timers
New Maths/English condition
Tighter sub-contracting rules
Apprenticeships
and Adult Skills
16-18 recruitment down
19+ ASB and apps on target
Apprenticeships expectation
17% ASB cut (23% on 19+ skills)
No tolerance or transition
New apprenticeship trailblazers
New traineeship plans
Employer routed funding by 2017?
Loans
Colleges using c66% of facility
2014-15 facilities up 27%
SFA Loan growth plans now
Extension of loans in 2016?
Sixth form colleges in 2014-15
Sixth Form College Funding 2014-15
A series of cuts to full-time student funding 2011 and 2015
Action to limit year-on-year change but end-point is lower £/student
New EFA funding formula introduced in 2013-14
Funding designed to support study programmes, English and Maths
No money for inflation
Many SFCs have policy to expand to maintain income
Student numbers forecast to rise by c3.5% in 2013-14 (+60 per SFC)
EFA allocations for 2014-15 up by an average +0.5% in 2014-15
Cash funding per 16-18 student falls by c3% in 2014-15
16-18 Funding in 2015-16
EFA faces a 16-18 cash crunch in 2015
The size of the 2015-16 budget is unclear
1.1% cuts for non-school DFE announced in 2013 Autumn Statement
Growth in 16-18 numbers plus the costs of extra FT students
Risk that there’ll be more cuts to rates or funded numbers
AoC , ASCL and SFCA working with others to protect budget
SFA also faces a continuing sharp but unclear reduction in budget
EFA and SFA will be confirming allocations in spring 2015
Important to confirm 2015-16 allocations before election
Public spending after the election
Public spending 2015 to 2020
Years 7,8 and 9 of a 9 year plan
Treasury plans to close deficit by 2018
Lab/Lib Dem target is 2020
After the election, a spending review
Decisions by December 2015
Current plans for 2016-17
£10 bil RDEL cut, £5 bil NI rise
800
700
600
500
Taxes
400
PSCE
RAME
300
RDEL
Deficit
For period 2015-16 to 2018-19
£34 bil (8%) cut in RDEL
Unprotected depts £80-100 bil
200
100
0
-100
Pensions and budgets
Cost of employing a teacher to rise by 5% plus any payrise
Now
By 2016
TPS
TPS employer
14.1%
16.48%
Aim is to recover underfunding
NI employer
10.4%
13.8%
Lower discount rate
Employer on-costs
26%
33%
Staff cost ratio
67%
?
High pay growth assumption
2015 reforms don’t save enough
Costs SFC 1% of income
Now
By 2016
TPS members (avg)
9.6%
9.6%
National insurance
NI employee
10.6%
12%
DWP simplifying the rules
£5 bil extra NI pays pension costs
Costs SFC 2% of income
Funding from 2016 onwards
DFE budget between 2015 and 2020
10% growth in 11-16 pupil numbers (280k extra 11-16s)
Costs of promises (eg free meals) and new institutions
8% fall in 16-18 population (low point is 2018)
83% of 16s in education, 10% in training or work, 7% NEET
Funding from 2016 onwards
16-18 issues
Lots of questions but answers unlikely until 2015
Formula Protection Grant ends (2015-16 is the final year)
Maths/English condition takes effect (from 2016-17)
New A-levels in place and New Tech Levels promoted
EFA may need adjustments to 16-18 formula
Will these be designed to cut funding?
BIS issues
Some big cuts likely in BIS spending (requires HE reform)
Any political decision on HE fees will have an impact from 2017
Employer routed funding for apprenticeships by 2017 ?
Expansion of FE loans likely to take place in 2016
Longer-term funding trends
Politics
The 2015 vote and Coalition negotiations pretty important
Events determine post-16 policy as much as ideology
Political views of ministers determine planning/market mix
Public spending
Post-2015 spending review may change tax/spending mix
Demography underpins student number trends and budgets
Three things working against 16-18 education
Demography (more children now, more older people)
Economics (deficit reduction continues to be a priority)
Politics (future of UK discussions)
No appetite to rebuild the size of government
Spending likely to dip around 2018
Thinking about funding and finance
At a national level
Important to stick to the facts and explain the consequences
Necessary to connect with people at an emotional level
Better to find friends than enemies
For individual colleges
Pessimism can be contagious. College fortunes vary significantly
Quality counts
Opportunities within £65 bil DFE+BIS revenue budget
Productivity improvements from IT only partly realised in education.
Some government budgets continue to rise (eg FE and HE loans).
Worth thinking about income generation
Vital to keep staff and governors onside