Student Numbers and New Campus Buildings Highlighted in Detailed Three Year Analysis

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The Learning and Skills Council (LSC) has released a detailed analysis carried out into colleges” financial planning for the next three years.

The analysis is based upon the information garnered from a breakdown of the three-year financial plans for 2005 ““ 08 submitted to the LSC by the colleges ““ numbering more than 370 ““ that are funded in the FE sector in England. Also, the LSC has published a comprehensive database that will allow each FE college to look at how their financial performance compares with other colleges in their college sector.

Forward Looking

The LSC has undertaken this analysis in an effort to provide a better long term support for strategic funding and budget decisions. The data collected has been collated by the LSC and analysed by college type ““ art and design, specialist designated colleges, land based, general FE, sixth form and tertiary colleges ““ and by region andnationally.

The analysis is in response to the findings of an earlier consultation. In this exercise, concerning future options for publishing an annual, sector-wide summary of colleges” financial planning. 316 (or some 94%) of the 335 colleges that responded, said that they would welcome better benchmarking data for the 2005-08 period.

The information examines issues such as student numbers, colleges” financial health, capital investment in the FE estate, staff costs, land and buildings disposals and borrowing. The findings are on the whole positive, with the sector financially robust and expectations that its financial health will get stronger. This will manifest itself in greater levels of operating surplus and cash reserves.

Projections

One finding of the study is that the total number of students aged 16 ““18 (full-time equivalents) is forecast to increase from 573,337 in 2004/05 to 626,203 in 2007/08 (a 9.2 % increase during the period under consideration). However, the total adult student numbers (full-time equivalents) are forecast to fall by 4.8 % between 2004/05 and 2007/08.

The financial health of colleges is also commented upon. The percentage of colleges in financial group A (with robust finances) will average approximately 50 % of all colleges, whilst the number within financial health group C (or those in a weak financial position) is expected to stabilise at approximately 17 %. This allows for the funding of staff wages, which are forecast to increase from 65.2 % of income in 2003/04 to 67.4 % of income by 2007/08.

As was mentioned above, capital investments are one of the areas considered by the analysis. The total land and buildings expenditure between 2004/05 and 2007/08 will total £2.88 billion across the whole sector. Of this, some £990 million will be financed by LSC capital grants, with the remainder funded through alternative sources.

Questions remain for the future of funding in FE. The drop in numbers of Adult Learners is tied in with the absolute terms cut in post ““ 19 funding from the LSC, and should the suggested imposition of increased fees for certain adult learning courses be imposed the estimate of a drop in numbers of 4.8% may prove modest.

Jethro Marsh

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