1. College Governance Summit Benchmarking (and some other issues) Julian Gravatt, AoC Assistant Chief Executive 4 March 2015 Slides available at: https://www.aoc.co.uk/funding-and-corporate-services/funding-and- finance/reports-and-presentations

2. College income Colleges SFA FE College income 2014-15 (£ millions) 233 Colleges EFA 2,823 (44%) SFA 1,734 (28%) Other 1,756 (28%) Total 6,396 Surplus 34 Sixth form colleges 2014-15 (£ millions) 93 Colleges EFA 822 (95%) Other 42 (5%) Total 864 Surplus 20 EFA

3. Funding update – where are we right now? EFA (16-18 education) 2015-16 allocations issued to colleges Very few changes to the formula or rules Average funding down by c2% (because student numbers down) Apprenticeships Budget ring-fenced but major reform programme underway SFA (19+ further education) 24% cut in “other Adult Skills Budget” (allocations 16 March 2015) New SFA CEO interested in simplifying the funding approach Loan supported education 24+ advanced learning loans - money available to grow No student number controls in higher education

4. Sources: GFE Finance records 2008/09 to 2013/14 (adjusted); Financial plans 2014/15 to 2015/16 College Forecast

5. College Forecasts

6. Financial health assessment College financial health (EFA/ SFA assessment) Cash based profitability Net current assets Levels of borrowing Latest scores (based on 2013-14 accounts) 45-50 FE colleges 10 sixth form colleges “inadequate financial health” Colleges with no debt can’t necessarily borrow c80 FE colleges have weak finances judged on surpluses & cash 150 FE colleges in a stronger position but facing a difficult present

7. 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 (eg schools, universities)

8. Some other things to think about Politics The general election New policies The 2015 spending review Education New A-levels, GCSEs, Tech levels Ofsted’s 2015 framework Rising student expectations Society & Economy Changing demographics Economic recovery Mental health Technology Social media Education technology New industrial revolution

9. Benchmarking – what’s available? Reputation People College Finance The College Finance Spreadsheet ILR Students Consultancies (eg Tribal) Ofsted Data Dashboard DFE/ BIS League Tables Surveys MiDES

10. Benchmarking – what’s available MIDES service https://mides.rcu.co.uk/ Provided as part of AoC membership Additional MIDES services (LMI £1,188; Vector £5,580) Consultancies (cost more, deliver more) www.tribalgroup.com Financial benchmarking Large publicly available spreadsheet from college accounts www.aoc.co.uk/funding-and-corporate-services/funding-and- finance/accounting gov.uk

11. MIDES (www.mides.rcu.uk)

12. RCU, Unit 3 Tustin Court, Port Way, Ashton on Ribble, Preston, PR2 2YQ Tel 01772 734855 | Fax 01772 721621 | 16-18 Classroom Learning In-Year Retention Report (2014/15 R04) In October 14/15 the College (96.97%) was higher than the GFE average (96.83%). The College’s retention rate (96.01%) was lower than the GFE average (96.45%) in 13/14 in October.

13. Why is the cost of teaching different? Is it as simple as; because there are more FTEs teaching?

14. The college finance spreadsheet www.aoc.co.uk/funding-and-corporate-services/funding-and-finance/accounting

15. The numbers aren’t everything… “Some of the world’s leading business brains have gone out of their way to highlight the role of more intuitive, subjective, creative thinking in driving corporate performance, and to warn that an excessive boardroom focus on number-crunching and cost management is coming at the expense of experimentation, innovation and top-line growth.” “It’s hard to imagine the future when your head is buried in a spreadsheet” Martin Sorrell, founder & CEO, WPP article in City AM, 26 Feb 2015

16. What governing bodies need to do Understand your position, your environment and your risks What do national trends mean for the college? Opportunities for income growth: 16-18, apprenticeships, loans Risks around every corner Stakeholders keep shifting (SFA, EFA, Ofsted, LEPs, Councils, MPs) Focus on your role Governing bodies - solvency, viability & future of the college Trustee relationship – it’s your principals, SMT and staff who deliver Take a cold, hard look at the present and the future (PS) Slides available at: https://www.aoc.co.uk/funding-and-corporate-services/funding-and- finance/reports-and-presentations