The New Funding System 2008/09 Presentation to London CFDG Nick Linford Head of Planning, Funding and Projects 8 November 2007

What do we know so far? Summary of changes to the funding system model Adult learner responsive model Employer responsive model The new demand-led funding formula Modelling the impact at sector level Modelling the impact at provider level What’s next and closing remarks Presentation Contents The New Funding System 2008/09

What do we know so far?  Initial aim of LSC in 2004 was to simplify FE funding formula  Three LSC funding formula consultations in as many years  Reform now widened to include FE, Apprentice, E2E, TtG and SSF  Modelling software (DLC) available to all FE providers  Changes to be applied for planning and funding 2008/09  New models and formula to be published next week? HEALTH WARNING The final changes have yet to be published and are subject to ministerial (DCSF and DIUS) sign-off

Summary of changes to the funding system 2007/082008/09 Further Education model Adult learner responsive model Employer responsive model Apprenticeships Entry to Employment Train to Gain * apprenticeships planned and budgeted in model (DCSF) School 6th Forms *

16-18 model Further Education model Entry to EmploymentSchool 6 th Forms  Strategic commissioning (Quality and Partnership critical)  Transitional protection and no reconciliation  New demand-led funding formula with historical provider factor  Significant change for schools but likely to have higher rate per SLN  Funding via the LEA rather than the LSC from 2010/11  New products with new contracting arrangements (Diploma)

Adult learner responsive model Adult Learner Responsive 19+ Further Education (excluding employer based NVQs)  Strategic commissioning (PSA targets and prioritisation are key)  Transitional protection likely to be +/- 2.5%  Mid-year and end-year reconciliation with tolerance and cap  New demand-led funding formula with historical provider factor  Co-funded SLN rates for those paying tuition fee (42.5% in 08/09)  Likely to have a lower rate per SLN than in the model  New products being piloted such as FLT and Learner Accounts

Employer responsive model Employer Responsive 19+ FE employer based NVQs  Primarily PSA targets in the form of NVQs and Skills for Life  Monthly payments in arrears on 10 th working day of following month  New demand-led funding formula with actual not historical factors  Area Cost Uplift to be based on location of main enrolment  Train to Gain funding to be paid monthly with 25% for achievement  Interesting dynamic with switch in funding from FE (e.g. TtG A)  Co-funded SLN rate for those paying tuition fee (e.g. ESOL) Apprenticeships (incl )Train to Gain (incl. SfL)

The new demand-led funding formula Simple at first glance SLN could be listed or unlisted and has maximum per learner £/SLN may be subject to transitional protection PF has up to six elements, based on history (16-18 & adult) or actual (employer model) ALS allocations will include formula and negotiation element Total funding has a cap x x = + More complex in reality Standard Learner Number (SLN) National Funding Rate (£/SLN) Provider Factor (PF) Additional Learning Support (ALS) Total funding x x + = Oh, and three census dates replaced by minimum number of weeks

Modelling the impact at sector level LSC analysis of the impact that the new funding formula will have on General FE colleges in 2008/09 via the model: If transitional protection is +/- 2.5% then 48% of colleges will need protection in 08/09, with 6% still not ‘harmonised’ by 11/12 Requires protection

Modelling the impact at provider level The Demand Led Calculator (DLC) converts an FE 06/07 ILR into SLNs But we don’t yet know:  The National Funding Rates  Approved SLN qualification values  The final Provider Factor (will be based on 06/07 8 Feb ILR F05)  The transitional protection %  And a great number of other technical uncertainties So the DLC builds awareness, but I would suggest we cannot reliably model the impact at present

What’s next and closing remarks  DIUS/DCSF Grant Letter, LSC Annual Statement of Priorities (PfS 3) and descriptions of funding models published next week? Soon we will begin completing the SSoA in the PaM system to include SLNs (taking account of 06/07 baselines, allocations and performance in 07/08 and of course 08/09 plans) The SSoA figures will become our targets for 08/09! Clearly a significant change to all LSC funding systems, alongside even greater emphasis on priorities and performance measures (e.g. MLP, FfE and mid-year reconciliation)  DLC version 3 released to include final SLN values, National Funding Rates and non-FE modelling?  Detailed funding guidance not anticipated until March 2008  New funding systems operational from August 2008

Questions and or comments