1. EFA Funding guidance for young people 2013 to 2014 CCP Reconciliation 2013/14 EFA Young Peoples Funding Team

2. Reconciliation rules and examples The principles of CCP funding adjustment and final reconciliation are. In-year payments are made on profile as is planned for all EFA 16-19 funding; in-year delivery of cash is reviewed during the year and where delivery is outside an agreed tolerance, action is taken to adjust the profile of payments from April for the remainder of the year; all funding variances are calculated by comparing total whole year delivery with the final funding allocation as paid for the year; Only cash is subject to reconciliation (not student numbers). 2

3. Reconciliation policy for CCPs Contract funded institutions (charitable and commercial providers known as CCPs) (rules detailed in paragraphs 22 – 30) the following detailed reconciliation rules apply: includes disadvantage funding within overall study programme funding; tolerance for both under and over performance reduced to 2.5% of cash allocations; growth tolerance capped at £25,000; growth subject to affordability but some set aside budget in addition to any additional clawback funding. 3

4. Reconciliation rules and examples Over performance - paragraphs 27 A tolerance of 2.5%/£25,000 (whichever is lower) will be applied for growth payments Total programme outturn will be compared to the allocation (including TP and FPF) The cash delivered over 2.5%/£25,000 above the allocation (together with any TP or FPF) will be paid as responsive growth subject to a growth cap and affordability. Growth payments will be limited by a cap at £100,000 or for CCPs with larger allocations the lower of 30% of the funded allocation or £1m. 4

5. Reconciliation rules and examples Underperformance - paragraphs 25 – 26 A tolerance of 2.5% will be applied for clawback Total programme cash outturn will be compared to total allocation (excluding TP and FPF) The cash delivered below 97.5% of the programme funding allocation will be recovered as clawback. The following slides include a provisional timeline and some examples. 5

6. Reconciliation timeline 6 Data ReturnAdjustments to Payments R06 (February – 6 months data) Growth – interim payments in April for institutions achieving at least 90% of allocation Clawback – only for institutions without a 2014/15 allocation or other exceptional circumstances. Where these institutions have achieved significantly less than their allocation they would face clawback from April. Other institutions – reconciliation statement summarising the current level of delivery based on the R06 return. R10 (June – 10 months data) Growth – interim payments in July for institutions achieving at least 100% of allocation Clawback – profiled from July onwards for any institutions achieving less than 90% of allocation R13 (September – 12 months data) Growth – no additional payments, await audited figures Clawback – in October and November based on final rules (2.5% tolerance) R14 (October – final return) Growth – final payment in December based on final rules (2.5%/£25,000 tolerance plus cap) Clawback – final adjustments in December based on final rules (2.5% tolerance) Note: growth payments subject to affordability

7. Worked Example (A1) - Allocation 7

8. Worked Example (A2) – Allocation 8

9. Worked Example (A3) – Allocation/Outturn 9

10. Worked Example (A4) – Allocation 10

11. Worked Example (A5) – Allocation/Outturn 11

12. Worked Example (B1) – More students, lower bands 12

13. Worked Example (B2) – More students, lower bands 13

14. Worked Example (C1) – Less students, higher bands 14

15. Worked Example (C2) – Less students, higher bands 15

16. Reconciliation - Transitional Protection (TP) and/or Formula Protection Funding (FPF) – Underperformance only Table 1: TP examplesNo TPTP + ve 1.1Funding Allocation£3,000 1.2 Transitional Protection (TP) or any Formula Protection Funding (FPF)£0£300 1.3Net Allocation *£3,000£3,300 1.4 Funding Allocation (that is being used for under performance reconciliation only)£3,000 1.5Tolerance - standard 2.5%£75 1.6 Funding Claim (figures from ILR FIS Funding Claim report).£2,400 1.7Clawback-£525 This slide shows how TP or FPF is used in calculating funding reconciliation for underperformance for CCPs only. 16

17. Reconciliation - Transitional Protection (TP) and/or Formula Protection Funding (FPF) – Over performance only Table 1: TP examplesNo TPTP + ve 1.1Funding Allocation£3,000 1.2 Transitional Protection (TP) or any Formula Protection Funding (FPF)£0£300 1.3Net Allocation *£3,000£3,300 1.4 Funding Allocation (that is being used for over performance reconciliation only)£3,000£3,300 1.5Tolerance - standard 2.5%£75 1.6 Funding Claim (figures from ILR FIS Funding Claim report).£3,400 1.7Responsive growth£325£25 This slide shows how TP or FPF is used in calculating funding reconciliation for over performance for CCPs only. 17

18. Outturn compared to allocation. Shows the alternatives at Final from In-year position In-year FINAL (payment adjustment to take account of in-year clawback ) Interim clawback adjustments Under (below tolerance)Within toleranceOver delivery UnderClawback No final adjustment other than reversal of in-year clawback Reversal of in-year clawback and Growth (subject to affordability) Within tolerance No reconciliation adjustment ClawbackNo final adjustment Growth (subject to affordability) Over delivery Interim growth (subject to affordability) Clawback Recovery of all interim growth No final adjustment other than recovery of interim growth Growth (subject to affordability) Adjustments from In-year to Final Claims (CCPs only) 18

19. In-year reconciliation example A (all in £) In-year out-turn (ILR figure) 870 Allocation1,000 Variance- 130 Add in-year tolerance (2.5%)+ 25 In-year adjustment (clawback) - 105 Funding out-turn (final Claim) 900 Allocation1,000 Variance- 100 Add final tolerance (2.5%)+ 25 Final reconciliation value (clawback) - 75 Final reconciliation cash adjustment - 75 (final) deduct (in-year clawback) - 105 Cash final adjustment (re-pay clawback) + 30 * Any clawback calculated from in-year funding figures that is not then calculated from the final claim figures is refunded to CCPs who have increased their delivery above the in-year figure. 19

20. In-year reconciliation example B (all in £) Allocation1,000 February R06 out-turn (ILR figure) 970 90% of allocation (February) 900 Variance+ 70 Potential interim in-year adjustment (growth) + 70 Funding out-turn (final Claim) 1,200 Allocation1,000 Variance+ 200 Subtract final tolerance (2.5%)- 25 Final reconciliation value (growth)+ 175 Final reconciliation cash adjustment +175 (final) deduct (in-year growth) - 70 Cash final adjustment (growth)+ 105 * All growth payments are subject to affordability. 20

21. EFA Funding guidance for young people 2013 to 2014 CCP Reconciliation 2013/14 EFA Young Peoples Funding Team