1. DEMAND-LED FUNDING THE FE FUNDING METHODOLOGY 2008-09 Presenter: Edward Drake April 2008 _______________________________________________________ Drake Lane Associates Ltd. www.drakelane.co.uk Tel: 01756 797211 Email: enquiries@drakelane.co.uk

2. DEMAND-LED FUNDING - CONCEPTS Activity is quantified in terms of Standard Learner Numbers (SLNs) Activity is funded within 3 discrete categories: 16-18 provision Adult learner-responsive provision Adult employer-responsive provision LSC funding is increasingly directed toward priority areas Each provider has Provider Factors which represent their individual profile and characteristics and are used to weight SLNs and therefore enhance funding

3. DEMAND-LED FUNDING - CONCEPTS (continued) Additional Learning Support (ALS) funding remains separate from all other LSC funding Therefore... LSC Funding = ( SLNs x Provider Factor x Funding Rate ) + ALS Important note: Different Provider Factors and Funding Rates will apply for each of the 3 funding categories for each provider SLNs are subject to Funding Rates in order to convert them into actual funding

4. KEY LSC FUNDING PRIORITY GROUPS Adult learners with basic skills needs (Skills for Life) Adult learners without a full level 2 qualification 16-18 year old learners on general FE programmes Adult learners without a full level 3 qualification Adult learners with skills needs at level 1 or below (Foundation Learning Tier) Learners of all ages on Apprenticeships and Work Based Learning Adult learners on employer-based NVQ programmes Adult learners on Train to Gain programmes

5. LSC FUNDING BLOCKS 3 discrete funding categories exist within Demand-Led Funding 16-18 Adult Employer-responsive Adult Learner-responsive FE E2E FE Apprenticeships Train to Gain FE UfI/Learndirect Note: The arrows above indicate projected movement (ie. increase or decrease) in funding between 2008-09 and 2010-11

6. STANDARD LEARNER NUMBERS (SLNs) SLNs are calculated as follows: SLN = annual GLH / 450 SLN calculations are capped at 1.75 SLNs per learner Most learning aims have a fixed (listed) GLH Where no such fixed (listed) GLH exist then SLNs are calculated based on planned GLH Starts are defined as follows: 24+ weeks6 week minimum retention period 2+ and < 24 weeks2 week minimum retention period < 2 weeksone attendance required

7. EXAMPLES OF LISTED AIMS Qualification Listed GLH Key Skills qualifications (Communications, ICT, Number) 36 Functional skills qualifications (English, ICT, Maths) 36 NVQ (delivered entirely at the provider in 450+ glh) 520 Each additional NVQ unit 30 International Baccalaureate (Diploma) 1350 Access to HE (studied in 450+ glh) 520 EDEXCEL National Diploma (18 units) 1080 EDEXCEL National Certificate (12 units) 900 EDEXCEL National Award (6 units) 450 EDEXCEL level 1 Introductory Diploma (6 units) 450 EDEXCEL level 2 First Diploma (6 units) 450 OCR level 3 National Extended Diploma (18 units) 1080 OCR level 3 National Diploma (12 units) 900 OCR level 1, level 2 & level 3 National Certificate (6 units) 450 Note:The above values apply to the 16-18 and Adult Learner Responsive models only

8. FUNDING FOR NEW DIPLOMAS Level 3 Advanced Diploma: Diploma componentListed GLH SLN Principal learning 5401.200 Extended project 1200.267 Additional & specialist learning 3600.800 Personal learning & thinking skills 600.133 Costs of collaboration 540.120 11342.520

9. FUNDING FOR NEW DIPLOMAS (continued) Level 3 Progression Diploma: Diploma componentListed GLH SLN Principal learning 5401.200 Extended project 1200.267 Personal learning & thinking skills 600.133 Costs of collaboration 360.080 7561.680

10. FUNDING FOR NEW DIPLOMAS (continued) Level 2 Higher Diploma: Diploma componentListed GLH SLN Principal learning 4200.933 Project 600.133 Functional skills - English 360.080 Functional skills - Maths 360.080 Additional & specialist learning 1800.400 Personal learning & thinking skills 600.133 Costs of collaboration/work experience 400.089 8321.849 Note: This example assumes that the learner has already attained Functional skills in ICT

11. FUNDING FOR NEW DIPLOMAS (continued) Level 1 Foundation Diploma: Diploma componentListed GLH SLN Principal learning 2400.533 Project 600.133 Functional skills - English 360.080 Functional skills - Maths 360.080 Functional skills - ICT 360.080 Additional & specialist learning 1200.267 Personal learning & thinking skills 600.133 Costs of collaboration/work experience 300.067 6181.373

12. FUNDING FOR NEW DIPLOMAS (continued) Programme weightings for the new Diplomas will be as follows: Diploma lineProgramme Weighting Level 1 Level 2/3 Construction & the built environment 1.31.3 Creative & media 1.31.3 Engineering 1.31.3 Information technology 1.121.3 Society, health & development 1.121.12

13. PROVIDER FACTOR Five elements dictate the Provider Factor as follows: 1. Average programme weighting -each provider has a single (annual) programme weighting (rather than having this variable operating at individual aim level) 2. Average disadvantage weighting -each provider has a single (annual) disadvantage weighting (rather than having this variable operating at individual learner level) 3. Area costs weighting -London (and surrounding area) providers continue to receive a provider level uplift 4. Short programme modifier -each provider has a single (annual) short course modifier (rather than having this variable operating at individual aim level) 5. Success factor -each provider has as a single (annual) success rate (rather than having this variable operating at individual enrolment level)

14. PROVIDER FACTOR (continued) Different Provider Factors apply to each of the 3 funding categories (ie. 16-18, adult learner-responsive, adult employer-responsive) Generally, Provider Factors are recalculated annually to reflect the most recent full-years data - however, the Provider Factor for the adult employer-responsive funding category is recalculated in-year based on actual data

15. FUNDING RATES The SLN Funding Rates for 2008-09 are: School Sixth Forms£2,945 16-18 FE£2,860 16-18 Apprenticeships£2,860 Adult Learner Responsive£2,775 Employer Responsive (except 16-18 Apprenticeships) £2,775 Note:Actual Funding Rates applicable in 2008-09 will be subject to Transitional Arrangements

16. FUNDING RATES (continued) Provision which is (and learners who are) eligible for tuition fee remission is/are Fully-funded (ie. assuming that running costs are fully covered by LSC funding) The Co-funded Rate is a function of the Fully funded Rate: Co-funded rate = fully funded rate - fee element Fee element = (fully funded rate x fee percentage) / provider factor Fee percentage = 42.5% (in 2008-09) Provision which is (and learners who are) not eligible for tuition fee remission is/are Co - funded (ie. assuming that running costs are covered by a balance of LSC funding and tuition fee income) The difference between Fully-funded and Co-funded is reflected in the respective Funding Rate to be applied

17. DEMAND-LED FUNDING - FRAMEWORK Learning Aims identifies Learning Aims Database LSC Funding convert to SLNs quantified in terms of SLNs - standard learner numbers via Provider Factor

18. _______________________________________________________ Drake Lane Associates Ltd. www.drakelane.co.uk Tel: 01756 797211 Email: enquiries@drakelane.co.uk SUMMARY OF KEY CHANGES

19. Planned and actual activity is measured in SLNs rather than £s Starts are based on fixed minimum retention periods rather than census dates Most provision (more than previously) is funded via fixed (listed) GLH / SLN values New Diplomas would generally appear to meet LSC criteria for being high priority provision New Diplomas will be funded via Learner Responsive funding (whether within the 16-18 or Adult funding blocks) Capping (at 1.75 SLNs per learner) replaces tapering

20. SUMMARY OF KEY CHANGES (continued) The Provider Factor replaces a number of independent variables within the previous funding system Removal of the census dates means that SLN out-turn can never decrease over the course of a funding year Key skills and the 16-18 FT Entitlement (no longer funded together) are not exempt from capping calculations Funding differentials will operate across the 3 discrete funding blocks (reflected in different Provider Factors and Funding Rates) New Diplomas are funded based on the individual elements being delivered by a provider

21. _______________________________________________________ Drake Lane Associates Ltd. www.drakelane.co.uk Tel: 01756 797211 Email: enquiries@drakelane.co.uk DEMAND-LED FUNDING 2008-09 KEY REFERENCE DOCUMENTS

22. KEY REFERENCE DOCUMENTS 2008-09 Delivering World-class Skills in a Demand-led System (LSC, January 2007) LSC Grant Letter: 2008-09 (DCSF & DIUS, November 2007) Our Statement of Priorities - Better skills, Better jobs, Better lives (plus associated Addendum - LSC, November / December 2007) The 16-18, Adult Learner & Employer-responsive Funding Models (LSC, November 2007) Funding Guidance for 2008-09 (LSC) - Funding Rates for 2008-09 (December 2007 and February 2008 version 2) - Funding Formula for 2008-09 (pending) - Funding Principles, Rules and Regulations for 2008-09 (April 2008) - ILR Funding Compliance Advice & Audit Guidance for 08-09 (April 2008) - ILR Funding Claims & Audit Returns 2008-09 (pending) Note: All above documents are available via the LSC website (www.lsc.gov.uk)

23. _______________________________________________________ Drake Lane Associates Ltd. www.drakelane.co.uk Tel: 01756 797211 Email: enquiries@drakelane.co.uk DEMAND-LED FUNDING 2008-09 APPENDICES

24. APPENDIX A - FUNDING CATEGORIES Scope and coverage of 16-18 funding model 16-18 year old learners enrolled to the following programmes: Provision in school sixth forms FE provision New Diplomas Programme-led Apprenticeships (not full framework) Entry to Employment (E2E) Foundation Learning Tier (FLT) Additional notes: Includes 16-18s enrolled to NVQ programmes (which are currently funded as FE) Includes 16-18 Apprenticeships for planning and budgeting purposes only (but which will be funded via the Employer Responsive model)

25. APPENDIX A - FUNDING CATEGORIES (continued) Scope and coverage of Adult Employer Responsive funding model Adults (19+ year old) learners enrolled to the following programmes: Apprenticeships (all types covering full framework) Train to Gain (including associated Skills for Life) NVQs delivered wholly or partially in the workplace (and funded as FE in 2007-08) Additional note: Includes 16-18 Apprenticeships for funding purposes (although such provision will have a separate allocation within the Employer Responsive model)

26. APPENDIX A - FUNDING CATEGORIES (continued) Scope and coverage of Adult Learner Responsive funding model All LSC funded provision and learners not covered by either the 16-18 or Adult Learner Responsive funding models Additional note: Also excludes Adult Safeguarded Learning funding