FE Funding Update 2007/08

5 June 200716.45 - 17.45Hinckley Island Hotel

Nick LinfordHead of Planning and Funding

Overview

This presentation focuses on the LSC grant for FE provision, whichon average accounts for more than 80% of GFE and SF College income

The LSC had planned to introduce a new FE funding formula in 2007/08,but a new ‘Demand Led’ funding formula is now planned for 2008/09

Therefore, the FE funding formula for 2007/08 remains unchanged

However, for 2007/08 there are some significant changes to:

• Values within the FE formula

• Fee remission eligibility

• Commissioning

Presentation contents

Inflation and the 16-18 MFG

National Base Rates (NBR)

Programme Weightings (PW)

The Assumed Fee Income (AFI)

Skills for Life and ESOL

The Level 3 entitlement for 19 -24 year olds

Negotiated and Tendered provision

Demand Led and the funding priorities

Changes to values within the formula

Changes to feeeligibility

Changes to contestability

Inflation and the MFG

Base rates will be increased by 2.5% in 2007/08 (inflation)

However, the DfES guarantee schools a rate increase which is aboveinflation, known as the Minimum Funding Guarantee (MFG)

In 2007/08 the MFG is a 3.7% increase (including inflation)

Since 2006/07 the LSC have applied this MFG to 16-18 year oldenrolments as an additional uplift within the FE funding formula

The uplift (applied within the Learner Information Suite) in 2007/08 is 2.059%, calculated as follows:

MFG

Inflation

2006/07 2007/08

1.034 1.037

1.025 1.025

x

x= 1.02059

Base rate and PW changes

Listed base rates

• 116 learning aim rates have increased above inflation• 115 learning aim rates have reduced below inflation• 9 learning aims have become loadbanded

Loadbanded base rates

Programme Weightings (PWs)

• 7 learning aims given higher PWs• 32 learning aims given lower PWs (mostly Skills for Life)

In all there are currently 23,315 FE funded learning aims for 2007/08, so what do these changes mean for providers?

• 63 learning aims have been given listed rates

NBR and PW changes

The financial impact will depend on how many enrolments are attachedto the learning aims that have NBR or PW changes

Forecast financial impact for Lewisham College (07/08 rates):

Learning aim Change Impact

Cert in Prep for Working Life (10022922) Listed to loadbanded - £60,527

Total impact - £60,527- £101,695- £109,968- £114,547- £122,591- £37,886- £37,886

Computerised Accounts (1005621X) Listed reduction - £41,168

Cert in Plumbing (10033579) Listed reduction - £8,273

Cert for ESOL Subject Specialists (1003450X) Listed reduction - £4,579

Cert in Childcare and Education (1000645X) Listed reduction - £8,044

BTEC First Diploma in Music (10057134) PW from 1.12 to 1.72 + 84,705

Assumed Fee Income (AFI)

National Base Rate (NBR)

AFI % AFI £

2004/05 £2,394 25% £598

Funding rate increase in three years = 10%

Assumed fee increase in three years = 66%

The AFI is a funding value deducted for learners ineligible for fee remission The LSC ‘assume’ learner fees will replace this reduction in fundingThe LSC have increased the AFI each year since 2004/05

NBR £ increase

AFI £ increase

5% 15%2005/06 £2,513 27.5% £691

2006/07 £2,576 32.5% £837

2007/08 £2,641 37.5% £990

2.5% 21%

2.5% 18%

Assumed Fee Income (AFI)

£0

£500

£1,000

£1,500

£2,000

£2,500

£3,000

04/05 05/06 06/07 07/08 08/09 09/10 10/11

25% 27.5% 32.5% 37.5% 42.5% 47.5% 50%

Current forecastPublished rates (450glh)

Lewisham College feeThus in six years rates increase by 19% and assumed fees by 138%

Forecast is that the AFI £ will rise a further 44% in the next three years

Academic Year

Skills for Life and ESOL changes

Non-approved (non-NQF) Skills for Life learning aims at Level 1 and 2 will:

• See the programme weighting fall from 1.4 to 1.0• No longer be eligible for fee remission• No longer be eligible for disadvantage uplift

However, it is unlikely any provision will remain non-NQF at the higher levels

Skills for Life changes

ESOL learning aims for adults will no longer attract automatic fee remission

ESOL specific changes

New ESOL for work qualifications will be introduced which:

• Will have a listed rate

• Will have a 1.0 programme weighting

• Will not contribute to PSA target

Fee eligibility changes

ESOL

The removal of automatic fee remission for ESOL learning aims will clearly be significant to relevant provider and adult learners

For example, every full time enrolment without remission will generate £990 less funding, which the LSC ‘assume’ the learner will pay

The School of ESOL at Lewisham College plans to generate £4.4min 2007/08 and forecasting the impact of this change is very difficult

Level 3 Entitlement and Adult Learning Grant

Automatic fee remission for 19-24 year olds on their first full Level 3

LSC predicts 45,000 learners will benefit in 2007/08

Adult Learner Grant introduced for full time adults on first full level 2s and 3s

Negotiated and Tendered Provision

When planning 2007/08 the LSC referred to ‘commissioning’ provision

However, the LSC are now differentiating between:

> Negotiated commissioning

These allocations are for providers who already have a contract to deliver provision, although there may be a cap on growth funds (includes FE mainstream, Work Based Learning and any time limited contracts such as Train to Gain, OLASS and Learning Agreement Pilots)

> Tendered commissioning

These allocations are ‘contestable’, in that they are put out to tender via an online procurement portal. They present opportunities to expand existing provision (e.g. WBL), new providers to gain a contract (e.g. TtG or E2E) and for the funding of new provision (e.g. WBL 25+)

Demand Led and the funding priorities

‘As it may look, based on Government priorities’

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006/07 2008/09 2010/11 2012/2013

Train to Gain

Learner accounts

FE (planned)

The following is an LSC slide entitled ‘Future LSC Funding World’:

The funding futurelooks more competitiveand less predictable?

This fundingshift is happeningfor 2007/08

Adult FE funding

Take a look atyour new Demand Led Calculator (DLC)

Closing remarks

Whilst the funding formula remains the same, there are potentiallysignificant changes to rates and fee eligibility – provider dependant

Modelling can be undertaken to measure the impact of rate changes,but predicting potentially significant funding decreases (ESOL) andincreases (FL2 and FL3 entitlement) relating to fee eligibility is difficult

There are also fee policies, fee targets and the impact on fee income to consider (including price elasticises and local competition)

Accurate ILR records and a sophisticated planning tool will assist in modelling the impact of changes to the budget and the ability to achieve negotiated and/or tendered funding allocations and related targets

Questions?