Capita F&HE Conference 2012

Survival of the Fittest!

Vici Cadwallader-Webb

May 2012

What is the currently happening within the Sector?

Period of significant challenge/ change

Significant budgetary constraints – To standstill is to grow!

Uncertainty around the future funding mechanisms

Many colleges are not hitting funding targets and are generating surpluses on the back of this

Increased regulation/ measurement

Poor Inspection results

BIS publication – New Challenges, New Chances

What is the currently happening within the Sector?

Consequences of failing to address the challenges… Inability to meet the needs of local learners/ communities Financial failure Merger/ Takeover/ Federation by/ with another College Closure?

All of the challenges with regard to funding and associated cuts amount to the same thing……. Better quality More learners/ activity Less funding Significant constraints In essence, more for less!

4

What do we think the cuts look like?

Funding Cuts

Current Contract 2010-11 14,028,887 128,173 4,011,199 995,127 19,163,386

Predicted Increase / Decrease -10% -20% -25% 50% -10%

Adjusted Increase / Decrease

Estimated 2013-14 Contract 12,625,998 102,538 3,008,399 1,492,691 17,229,626

Reduction in Contract 1,933,760Move to Breakeven * 0Total Saving Required 1,933,760

Adult Skills Budget

16-18 Apprenticeships

Total

Savings Required Amount £

Funding Cuts 16-18 FE Adult LR

Do nothing

Reduce costs

Increase income

Group Structure /Collaboration/ Federation/ Merger

Options that Colleges could employ

Reducing Costs

Increase Group size Increase Teaching Staff Utilisation Curriculum Efficiency Reducing Support Staffing Costs

“The direct cost of putting a lecturer in front of a group of learners is between £40 and £60 per hour based on average utilisation levels within the sector”

“The use of learning technologies in delivery must increase moving forward….”

“The mix of permanent to temporary staff should be a strategic decision based on the needs of the college…”

“Colleges must now adopt a policy of continuous improvement….”

Increasing Income

Full Cost Degrees Growing Overseas Provision E-Learning & Innovative Delivery Models Purchase of Independent Training Provider Academies

Growing income can be uncertain, especially in the current environment, growing income is no substitute for the cost reduction and efficiency agenda but should be seen as a companion to it.

Quick Case Study – Growing Provision for Overseas Students  At a college we worked with: The provision initially commenced with 400 overseas places approved through the BAC and Tier 4 in September 2009 and these were soon filled.

In January 2010 the number of places was increased to 800 and again these were filled by March 2010.

The total income from these students for a full academic year is £3m.

Purchase of Private Training Provider can install some much needed commercial awareness into the parent college, and galvanise existing curriculum delivery departments.

Group Structure/ Collaboration/ Federation

Managing the estate more effectively Outsourcing backroom services / Shared

Services  Federations 14-19 and Diploma Partnerships

Mothballing some of the estate;

Additional uses of estate:

• Effective Events Management• Meeting place for local businesses• Sports Fields / Pitches – Increasing

evening income• Short term Leases

Taking over / running Local Academies Data Management;

Work with other local colleges to share and allow the best performer to take over duplicated provision;

Merger

Merger as a genuine option must be driven by: Localism; Learner need; It must stand up in terms of enhancing the opportunities for

existing and potential learners; and, Offer financial stability for the new college in the long term.

The term “modern merger” has been coined perhaps to distinguish it from some of the “shotgun weddings” which have occurred in the sector.

An early Due Diligence of both colleges would confirm the criteria in the Heads of Terms and may suggest others.

The colleges would create an over-arching entity which would bring the support systems of the colleges together on an outsourced basis in the short term.

Process (Pre 1 April 2012):• Strategic Options Review• Feasibility study• Initial Outline Proposal• Due diligence/ Public consultation;• Full Merger Proposal and White File;• Secretary of State makes a decision• Put before Parliament

Process (Post 1 April 2012):• College Structure and Prospects

Appraisal• Competition?

What do the best colleges achieve and why?

Engaged by LSIS to identify those colleges that appear to have a high level of efficiency and effectiveness and to understand through discussion with and review of college data how they achieve this:

The College type is either General FE or Tertiary; Financial health is classed as either good or outstanding; The overall 2009/10 success rate for the College exceeds 80%; The surplus/deficit made by the College is at least 7% of the total income; The learner destination survey results are at least 80%; The learner views survey results are at least 8.0; The employer views survey results are at least 8.0; The Ofsted report is either good or outstanding; and, The above results were shown to be stable or moving in a positive

direction when reviewed against previous years.

How many colleges met the above criteria?

What do the best colleges achieve and why?

Findings from the review:

All colleges managed the following KPI’s in the detail across all levels within the College:

Success Rates Group Size Staff Utilisation Curriculum Efficiency Support Costs

The colleges were already planning for the proposed changes to the Funding Methodology and many have revised the offer to learners on the back of the announcements to date

The colleges looked to use technology to drive further efficiencies rather than allowing it to be a barrier

Structural Changes/ Actions Necessary to Survive the Cuts

Immediate

Year 1 – Year 2

Year 3

Continuous Stronger. More Efficient More adaptable

to Change

College

College

Immediate

KEY DRIVERS

Establish what they are

Determine Current Performance

Monitor / Establish a monitoring system

DELIVERY

Review Teaching Staff Utilisation

Cut back on temporary staff if resource is available in College

Review Support Costs & take appropriate action

Review Curriculum Efficiency

INCOME / COSTS

Assess Income Streams & plan to increase

Review Collaborative Arrangements

Implement Changes coming out of above

SET PERFORMANCE TARGETS

Set for Curriculum Teams for Curriculum Efficiency

Set for Staff Utilisation and Monitor Regularly

Quality of Provision

CURRICULUM PLANNING

Deal with Curriculum inefficiencies quickly

Identify Staffing Requirements based in Curriculum Plan

Review Permanent and Sessional Contracts

Identify Blended Learning and Common Unit Teaching

SUPPORT COST MANAGEMENT

Identify duplications in business processes (look at different sites)

Work with Managers to most effectively work / Centralise or De-Centralise processes.

Consider shared services

Years 1 and 2

Year 3 and Continuous

Review and Implement Shared Services if relevant

Develop a robust procurement approach to all suppliers / services

Continue to benchmark spend in key areas against sector median

Explore Merger / Federation

Regular Revisit of Independent Strategic Options Reviews