REVIEW OF SCOTLAND'S COLLEGES [SEETLLD DCMWG-P09]

WORKING GROUP: THE DIFFERENCE COLLEGES MAKE

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INDICATORS OF EFFICIENCY AND PARTNERSHIP IN SCOTLAND'S COLLEGES

Purpose

1. This paper sets out some thoughts on the evidence for the efficiency of Scotland's colleges that the group might want to use or make reference to when reporting to the core group. It also highlights benchmarking work taking place between colleges and other forms of partnership. Such information will hopefully add to the evidence for the competitiveness of the college sector.

Background

2. The group has previously discussed the problems in putting together sector wide information on this topic. Colleges will use the resources available to them to provide education to students. If more resources are available colleges will, in general, be able to spend more on the provision they offer. It is very difficult to obtain objective sector wide information on the cost of provision which can then be used to measure efficiency. The cost is in general related to the amount of funding and represents more what a college can afford and is prepared to pay.

3. Therefore we should think of other ways to show how colleges are being efficient. The rest of this paper outlines some possibilities and discusses work contributing to efficiency happening in the sector.

Financial security

4. Improving and maintaining the financial security of the sector has been a high priority for the last few years and we are on course to achieving SFC's objective of achieving a financially secure sector by 2006. SFC has provided significant additional funds to the sector to help with financial security but this has been coupled with improving college management and making better use of the resources available.

5. Financial security is being achieved at a time when the sector faces significant above inflation costs pressures such as:

· Increased pension costs;

· recruiting and attracting high quality staff in an increasingly competitive and fluid market;

· legislation and regularity requirements, eg disability, equalities, disclosure;

· improving social inclusion and widening access; and

· despite considerable investment, a continuing need to improve and maintain the college sector estate and keep it relevant to changing demand and technologies;

6. Although SFC has provided additional funds to help with much of the above it is likely that these funds will contribute towards but not cover the full costs of dealing with all of these issues.

7. Additionally, the analysis below shows that at the same time as addressing financial security the sector appears to be delivering WSUMs more efficiently.

WSUMs funding

8. There two types of linked analysis that we can probably do to look at increasing college efficiency in this area:

· A time series of actual WSUMs compared to WSUM target ( Table 1); and

· core SFC funding per actual WSUM in 2000-01 and 2003-04 compared to change from 2000-01 if we apply GDP deflators ( Table 2).

9. SFC introduced a new funding method from academic year (AY) 2000-01. Therefore it makes sense to look at a funding time series analysis from that year. The latest year we can go up to at the moment is AY 2003-04. In both analyses UHIMI HE activity is included for 2000-01 but as we are looking at comparing ratios this does not invalidate the results.

Table 1

Table 2

10. Taking both of these tables together shows that colleges are improving their efficiency by being able to operate above their WSUMs target and deliver an increase in activity proportionately greater than funding (taking inflation into account). This has been done without affecting quality and while colleges are working towards financial security and improving their financial health.

Comparisons with other sectors

11. Identifying information to compare funding with other sectors is difficult because of different structures and systems in other countries. However, in 2001 SFC collaborated with colleagues in England, Wales and Northern Ireland to compare funding levels. That analysis showed that college core funding in Scotland was about 13% per FTE lower than England. This indicated that colleges in Scotland were operating more efficiently than in England. The increases in funding since then across the UK have been broadly similar and therefore the relative positions will not have altered greatly.

12. We could try to look at updating this figure and also compare with relative outputs.

Benchmarking

13. There are two main projects in the sector that have been looking at benchmarking.

Rural colleges

14. Scotland's Rural College Network has been looking at good practice comparisons and efficiencies for several years. This has resulted in closer collaborative links between many colleges in areas such as curriculum planning and sharing of teaching materials. These colleges are continuing to work together to develop and implement collaborative approaches to improve provision for students from remote, rural and island areas.

15. It may be useful to include in the report to the main group a section on the work that Scotland's Rural College Network is doing.

Sector wide benchmarking

16. The provision of cost benchmarking support to colleges was identified as one of the elements of the financial security campaign. SFC has been working with the sector to develop a diagnostic model based on colleges' financial statements. Work on this project started in 2003 and the model continues to be developed as results are produced. See SFC circular letter FE/36/05 for the latest information.

17. The benchmarking results are intended to be a tool to help college boards and managers evaluate and improve the financial performance of their college by sharing and learning from the practices of others. A great deal of effort by colleges and others has gone into providing data which, by being comparable between colleges and increasingly reliable, provides a valuable starting point for reviewing how particular activities are carried out.

18. However it is not appropriate to make sector wide assumptions and comparisons on the data provided. It is important to remember that the benchmarks are designed to provide a basis for further discussion and review. The benchmarks cannot be interpreted reliably in isolation of the activities and practices which underpin them.

19. Therefore it would probably make sense to refer to this piece of work in the report to the core group as a way that colleges are working together but not perform any analysis of the figures.

Partnership

20. A key way to improve efficiency is to share services and provision in partnership with other colleges and mergers are an obvious way to achieve this. Over the last few years there have been three college mergers:

· Glasgow College of Building and Printing and Glasgow College of Food Technology merged to form Glasgow Metropolitan College on 7 February 2005;

· Fife College and Glenrothes College merged to form Adam Smith College on 1 August 2005; and

· Falkirk College and Clackmannan College merged to form Forth Valley College on 1 August 2005.

21. There are also other partnerships in the sector (or with other sectors), for example:

· Edinburgh and Lothian Colleges group: A strategic partnership of colleges in Edinburgh and Lothian which supports collaboration between colleges, the sharing of services and identifies overlaps in provision in order to agree the rationalisation of curriculum.

· Glasgow Colleges Group: a strategic partnership of colleges in Glasgow whose mission is to "initiate and facilitate collaboration, manage projects, develop policies and practices, and build relations with external partners in order to promote and sustain the ability of the FE sector in Glasgow".

· Aberdeen College and Robert Gordon University: degree link partnership where Aberdeen College deliver the first two years of a degree and Robert Gordon the final two years to avoid duplication of provision.

· Land based colleges group: works to integrate planning and delivery of courses at land based colleges.

Recommendation

22. The group is invited to note the above information and comment on its usefulness in contributing to the report for the core group.

Further information

Gordon Craig, SFC, e-mail gcraig@sfc.ac.uk, tel: 0131 313 6503.

Scottish Funding Council

November 2005