SFA delays full implementation of simplified funding system

Skills Funding Agency listen to feedback from FE providers and delay roll-out until 2013/14

The Skills Funding Agency (SFA) has delayed full implemenation of its ‘simplified’ adult skills funding system until 2013/14.

Colleges and training organisations will have to use the current methodology in 2012/13, but are advised to plan for the upcoming changes in what has been called a ‘dual running’ period.

The agency had originally planned to implement the new funding system in 2012/13.

However, a spokesperson from the SFA said that the timing of the new methodology was always “subject to further engagement with the sector”.

“We have engaged and have listened to the feedback from providers and will implement a dual running approach in 2012/13,” the spokesperson said.

“Colleges and training organisations will continue to be paid for the year in accordance with the current methodologies, but will also have sight of the new methodologies in order to plan for the changes in the year ahead (2013/14).”

The most recent reference to a 2012/13 launch can be found in a SFA policy update titled ‘Proposals for Funding Simplification’ published on April 27 (click here to download).

It states: “This paper sets out the proposals for simplifying the Skills Funding Agency’s funding system in 2012/13.  Proposals include a simplified rates and funding formula, as well as initial thinking about a new earnings and payment process for providers.”

It later shows a draft table of the simplified rate structure and plans to retain area cost uplift.

A further presentation given by David Hughes, National Director of College & Provider Services at the SFA  on November 17, 2010 outlines plans for a simplified rates system, simplified data returns and removal of provider factor, excluding area costs in 2012/13.

The SFA said in a previous statement to FE Week that they never intended to roll out the new methodology in 2012.

A spokesperson from the SFA said: “There isn’t any delay. We have always been committed to start the funding simplification process in 2011/12 so that we are ready for roll out of dual running in 2012/13 and full implementation in 2013/14.”

The delay, announced in ‘A new streamlined funding system for adult skills’  on October 10, proposes a simplified funding system which includes a single Adult Skills Budget for all colleges and training providers, as well as a single methodology for providing them with funds.

The document also suggests a standard ‘rates matrix’ which would fund all provision, including apprenticeships, and a funding system based on delivery in Individualised Learner Record (ILR) returns.

The SFA argues that the new system will be “a more open and transparent mechanism for determining funding” and mean that colleges can work more easily with their local communities.

The latest report states: “Any new approach must be fair and transparent. It must also recognise the diverse needs of adults, some of whom face barriers of disadvantage and disability, and in addition it must safeguard public funds.”

The document also confirms that the area cost and disadvantage uplifts will be kept in the new simplified funding formula.

The SFA suggests that because colleges and training organisations will no longer be required to record guided learning hour (glh) data, administration costs will also be reduced.

However, Beej Kaczmarczyk, Director of Funding at Sector Training, said: “Serious questions should be asked as to whether this delayed 19 plus funding reform is worth implementing. In places it adds complexity, others inconsistency, and many questions remain unanswered.”

The adult skills provision is currently funded through the Demand Led Funding (DLF) methodology introduced in 2008/09.

Classroom and workplace learning are divided in the current methodology, but would be combined under the new funding system. Providers would be paid using the monthly method.

The new SFA report follows a BIS-led consultation ‘A Simplified FE and Skills Funding System and Methodology’ and the response in ‘FE – New Horizon, Investing in Skills for Sustainable Growth’ published in 2010.