Ten things we learned from the SFA and EFA annual reports

Ten things we learned from the SFA and EFA annual reports

The Skills Funding Agency and the Education Funding Agency have both released their annual reports and accounts for 2016-17 today – their last before they merged to form a single agency on April 1.

Here are 10 interesting facts we learned through combing through both reports:

  1. The SFA underspent by £156.8 million (4.6 per cent) of its total budget

This is attributed to “a combination of the timing of area reviews and some underperformance in the sector”.

  1. Talking of the area reviews…

According to the SFA, the reviews – which ended in March – resulted in 56 recommendations for mergers involving FE colleges, and 22 recommendations for new apprenticeship delivery models.

These figures are for all 37 reviews, plus two previous pilot reviews – whereas the EFA has only reported on the recommendations from the 22 published review reports.

It says that those 22 reviews, which included 70 sixth form colleges, “recommended that 49 sixth-form colleges consider becoming an academy, eight to merge with a general FE college and 13 to remain as individual sixth-form colleges. One sixth-form college converted to academy status during the reporting year.”

In terms of cash to implement the recommendations, the SFA’s accounts show that £6 million in transition grants has been handed out to colleges, while £2,850,000 has already been allocated in loan funding from the restructuring facility.

  1. Financial health of FE providers is still a risk

The “declining financial health of the FE sector” is causing “greater demand for intervention and growing pressure for exceptional financial support”, which results in “an unfunded pressure on the adult education budget” – still a significant risk for the SFA.

A total of £4,151,000 was issued in EFS in 2016/17, with the total balance of EFS loans standing at £47,130,000.

  1. Provider funding error is also seen as a risk to the SFA

“The increased provider funding error rate may be indicative of weak financial controls within the sector. If unchecked, and an upward trend in the error rate continues, this could limit assurance over the proper use of public funds that colleges and other training organisations receive,” said the SFA.

Analysis of the errors found “no single common factor” behind them, but noted that a “number of colleges were undergoing significant organisational change” which “places stretch across all college resources”.

But these errors were “not indicative of fraud”.

  1. The number of providers currently under notice from the SFA has risen sharply

There are 89 providers with a current notice – up from 59 in 2015/16.

This is largely due to huge increase in the number of private providers being hit with a notice of serious breach, up from one in 2015/16 to 26 in 2016/17.

The number of FE colleges, local authority-maintained institutions, or specialist designated institutions being issued notices of concern has remained relatively stable – 58 in 2015/16 and 63 in 2016/17.

  1. Peter Lauener’s pay package has gone down this year

The chief executive of both agencies (now merged into the Education and Skills Funding Agency) received a salary of between £140-145,000 this year, as he did in 2015/16.

But because his pension benefits are lower this year, his total pay package stands at £145-150,000, which is £30,000 less than in 2015/16.

Nor is he the most highly paid director at the agencies.

The largest remuneration package across both agencies this year actually goes to Mike Green, the director of capital group at the EFA, who has a total package of £190-195,000.

  1. The number of SFCs has gone down this year

There were 93 in March 2016, according to the EFA report – but just 89 by March 2017.

This reduction is due to mergers, the report says, and also academisation, as the first SFC completed the process to become a 16 to 19 academy during 2016/17.

  1. A third of SFCs were in ‘early intervention’ this year

The EFA’s ‘early intervention and prevention’ approach, published July 2015, was designed to encourage early action where “it is evident that the sixth form college is close to triggering formal intervention thresholds”.

According to the EFA report, 30 SFCs were subject to the approach this year, while three financial notices to improve were also handed out along with one notice for an ‘inadequate’ Ofsted grade.

  1. EFA intervention time is going up – and down

The EFA is aiming to “reduce the average time spent in formal intervention for all colleges which have been in formal intervention for more than 24 months” as part of its objective to improve the financial health of the sector.

On average the amount of time that colleges and SFCs are spending in formal intervention has gone up this year and now stands at 95 weeks in 2016/17, compared with 82 in 2015/16.

But the average number of weeks by which interventions have gone over the 24 month targets has dropped significantly – from 89 in 2015/16 to 28 in 2016/17.

  1. On average, EFA employees are healthier than SFA staff

The EFA lost an average of 4.1 days to sickness absence per employee in 2016/17, while the SFA lost 4.6 per employee.