FE Commissioner Dr David Collins has criticised small classes, big staffing spends and a skills shortage on governing boards in a letter to the sector.
Dr Collins, who has so far visited at least 10 colleges since his appointment last year, has written to governors, chief executives and colleges to update them on his progress.
It comes as the sector awaits the publication of the commissioner’s first reports, the first round of which were supposed to be in the public domain by the end of last week.
In his letter, the second he has written to the sector, he said many colleges had responded successfully to financial pressures but said most of the colleges he had inspected were not rising to the challenge.
Dr Collins said: “In most of the colleges I have visited to date, it would be true to say there hasn’t been the level of challenge and scrutiny by the governing body that might be expected in an organisation that is dealing with financial concerns.
“This is often because some governing bodies do not have sufficient financial expertise within their membership to oversee complex multi-million pound organisations. Board members have also sometimes relied too heavily on the flow of information provided by the principal and derived too much comfort from satisfactory audit reports.
“A strong board/principal relationship is critical for a successful college, and audit reports are an important source of information for governing bodies. However, if there are lessons to be learned it would be that Boards need to ensure they have the right skills mix amongst their members rather than being purely concerned with being “representative” and that they have sufficient access to other members of staff, including the finance team, to be able to triangulate the information that they receive.”
In the letter, Dr Collins also raised concerns about the proportion of college budgets being spent on staff, and said there were often too many support staff.
He said: “In those colleges experiencing financial difficulties, costs — particularly staffing costs — are frequently well in excess of what might be expected in the sector (over 70 per cent of overall income as compared to a more normal 60 per cent to 65 per cent in the case of staffing).
“These extra costs usually derive not from a shortage of contracted teaching hours (the median figure being 24 per week or 864 per year), but from an excess of support staff and, most importantly of all, from small class sizes. Too many groups in colleges with financial problems were in single figures and far from the 16 to 20 averages that would be found in the more efficient.
“On occasion, this issue is the result of a lack of appropriate expertise within the executive team where the principal or chief executive may be a specialist in improving quality but has had little significant financial experience in his/her way to the top. For new principals in particular, the assignment of an experienced principal or ex-principal with a balancing set of skills as a mentor could be a very useful development tool, particularly in the first year of appointment.
“It is also important that a member of the senior team is appropriately experienced and qualified in finance.”
He went on to say that some colleges had been “caught out” by a failure to carry out a cost-benefit analysis of new initiatives and that some were under-utilising their estates.
He added: “However, despite these issues what is encouraging is the speed at which new executive teams have got to grips with the problems they have inherited and have clearly identified potential risks to the future sustainability of their college. In some cases there is early evidence that the college is on course to deliver a financial ‘turnaround’ in a remarkably short period of time.
“This has often involved taking some difficult decisions – in one case reducing staff numbers by almost 50 per cent – but with positive results that go a long way to solving the financial problems which they face and within a twelve to eighteen month period.
“In all of this what must not be forgotten, of course, is that the colleges and institutions attracting an intervention under the terms set out in rigour and responsiveness are the ones that for whatever reason are causing concern. They are very much in the minority in what remains a very successful sector.”
Dr Collins’s interventions are triggered either by a grade four Ofsted rating, a notice of financial concern from the Skills Funding Agency or Education Funding Agency, or failure to meet national minimum standards of performance set by the Department for Business, Innovation and Skills or the Department for Education.
The commissioner has so far visited LeSoCo, Barnfield College, Stockport College, City of Liverpool College, K College, City of Bristol College, Weymouth College, Bicton College, City of Wolverhampton College and Stratford-upon-Avon College.