A cash-strapped college has received £3.5 million in emergency funding, according to its accounts.
Cornwall College Group received exceptional financial support in December after it ended the year with £2.25 million less in the bank than planned – and ahead of an application to the restructuring facility.
“The group’s highest and most significant risk is currently managing the cashflow and controlling costs,” the college’s accounts for 2016/17 warned.
“A new request for £3.5 million of short-term exceptional financial support has been made with the Education and Skills Funding Agency to cover cashflow requirements during the 2017/18 financial year, which was approved on December 11, 2017.”
The college is in the process of applying to the restructuring facility, which is designed to support colleges to implement post-area review changes they can’t afford to pay for themselves – even though it has no plans to merge.
That application “will not be concluded until the final term of the 2017/18 academic year”.
“Once agreed, this facility has the capacity to reset the group’s balance sheet by improving its working capital and in doing so accelerate its financial recovery,” the document said.
A spokesperson for the college insisted it was “working alongside the Department of Education in the normal timeframe for the application”.
The grade two-rated group – which includes Cornwall College, Duchy College, Bicton College and Falmouth Marine School – ended the year with just £760,000 in the bank, according to the accounts – almost £2.25 less than the £3 million that had been forecast.
The shortfall was blamed on a combination of property sales that raised less than was predicted, and staff redundancy costs.
But the college’s operating deficit was just £35,000 for 2016/17, compared with over £4 million the previous year.
Cornwall College emerged from the Somerset, Devon, Cornwall and the Isles of Scilly area review with a plan to standalone but with a “fresh start approach to deliver financial stability”, a recommendation that the college said had not changed.
“With regard to financial sustainability, this college is not currently viable or resilient, with weak solvency and forecast operating deficits for the duration of the financial plan to 2019/20,” said the area review report, published August 2017.
This included calls by the University and College Union for Mr Basi to take a pay cut as up to 60 members of staff faced losing their jobs just a month after the college was served with a notice of concern for financial health from the SFA in April 2016.
FE Week reported last week that Lambeth College was expecting to receive £25 million from the restructuring facility, which would be enough to cover the EFS it owes to the government as well as its bank loans.
And Telford College of Arts and Technology received £21 million as part of its merger with New College Telford, to form Telford College.
Raoul Humphreys, principal and chief executive of The Cornwall College Group reflected on the “recovering” finances for his institution.
“Our financial position is recovering, with a turnaround to our operating position and a cash flow surplus,” he said.
“Last year we received £4.5m of exceptional financial support which we paid back in full by the end of August 2017. This year, it has reduced to £3.5m, which we will also pay back by the end of this financial year. This covers a working capital gap in the spring, a challenge for many FE Colleges.
“We are at an advanced stage in our discussion with the Transactions Unit and are seeking to achieve an outcome which will speed up our improving financial position.”