SFCA welcome significant funding win for two year courses

Funding for students that drop-out in the second year of their two year course will be doubled, under a temporary change the Sixth Form Colleges’ Association is claiming to have secured with the Education and Skills Funding Agency.

Under current funding rules, if a student fails to finish their course (regardless of whether they achieve the qualification) the funding is halved via a ‘retention factor’. 

This means, typically, the longer the course the more likely a student drop-out before the end and therefore the lower the funding.

A-Level courses are doubling from one to two years, so pressure is on the ESFA to address the inevitable funding drop a fall in retention would create.

In correspondence from the ESFA to the SFCA, seen by FE Week, they confirmed both academic and vocational students dropping out in the second year of a two year course would now be treated as retained, and therefore fully-funded in the allocations for 2018/19. The impact per student would be more than £2,000 of additional funding (half the unweighted funding rate for a full time 16 or 17 year-old).

The ESFA said: “On the issue of the impact of two-year linear A-levels on the retention rates, we have looked carefully at this issue in light of comments from the SFCA and other associations and following a number of queries from individual institutions. 

“We have concluded that it would be right to amend the retention calculation so that we do not penalise institutions as the new qualifications are introduced.

“To achieve this, all students recorded on a two-year academic or vocational programme will be treated as retained in their first year if they have completed that year. 

“This adjustment will apply to 2018/19 funding allocations and will continue until further notice.

“To establish whether the student on the first year of a two-year programme has completed the year we will review whether the student was still in learning on 30 June. 

“Students recorded on a two-year programme who withdraw before that date will continue to be treated as not retained and a 50 percent funding reduction will apply.  

“We do not however expect the above to be a permanent arrangement. 

“We are concerned about high drop-out rates between year 1 and year 2 for two-year programmes and want to ensure that students are getting good advice before choosing courses, and effective support during their programmes.

We are therefore reviewing how retention should be treated in all institutions, particularly into students’ second year and we are investigating potential funding levers in this respect.  We would welcome your contribution, and those of other representative organisations, to help develop our thinking on this.

“I will be in touch with you in due course to discuss this further. In the mean time we will indicate for institutions, purely for information, what the retention penalty would have been if we had not made this adjustment to the rules.

“This will demonstrate to institutions where they do have a significant number of students drop out after the first year of a two-year programme.”

In response the SFCA said: “This is a very welcome and sensible response from the ESFA.  The 16-19 funding formula was designed at a time when one year courses were the norm.

“We have been saying for some time that as two year courses become the norm, it is important that the retention element of the funding formula adapts to reflect this.

“Without this change, colleges and schools would have been hit by a retention ‘stealth cut’ on top of the existing funding pressures they are grappling with. This is the right decision by the ESFA and they should be commended for taking it.”

However, the ESFA statement leaves several important questions unanswered, such as:

1. Will this change be applied to all two year academic and vocational enrollments and not just at level 3? Or, is the ESFA planning on a very restricted number of eligible vocational qualifications at Level 3 that are on the DfE performance tables?

2. Will this change only apply to full time students (those on 540 or more planned hours each of the two academic years)?

3. What, if any, impact will this have on the qualification achievement rates calculation?

4. Has the ESFA modeled the likely funding impact for every provider, and will they be sharing this ahead of the allocations?

We have put these questions to the ESFA and intend to publish them once supplied.

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