Scottish further education colleges are facing a "year zero" as they battle to absorb a flat cash settlement from the Scottish Funding Council (SFC) for the next academic year - and they have been warned that they may face further cuts during 2010-11.
The SFC today unveiled a pound;690 million grant package for the 43 colleges for the year beginning in August. But around pound;521 million of this is earmarked for teaching and the student fees it is assumed colleges will receive - a 0.0 per cent settlement.
The overall deal will not come as a surprise to most colleges, many of which have been fearing the pinch and have begun "scenario planning" to anticipate life on restricted public funding.
And Mark Batho, chief executive of the SFC, has warned that resources could become tighter still. He said his council "reserves the right to revisit the settlement" if the pressures on public spending become more acute in the course of the year.
He told The TESS: "It's simply prudent to signal that this could be an option if there's a tight post-election settlement. We have absolutely no information to go on for 2011-12 at this stage and, if we have to reduce spending further, it would be too big a hit to do it all in the one year."
Mr Batho acknowledged this was a "tough settlement", in contrast to the more optimistic note struck by Education Secretary Michael Russell when he wrote to the funding council in February to celebrate a 4.5 per cent real- terms increase for colleges in 2010-11, compared with a rise of only 2 per cent for the universities.
But the Government's figures for FE included capital expenditure and a sum of pound;15.3 million to mitigate the effects of the recession, of which pound;6.9 million was from European sources.
The remaining pound;8.4 million has come from the funding council: it is included in the figures released this week but will be distributed to the colleges separately, since it has to be allocated to those serving areas of high youth unemployment to create places for another 4,100 students.
Of the pound;690 million total, teaching accounts for pound;402.7 million and anticipated student fee income for pound;118.6 million - making up pound;521.3 million, as shown in the table.
The remainder consists of other key elements, including pound;109 million for capital investment in college buildings and equipment and pound;83.9 million for student support.
The sum for student support represents a pound;5 million increase in bursaries to pound;69 million, which brings the total rise over three years to pound;11.7 million. Another pound;6.4 million is earmarked for discretionary support for students (including asylum seekers) and pound;8.9 million will help meet students' childcare costs.
The council believes its settlement gives priority to core funding for teaching and student support which, Mr Batho said, would "help students gain access to and, importantly, remain in college courses".
The settlement also reflects "strategic" moves in line with government policy. The allocation to encourage mergers and collaboration among colleges has been increased from pound;2.7 million to pound;5.2 million, for example, and a new pot of pound;1 million has been established for colleges in rural areas to help small businesses cope with the recession.
Unlike the universities, which were "fined" pound;1 million this year for exceeding their limit on funded student places, there is no such sanction in FE. The penalty for universities stems from the knock-on effect additional students have on the budget of the Student Awards Agency for Scotland. In FE, student bursaries are controlled by the funding council which, for the coming academic year, has linked student support more directly to the amount it pays colleges to run particular courses.
The incentive for colleges is not a fine but a clawback of funds for those who do not meet their targets. There are no colleges in that position this year.