The association was highly critical of the grant announcement for the 2001-02 academic year which it said gave colleges only 1.5 per cent more for teaching costs; the overall additional funding of 12.5 per cent was largely for additional responsibilities.
Mr Kelly said: "Since the size of the overall cake is not going to be greatly increased next year, you are bound to have winners and losers if you have a major redistribution in funds of this kind. So long as you have a funding formula which sets an average price for a highly diverse and varied product, you are going to have a problem. We need a more genuine match between the actual costs of running a college and the funding that is provided."
A fundmental rethink of the FE funding formula has been called for by the Educational Institute of Scotland. The union wants to see an end to SUMS for allocating additional money to colleges, which is usually ring-fenced, beyond their core grant.
"A more sophisticated means should be developed that is based on the distinct needs of the community, within which individual colleges are located," Marian Healy, the union's further and higher education officer, stated.
"For example, when allocating discrete funding for widening access, those colleges operating in areas of economic deprivation and high unemployment should receive the larger slice of funding - instead of every college getting something irrespective of their circumstances."
The EIS intends to press its case for a review when it gives evidence to the parliamentary inquiry into lifelong learning, which gets under way shortly.