Apparently, a child of six laughs 300 times a day; an adult 50 times. There is no data on how often governors and principals laugh - some days, I suspect, not at all.

Governors can smile about some things. The setting up of the Association of Colleges has gone through relatively smoothly, although the battle for its soul is just beginning.

Its chief executive, Roger Ward, has the task of uniting what has been a disparate sector and ensuring that further education’s voice is heard clearly and loudly at policy-making level, crucial in an election year. One important task - the involvement of sixth-form colleges - has already been achieved.

In England, David Melville has taken over as chief executive of the Further Education Funding Council. Two members of his senior team have moved on. Their departure coincides with a major review of the funding methodology and the period of consultation on new inspection arrangements.

Having toured the regions and, importantly, listened to the sector, Professor Melville has a chance to bring in his own ideas. Changes will happen. After all, rare is the new chief executive who claims that “everything is fine - let’s keep things as they are”.

Lord Nolan has reported. His conclusion that in FE “standards of conduct are generally very good” contrasts somewhat with the public’s view of Members of Parliament. Governors appear almost saint-like in comparison - no allegations of sleaze here. Nolan, of course, made some sensible recommendations which, while not statutory, need to be acted on by governing bodies. The funding council and college associations are considering the sector’s response.

Governors now have access to several checklists setting out how to review and improve their procedures, useful in the new climate of self-assessment.

The FEFC’s “Governance and Management” lists 26 issues on which governors may wish to take action, grouped under broad headings such as composition and appointment, conduct and administration of meetings. And a recent set of FEFC notes covering strategic planning, financial monitoring, quality assurance and governance focuses on key information that governors might expect to receive. Under the proposed new inspection arrangements in England, governance is likely to be assessed and graded separately from management. Some see this separation as a retrograde step - governors and managers have to work closely to ensure the success of the college, and governors are not college employees and do not receive any pay. A poor grade for governance might lead to resignations.

On the other hand, governing bodies are custodians of public funds and, in the Nolan spirit of openness, their performance should be clearly and separately judged.

There are some key issues for governors as we begin 1997. The first is money - or, more accurately, the public expenditure settlement (PES) in November 1996. The Pounds 40 million for 1997-8 additional to that set out in the 1995 PES is welcome, even if Pounds 17m disappeared in “adjustments”.

Governors, however, need to know that the overall funds available for FE will decline over the next three years, and that colleges are expected to increase student numbers and make efficiency gains of 5 per cent per year up to 2000.

A second spectre is the forthcoming election. Any incoming government faces the challenge of matching increased demand for post-16 education with the ability and willingness of people to pay.

There are few differences between the major political parties in their FE policy. And a recent survey of educational priorities reported in The TES showed that MPs of all parties ranked vocational education well below nursery and primary education.

Tony Blair went on record as saying that Labour had three major priorities - education, education and education. Is this code for nursery, primary and secondary education? There is likely to be little new money available for FE under a Labour government.

The Liberal Democrats are committed to increased spending on education through raising income tax (and, incidentally, to abolishing the FEFC in England), though most would go on schools. The Conservatives will continue as now. Although vouchers for post-16 students have been ruled out, ministers will look closely at the impact of vouchers in nursery education.

A third issue is the overall number of colleges. De La Salle College is the first FE sector college to close. Quality was a key determinant. Expect 1997 to see an increase in the number of mergers.

There are also likely to be repercussions from Stoke-on-Trent where the college is facing a very large deficit. Whatever the outcome, it will be hard for the FEFC to reduce its scrutiny of the sector in spite of strong representations to allow colleges more freedom.

Finally, there’s the pension bombshell. Although governors from outside education may wonder what all the fuss is about, the right to a pension after 50 has been as deeply engrained in psyches as that of holidays in August.

From April 1, a college will have to pay a proportion of a teacher’s pension for the rest of that person’s life; a huge financial burden for any college and the end of early retirement as a realistic option for institutions seeking to reduce staff.

Education - schools rather than FE - has been too generous in granting early retirement in the past. Too much money has been flowing out of, rather than into, the teachers’ pension scheme. Teachers will be treated like other members of pension schemes.

The Department for Education and Employment is currently seeking to stop a mass exodus of staff before April 1. And, less well known, many colleges are facing a hefty increase in employer contributions for support staff in local government schemes.

It is likely to be a tough year. Governors and managers will be facing their biggest challenges since incorporation. The old adage “laugh and grow fat” may need to be replaced: “grit your teeth and grow thin” rings truer in the late 1990s.

John Graystone is chief executive of the Association of Colleges in the Eastern Region.