Colleges have voiced "shock" and disappointment that the Scottish Funding Council has chosen not to bid for EU funding for 2013-14 - potentially losing the sector millions of pounds.
For the past two years, colleges have received pound;4.5 million of European structural funding per year and they expected to attract the same again for 2013-14. The money would have provided a crucial supplement to college budgets at a time of major cuts.
According to one sector expert, the SFC could have used government funds to match-fund and pursue European money for the 34 colleges involved in the programme, but instead distributed them to support growth and skills priorities in a smaller number of colleges without consulting the sector.
While the release of any funds was welcome in the current climate, questions had to be asked why the SFC was not pursuing additional funding from the EU for the benefit of the sector as a whole, the source added.
"I was shocked when I heard this," one principal told TESS. Considering the cuts the college sector was currently facing, it was up to the government and the funding council to maximise the funds available to the sector, the principal added.
Another said he was "disappointed" that the SFC had chosen not to pursue additional funding in times of financial hardship.
A funding council spokesman said there were few resources available as there had been no underspend in the college sector, and even if limited money had been available, "it would not be practical for colleges to provide additional places and demonstrate successful outcomes for students" in the remaining five months of the EU funding programme.
Labour MSP Graeme Pearson, who raised the issue in Parliament in November, said: "It appears to me the current approach hampers full consideration of the opportunities that may exist to access funding. I would have thought whatever resources might have been made available they could have been targeted in an effective manner, given tight budgets but ever-growing demands."
The SFC took over responsibility for administering bids for European structural funding in 2010 to save colleges from the burden of associated paperwork. Insiders now feel it has overstepped its remit by making a strategic decision to release government funds and not use them to match- fund.
The sector is now hoping to be assigned some of the pound;27 million European funding the government has set aside for youth employment activity.
ESF funding for colleges Original headline: `Shock' over decision not to bid for EU funding
Original headline: `Shock' over decision not to bid for EU funding