Every learning and skills council is under-staffed, with some offices having only half the number of employees required, FE Focus can reveal.
Fears have been expressed that this is causing severe problems for the proper management of public funds. The LSC has overpaid providers by more than Pounds 100 million, in just one month, although this will eventually be recovered.
The under-staffing is stark in some councils, according to documents seen by FE Focus.
In Gloucestershire the council is 47 per cent down on budgeted posts, in the West of England 41 per cent, Devon and Cornwall is down 40 per cent, London is 23 per cent. In only a handful of colleges is the shortfall in single figures.
Overall, the figures show there are 1,200 too few employees to carry out statutory functions. Even at the national office in Coventry there is a shortfall of 61 members of staff.
A "re-shaping" of the LSC has been carried out over the past two years, but now there are fears it has gone so far that it has led to weak financial management. The document says that budget details for posts are as at May 2003, and national office figures for April this year.
In one instance, a college was paid pound;11m, when it was only due pound;1m. Coventry is now carrying out an urgent internal investigation.
PCS, the civil service union which represents LSC staff, said they were furious. Full-time official Andrew Lloyd said: "Whichever way you interpret these figures, it means there has been serious mismanagement on behalf of the LSC. This has impacted on our members, creating massive stress due to the ridiculous work pressures, and undoubtedly led to the chaos in funding.
"LSC management will find it difficult to defend themselves when they have clearly been responsible for these huge overpayments. You cannot expect to mismanage staffing levels, or disguise them as efficiencies, and not expect a breakdown in service."
But Jan Davison, for the LSC, insisted the issues of staffing and funding were unrelated. "We should be congratulated on our staff reductions."
She said the percentages were based on the differences between now and the period before re-shaping began, and so the huge variations gave a misleading picture. "We have 131 vacancies, which is 3.3 per cent. Most businesses run at a 10 per cent vacancy rate," she said.
On funding, Ms Davison added: "In September, due to an IT contractor error, just over 50 colleges out of more than 4,000 contractors were paid over their anticipated profile for the month. In all cases either the money has already been returned to the LSC or an agreed date for the return has been made. All colleges have co-operated fully.
"As part of the LSC's funding agreement with colleges, they are required to declare that LSC funds have only been used for the purposes Parliament intended. These declarations are independently audited.
"The total allocation of funds to a college for a particular academic year is based on the anticipated level of activity for that year. The total amount to be paid can be adjusted monthly in the light of actual activity with colleges being paid an amount based upon their estimated need for that month.
"The total of these individual payments equals the agreed total allocation subject to any negotiated adjustments."
Julian Gravatt, director of funding and development for the Association of Colleges, said: "Mistakes happen - but at least colleges were paid twice in September rather than not at all."
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