A college at the centre of a pound;2 million fraud investigation and with debts of pound;12m is to shed more than 100 jobs, the bulk of them in teaching and teaching support.
Sandwell college in the West Midlands also plans to close four campuses and relocate to a new site in West Bromwich by 2007.
Police were called to the college at the end of last year after a tip-off from the Learning and Skills Council. They are now investigating allegations that private training firms defrauded the college by making bogus claims for tuition that was not provided under a franchise agreement.
College staff are not under suspicion.
Principal Val Bailey said: "While the proposed job losses are not good news, we are confident that our staff appreciate that the changes taking place will secure the future of the college and will prove beneficial to Sandwell and local business leaders alike."
She said the college intended to broaden its range of education and training, including plans to extend vocational diploma courses in areas such as plumbing, construction and electrical engineering. The changes were necessary to secure the long-term future of the college, she added.
But Chris May, the regional official for Natfhe, the lecturers' union, described the proposed cuts as "savage".
He said: "What has happened here is the mismanagement of franchising, despite increasing warnings. This has to be watched so carefully, so that you know how many people are on a course.
"Participation in education in Sandwell is much lower than the national average.
"We have a real problem of people leaving so early, which is why all this is so dangerous."
Last year the college was put into the "serious concerns" cate-gory by the LSC.
Another college in serious financial difficulty is Salisbury, which is planning to lose 96 posts. Staff there will be told on Monday whether their applications for voluntary redundancy have been accepted. If there are insufficient volunteers, then redundancies will be compulsory.
Salisbury college has an operating deficit of pound;2m for 2003-4 and is being supported by the LSC with an advance payment of pound;1m, with a further pound;0.8m handout to come later.