A Welsh further education college once faced with crippling debts is now back on track. Michael Prestage reports. A rescue package has transformed debt-wracked Coleg Ceredigion into one of the most successful further education institutions in Wales.
The college in Dyfed became a symbol for the end of the post-incorporation honeymoon period last July after debts of Pounds 870,000 were revealed. Police were called in to investigate possible financial irregularities at the college.
Although the inquiry was exceptional, the Further Education Funding Council for Wales said the problems were not unique. Senior officials admitted that they were "closely monitoring the financial health of two other colleges".
The case also prefigured the publication of data by the English FEFC showing up to 58 colleges with deep financial problems.
The lessons learnt in the most public cash crisis in a Welsh further education college are seen as immensely useful for other colleges which may get into similar difficulties.
The problems identified were the result of numerous pressures. Like all higher spending colleges, it had to cut unit costs while coping with poor accommodation in buildings, many of which were very old. Recruiting from a wide rural area, expensive policies such as free buses for students, failed to attract enough students.
After incorporation, the FEFC for Wales allowed a honeymoon period of about 18 months before applying a more rigorous funding formula on colleges. Ceredigion ran up a deficit of Pounds 160,000 over 16 months.
Extra courses were put on but student numbers never materialised. Some A-level courses were being run with only two or three students. Overheads became disproportionately high and the debt soared. Management consultants Coopers and Lybrand were called in to study the finances, producing a report on which a rescue package was drawn up.
Professor John Andrews, chief executive of for FEFC Wales, said colleges could get into difficulties for a number of reasons, but the experience at Coleg Ceredigion was being shared within the sector.
And he praised the efforts of staff and governors at Coleg Ceredigion. "There are an awful lot of people to be congratulated on the work they have put in including the staff who have responded extremely positively and worked hard and the governors who have committed themselves without stint to the college.
"There are still things to do, but it is now running within budget. The commitments have been reduced to what can be afforded and student recruitment has grown despite the recent bad publicity. On the whole it is very much a success story."
At Ceredigion the recovery has not been achieved without some pain. As Cyril Lewis, the principal at Swansea College, who was called in as acting principal, had to find a Pounds 1 million spending cut in a Pounds 3.25 million budget, job losses were inevitable.
The principal and finance manager had already gone when 21 managers, teachers and administrators were lost, all bar one through voluntary redundancy. Now one of the four split sites that make up the college campus will close and there is still a question mark over a second that has to be resolved.
Because of the rural nature of the college which has a catchment area along a 40-mile strip of mid-Wales from Aberystwyth to Cardigan - and its importance as a Welsh-speaking area - it was decided to protect the curriculum.
With the exception of an A-level course that had one student enrolled that has been achieved. But the workload of individual staff at the college with 2,400 students has been increased by 30 per cent.
Mr Lewis said the recovery plan only worked because of the support of all staff. "It was important I wasn't seen as a dictatorial creature coming from Swansea to take over.
"I wasn't prepared to fight the staff, but there had to be changes and they agreed to that." It has not all been cuts. There will be significant capital investment at the Aberystwyth and Cardigan sites.
At Cardigan there are plans to demolish some dilapidated buildings and replace them with a new Pounds 1 million teaching block to be completed by August. After four months, the college now has a surplus and is paying back creditors. It is hoped debts can be cleared within three years.
Mr Lewis said: "Coleg Ceredigion is now among the most financially efficient colleges in Wales. The effort by the staff has been remarkable given the pace of the changes at the college."
Keith Jones, a senior lecturer and staff representative on the board of governors, said the arrival of Mr Lewis had been met with fear, but morale among staff was now greatly improved and there were hopes for the future.
"There is now an upbeat message," he said. "We have stayed as an independent college with our own principal and there is now firm financial ground.
"That wasn't the case even before last summer's crisis emerged because we knew something was wrong. There was mismanagement and Cyril Lewis has retrieved the situation."