The highly complex way in which colleges in Scotland are funded is to be fundamentally overhauled to make the system more transparent, it has been announced.
At present, colleges receive money based on a complex formula that takes various factors into consideration, including teaching costs or a target student group, making it difficult for people in the sector to understand.
But the Scottish Funding Council (SFC) has unveiled plans to replace the so-called "weighted student units of measurement" (WSUMs) with a system of "credits" designed to be more straightforward.
It is understood that education secretary Michael Russell is behind the idea of a simplified system.
The plans were included in guidance to colleges on outcome agreements for 2014-15. While the SFC said a lot of the detail was yet to be decided, a spokesman told TESS that the proposed credits would not be subjected to the complex weighting system that is currently used.
Instead, there will be four or five credit bands, or prices, each associated with a group of subjects, depending on how much it costs to deliver them. These will apply equally to all colleges, creating a more transparent, logical set-up.
To ensure that colleges can continue to cater for a wide range of students, TESS understands that colleges would also be able to receive extra premiums to cover additional costs, such as those associated with teaching students with learning difficulties.
"The changes we are starting to talk about with the sector are about simplifying the system to make it easier to understand and about it supporting a new needs-based approach to the funding of colleges," the spokesman said.
Colleges Scotland chief executive John Henderson said: "Simplification of college funding has been a long-term goal for government and the sector, but as colleges offer many types of learning offered in many different ways, any new system must take account of that.
"The way the sector is funded is an opportunity to create something that is clearer and strikes the right balance between stability and meeting future needs."
The guidance from the funding council also outlined plans to move to a three-year cycle for outcome agreements, which set out colleges' priorities and targets in exchange for their funding and are agreed between individual regions and the SFC. These would replace the current annual arrangement and would allow for more long-term strategic planning.
Once introduced, the three-year agreements would be subject to annual adjustments, the SFC said, and at the beginning of every three-year period discussions with the sector would take place on what Scotland-wide impact it will aim to deliver.
"The three-year outcome agreement cycle has the potential to be a positive change for the sector, giving it the ability to set out a plan for the long term, which better aligns with the way people tend to study and progress," Mr Henderson said.
But he said that their introduction strengthened the case for moving to a three-year funding settlement. "There should be as much certainty and stability as possible for colleges, particularly in these key early years of regionalisation."
College mergers that took place last week were "rushed through" by the SNP in a "desperate attempt to try and reduce the impact of their #163;50 million cut to the college budget", Scottish Labour's education spokeswoman has claimed.
Kezia Dugdale added: "Saving money by merging colleges sounds fine on paper, but we know that Audit Scotland doubts whether the estimated savings will actually materialise. I hope for the sake of students that they do, otherwise college students will continue to pay the price for the sector being the poor cousin to higher education under the SNP."
Education secretary Michael Russell said last week that this was an "exciting time for our college sector, with students and employers reaping the benefits".