Inverness College, still struggling to reduce a deficit of more than pound;3 million, told staff last week that, apart from two departments, there will be no more compulsory redundancies as part of the current efficiency savings exercise.
This was a timely conclusion since it came just ahead of the appearance before MSPs on the parliamentary audit committee of Professor John Little, the college principal, and Ken Mackie, chair of its board of management.
They appeared with their counterparts from West Lothian and Lews Castle, the two other colleges which were the subject of a special report by the Auditor General for Scotland over "risks to (their) sustainability".
Inverness now says that the responses to an offer of voluntary redundancy packages have ensured that the vast majority of staff, with the exception of those in two departments, were able to start their summer break last Friday knowing they will not lose their jobs.
The hospitality and tourism department and forestry are the two sections of the college where not enough staff have volunteered for redundancy. The college's response has been to extend to the end of the summer holidays the period for volunteers to come forward; the position for those staff will then be reviewed.
The college aimed to shed 25 lecturers and has so far made 16 redundant. In May, it made four staff at its Skye and Lochalsh outreach centre compulsorily redundant, but redundancy packages have now been agreed with them.
A college spokesman said: "These past few months have been difficult for all staff as we have consulted on the need to deploy our staff more efficiently in future."
The college expressed confidence that the introduction of new financial controls and other measures will ensure that it does not have to go through this exercise again. It believes it has now moved closer to the norm in the FE sector for staffing efficiency. Staffing costs had been steadily rising from 60 per cent of expenditure in 2000 to 71 per cent in 2003-04; this contrasts with a sector average that has remained virtually steady at 66 per cent over the four years In a paper to the audit committee, Professor Little, who is the college's fourth principal or acting principal in six years, revealed the extent of the college's woes. In 2000, he said, total debt ran to pound;6.76 million on a pound;12 million turnover. The funding council was forced to make a pound;1.5 million advance on the college's annual grant that year.
By July last year, the debt had been brought down to pound;3.3 million, which was only made possible by another pound;1 million injection from the funding council. Meanwhile, the college has gradually been repaying the 2000 loan, which will take until 2006-07.
While Professor Little said the level of debt will have been reduced to Pounds 2.72 million by August, he also acknowledged that forecasting is not an exact science. There had been a "disappointing" surplus of just pound;38,000 for the 2003-04 financial year, against a target of pound;547,000.
The reasons were unexpectedly strong demand in construction and care which the college had to fund itself, pushing up staff costs. The total staffing bill is pound;10 million.
Overall, the total debt of pound;6.76 million will not be repaid until 2009-10, which the funding council has accepted under the financial recovery plan it has agreed with the college. Despite its huge mountain of debt, the college is confident it will achieve financial security by the end of July next year, which means it will be able to build up modest reserves in a way that will be sustainable.