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Why more funding can sometimes mean less

THERE was some surprising news about further education funding in the Department for Education and Employment's annual report this month. A table in the report showed that funding per full-time equivalent student would drop by 4 per cent in 2001-2.

This decline appears to be at odds with the Government policy of limiting the annual efficiency gain to 1per cent. The Association for Colleges is seeking an official explanation but, as ever, the answer appears to lie in the way that targets are set and students counted.

The first, indisputable, fact about FE in 2001-2 is that there will be more government cash coming into the sector. The creation of the Learning and Skills Council makes it difficult to follow the figures but you cannot argue with the pound;522 million increase reported by the DFEE. This brings planned spending on further education up to pound;4,024m.

Three years ago, spending was less than pound;3,200m. The cash increase for 2001-2 is 13 per cent. The increase over three years is 30 per cent. So why the 4 per cent decline in funding per student?

Ask someone in a college corridor and they might come up with three answers: (1) the cash increase is phoney and involves double-counting;(2) the cash has been diverted into initiatives (3) the cash is up but targets are up even more.

The first answer is easy to say but daft in reality. Civil servants may be clever with figures but they don't lie in public about money. If the DFEE's report says cash is up, it's up.

Answer two is more plausible. The number and size of FE initiatives has multiplied in the last three years. In 1998-9, the DFEE spent about pound;100m on funds such as the access fund; three years later, in 2001-2, more than pound;435m will be spent on a host of initiatives aimed at raising standards and strengthening the infrastructure. There's also pound;100m for learner support. This fivefold increase means that targeted funding now accounts for more than half a billion.

But these initiatives do not explain the funding cut. The are additional to increases in the mainstream grant, which has grown by hundreds of millions. This leaves us with the third answer: cash is up but so are the student number targets.

In line with ministers' "something-for something" spending philosophy, the DFEETreasury deal for post-16 education in 1999 traded a lot more money for the period to 2002 in return for 700,000 more students. The funding change in 2001-2 should be set in this context: more money but more students. As if that were not enough, there is another significant challenge posed by the new post-16 curriculum.

Curriculum 2000 requires colleges to increase teaching hours and therefore spending on each 16 to 18-year-old. The Further Education Funding Council estimates it spent pound;105m in 2000-1 supporting the implementation of Curriculum 2000.

The impact on student numbers is visible in the table above, taken from the FEFC's 2000-1 grant letter. There is a clear pattern of acceleration, slowing down, then speeding up again. Half the total growth is in the final year, which happens to be 2001-2 As a result of all this, 2001-2 is the year with the largest cash increase but largest growth targets. The DFEE use a complex formula to convert students into full-time equivalents. In this process, its sums produced a 4 per cent decline.

The AoC is right to challenge this figure and to ask for more cash. But the wider issue is what happens to the student number targets. The summer 2000 spending review produced a new set of targets covering the period 2001-4. The Learning and Skills Council inherited both sets of targets on April 1 2001 but its immediate priority is consolidation. The future of the targets is a key question in its corporate plan.

How about this for an answer ? Our current targets are calculated in pounds, students, units and FTEs. We try to do more for less. We could do with more clarity and fewer targets.

Julian Gravatt is director of finance at the City Lit. E-mail

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