DEMAND-LED FUNDING THE FE FUNDING METHODOLOGY Presenter: Edward Drake April 2008 _______________________________________________________ Drake Lane Associates Ltd. Tel:

DEMAND-LED FUNDING - CONCEPTS Activity is quantified in terms of Standard Learner Numbers (SLNs) Activity is funded within 3 discrete categories: provision Adult learner-responsive provision Adult employer-responsive provision LSC funding is increasingly directed toward priority areas Each provider has Provider Factors which represent their individual profile and characteristics and are used to weight SLNs and therefore enhance funding

DEMAND-LED FUNDING - CONCEPTS (continued) Additional Learning Support (ALS) funding remains separate from all other LSC funding Therefore... LSC Funding = ( SLNs x Provider Factor x Funding Rate ) + ALS Important note: Different Provider Factors and Funding Rates will apply for each of the 3 funding categories for each provider SLNs are subject to Funding Rates in order to convert them into actual funding

KEY LSC FUNDING PRIORITY GROUPS Adult learners with basic skills needs (Skills for Life) Adult learners without a full level 2 qualification year old learners on general FE programmes Adult learners without a full level 3 qualification Adult learners with skills needs at level 1 or below (Foundation Learning Tier) Learners of all ages on Apprenticeships and Work Based Learning Adult learners on employer-based NVQ programmes Adult learners on Train to Gain programmes

LSC FUNDING BLOCKS 3 discrete funding categories exist within Demand-Led Funding Adult Employer-responsive Adult Learner-responsive FE E2E FE Apprenticeships Train to Gain FE UfI/Learndirect Note: The arrows above indicate projected movement (ie. increase or decrease) in funding between and

STANDARD LEARNER NUMBERS (SLNs) SLNs are calculated as follows: SLN = annual GLH / 450 SLN calculations are capped at 1.75 SLNs per learner Most learning aims have a fixed (listed) GLH Where no such fixed (listed) GLH exist then SLNs are calculated based on planned GLH Starts are defined as follows: 24+ weeks6 week minimum retention period 2+ and < 24 weeks2 week minimum retention period < 2 weeksone attendance required

EXAMPLES OF LISTED AIMS Qualification Listed GLH Key Skills qualifications (Communications, ICT, Number) 36 Functional skills qualifications (English, ICT, Maths) 36 NVQ (delivered entirely at the provider in 450+ glh) 520 Each additional NVQ unit 30 International Baccalaureate (Diploma) 1350 Access to HE (studied in 450+ glh) 520 EDEXCEL National Diploma (18 units) 1080 EDEXCEL National Certificate (12 units) 900 EDEXCEL National Award (6 units) 450 EDEXCEL level 1 Introductory Diploma (6 units) 450 EDEXCEL level 2 First Diploma (6 units) 450 OCR level 3 National Extended Diploma (18 units) 1080 OCR level 3 National Diploma (12 units) 900 OCR level 1, level 2 & level 3 National Certificate (6 units) 450 Note:The above values apply to the and Adult Learner Responsive models only

FUNDING FOR NEW DIPLOMAS Level 3 Advanced Diploma: Diploma componentListed GLH SLN Principal learning Extended project Additional & specialist learning Personal learning & thinking skills Costs of collaboration

FUNDING FOR NEW DIPLOMAS (continued) Level 3 Progression Diploma: Diploma componentListed GLH SLN Principal learning Extended project Personal learning & thinking skills Costs of collaboration

FUNDING FOR NEW DIPLOMAS (continued) Level 2 Higher Diploma: Diploma componentListed GLH SLN Principal learning Project Functional skills - English Functional skills - Maths Additional & specialist learning Personal learning & thinking skills Costs of collaboration/work experience Note: This example assumes that the learner has already attained Functional skills in ICT

FUNDING FOR NEW DIPLOMAS (continued) Level 1 Foundation Diploma: Diploma componentListed GLH SLN Principal learning Project Functional skills - English Functional skills - Maths Functional skills - ICT Additional & specialist learning Personal learning & thinking skills Costs of collaboration/work experience

FUNDING FOR NEW DIPLOMAS (continued) Programme weightings for the new Diplomas will be as follows: Diploma lineProgramme Weighting Level 1 Level 2/3 Construction & the built environment Creative & media Engineering Information technology Society, health & development

PROVIDER FACTOR Five elements dictate the Provider Factor as follows: 1. Average programme weighting -each provider has a single (annual) programme weighting (rather than having this variable operating at individual aim level) 2. Average disadvantage weighting -each provider has a single (annual) disadvantage weighting (rather than having this variable operating at individual learner level) 3. Area costs weighting -London (and surrounding area) providers continue to receive a provider level uplift 4. Short programme modifier -each provider has a single (annual) short course modifier (rather than having this variable operating at individual aim level) 5. Success factor -each provider has as a single (annual) success rate (rather than having this variable operating at individual enrolment level)

PROVIDER FACTOR (continued) Different Provider Factors apply to each of the 3 funding categories (ie , adult learner-responsive, adult employer-responsive) Generally, Provider Factors are recalculated annually to reflect the most recent full-years data - however, the Provider Factor for the adult employer-responsive funding category is recalculated in-year based on actual data

FUNDING RATES The SLN Funding Rates for are: School Sixth Forms£2, FE£2, Apprenticeships£2,860 Adult Learner Responsive£2,775 Employer Responsive (except Apprenticeships) £2,775 Note:Actual Funding Rates applicable in will be subject to Transitional Arrangements

FUNDING RATES (continued) Provision which is (and learners who are) eligible for tuition fee remission is/are Fully-funded (ie. assuming that running costs are fully covered by LSC funding) The Co-funded Rate is a function of the Fully funded Rate: Co-funded rate = fully funded rate - fee element Fee element = (fully funded rate x fee percentage) / provider factor Fee percentage = 42.5% (in ) Provision which is (and learners who are) not eligible for tuition fee remission is/are Co - funded (ie. assuming that running costs are covered by a balance of LSC funding and tuition fee income) The difference between Fully-funded and Co-funded is reflected in the respective Funding Rate to be applied

DEMAND-LED FUNDING - FRAMEWORK Learning Aims identifies Learning Aims Database LSC Funding convert to SLNs quantified in terms of SLNs - standard learner numbers via Provider Factor

_______________________________________________________ Drake Lane Associates Ltd. Tel: SUMMARY OF KEY CHANGES

Planned and actual activity is measured in SLNs rather than £s Starts are based on fixed minimum retention periods rather than census dates Most provision (more than previously) is funded via fixed (listed) GLH / SLN values New Diplomas would generally appear to meet LSC criteria for being high priority provision New Diplomas will be funded via Learner Responsive funding (whether within the or Adult funding blocks) Capping (at 1.75 SLNs per learner) replaces tapering

SUMMARY OF KEY CHANGES (continued) The Provider Factor replaces a number of independent variables within the previous funding system Removal of the census dates means that SLN out-turn can never decrease over the course of a funding year Key skills and the FT Entitlement (no longer funded together) are not exempt from capping calculations Funding differentials will operate across the 3 discrete funding blocks (reflected in different Provider Factors and Funding Rates) New Diplomas are funded based on the individual elements being delivered by a provider

_______________________________________________________ Drake Lane Associates Ltd. Tel: DEMAND-LED FUNDING KEY REFERENCE DOCUMENTS

KEY REFERENCE DOCUMENTS Delivering World-class Skills in a Demand-led System (LSC, January 2007) LSC Grant Letter: (DCSF & DIUS, November 2007) Our Statement of Priorities - Better skills, Better jobs, Better lives (plus associated Addendum - LSC, November / December 2007) The 16-18, Adult Learner & Employer-responsive Funding Models (LSC, November 2007) Funding Guidance for (LSC) - Funding Rates for (December 2007 and February 2008 version 2) - Funding Formula for (pending) - Funding Principles, Rules and Regulations for (April 2008) - ILR Funding Compliance Advice & Audit Guidance for (April 2008) - ILR Funding Claims & Audit Returns (pending) Note: All above documents are available via the LSC website (

_______________________________________________________ Drake Lane Associates Ltd. Tel: DEMAND-LED FUNDING APPENDICES

APPENDIX A - FUNDING CATEGORIES Scope and coverage of funding model year old learners enrolled to the following programmes: Provision in school sixth forms FE provision New Diplomas Programme-led Apprenticeships (not full framework) Entry to Employment (E2E) Foundation Learning Tier (FLT) Additional notes: Includes 16-18s enrolled to NVQ programmes (which are currently funded as FE) Includes Apprenticeships for planning and budgeting purposes only (but which will be funded via the Employer Responsive model)

APPENDIX A - FUNDING CATEGORIES (continued) Scope and coverage of Adult Employer Responsive funding model Adults (19+ year old) learners enrolled to the following programmes: Apprenticeships (all types covering full framework) Train to Gain (including associated Skills for Life) NVQs delivered wholly or partially in the workplace (and funded as FE in ) Additional note: Includes Apprenticeships for funding purposes (although such provision will have a separate allocation within the Employer Responsive model)

APPENDIX A - FUNDING CATEGORIES (continued) Scope and coverage of Adult Learner Responsive funding model All LSC funded provision and learners not covered by either the or Adult Learner Responsive funding models Additional note: Also excludes Adult Safeguarded Learning funding