1. YPLA Funding Team YPLA Funding Guidance 2011/12 v2 – amended February 2012 ( to include new advice on mid-year estimates in slides 20-32 ) ILR Funding Returns (separate presentations are also available on Learner Eligibility Guidance and Funding Regulations, Rates and Formula Championing Young People’s Learning

2. ILR Funding Returns ( Version 2 published in February 2012 ) ( Version 1 published in July 2011 ) Championing Young People’s Learning 2

3. ILR Funding Returns Every provider receiving any ILR learner responsive funding is required to return to the funding Agency through the Data Service an ILR data return that includes the: learner numbers, SLN and the associated generated total funding with reference to the 2011/12 YPLA funding allocation. For 2011/12 the YPLA only requires the return of separate individual mid-year and year end estimates from the following providers: Contract Providers HEI who do NOT make ILR returns to the Data Service (those small number of Higher Education Institutions that return learner number data through HESA rather than ILR returns). Any provider who fails to meet the Information Authority (IA) deadlines for R06 or R14 returns will also need to return a funding estimate. For all other providers the YPLA will use the providers R06 and R14 data as mid and year-end funding returns. The final signed claim is still required from all providers for the reasons set out in Annex A paragraphs 20 - 22. 3

4. Championing Young People’s Learning Deadline for Returns Funding model (all types of provider) Deadlines for returns* ILR R06 (2011/12) and for Contract Providers a full year Annex B: Mid-year estimate 6 February 2012 (R06 latest return date) (only expected from HEI not making ILR returns) IPP mid-year estimates (Annex B) emailed before the end of February 2012 ILR R14 (2011/12) and for Contract Providers a Annex B: Year-end estimate. 3 September 2012 (R14 latest return date) (only expected from HEI not making ILR returns; or Contract Providers subject to funding reconciliation making any manual adjustments to R14 data). All Providers Annex B: Final claim; and ILR R15 (2011/12) All ALS cost forms in excess of £19,000 – see paragraph 30. All Providers 16 November 2012 (also R15 return date) The claim value must match final ILR R15 return and claim must be signed by Head of Institution (see Annex A paragraphs 20- 22). Final funding audit report.As specified by the YPLA on an individual provider basis. Where requested, all audit reports on individual funding claim returns must meet the claim return deadlines set out above. 4

5. Championing Young People’s Learning Explanatory Annexes in the Guidance AnnexDescriptionApplies to AGuidance for Completing Forms: ILR Funding Estimate/Claim 2011/12 All providers BILR Funding Estimate/Claim 2011/12 (Mid-year Estimate/Year-end Estimate/Final Claim): All Providers All providers CCalculation of any Adjustment of Funding for 2011/12YPLA Contract providers DReconciliation Statement for 2011/12: All Providers (for contract providers includes some reconciliation calculated examples) All providers EExample of a LIS YPLA Funding Claim Report 2011/12: All Providers (this includes additional technical information on the Funding Claim Report) All providers FManual Adjustments 2011/12: All ProvidersAll providers 5

6. Championing Young People’s Learning Annex A – Purpose of Final Claim Annex A of the Guidance provides Guidance for completing the 2011/12 ILR Funding Claim. This includes : calculation of funding; and any relevant authorised manual adjustment. Purpose of Final Claim The purpose of the claim is to provide the YPLA with an assurance statement by the relevant accounting officer over the regularity of the provider’s funding claim and ILR data returns. This also enables the YPLA and the provider to have an agreed final out- turn that enables comparison of out-turn to allocation on a provider, regional and national basis. The final claim will also determine for all providers whether any funds paid for 2011/12 will be adjusted for retrospective clawback adjustments. The YPLA expects the overall total of cash claimed to be consistent with any financial provision being made by the provider in its financial statements 6

7. Championing Young People’s Learning Final Claim Signature The principal or head of the institution should sign all final claim forms. In the case of higher education (HE) institutions, the person with equivalent responsibility for further education (FE) in the institution should sign the final claim forms. Providers and funding auditors are reminded that the final claim forms returned by the funding auditor to the YPLA should contain an original signature, not a photocopy or facsimile. The principal or head of the institution is required to certify that, to the best of his or her knowledge, the funding claimed has been calculated from data correctly extracted from the institution’s records, which accurately reflect enrolments during 2011/12, in accordance with the guidance and definitions set out in the various documents that make up Funding Guidance 2011/12 and other relevant guidance. 7

8. Championing Young People’s Learning ILR Funding Claim FUNDING Claim Report 2011/12 - Summary Funding Lines Category Each funding line has all 4 categories but ALS varies according to funding line Each category below is applied to each Funding Line Type "ALS" A 16–18 Learner Responsive Funding Funding value (£)ALS (Formula) B 16-18 Learners with High Cost ALS SLNALS (Costs) C 19-24 LLDD funded by YPLA LearnersALS (Costs) D 19+ Continuing Learners (excluding High Cost ALS) ALS (Formula) (This is only applicable to Sixth Form Colleges) Total funding (programme funding only) (A +B + C + D) 8

9. Championing Young People’s Learning Annex E: Additional Information 1.The Funding Claim Report reporting code takes into account: (a)the split in funding responsibility between YPLA and Skills Funding Agency (SFA); (b)that the funding responsibility for learners aged 19-24 with significant ALS cost (above £5,500) needs remain with the YPLA for 2011/12; (c)learners who started programmes aged 18 in the first year of their programme but are aged 19 or over on the 31 August 2011 are usually the funding responsibility of the SFA for 2011/12 (unless they meet the criteria set out in (b) above or (d) below. (d)In addition from 2011/12 the funding responsibility for 19+ continuing learners at sixth form colleges (defined in c above) is with the YPLA and they are funded under the YPLA funding model 2. The ILR fields used to determine into which part of the Funding Claim Report the learner and their funded cash appear is set out in Annex E (Table E1). 9

10. Championing Young People’s Learning Annex E: Additional Information see page 26 Source of Funding Funding ModelALS Field A10721Not "2" B10721"2" C10721 or 22"2" D10721Not "2" Total (Programme funding only) = A + B +C +D (For C and D learners must also be aged over 19 or over on 31 August 2011) 10

11. Championing Young People’s Learning Annex F: Additional Information Notes 4. The report calculates using the codes shown in Table E1 above. The notes at the bottom of Page 1 of the LIS report help explain the report and are also explained below: ’Section C: ALS High Value Claims figure is excluded from all totals on this page. This page includes all learners who have learner responsive funding and are identified in the ILR as YPLA funded. Any learners with ILR Field “source of funding”, the Funding Model set to 107 (16-18 learner responsive funding), but aged 19 or over on 31 August 2011 and hence coded (“source of funding” = 105) as SFA funded will not usually appear on this page but on the SFA Page of the report. The rows labelled C include learners (“funding model” = 22) (who should be aged 19-24 on 31 August 2011) funded by the YPLA at the ALR funding model rates where field “source of funding” = 107. For 2011/12 all learners with a Section 139A Learning Difficulty Assessment must have this recorded in ILR field “Learning funding and monitoring code” so the LDA reference is recorded as 1 as this will be part of the 2012/13 funding allocation process. The Data Service has issued full guidance on the ILR Funding Claim Report within the LIS 2010/11 Report Guidance. This information will be available from: http://www.thedataservice.org.uk/Services/DataCollection/software/ 11

12. Championing Young People’s Learning Annex E: Additional Information ILR Data Recording Issues 5. Providers are now required to update the data entry in ILR field “source of funding” and “funding model” appropriately for all continuing learners that change funding body responsibility for a later year of their programme. The ILR record at a learning aim level is for such learners different across the different funding years. 6.All LLDD learners aged 19-24 on 31 August 2011 and for whom the YPLA has agreed funding responsibility should be coded in “source of funding” as 107. 7All 19+ continuing learners (those who started programmes whilst aged 16-18) in sixth form colleges and for whom the YPLA has agreed funding responsibility should be coded in “source of funding” as 107. 8All other learners aged 19 or over on 31 August 2011 should be coded in “source of funding” as 105. 12

13. Championing Young People’s Learning Annex E: Additional Information ILR Data Recording Issues 9Providers must avoid in R04 returns incorrectly coded learners who are aged 19 or over on 31 August 2011 (and that are not agreed YPLA funded 19-24 LLDD learners) as YPLA funded (“source of funding” =107). These learners are not eligible to be funded by the YPLA and should be included in all data and funding returns as SFA funded learners (“source of funding” =105). All such errors must be corrected before any R04 and later data returns are made to the Data Service. 10The YPLA will exclude any of these learners (under YPLA internal ILR analysis) from the lagged learner numbers used for the 2012/13 allocation process. 13

14. Funding Reconciliation 2011/12 Championing Young People’s Learning 14

15. Championing Young People’s Learning Tolerance Principles & VfM The YPLA tolerance arrangements for Contract Providers have been agreed to recognise that minor shortfalls in learner recruitment do not incur financial penalties that are disproportionate to any financial saving providers make from such shortfalls. Tolerance arrangements need to meet requirement to safeguard public funding, especially where it is transferring to the private sector, and obtain as much Value for Money (VfM). It is however important that providers who significantly under deliver their allocations are identified as early in the year as possible so funding resources can be redeployed within the system. Providers targets for each year remain their whole allocation and providers who identify tolerance limits as their targets jeopardise both their own future funding and the funding body arguments in favour of tolerance in the future. It is important that revisions to mid-year allocation for 2011/12 (Spring/Summer 2012) are processed as early as possible to support the above principles. In previous years the YPLA has been required to return all final post-year clawback to DfE (Treasury). The tolerance limits for 2010/11 have been carried over for 2011/12 but providers are expected to deliver at least 100% of their allocation each year and any tolerance limits for 2012/13 will be reviewed for any contract providers who have significantly benefited from previous tolerances. 15

16. Championing Young People’s Learning Grant Funded Providers Grant funded Providers are not subject to reconciliation BUT are still required to make the necessary funding returns. Providers are expected to deliver their allocation every year. Reference paragraph 29 (repeated below). Providers are reminded that they are still expected to deliver at least 100 per cent of their funding agreements in every funding year. The YPLA will be reviewing provider performance for previous years with the intention of ensuring that provider allocations are soundly based across funding years. Providers are reminded that tolerance and non- reconciliation of YPLA funding is not designed to reward persistent underperformance. The YPLA will review tolerance limits for 2012/13 for any contract providers who significantly benefit from the tolerances in both 2010/11 and 2011/12. 16

17. Championing Young People’s Learning Contract Funded Providers Contract funded Providers ARE subject to reconciliation set out in paragraph 28: Learner numbers are the key indicator of performance and have a direct effect on both the current year’s performance and future allocation. The principles of contract provider funding adjustment and final reconciliation for 2011/12 are: In-year payments are made on profile as is planned for the 16-18 learner responsive model; in-year delivery of learner numbers (and thereby cash) is reviewed during the year and where delivery falls below an agreed tolerance, action is taken to adjust the profile for the remainder of the year; all funding variances (both in terms of learner numbers and cash) are calculated by comparing each individual provider total whole year delivery (either mid-year estimate or final claim) with their final funding allocation as paid for the year; for the purposes of all final reconciliation calculations the YPLA will moderate the reconciliation cash recovery (clawback) for contract providers according to which of the criteria set out overleaf have been met. 17

18. Championing Young People’s Learning Contract Funded Providers Paragraph 28 continued…. (ii) For providers who have delivered at least 95% of their learner number target a cash tolerance of 10% of the programme allocation will be allowed when comparing total programme cash delivered against the total cash programme allocation. In such cases all the cash not delivered below 90% of the allocation will be recovered as retrospective clawback. (iii) For providers who have not delivered at least 95% of their learner number target a cash tolerance of 5% of the programme allocation will be allowed when comparing total programme cash delivered against the total cash programme allocation. In such cases all the cash not delivered below 95% of the allocation will be recovered as retrospective clawback. 18

19. Championing Young People’s Learning Contract Funded Providers Paragraph 28 continued…. (iv) In calculating any final clawback the YPLA will adopt the principle that providers are not significantly disadvantaged at the final reconciliation process because of any reductions to in-year funding. This principle will be built into the national reconciliation calculation system. To meet this requirement in 2011/12 the YPLA will not adjust the funding allocations for in-year under delivery but will instead start recovering clawback for underperformance during the year so as not to reduce the value of the tolerance for under performance. The slides in the mid-year reconciliation section give some examples of the inter-action between mid- year estimate and final claim reconciliation. 19

20. Mid-year Funding Reconciliation 2011/12 Championing Young People’s Learning 20

21. Mid-year funding estimates and reconciliation –Mid-year estimate (Annex B) available as a workbook from Funding Guidance webpage at: –http://www.ypla.gov.uk/colleges_and_providers/funding/funding-guidance/http://www.ypla.gov.uk/colleges_and_providers/funding/funding-guidance/ –mid and year-end estimates only required from contract providers –Mid-year process similar to final claim process (rules same as those used for final claims 2010/11). Providers must include an estimate of additional delivery in the second half of the year in their mid-year estimates. –out-turn data from 2010/11 split into delivery between first and second half of the year and is being notified to providers to assist them in making accurate mid-year estimates for 2011/12 –Clawback profiled from May 2012 to March 2013 so part of in-year clawback deferred to 2012/13 for providers with 2012/13 allocations and this gives providers time to increase delivery to reduce the final clawback figure 21

22. Completing the mid-year estimate – Column D –The ILR R06 figure (from the LIS Funding Claim Report) showing funding earned at 31 January 2012 should be entered in column D. –For YPLA funding learners funding is generated from their learning aim start date until their planned end date. For this reason learners enrolled on whole funding year learning aims generate all their funding from their first ILR entry. This explains why funded providers will have generated more than 50% of their funding at the mid-year date. 22

23. Completing the mid-year (rest of year) estimate – Column E The rest of the year estimate figure in column E should only include: –existing learners who commence new learning aims on or after 1 February 2012 (those on a funded learning aim that started before 1 February) – this will add to the funding value but does not require a learner number entry in column E; –learners not on any funded learning aims before 1 February 2012 – this will add to both the funding value and the learner number entries in column E. 23

24. Column E – foundation weekly learning aim –For foundation weekly learning aims it is very important that the actual end date and completion status are correctly entered on the ILR before generating a LIS funding claim report. –Learners whose planned end date is before 1 February 2012 and who are continuing in learning will continue to generate funding up to their actual end date. An entry will be required in column E for any learners that are expected to continue past their planned end date. 24

25. Championing Young People’s Learning Mid-year funding estimate validation –Return of mid-year estimates (Annex B in February 2012) –Validation of mid-year estimates by YPLA – national and territorial –Data sheet being sent to Territories to assist in their validation (March) – maybe made available to providers where mid-year estimate needs further review –Average profile of total funded activity at the mid-point for IPP for 2010/11 is 70.5% (comparing F02 to F05 totals) –All returns must be electronic and made by completing workbook available from funding guidance page on YPLA website –Opportunity for providers to be targeted for early funding audit assurance if serious concerns raised about either the accuracy or content of the estimate. 25

26. Championing Young People’s Learning Calculating reconciliation Reconciliation calculation (assumes underperformance) Claim/Estimate (£) - Allocation (£) = Variance (£) If performance outside tolerance range do calculation below) + (Tolerance in reverse sign to variance) (£) = Revised Variance (at Full Rate) (£) = £ Cash recovery adjustment 26

27. Championing Young People’s Learning Mid year reconciliation example A Mid-year Estimate 90 Allocation100 Variance- 10 Deduct mid-year tolerance (5%)+ 5 Mid-year Adjustment (Clawback) - 5 Final Claim 94 Allocation100 Variance- 6 Deduct final tolerance (5%)+ 5 Deduct mid-year adjustment - 5 Final Adjustment (Clawback) + 4 * Any clawback calculated from mid-year estimate figures that is not then calculated from the final claim figures is refunded to providers who have increased their delivery above the mid-year estimate. 27

28. Championing Young People’s Learning Mid year reconciliation example B Mid-year Estimate 95 Allocation100 Variance- 5 Deduct mid-year tolerance (5%)+ 5 Mid-year Adjustment (Clawback) - 0 Final Claim 90 Allocation100 Variance- 10 Deduct final tolerance (5%)+ 5 Deduct mid-year adjustment - 0 Final Adjustment (Clawback)* - 5 * Providers whose final claims are lower than their mid-year estimates will see no advantage from the final claim calculations from over stating their mid-year estimates. 28

29. Championing Young People’s Learning Mid year reconciliation example C Mid-year Estimate 90 Allocation100 Variance- 10 Deduct mid-year tolerance (5%)+ 5 Mid-year Adjustment (Clawback) - 5 Final Claim 105 Allocation100 Variance+ 5 Deduct final tolerance (5%) Deduct mid-year adjustment - 5 Final Adjustment (Clawback) * + 5 * Over delivery is not paid by the YPLA but any clawback calculated at mid-year that is not calculated from final claim figures is refunded to providers who have increased their delivery above the mid-year estimate. 29

30. Reconciliation - Transitional Protection (TP) Table 1: TP examplesTP - veNo TPTP + ve 1.1Funding Allocation£3,000 1.2Transitional Protection (TP)-£300£0£300 1.3Net Allocation *£2,700£3,000£3,300 1.4 Funding Allocation (that is being used for reconciliation)£2,700£3,000 1.5Tolerance - standard 5%£135£150 1.6 Tolerance - higher 10% if above 95% of learners number allocation£270£300 1.7 Funding Claim (figures from ILR LIS Funding Claim report). Provider only delivered 90% of Learner Number Target£2,400 1.8Clawback-£165-£450 This slide shows how funding reconciliation for providers with either positive or negative TP 30

31. Clawback recovery profile for 2011/12 This slide shows the clawback payment profile that will be applied to all clawback figures for 2011/12. Providers with no future year allocations are expected to have repaid any clawback before the end of the funding year. The clawback profile for continuing providers each month uses the same proportion of the main allocation payments to minimize the impact. Table 2: Clawback profile Apr- 12 May- 12 Jun- 12 Jul- 12 Aug- 12 Sep- 12 Oct- 12 Nov -12 Dec -12 Jan- 13 Feb- 13 Mar- 13 Allocation Payment profile % 12.56 % 11.60 % 9.60 % 5.68 % 12.56 % 9.44 % 9.56 % 7.44 % 5.60 % 5.20 % 5.16 % Providers with 2012/13 Allocations- 13.27 % 10.98 % 6.50 % 14.36 % 10.80 % 10.93 % 8.51 % 6.40 % 5.95 % 5.90 % Providers with no 2012/13 Allocations 31.85 % 29.41 % 24.34 % 14.40 %-------- 31

32. Outturn compared to allocation. Shows the alternatives at Final from Mid Year position MID YEAR FINAL (payment adjustment to take account of in-year clawback ) Interim clawback adjustments Under (below tolerance)Within toleranceOver delivery UnderClawback No final adjustment other than reversal of in- year adjustment Within tolerance No reconciliation adjustment ClawbackNo final adjustment Over deliveryNo adjustmentClawbackNo final adjustmentNo adjustment Adjustments from Mid to Final Claims 32

33. Annex D: Part 2 Contract Provider Reconciliation Examples 1-7 (from the rules set out in paragraph 28) Championing Young People’s Learning 33

34. Championing Young People’s Learning Examples 1 & 2 Final Reconciliation – 2011/12 - Contract Providers OnlyAnnex D (Part 2) Comment Clawback Comment Learner NumbersCash Variance (£) Variance (%) (of cash Variance (%) (of learner numbers ) Tolerance at 10% (cash) (>95% Learner numbers) Tolerance at 5% (cash) (<95% Learner numbers) Clawbac k Allocation 1,000£3,000,000 £300,000£150,000 Example 1: Provider at 80% for both learner numbers and cash Out-turn (below target cash & learner numbers) Learner numbers out-turn less than 95%800£2,400,000-£600,00080.00% £150,000-£450,000 Example 2: Provider at 80% for learner numbers and at 90% for cash Out-turn (below target cash & learner numbers) Learner numbers out-turn less than 95%800£2,700,000-£300,00090.00%80.00% £150,000-£150,000 34

35. Championing Young People’s Learning Examples 3 & 4 Final Reconciliation - 2011/12 - Contract Providers OnlyAnnex D (Part 2) Comment Clawback Comment Learner NumbersCash Variance (£) Variance (%) (of cash Variance (%) (of learner numbers ) Tolerance at 10% (cash) (>95% Learner numbers) Tolerance at 5% (cash) (<95% Learner numbers) Clawbac k Allocation 1,000£3,000,000 £300,000£150,000 Example 3: Provider at 80% for learner numbers and at 95% for cash Out-turn (below target cash & learner numbers) Learner numbers out-turn less than 95%800£2,850,000-£150,00095.00%80.00% £150,000£0 Example 4: Provider at 95% for learner numbers and at 80% for cash Out-turn (below target cash & learner numbers) Learner numbers out-turn greater than 95%950£2,400,000-£600,00080.00%95.00%£300,000 -£300,000 35

36. Championing Young People’s Learning Examples 5, 6 and 7 Final Reconciliation - 2011/12 - Contract Providers OnlyAnnex D (Part 2) Comment Clawback Comment Learner NumbersCash Variance (£) Variance (%) (of cash Variance (%) (of learner numbers ) Tolerance at 10% (cash) (>95% Learner numbers) Tolerance at 5% (cash) (<95% Learner numbers) Clawback Allocation 1,000£3,000,000 £300,000£150,000 Example 5: Provider at 95% for learner numbers and at 89% for cash Out-turn (below target cash & learner numbers) Learner numbers out-turn greater than 95%950£2,670,000-£330,00089.00%95.00%£300,000 -£30,000 Example 6: Provider at 95% for learner numbers and at 90% for cash Out-turn (below target cash & learner numbers) Learner numbers out-turn greater than 95%950£2,700,000-£300,00090.00%95.00%#REF! £0 Example 7: Provider at 120% for learner numbers and at 110% for cash Out-turn (above target cash & learner numbers) Learner numbers out-turn greater than 95%1,200£3,300,000£300,000110.00%120.00% No tolerance needed as over delivery£0 36

37. YPLA Funding Team YPLA Funding Guidance 2011/12 v2 – amended February 2012 ( to include new advice on mid-year estimates in slides 20-32 ) ILR Funding Returns (separate presentations are also available on Learner Eligibility Guidance and Funding Regulations, Rates and Formula Championing Young People’s Learning