1. Survival guide to 16-18 year old LSC funding 3 June 2008 12.20 - 13.20 Hinckley Island Hotel Nick Linford Director of Planning and Performance

2. At the right seminar? This seminar considers aspects of 16-18 year old funding for 2008/09 Demand-led funding means that further education will not exist as a funding stream in 2008/09 “The move to a demand-led funding system in 2008/09 signifies a wholesale step change for the learning and skills sector. From 2008/09 the LSC will fund provision through three main funding models: 16-18, Adult Learner Responsive, Employer Responsive.” www.lsc.gov.uk As we know, the FE funding methodology and formula has changed In the next hour I will first introduce the funding and new formula, and then look at some of the more interesting aspects of the methodology

3. Contents This presentation on 16-18 funding comes in three parts: 1. Introduction to: 2. The interesting stuff not in The Guidance: The 16-18 funding and model The new national funding formula Example 16-18 year old learner funding 3. Final thoughts, questions and discussion Why a low funding rate is good news Decimal-led funding Rising ratios inevitable? Know your learner apples from pears Note: 16-18 Apprenticeship funding is planned and budgeted from the 16-18 model, but payments are via the employer responsive model. Therefore, Apprenticeship funding will be covered tomorrow during the adult and employer responsive funding seminar (10.05 in this room).

4. The 16-18 funding and model Funding from the Department for Children, Schools and Families (DCSF): 2007/08Funding type £3,046Further Education (FE) £2,053School Sixth Form (SSF) £198Entry to Employment (E2E) £5,297Total funding (£ million) Source: LSC grant letter 2008-09 Three different funding streams in 2007/08 SSF FE E2E One 16-18 funding model in 2008/09 FE SSF E2E Shift + 8% + 3% - 7% + 6% 2008/09 £3,300 £2,108 £185 £5,593

5. The new national funding formula Simple at first glance SLNs come listed and unlisted with 1.75 learner cap per year £/SLN may be subject to transitional protection The 16-18 PF has six elements which are based on historical performance from 2006/07 ALS allocations will include formula and negotiation element Total funding is capped x x = + But take a closer look Standard Learner Number (SLN) National Funding Rate (£/SLN) Provider Factor (PF) Additional Learning Support (ALS) Total funding x x + =

6. Example 16-18 year old learner funding Sep ’08 - Jul ’09 daytimeSLN GLH SLN GLH divided by 450 to convert into SLN SLN AS Economics1500.3r AS History1500.3r AS Politics1500.3r AS English1500.3r AS General Studies360.08 Key Skill in Numeracy360.08 Entitlement (incl. tutorial)1140.253r Total786/ 450 =1.746r First year A-level learner (just within the 1.75 SLN per learner cap) SLN x National Funding Rate x Provider Factor = Funding 1.746r x £2,860 x 1.123 = £5,610

7. Why a low funding rate is good news The new funding formula and qualification rates create winners and losers The LSC protect funding by giving big winners and losers ‘transitional rates’ Within +/- 2.1% so the £2,860 National Funding Rate is given Winners given a transitional rate lower than £2,860. Unless SLNs changed, up to 4.2% more funding is allocated Losers given a transitional rate higher than £2,860. Unless SLNs changed, up to 4.2% less funding is allocated Funding rate less than £2,860 Funding rate more than £2,860 151101151201 Colleges (indicative values) -10% -5% 0% +5% +10% -7.5% -2.5% +2.5% +7.5% % change in funding (owing to new formula and rates)

8. Decimal-led funding SLN decimal places 2 3 4 5 6 7 8 £171,600 £257,400 £265,980 £266,838 £266,924 £266,932 £266,933 Extra funding per SLN decimal The new formula relies on choosing the decimal place SLN rate for an AS-level with 150 SLN GLH? 0.3, 0.33, 0.333, 0.3333, 0.33333 or 0.333333? Of course all of these are correct, yet all generate a different funding value once multiplied by £2,860 The A-level programme from the previous slide with SLNs to one decimal place would generate an unweighted £9,724,000 for 2,000 learners. This graph shows the extra funding per SLN decimal place. In addition, the number of decimal places used for the provider factor has a similar impact This may make matching LSC funding reports difficult!

9. Rising ratios inevitable? The SLN per learner ratio is important to the LSC, as the higher the ratio the more it costs them to fund the same number of learners The LSC will probably cap the ratio when setting allocations and targets “to offer opportunities for as many learners as possible we need to control unit cost increases, including those arising from the expansion of learners’ programmes’ Source: LSC Statement of Priorities 2008/09 – 2010/11 But, with the fall in part-time learners (as a result of the big cut in short courses for adults?) an SLN ratio rise seems inevitable for GFE colleges LSC projection (’000)*2008/092009/102010/11SLN ratio** 16-18 FT learners6606646661.5 16-18 PT learners1131091070.5 Total 16-18 learners773 SLN per learner ratio1.3541.3591.362 *Source: LSC Statement of Priorities 2008/09 – 2010/11 **Example SLN averages

10. Know your learner apples from pears Withdrawals in October will no longer generate funding nor count towards learner targets The tri-annual FE funding census dates (1 Oct, 1 Feb and 15 May) have been replaced by annual minimum attendance periods. DurationMinimum attendance 24 weeks or more6 weeks 2 to 24 weeks2 weeks Less than 2 weeksOnce This means there is a new ‘definition of a start’, so the learner counting methodology has changed. Be careful not to compare 2007/08 apples with 2008/09 pears (esp. full time September starts). Mid-Sept OctMid-OctNovMid-Nov Start Drop-out that count The total annual SLN value is earned unless the withdrawal date is before the minimum attendance period.

11. Final thoughts Has you SLN per learner ratio risen between 06/07 and 07/08? If so, find out why and discuss this with LSC when setting allocations. Questions and discussion Compare LIS and DLC learner numbers – fewer FT and more PT in DLC? Take this into account when setting and hitting participation targets. Download free resources from www.lewisham.ac.uk/pf Finally, keep an eye on these new abbreviations. Know what they are?

12. Survival guide to adult and employer responsive LSC funding 4 June 2008 10.05 - 11.05 Hinckley Island Hotel Nick Linford Director of Planning and Performance

13. At the right seminar? This seminar considers adult learner and employer funding in 2008/09 Demand-led funding means that further education will not exist as a funding stream in 2008/09” “The move to a demand-led funding system in 2008/09 signifies a wholesale step change for the learning and skills sector.” From 2008/09 the LSC will fund provision through three main funding models: 16-18, Adult Learner Responsive, Employer Responsive.” www.lsc.gov.uk The FE, WBL and TtG funding methodologies and formulas are changing In the next hour I will first introduce the funding and new formula, and then look at some of the more interesting aspects of the methodology

14. Contents This presentation on adult funding comes in three parts: 1. Introduction to: 2. The interesting stuff not in The Guidance: The adult learner and employer funding models The new national funding formula Example adult learner responsive funding Example adult employer responsive funding 3. Final thoughts, questions and discussion Key learner and employer model differences Tuition fees (unweighted and weighted) Rising ratios inevitable? Employer model monthly instalments Note: 16-18 Apprenticeship funding is planned and budgeted from the 16-18 model, but payments are via the employer responsive model.

15. Adult learner and employer funding models Adult Safeguarded Learning Learners with learning difficulties and/or disabilities Skills Accounts Adult FE funding (excl. Skills Accounts & workplace NVQs become Train to Gain) Train to Gain Apprenticeships Graph on page 26 of the LSC Annual Statement of Priorities 08/09 – 10/11 Projected expansion of adult demand-led funding Note: projected dominance of Train to Gain and Skills Accounts by 2014 but more cautious than proposals in Leitch Review of Skills 05/06 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 06/0707/0808/0909/1010/1111/1212/1313/1414/15 Academic Year Funding including inflation (£ millions) Adult learner responsive model Adult employer responsive model

16. The new national funding formula Simple at first glance SLN could be listed or unlisted and has maximum per learner £/SLN may be subject to transitional protection PF has up to six elements, based on history (learner model) or actual (employer model) ALS allocations will include formula and negotiation element Total funding has a cap x x = + But take a closer look Standard Learner Number (SLN) National Funding Rate (£/SLN) Provider Factor (PF) Additional Learning Support (ALS) Total funding x x + =

17. Example adult learner responsive funding Full time NVQ5201.15r£2,7751.321£4,236 Cert in ESOL45 (unlisted)0.1£2,7751.321£367 Adult learner responsive example (fee remitted) using National Funding Rate (NFR) QualificationSLN GLH / 450 = SLN x NFR x PF = Funding Adult learner responsive example (fee paying) using Co-Funded Rate (CFR) Full time NVQ5201.15r£1,8821.321£2,873 Cert in ESOL45 (unlisted)0.1£1,8821.321£249 QualificationSLN GLH / 450 = SLN x CFR x PF = Funding £2,775 NFR - (£2,775 NFR x 42.5% Fee element / 1.321 PF) = £1,882 CFR Deduction is the fee element, which is 42.5% of the unweighted funding: 1.15r SLN x £2,775 NFR x 42.5% = £1,363 fee element deducted 0.1 SLN x £2,775 NFR x 42.5% = £118 fee element deducted

18. Example adult employer responsive funding Retail Apprenticeship SLN x NFR = Funding* - Fee element Framework funding0.759£2,775£2,106% on LAD NVQ 2 in Retail Skills0.286£2,775£794% on LAD Cert in Retailing L20.3£2,775£833% on LAD Key Skills in Comms0.08£2,775£222% on LAD Key Skills in Number0.08£2,775£222% on LAD Total1.505£4,176 Adult employer responsive Apprenticeship funding example: Adult employer responsive Train to Gain funding example (First Full Level 2) NVQ 2 Lower Rate0.286£2,775£2,171 Qualification SLN x NFR = Funding* * These examples are unweighted by elements of the provider factor

19. Key learner and employer model differences 16-18 and adult learner modelEmployer responsive model Historical Provider Factor with monthly payments against agreed profile (mid and year-end reconciliation for adults) Historical Provider Factor used for maximum contract value but monthly instalments based on actual delivery Retention and achievement funding accounted for by the success factor within the Provider Factor Achievement funding 25% for Train to Gain and Apprenticeships. (excl. Key Skills and Tech Cert) Funding not reduced further if learner is withdrawn after minimum attendance Withdrawal may impact on funding as payment based on monthly instalments Transitional protection applied by giving a rate higher or lower than the national rate No transitional protection, except for NVQs that were previously FE Five programme weightingsThree programme weightings Funding claims submitted minimum five times with 3 during year and 2 after Monthly funding claims made to the LSC every 4 th working day of the month Fee element = % of unweighted fundingFee element = % of weighted funding Annual per learner cap of 1.75 SLNNo per learner cap on funding

20. Tuition fees (weighted and unweighted) Academic year2004/052005/062006/072007/082008/09 Unweighted 450 glh base rate £2,394£2,513£2,576£2,640£2,775 Fee element %25%27.5%32.5%37.5%42.5% Fee element ££599£691£837£990£1,179 Annual increase %15%21%18%19% Annual increase ££93£146£153£189 Increase on 2004/0515%40%65%97% Adult learner responsive assumed fees now nearly double 04/05 level Train to Gain assumed fees are 42.5% of total (weighted) funding whilst each Apprenticeship element has a fee % listed on the LAD Plan is for fee element of 47.5% in 09/10 and 50% in 10/11

21. Rising ratios inevitable Learners SLNs 2005/062006/072007/08 0 500 1,000 1,500 2,000 2,500 Adult learners Your adult learners are probably falling even if your SLNs are increasing “the pattern of that learning will change. To meet our national priorities, we need to shift the pattern so that we provide longer and more expensive courses for adults. So while maintaining the overall volume of adult funding, we estimate there will be a net reduction in publicly-funded places” Source: LSC Grant Letter 2006/07 Therefore, the LSC should not be surprised by SLN per learner ratio increases. Colleges should beware SLN ratio capping by the LSC.

22. Employer model monthly instalments Example £1,190 paid for a five month Train to Gain enrolment: £1,200 Dec Installment £0£200£400£600£800£1,000 Jan Inst. Feb Inst. Mar Inst. Apr Inst. May Achievement Monthly instalments paid, with last day of the month as census point Train to Gain: First two months paid in first instalment 25% held back for achievement Apprenticeships: First two months paid in first month Less than 25% held back for framework achievement as KS & Tech Cert paid in full Funding claim 4 th working day, instalment paid 10 th working day

23. Final thoughts Questions and discussion What impact will the new Train to Gain instalments have on funding and timing of payments. Detailed profiles are vital for monitoring performance. Compare LIS and DLC learner numbers – fewer FT and more PT in DLC? Take this into account when setting and hitting participation targets Download free resources from www.lewisham.ac.uk/pf Finally, keep an eye on these new abbreviations. Know what they are?