FINANCE & RESOURCES COMMITTEE by Tqurg9

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               MINUTES OF THE FINANCE & RESOURCES COMMITTEE
                    MEETING OF THURSDAY 26th MARCH 2009



Present:     J Ward – Chairman (JW), Mrs. J W Dakin JWD), Mrs. G P Richards (GPR),
             Mrs. M Bevan Thomas (MBT), A C Tyley (ACT), A Walpole (AW).
             Attendance: 75%

In          P H May (PHM), K C Norton (KCN), J E A Parry (JEAP).
Attendance: S Winter (SW) – Tenon
            W E Hitchen – Clerk.

             The Chairman welcomed JWD and MBT to their first meeting of the
             Committee and expressed the hope that they would find the experience
             enjoyable and valuable.

26/03/09/1   Apologies
             Members: Ms. C A Clifford (CAC), F B Udale (FBU).
             Normally in Attendance: Ms. M Young (MY).

26/03/09/2   Declarations of Interest
             None.

26/03/09/3   Minutes of meeting of 2nd February 2009 (Document A)
             The minutes were approved as a true and accurate record and signed
             by the Chairman.

26/03/09/4   Matters arising:
              2/02/09/5     Risk Register & Monitoring Report – Adult Learner numbers to be
                            added to agenda – see 26/03/09/6

               2/02/09/6    December 2008 Management Accounts- an additional line be added
                            to the cash flow forecast to show the original estimate against the actual
                            update – implemented, see 26/03/09/8.

               2/02/09/7    Funding Bid for 2009-2010- Shipley Campus has some surplus
                            capacity and is seen as a vocational centre- vocational opportunities to
                            be identified



Corp’n/Finance & Resources Committee/2008-09                                         26th March 2009
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               2/02/09/8     Budget 2009-10 - timetable and outlook- Director of
                             Finance be invited to attend Senior Leadership Team away day (did
                             attend)
                             Fees & Charges 2009-2010 approved by the Board-12/02/09/10.4

               2/02/09/9     Feasibility study from Baart Harries Newall- a business case to be
                             brought to the Committee’s next meeting- see agenda item 26/03/09/9



26/03/09/5   Tenon Benchmarking Report (Document B)
              SW gave an introduction to the report and said that Tenon had been looking
             externally to benchmark the College and internally to identify financial
             efficiencies, the impact of the new funding methodology and the quality
             of provision.
             He used the data on page 2 of the report to demonstrate to members the fact
             that the College is less than half the size of the median in Tenon’s Further
             Education sample.
             This, he suggested, is one reason why the support staffing ratio is relatively
             high. He also said that the College was below the typical 4% of Higher
             Education provision and that this was profitable work. Another area in which
             the College falls below the benchmark is the percentage of 16-18 learners.
             SW drew members’ attention to page 4 where 5 priority areas are identified
             for action:
                  1. Review the planned guided learning hours and success rates
                  2. Increase the percentage of courses contributing to priority targets
                     for adult learners
                  3. Improve retention and achievement rates
                  4. Decrease support staffing levels
                  5. Review support non-pay costs
             The Chairman thought the data was out of date and did not reflect the
             outcome of the Teaching Staff Review. SW pointed to the table on page
             7, which includes an additional column to reflect this and said that the
             benchmark data was based on a sub-set of 20 colleges.
             PHM told members that the guided learning hours for ‘A’ level students
             at the College was half an hour over the Learning & Skills Council
             recommended level, with success rates at the median level with some
             subjects below.
             SW then referred members to the graphs on pages 13-16 and explained
             that the target for the College was to have success rates in the bottom
             right segment for each area. Preparation for Life & Work success rates
             are lower than Ofsted target and guided learning hours are above the
             Learning & Skills Council’s guideline. The area represents 16% of the
             College’s Further Education core funding.
             The Principal & Chief Executive reminded members that the average
             class size in College is small (less than 14) and is a key factor in the
             College’s efficiency problems. The key targets are to improve success rates
             for Preparation for Life & Work and the average class size.

Corp’n/Finance & Resources Committee/2008-09                                         26th March 2009
                                                 3

             The Chairman pointed out the new Higher Education programmes
             beginning at Walford, but SW said that it is a difficult time to move
             into higher education with the problems of attracting students.
             SW added that Tenon had identified some inefficiency in Support Staff,
             but recognized that this was partly due to the size of the small college. He
             said that there is a real tension between the role of colleges in the community
             and what the Learning & Skills Council wishes to fund.
             The Principal & Chief Executive said that the trend is for fewer learners
             with more of them full-time. He added that he would regard the
             data on Support Staff as an indicator rather than an answer. He said that
             Estates costs (page 31) had been lower in comparison with benchmark than
             expected and Marketing expenditure (page 26) might justifiably be increased.
             Management (page 29) and Central Administration (page 30) costs are
             well above benchmark whilst Finance (page 27) and Management
             Information System cost are also above benchmark.
             AW posed the question, “What do we do?” The Chairman said that
             the Senior Leadership Team should bring its proposals to the Committee.           ACT
             GPR asked if the 20 colleges in the benchmark population had been
             selected specifically. SW said they were chosen randomly. The Chairman
             commented that the majority of colleges were urban, to which SW replied
             that Tenon would shortly be reporting on the agricultural colleges and
             said that he would include Walford data at no charge.
             AW then questioned guided learning hours and total hours. SW referred
              him to pages 6 & 7 that show that the College’s utilization of its teaching
             staff is very high.
             AW then asked about the key performance indicator relating to Learner
             Experience (page 65) and was told due to the small sample size the results
             Had not been published in this report. ACT reminded AW that the College
             would carry out its Learner Survey in the next few weeks and report the
             outcome to members in the usual manner. The Chairman then asked about
             the impact of the new funding methodology. SW said that pages 44-47
              covered this and that the College appeared to be operating around the
             median for 2007-08. The Principal & Chief Executive said that the impact
             would be felt in 2010 when the new Shropshire Council would become
             a major funder. He added that North Shropshire was the most active part of
             the county for the new Diplomas and the College’s partnerships with its
             provider schools had been well received. ACT then asked SW how the
             Learning & Skills Council might react to the report. SW said the Council
             already had much of the data and that the only issue might be teaching
             resource and whether the College was addressing the Support Staffing
             question. He added that most colleges’ utilization of teaching staff is poor
             (c.70% compared with the College’s 88%-101%) and is sometimes as low
             as 60%. On that basis, SW said, the College is very efficient.
             The Chairman thanked SW for his report.

             (SW left the meeting at 6.47pm)



Corp’n/Finance & Resources Committee/2008-09                                          26th March 2009
                                                  4



26/03/09/6   Risk Register & Monitoring Report (Document C)
             The Principal & Chief Executive said that the changes had been printed in
             bold. He then referred to the following:
             Risk 3 Poor Staff Morale: Re-graded to ‘green’. ACT referred to the
             evidence in the Investors in People report but noted that this risk continued
             to need careful monitoring (emailed to members).
             Risk 4 Failure to acquire and utilize management information
             effectively and meet Learning & Skills Council deadlines: Re-graded to
             ‘green’. Verbal confirmation had been received from the Learning &
             Skills Council that the College would go into plan led funding. AW
             commented that the risk could be re-focussed on internal issues and the
             move to greater automation. ACT said that managers were getting better
             information and attendances were being tracked electronically. The
             system would be upgraded during the summer. However, educational
             maintenance allowances were still largely paper based and duplicate the
             register system. It might soon be possible to rely on the register data and
             increase efficiency. AW asked if the committee could receive a report or           ACT
             presentation on this. The Principal & Chief Executive said he would
             provide a user friendly summary.
             JEAP said that Train to Gain had a very complex funding structure and
             made great demands on the management information system. PHM added
             that demands from curriculum staff would also continue to grow.
             Risk 7 Failure to meet core funding target: Remains red. The first final
             return for 2007-08 indicates that the College has met the core funding
             target effectively and would not face a clawback. The 16-18 target for
             2008-09 is likely to be substantially exceeded, but the adult learner targets
             require a range of measure to be successful to make good the shortfall.
             Risk 44 Succession/Transition Management re Senior Leadership Team
             changes: Remains ‘green’, but the absence through ill health of the
             Deputy Principal and the Head of School of Continuing Education were
             posing pressures on the team that suggested an additional risk be added to         ACT
             the register reflecting the risk of overload on the Senior Leadership Team
             should a major incident occur. That risk would probably be graded
             ‘amber’.
             Members received and noted the report.

26/03/09/7   Progress Update re Core Funding Target (Document D)
             The Principal & Chief Executive that Adult Learner Responsive
             performance was still substantially below the target and under threat of
             claw back. He added that there is a national under spend in this area.
             PHM was leading a major push to increase distance learner numbers and
             Phil Ridley was negotiating with Shropshire FA to improve franchise
             returns. Skills for Life is well below target and would be the hardest to
             rectify.
             Employer Responsive- National Vocational Qualifications is also below
             target, but both Apprentices and Adult Safeguarded Learning are above

Corp’n/Finance & Resources Committee/2008-09                                             26th March 2009
                                                  5

             target. However, there is no virement.
             2009-2010
             The LSC funding allocations are still awaited. ACT said the 16-18
             allocation could be substantially more than the provisional allocation of
             £4,726,000. On the other hand, no clear message is being given with
             regard to Adult Learner Responsive, other than the likelihood of a cut,
             which could be in a range from 10 -20% Adult Safeguarded Learning
             should be broadly similar to this year. Apprentices would be subject to
             bids.
             The Committee noted the performance to date on funding and
             recruitment for 2008-09 and the funding outlook for 2009-10.

             Members commented that they found it very disappointing that firm
             figures were not available to enable the Senior Leadership Team to
             prepare budgets for consideration and approval by the Board.

26/03/09/8   January/February 2009 Management Accounts (Document E)
             KCN said that the accounts for February 2009 show an operating deficit of
             £279,000 which is £38,000 adverse to budget. The operating deficit for
             the first seven months of 2008-2009 is £337,000 compared with the
             budgeted deficit of £352,000, a favourable variance of £15,000. He
             advised members that the profile of income from the Learning & Skills
             Council affected the monthly accounts. If the income came in equal
             monthly instalments, then the College would have received a further
             £250,000 at the end of February. He then took members through the main
             variances including Enterprise & Development and Employer Engagement
             income and expenditure. The Chairman commented that these two areas
             of activity disappoint members annually. JEAP pointed out that some of
             the budget for Enterprise & Development was accounted for within the
             Learning & Skills Council core funding. The Principal & Chief Executive
             said that the area would be reviewed again over Easter, but the issue of
             bidding was fraught with uncertainty. He suggested that the probability of
             success might be too low to justify continuing with the process. In
             comparison with Train to Gain, where the funds are available, bids to the
             European Social Fund and Advantage West Midlands require a lot of work
             with a lower chance of success (based on recent experience).
             KCN then turned attention to the cashflow statement and said he had
             added an additional line at the bottom to show the original forecast
             balance.
             Members received and noted the report.

26/03/09/9   Draft 2009-10 Budget (Document F)
             The Principal & Chief Executive said that the major income figures were
             still unknown, but the College was committed to achieving break even or
             better in 2009-2010. A pay award had been built into the draft budget, but
             there was no clear indication of what the national recommendation might
             be. ACT said that he would prefer to aim for a surplus if the Learning &
             Skills Council core funding allocation was better than budgeted. On the

Corp’n/Finance & Resources Committee/2008-09                                             26th March 2009
                                                  6

             other hand, if the allocation was lower than budget, it would be necessary
             to review support staffing costs again. The Principal & Chief Executive
             told members that a break even budget would generate an additional
             £440,000 cashflow and no income from asset sales had been included in
             the draft budget. He added that there is a possibility of capacity building
             money being available from the Learning & Skills Council to use in
             marketing Employer Engagement.
             Members agreed to:
                 1. Note the initial proposals for the draft budget for 2009-2010;            ACT
                     and
                 2. Request a final budget proposal for approval at the
                     Committee’s June meeting.

26/03/09/10 Residential Accommodation - Business Case Document G)
            The Principal & Chief Executive presented the paper as a summary case
            for the investment of £1,000,000 to address the issues raised by Ofsted’s
            inspection before the three year review is conducted. Early stage
            discussions have been held with Yorkshire Bank. The Learning & Skills
            Council has indicated that there will be no capital grant, but wished the
            College to continue with its plans. ACT said that the feasibility study by
            Baart Harries Newall had suggested a ‘Rolls Royce’ solution, whilst he
            would recommend a more economical version. If agreed, the
            developments could be in place for the start of 2010-2011 and some six
            months prior to the next Ofsted inspection. The Principal & Chief
            Executive said he was not asking for approval to incur the £20,000-
            £25,000 to secure planning permission at present.
            AW asked about the financial implications of moving from a net
            contribution of £46,000 to one of break even following the proposed
            developments. ACT said that a 15-20 year loan would be required and
            some of the depreciation provision would be set aside to create a sinking
            fund from which to repay the capital. The Principal added that the loss of
            10 students through not improving the hostel accommodation would cost
            £46,000. Indeed, it is possible that Ofsted could close the accommodation
            altogether if no action is taken to improve it and this would result in the
            loss of over 60 students and the end of Agriculture and Equine courses at
            Walford.
            GPR said that some of the proposed costs (e.g. the doors) were at the top
            end of likely costs and she felt the Committee had no option but to support ACT/JEAP
            action to improve the hostel accommodation as suggested. The Chairman
            asked that some analysis of potential vacation income be made and
            reported to the Committee.
            Members agreed to:
                1. Recommend the draft business case for residential                      JW
                    accommodation to the Board;
                2. Authorise the Principal & Chief Executive to seek approval
                    from the Learning & Skills Council for long term borrowing of         ACT
                    £1,000,000 to finance replacement of Haughmond Hostel;
                3. Request the Acting Director of Finance to seek tenders from up         KCN

Corp’n/Finance & Resources Committee/2008-09                                           26th March 2009
                                                   7

                     to four potential lenders to finance a £1,000,000 loan;
                  4. Request the Estates manager to seek tenders from up to six               ACT
                     potential Project Managers for design/management of the
                     proposed investment; and
                  5. Request the Estates Manager to take informal planning
                     guidance from the local authority on the proposed replacement            ACT
                     of Haughmond.

26/03/09/11 Franchise Report (Document H)
            JEAP said that both Willowdene and ATC were unlikely to meet their
            targets. However, Shropshire FA had received additional permission from
            the Learning & Skills Council to increase their target and this would
            compensate for the former. Shropshire FA will be mainly training coaches
            for youth football teams.
            The Chairman asked what would happen in future. JEAP said that
            franchising should continue as it contributes to the College, but would
            never be a major growth area.
            Proposed: GPR; Seconded: MBT; Agreed: Nem con to recommend                         JW
            the Franchising report to the Board for approval.

26/03/09/12 Any Other Business
            None

26/03/09/13 Date of next meeting – Thursday 25th June 2009                                     All




There being no further ordinary business, the meeting moved to discuss the confidential business at
7.55pm.




Chairman:………………………………………………………………………………….




Date:……………………….




Corp’n/Finance & Resources Committee/2008-09                                           26th March 2009

								
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