Sunday, June 05, 2011

TES reports FE colleges in the black in 2009/10 - so what?

The Times Education Supplement on Friday published an interesting analysis on the state of the college sector's finances. The headline was somewhat eye-catching: FE colleges in the black.

The numbers crunched for the article showed:

On average, colleges reported an operating surplus of about £300,000 last year, after two years of deficits. This came despite the lowest rate of income growth for five years.

Of course averages can disguise as much as they reveal. (In particular, mean averages are a crude measure which can be distorted by extreme outliers. The article did not indicate if the analysis used the more useful average of the median - the value in the middle of the distribution.)

Certainly in 2009/10 there were over 70 colleges with operating deficits. That is a lot of red ink - even if the college sector as a whole is in the black.

Comparing like-with-like is helpful although tricky when there is a lot of churn with mergers and takeovers in the college sector. When I compared the performance of individual colleges excluding those that had been dissolved or merged, indeed the figures suggest that three-quarters had larger operating surpluses (or smaller deficits) in 2009/10.

The article asks the question: So are institutions in better shape than their funding body feared?

While 2009/10 was a better year than the previous year, we have to remember that we are talking about financial years starting on 1 August 2009 - over 22 months ago - and ending before the cuts heralded by George Osborne's Spending Review. While Labour had introduced their own cuts in funding rates, the Conservatives are taking the axe to whole programmes such as Train to Gain. The squeeze will be felt in the next four years - not in 2009/10.

So perhaps "doom-laden predictions about the state of college finances" cannot be discounted in 2011 on the grounds that the college sector on average had a less bad time in 2009/10.

No comments: