College accounts: how colleges are surviving in hard times

Before Easter the Skills Funding Agency published the college accounts spreadsheet for 2010/11. In recent years the spreadsheet has generated more interest than a quick look to check out the Principals’ salaries. The spreadsheet offers some insight – albeit a little dated - into how colleges are coming with the age of austerity.

Sadly the college accounts spreadsheet currently omits almost all sixth form colleges. The Young People’s Learning Agency never got round to validating the figures before it was abolished into the Education Funding Agency at the Department for Education. Once the figures have been validated by the EFA, a revised spreadsheet with include these sixth forms.

For further education and tertiary colleges the accounts show the sector is stable but still in difficulty. There are 68 further education and tertiary colleges making operating losses but this figure is an improvement on 2009/10.Of course, some of the deficits will have disappeared through merger. Nevertheless, the funding cuts have been absorbed without a dramatic deterioration in financial health.

It is clear from the accounts that colleges are responding to funding reductions by saving costs at both the chalk face and in the back office. The pay bill for further education and tertiary colleges was about £200 million lower in 2010/11 than the previous year.

For the sub-sector of general FE colleges the operating surplus in relation to income fell only slightly from 1.7% to 1.6%. This was achieved as pay was cut faster than income fell. The critical pay:income ratio being reduced from 65.3% to 64.5%. For the small sub-sector of tertiary colleges the operating surplus fell more significantly from 2.6% to 2% as the pay:income ratio actually crept up 65.6% to 66.8%. As there are many more general FE colleges than tertiary colleges, the overall effect was one of staff numbers and pay levels taking the strain for the sake of colleges’ survival.