College faces financial deficit

The new chairman of Shetland College board says he is hoping the financial situation of Shetland College will improve, after a private meeting about the college and its finances this week.

The college faces a possible clawback in funding as well as a projected deficit of £753,000 for the 2013/14 financial year.

Peter Campbell, who has replaced Drew Ratter as chairman of the board in the recent council shake-up, was at the seminar on Tuesday.

The event was a chance for coun­cillors to understand how the college is financed and an opportunity to meet with college staff and finance officials.

SIC finance chief James Gray explained the college’s financial predicament, Mr Campbell said, and the seminar had been a success in clarifying the situation.

“It was very helpful to have things presented in a very coherent and easily understandable way,” Mr Campbell said. However, he denied it was a crisis meeting.

He said beforehand: “It’s a good time to focus minds because of the situation and it may well be that because of the financial situation minds may be more focused.”

Mr Campbell said any sug­­ges­tions from members to improve the college’s situation were welcome. He did not disclose ideas put forward at the meeting but said “we’re in a position just now where nothing has been decided” but “everything is a consideration”.

He added that they would be looking at a wide range of potential courses that could be considered in future.
“The aim is to have a sustainable college and I think we will achieve that,” Mr Campbell said.

Last month members of the college board were told it was no longer possible for the college to reach its student enrolment target for this academic session.

As a result it faces a possible claw­back in funding from the Scot­tish Funding Council (SFC), which provides finances based on student figures and student activity. Money is allocated to the college by weigh­ted student units of measurement (WSUMs).

Shetland College has a total target of 5,288 WSUMs, while the NAFC is 1,022.

At last month’s college board meeting, members were told the college had enrolled 53 full-time and 883 part-time further education students – compared to 66 full-time and 1,117 part-time FE enrolements in March last year.

The report also stated that 88 full-time and 191 part-time higher education students had enrolled – compared to 90 full-time and 241 part-time students in March 2013. The shortcoming would be about £300,000, members were told.

But this week Mr Campbell said there were more enrolments to take into account and he was hoping the possible clawback would instead be around £200,000. Previously, he explained the college was not alone in struggling with falling student numbers.

College board members were told last month that whether or not there was any clawback from the SFC, and at what level per college, was likely to be a matter for the High­lands and Islands Regional Board.

Mr Campbell said historically the college has always provided more courses than what it was receiving WSUMs for, meaning theoretically it was providing a percentage of courses for free.

Earlier this month he said he was convinced the buoyancy of the economy was impacting on the college, as people were able to get well paid jobs without needing college-taught skills.

Mr Campbell said it was also more difficult because of new fund­ing arrangements for courses and there had been a decline in the number of SIC staff being trained or going through short courses at Train Shetland, which also adds to the WSUMs count.

He warned if there was a similar pattern next year in terms of declining student numbers, then the college would be in “a very serious position”.

Janice Thomason, management accountant at Shetland Islands Council, said the predicted revenue deficit of £753,000 for the 2013/14 financial year was a separate figure to the potential clawback from the SFC.

Of the £753,000, £375,000 is a contribution to the capital costs of the phase three extension at the college, which was agreed when the project was started, she said. That contribution is to be funded from the college’s reserves, which form part of the council’s reserves. Plans are in place in a bid to ensure the college does not have to pull any more from the reserves to fund the building project.

The extension work includes a new library, reception, resource centre and linking of college buildings.

This week Mr Campbell said the college extension was nearing completion and would be open for students in August.

The remaining deficit was down to a reduction in course fee income, a reduction in contributions from the SFC and failure to implement bud­get­ed savings through the council-run SOFIE programme.

SOFIE stands for “sussing out further internal efficiencies” – mean­ing savings that can be made without significant changes to frontline services.

Last month a number of options were presented to members of the college to offset the probable SFC funding shortfall.

These included relocating Train Shetland courses to the extended college, saving £50,000 in property costs and renting out the building.

Mr Campbell said although this was “technically possible” it would not be “100 per cent desirable”.