July 26, 2017

Understanding Financial Viability

FE Underfunding: This Venn Diagram shows the relationship between Finance, Curriculum and Estates when curriculum is changedFE is facing new challenges every term. Many of these were identified in the recent JISC survey of senior FE staff who were asked to rate six challenges. One was Financial Viability I.e. FE underfunding.

There was a large level of agreement over the feedback with the major challenge identified being about how to create a financially viable organisation. The answers implicit in the feedback were largely identified within the challenge rated as number two on the list; how to create an agile organisation that can anticipate and react to change. FE Underfunding is at the heart of the whole issue and is now an International issue. 

FE Underfunding is now a fact of life. It isn’t going to go away. So we need to rethink our approach. The good news is it is possible to be financially viable under the new funding regime. But you cannot do it by maintaining the management status quo. Changes are need and some may appear unpalatable .. but unless you can find other answers they are inevitable and totally necessary.

However change on aspect of your operation and there will be an impact of others. For example when the Curriculum is changed that has an impact on the teaching space requirement and affects Estates. These in turn impact the income and expenditure and involves Finance. The good news is that if a holistic approach is taken each can leverage the savings that can be made and the sum can be greater than the whole.

The FE Underfunding Myth

Optimists tell me a future government will increase FE funding and all will be well again.

I believe that is a myth. I don’t believe we will see high levels of funding again in my lifetime. “Inadequate funding” is actually now the norm. We have to work with this funding and not live in expectation it will improve. Government  isn’t going to suddenly find a lot of extra cash for us.

They have put the ball in our court. We either play with that ball or admit defeat.

At Underfunded we’ve also conducted a survey. One thing that became very obvious to us is that outstanding providers do things differently; they obey the rules but apply them in a different way.

My research has led me to the view that, as strange as it sounds, FE isn’t “underfunded” if viewed from a political perspective.  Effectively that means we have to rephrase the questions we need to ask. To reimagine our situation and future. The problem isn’t now about a temporary “lack of money” as that is now the norm. It’s now about how the sector utilises its severely depleted resources.

We’ve managed FE in essentially the same way for years. But the world has moved on and we need to rethink our strategies. Those providers that have already taken this approach are not suffering as much as those that have ignored change. But even those making change are often only scratching the surface. There is a lot more they need to do if they are to survive.


FE Underfunding: Answers Not Challenges

To discover the answers to the “underfunding” issue we need to look to Education/FE in the wider sense. Whereas colleges tend to spend huge sums on new buildings, often costing tens of £millions, the private providers spend far less. Understanding how they achieve this is fundamental to the survival of colleges.

We also need to look at our competitors. So many providers think it is others in the formal FE world. That’s only true to a limited extent. Only yesterday I was in a shop that looked as if it sold chocolate. But behind the scenes it was running courses in the space that FE thinks is reserved for them! These competitors are largely hidden in full view .. but FE doesn’t see them.

The many challenges are obvious. What we need are answers. How do some providers .. private and public .. do much better than others? And how do providers overseas cope? 

For more than a decade I have led a team that has worked with over 200 providers. We’ve researched these providers on a regular basis and have found there are similar characteristics  running through providers that result in their high standing on the spectrum between outstanding and poor.

Of course no single outstanding provider will exhibit all of the features our research identified as being characteristic of an outstanding provider. And to be a poor provider it is not necessary to exhibit every one of the characteristics that are inherent in even the worse poor provider. To be poor it only needs a few really bad characteristics to aggregate into a disastrous situation.   

In carrying out our research we have not limited ourselves to FE colleges and private providers in England. Where exemplars of good or practice are apparent we have dug deep to discover the whys and wherefores. Our main research is UK based, but we have also included colleges, universities and private providers of all sizes, as far away as the US, Europe and South Africa.


FE Underfunding: Changing the Rules of Engagement

“Insanity: doing the same thing over and over again and expecting different results”   Einstein

Education has a tendency to be traditional, to be conservative in the adoption of the new. But we live in a fast moving world and the young people we serve were brought up in a digital age. It is all they know.

Not everything new is good. But we need to be aware of new methods, techniques and strategies and implement the best of them if we are to remain viable. Our schools are adopting digital teaching methods at a faster rate than FE. That means that for some students leaving school and going to college is a step backwards. Not the step forwards they have been promised. Businesses are adopting new methods on a daily basis, from being to order a coffee via an app before arriving at the coffee shop, MOOCs, online shopping and remote working to adopting automated business processing they are moving forward and becoming more efficient. We can not be left behind. If we are to balance our income and expenditure we need to change our approach to the delivery and management of education.

The ideas we present about FE Underfunding may represent a future some abhor. The ideas maybe unthinkable to some. But they are examples drawn from the wider education and training sector and are being implemented by those organisations that are balancing their books.  I’m open to anyone that can present me with better ideas; but so far these are the best the sector has offered me. I believe we must consider them and make changes or perish.

Funding is not going to improve. Only those that dramatically reduce their expenditure in line with greatly reduced income will survive. FE Underfunding is now the norm!

I do not believe we are underfunded .. provided we can cut expenditure in line with the new reality.


Our Thanks

We want to record our thanks to all that took part in our research and to share it with the sector in a bid to ensure outstanding becomes the norm.

To limit the size of this paper we have reduced this report to a series short statements covering a wide range of relevant topics. We are happy to elaborate on them on a one to one basis upon request.  Our contact details are StefanDrew@gmail.com  01404 891920

You can Find more about FE issues at www.ProviderMastermind.com 


Stefan Drew

July 2017