FUNDING POLICY WATCH. The 16-18, Adult Learner- and Employer- responsive Funding Models ALL CHANGE. January Policy and Curriculum 2008/1

Transcription

1 Policy and Curriculum FUNDING POLICY WATCH 2008/1 January 2008 The 16-18, Adult Learner- and Employer- responsive Funding Models ALL CHANGE In November 2007 the LSC released their new 16-18, Adult Learner and Employer Responsive Funding Models. This signifies a huge change in LSC funding methodology. This Funding Policy Watch attempts to summarise this 74 page document which can be found in full on the LSC website at: It s all change as a new funding formula will be introduced for 2008/09. The new demand-led funding models will also be implemented on 1 August 2008 for 2008/09 funding. The three models fund separately i) provision, ii) adult learner-responsive provision, and iii) employer-responsive provision. This Funding Policy Watch is split into 2 sections: Section 1 The new funding formula - looks at how the SLN will work in the and adultresponsive model, and the employer-responsive model, and at the details of the provider factor, success factor, and additional learning support. Section 2 - The 3 new funding models - summarises the 3 new funding models, and looks at each in a bit of detail - the Model, the adult responsive model, and the learner responsive model. Funding Policy Watch LSC Statement of Priorities Created by Sian Owen Authorised by Steve Besley December 2007 Page 1 of 8

2 SECTION 1 - THE NEW FUNDING FORMULA The formula that underpins the demand-led funding models is outlined below. Standard Learner Number (SLN) (SLN could be listed or unlisted and has maximum per learner) x National Funding Rate ( /SLN) ( /SLN may be subject to transitional protection) x Provider factor (PF) (Has up to six elements based on history (16-18 and adult models) or actual (employer model)) + Additional Learning Support (ALS) ALS allocations will include formula and negotiation element = Total funding (Total funding has a cap) A start A learner can only generate an SLN value when they have started. A learner has started a learning aim once they stayed for the minimum duration, and if they stay for less time no funding can be claimed. Starts are determined separately for each year. Re-sits, retakes and transfers do not generate an SLN value. Learning aim length >= 24 weeks 2 to 24 weeks <2 weeks Minimum attendance to be a start 6 weeks 2 weeks 1 learning engagement SLNs in the and adult learner-responsive model Guided learning hours - SLNs in the and adult learner-responsive models are based on guided learning hours (glh). Some will be listed and others unlisted. Annualisation - the proportion of the learning aim delivered in the current academic year will be calculated based on the number of days in the year. For learning aims achieved early, the actual end date is used to calculate the number of days in the academic year. In-year glh is calculated by multiplying the glh by the proportion of the learning aim delivered in the year. Conversion to standard learner numbers - the uncapped SLN for each learning aim is the inyear glh divided by 450. The SLN value is then capped by adding the values for the individual learning aims and capping at a maximum of 1.75 SLN per learner per academic year. Fully funded/co-funded to 18-year-olds are automatically treated as fully funded. The co-funded rate for the adult learner-responsive model will vary in line with the provider factor, as the LSC s policy is to have the same fee element irrespective of other factors, such as area costs or programme weighting. Created by Sian Owen Authorised by Steve Besley January 2008 Page 2 of 8

3 SLN in the Employer-responsive model Activity costs - the basis of SLN in the employer-responsive model is activity. Activity can take two forms, one-to-one contact and group-based hours. Group-based hours are broadly equivalent to glh, but are not identical. The learning aims database holds listed SLN values for all employer-responsive provision. Annualisation this will work as for the and adult responsive model. The proportion of the learning aim delivered in the current academic year will be calculated based on the number of days in the year. For learning aims achieved early, the actual end date is used to calculate the number of days in the academic year. In-year glh is calculated by multiplying the glh by the proportion of the learning aim delivered in the year. Capping this will work as for the and adult responsive model. The SLN value is capped by aggregating the values for the individual learning aims to learner level and capping at a maximum of 1.75 SLN per learner per academic year. Fully funded/co-funded all Apprenticeships for year olds are fully funded. All 19+ Apprenticeships are automatically treated as co-funded. It is calculated as for the and adult responsive model. Provider factor The provider factor is calculated annually in advance for each provider to reflect the relative funding levels that they will receive. It is largely based on historical data. It will be applied to the formula in the and adult learner-responsive models to determine the provider s allocation and to calculate the funding generated in-year. The provider factor will be calculated for the employer-responsive model, and used to generate a maximum contract value. However, the employer responsive model will then calculate funding based on actual values in-year for each element of the provider factor at learning aim level. The provider factor will include the following elements, which are multiplied to give the overall factor. Success factor The success factor includes retention and achievement, which will no longer be separately used for funding purposes in the and adult learner-responsive models. The employer-responsive model funds actual activity on a 25% achievement element and monthly retention. The provider factor used in the contracting process for the employer model includes a retention and achievement factor, rather than a success factor. Area costs The existing index of area cost factors will be used. For the and adult learner-responsive models, the provider-level area cost uplift will be determined by the geographical location of the provider s headquarters. In the employer-responsive model, area cost uplift will be determined by delivery location i.e. employer premises. Programme weighting, disadvantage and short-programme modifier Programme weightings for all learning aims are taken from the learning aims database. Created by Sian Owen Authorised by Steve Besley January 2008 Page 3 of 8

4 The disadvantage uplift factor - in 2008/09, the element of the disadvantage factor based on the learner postcode will be updated to use the Index of Multiple Deprivation 2004 (until 2007/08 the Index of Multiple Deprivation 2000 was used). The short-programme modifier is calculated from the learner level annual glh. It only applies to learners with an annual glh of less than 225. Additional learning support Additional learning support (ALS) is split into three parts under demand-led funding. The first 5,500 of any claim is funded based on the low-cost ALS formulas although this may involve some discussion with the LSC. The next 13,500 (up to 19,000 total claim) is funded from an allocation made based on historical allocation and claim data and discussion with the LSC. Amounts above 19,000 are funded from a regional budget on an individual basis. SECTION 2 - THE NEW FUNDING MODELS All current providers and provision will now be funded through one of these routes, using the new funding formula. School 6 th Forms Entry to Employment Further Education Apprenticeships* Train to Gain Model Adult learner responsive model Employer responsive model *16-18 Apprenticeships will be planned and budgeted in the model MODEL In summary the model uses strategic commissioning without reconciliation Apprenticeships will be planned and budgeted through this model, but funding will be calculated using the employer-responsive model. Funding characteristics - past performance informs (not determines) future allocations, calculated using SLN, payments made monthly to an agreed profile, allocations and profiles only adjusted in-year in exceptional circumstances, providers subject to monitoring arrangements, but not to reconciliation of payments to actual delivery or adjustments to their allocation for the year, independent providers subject to monitoring, past payments not subject to reconciliation to actual delivery, year-end and in-year performance informs future SLN negotiations. Created by Sian Owen Authorised by Steve Besley January 2008 Page 4 of 8

5 14 19 reform and planning principles the LSC will work with each LA to implement the reforms. This will include a plan, and a strategic partnership that involves all key stakeholders. Allocations will be made to fund provision in line with the plan and the regional commissioning plan. Provision that does not support the locally agreed plan and local objectives will not receive any allocation for growth, and in future funding may be withdrawn. Links between funding and quality - for FE and Apprenticeships, the minimum standard the LSC will fund is defined by minimum levels of performance (MLPs). MLPs will rise periodically, provision must improve ahead of these rises to remain fundable. Exceeding an MLP does not guarantee funding. The Framework for Excellence is being introduced. Restrictions will apply if provision is less than satisfactory. FE providers subject to a Notice to Improve (NTI) will not have their allocation confirmed until progress is properly established. The LSC will work with LAs on a Support and Challenge programme for school sixth forms. This will result in a list of school sixth form priorities for school improvement partners (SIPs). The funding allocations formula includes a success rate factor that increases the funding allocation for above-average success rates. The budget and virement - the LSC will be able to move funds between any post-16 option, but cannot reassign them to the budget from the adult- or employer-responsive budget, or from the budget to other provision without permission from DCSF and DIUS. Approach to growth - the LSC will work with all post-16 providers to gather information to take decisions on allocation of growth. The LSC will use a standard decision-making process. The LSC s priority is to achieve growth in participation, this will be given priority over growth in breadth of learning programmes. Commissioning the LSC expect to secure the bulk of provision through negotiation and dialogue. But, if the required provision is new, is replacing a gap in the offer locally or replaces poor quality, and if it is of substantial volume, it may be subject to open and competitive tendering (OCT). Operation of the model - the objective of the model is to agree a summary statement of activity (SSoA) with provider, so provision will the requirements determined by local priorities and the plan and prospectus, within the allocated budget. The model uses strategic commissioning based on past performance, and a planning dialogue and competitive tendering for major new or changed provision. The allocation is calculated from agreed volumes of participation and the volume of learning to be delivered. Once set, the allocation would not normally change during the year to take account of variations in actual recruitment, but in-year performance will inform future funding allocations. Main differences from the current business cycle - currently FE allocations are mainly based on the last full year s data. Now allocation will be based on agreed plan, informed by priorities and in-year data. Another key feature is committing to consolidating growth in learner numbers into the following year s allocation for increasing participation. School sixth forms will feel the change more than others there are significant changes for school sixth forms. For first time schools will have dialogue with LSC about allocations. New funding formula will be used to provide nationally consistent method of calculating allocations. The Index of Multiple Deprivation replacing the use of free school meals measure. Individual school success rates will be calculated at a learning aim level in place of the standard national achievement rate of 87%. ALS being introduced as element of the funding calculation for schools. Funding rates - minimum funding guarantee (MFG) for schools is 2.1% for 2008/09. This will also apply to all other provision, except Apprenticeships. In 2009/10 and 2010/11, the MFG will also be 2.1%. Funding rates for Apprenticeships will increase by 1.6%. Created by Sian Owen Authorised by Steve Besley January 2008 Page 5 of 8

6 Transitional protection the LSC will limit the variation in funding per learner to +/-2.1% in real terms. No post-16 provider will have a cash value of funding per learner lower than 2007/08. They envisage the transitional approach will bring the majority of institutions into the normal funding arrangements within three years. Progression pathways (within the Foundation Learning Tier) - progression pathways will begin to replace Entry to Employment (E2E) and sub-level 2 learning from August The funding formula will be applied to progression pathways. Programme weighting will be identified from the learning aims being taken, and a success factor will be built into the provider factor in due course. Diplomas - the funding system will be introduced for 2008/09. Further requirements may be introduced for 2009/10. Standard funding formula and model will apply. Each Diploma has an SLN value. FE programme weightings will apply. Funding allocated to and flows through the home provider. Success rates calculated for achieving the whole Diploma. Yet to be confirmed whether funding calculated at the level of whole Diploma or for constituent parts. Entry to Employment - E2E will continue to be available, and will operate under the model. SLN values will be calculated for weeks of learning and bonuses. Where the bulk of a provider s provision is not E2E, the overall success factor for will be used to calculate the provider factor. Where the bulk of provision is E2E, the provider factor will be based on the average success factor for E2E. Data and payments - all providers will continue to use existing data-collection methods for the immediate future, depending on their historical arrangements. Audit implications existing audit arrangements for colleges should largely still apply. The role of audit for schools and independent providers yet to be determined. ADULT-RESPONSIVE MODEL Summary 19+ adult learner model will use strategic commissioning with mid-year and yearend commissioning. Scope - current FE adult provision, apart from employer-based NVQs delivered within FE. Excludes adult safeguarded learning (including personal and community development learning currently delivered by FE colleges). Also likely to exclude learndirect provision in 2008/09. Funding principles funding system same as that developed for provision, but with addition of funding reconciliation for over-performance on high-priority provision, and for general underperformance. Two funding rates per SLN for each provider fully funded and cofunded. Allocation paid to providers using monthly profile (similar to provision), but with mid-year and final reconciliation payment adjustment, based on comparison between delivered and profile activity. Characteristics - excellent/ good provision allowed to grow through negotiation; new provision open to competition through competitive tendering. Minimum levels of performance (MLP) apply as they do to provision (see above). Approved providers agree allocation value with LSC prior to the start of the year. Not a guarantee of funding, provider s budget will depend on learner demand, reconciliation arrangements will recover funding from those that fail to deliver. Providers earned value will be compared mid-year and year-end, and performance outside agreed tolerance limits will result in adjustments to provider payments. Created by Sian Owen Authorised by Steve Besley January 2008 Page 6 of 8

7 Transitional protection will limit increase or decrease in the funding per SLN that can take place in 2008/09 to +/-2.1% in real terms, the same range as for the model. Transitional arrangements only impact on funding per SLN. Where numbers fall funding falls. Reconciliation will make a direct link between number of learners, and funding. It will take place at two points mid, and end of year. Tolerance will be used for under- and overperformance. Tolerance levels different at mid-year and year-end points. Under-performance assessed on total provision; additional funding for over-performance paid only if this relates to high-priority provision (defined as full Level 2, full Level 3 and Skills for Life provision only). Growth between the tolerance and cap will be funded at the full rate. Data and payments - providers will be paid using a monthly profile, as now. The difference is that they will be subject to reconciliation, which will include recovery of funding for underperformance and additional funding for over-delivery in specified priority areas. Audit implications - the new approach requires reconciliation of actual delivery to planned delivery, with funding adjustment for over- or under-performance. It is a risk-based approach, which will involve risk-assessing providers and carrying out funding-audit visits to those that are identified as higher risk. Low-risk institutions would receive a light touch, with less frequent audit visits. EMPLOYER-RESPONSIVE MODEL Summary this will encompass Train to Gain (Skills for Life, full Levels 2, 3 and above, and employer-based NVQs currently funded through the FE funding system) and Apprenticeships. Funding earned by providers will be based on actual delivery, with monthly payment in arrears. Scope - provision being delivered as Apprenticeships, Train to Gain and NVQs delivered wholly or partially in the workplace within mainstream FE. Apprenticeships include all ages of Apprenticeships, Advanced Apprenticeships, Higher-level Apprenticeships and Apprenticeships for Adults. This also includes Apprentices who are non-employed learners following a full Apprenticeship framework and who were previously funded through Work-based Learning in 2007/08. It does not include learners on Programme-led Apprenticeships who were funded through FE in 2007/08. Train to Gain includes all employer-based provision. NVQs delivered in the workplace to learners aged will remain funded using the model. The Apprenticeship provision will have a separate budget within the employer-responsive model. For 2008/09, the provision will be planned and managed using the model, but funding will be calculated and paid using the employer-responsive model. Funding principles - payments made monthly in arrears, and based on actual delivery. Funding paid in instalments over the expected length of programme aim, the Apprenticeship achievement element paid on achievement of the full framework, Train to Gain achievement element is paid as each aim is achieved. Expected that most learning will take place on employer premises. The disadvantage uplift only applicable for learners who are following an Apprenticeship framework. A learner who is expected to be in learning for more than 24 weeks, but who leaves without having completed six full weeks in learning, will not be funded; funds will be reclaimed. If a learner is expected to be in learning for less than 24 full weeks, the qualifying period two full weeks. Funding for Train to Gain will be based on the level of activity required in order for the learner to achieve their qualification. A learner following Train to Gain will have their learning fully funded if they are completing their first Level 2 qualification or Skills for Life qualification, excluding English for speakers of other languages (ESOL). Other qualifications, such as a second Level 2 or Level 3, will be subject to eligibility and some level of employer contribution. Created by Sian Owen Authorised by Steve Besley January 2008 Page 7 of 8

8 Characteristics - regional commissioning plans will identify skills and sectoral priorities. Responsive funding is not limited by a region s budget where there is available capacity nationally. Excellent or good current provision will be encouraged to expand through negotiation, where demand is proven; new provision will be open to competition through competitive tendering. Prior to the start of the year, providers will agree an indicative maximum contract value with the LSC. This is not a guarantee of funding. Providers earn money based on actual delivery. Twice a year, a provider s earned value is formally compared with the provisional forecast profile and indicative maximum contract value. There will be a year-end review of performance against contract. Providers experiencing more demand can request funds from the regional response fund; providers seeing less demand will have their maximum contract value lowered. Funds released will be used to expand existing provision through negotiation with current providers or put to open and competitive tender. Delivery identified from priority sectors will receive preference for funding. Funding and quality - for Apprenticeships, the minimum standard the LSC will fund is defined by MLPs. Apprenticeship provision that fails to meet the minimum level will be subject to competition. 156 MLPs will rise annually, and provision must improve ahead of these rises to remain fundable. Meeting the MLP does not guarantee funding. The Framework for Excellence is being introduced. Train to Gain has an indicative minimum level of performance, but for this year will not result in the removal of funding. Budgets and funding the budget for the employer-responsive model budget will be formed from the Apprenticeship employer-responsive (16 18) budget and the employer responsive (19+) budget. A learner will be funded from the budget at a rate that depends on their age at the start of the academic year. Transitional protection there will always be winners and losers when the funding system changes. The LSC will monitor changes and have put in place transitional protection. They limit the increase or decrease in the funding per SLN that can take place in 2008/09 to +/-2.1 per cent in real terms. Transitional arrangements will apply to Apprenticeship and FE NVQ provision, but not to Train to Gain. Edexcel Funding Policy Watches are intended to help colleagues keep up to date with national developments. Information is correct at the time of writing and is offered in good faith. No liability is accepted for decisions made on the basis of information given. Centres can access the LSC s Learning Aims Database which allows them to search for aims and view aim details at: The last word on funding lies with the LSC. Centres should be in contact with their LSC in relation to the planning and funding of their provision. Created by Sian Owen Authorised by Steve Besley January 2008 Page 8 of 8