Finance & Resources Committee held on Monday 7thMarch 2016 from 5.00pm at Huddersfield New College.
Confirmed Minutes.
Present:Mr J Dawson, Ms T Wright, Ms J Pryce, Mr P Cropper and Ms A Williams (attendance 100%)
In attendance: Mr A Shaw and Mr M Hirst (for agenda item 4 only)
Clerk: Mrs C Coupland
- Apologies for Absence/ Declaration of Interest
No apologies were submitted
No declarations of interest were recorded.
- Minutes from Meeting held on1st December 2015
Resolved
- That the minutes be accepted as correct record.
- Matters arising
i)Treasury Management Policy: Management of Short and Long Term investments
As resolved at the last meeting; the Committee took the opportunity to further review the Treasury Management Policy.
A robust discussion was had with all members agreeing that the current criterion for deposits with UK banks/Building societies remains to be proportionate and appropriate; namely:
-Accounts can only be with institutions (or group of institutions) assessed with a long term credit rating of at least A /stable rating.
-Total Investment to be limited to £1.2 million for 1 institution (Including current accounts)
-Investments to not be for greater than 12 month
The Committee asked for Mr Shaw to return the Treasury Management Policy should the criteria not be feasible inpractice given that only asmall number of institutions currently hold a Standard and Poor’s A/Stable rating.
Resolved:
- To receive the report
- To retain the current criteria for short and long investments.
ii)BAF Assurance Review: Maintaining Compliance with Health and Safety Legislation
The Committee recalled that at its last meeting, members assigned green assurance level to this individual risk for they were satisfied that the college continues to invest in health and safety and that staff follow procedures to minimise risk throughout the college. However, the committee at that time was also of the opinion that the wealth of evidence presented at the meeting was not sufficiently captured within the Board Assurance Framework. Members tonight, received the updated BAF assurance report, it was agreed that the report now comprehensively reflects current practice.
Resolved:
- To receive the report
ii)Capital Developments: An Update.
Mr Shaw confirmed that a Condition Improvement Fund Bid was submitted for the deadline of 16th December 2016. Only 1 minor query has been received to date, but a decision should be notified by 31 March 2016.
Mr Shaw took this opportunity to also confirm that the Summer 2015 curriculum move project was now completed. The 2015 CIF roof works was also completed in February half term. Members were also informed that the smoking shelter canopy will be installed at Easter at a cost of £12k.
Health & Safety:
- H&S Mid-Year Review
The Health and Safety report prepared by Mr Hirst was considered by the committee.
Members agreed that it provided a comprehensive review of the matters arising mid-year in relation to the college’s health and safety performance.
It was noted that to date there have been two RIDDOR reportable accidents; Mr Hirst acknowledged that one of the incidentsagain involved a student injuring their finger whilst in a sewing class. This type of incident continues to be a recurring concern for the college despite preventative action having been taken by the department – Governors were therefore assured that a full review will again take place to determine any additional measures that can be taken to minimise future incidents.
Governors noted from the accident analysis that a high proportion of accidents recorded had indeed happened outside of college (non-college activities). These may have been injuries incurred at home or on the way to college; however treatment has been sought by the student on arrival at college.Mr Hirst informed the committee that H&S reports shall now distinguish between the number of incidents within College and the number of incidents from outside the college which have impacted on first aid requests for treatment. This was welcomed by Members however it was made clear that the reporting format should always continue to include analysis of other/off site incidents given that it may be possible to determine signs of vulnerability from any patterns emerging.
Governors weresatisfied with the number and type of health and safety training opportunities available at college and with the monthly site audits taking place by the Estates Team covering all sections of the premises.
Resolved:
- That the report be received.
Mr Hirst left the meeting.
Finance:
- Latest Management Accounts
Mr Shaw presented the management accounts to January 2016.
The Committee was advised that all current targets are expected to be met by July 2016 and that the latest forecast cash position as at July 2016 of £2,262k is £113k above budget. Variances from the budget of £2,149k were considered by members.
The Committee was also informed that the Income and Expenditure account shows that the surplus is expected to be slightly above thebudget of £128K by £97k. Mr Shaw explained that £221k of contingencies still remains. 4 staff members are currently on long term sickness absence, with one staff member leaving on 31st March 2016.
Mr Shaw confirmed that student retention is still holding up after a positive enrolment. As at 1st February the total attending is 2311, being 98.3% retained from the 12 October 2015 census Day 42 funded number of 2352 (2350 target). Members were advised that a draft forecast is being prepared for 2016-18, based on the 2350 target student number and the latest EFA funding factors.
Resolved:
- That the report be received.
- Funding Allocation
Members were advised that the student numbers as at Day 42 was 2354 and will form the basis for 2016-17 funding. Mr Shaw also notified the Committee of the EFA funding allocation for 2016/17 – which is 95% of the annual College funding. The EFA Allocation Statement confirms the following:
-Programme funding of £10,043,117 for 2016-17
-EFA High Needs funding of £312,000
-Student Financial Support funding for distribution to students with financial hardship is still outstanding. For 2015-16, £429,376 was received being £305,279 for Student Bursary funds and £124,376 for Free Meals. This is likely to decrease by around 1/8 or about £50,000 in total.
Mr Shaw explained that comparison between 2016-17 funding and that of the current year 2015-16 shows that the reduced £368,000 funding for 2016-17 is mainly due to:
-lagged funding for the 44 less students of the 2354 funded amount for 2016-17 (£191k),
-Worsening funding factors for
- Retention: for last year this was based on 2 years before data, but finally the EFA have started
using the previous year’s data. Unfortunately for us this has missed the best results to date from 2013-14. (£71k)
- Disadvantage (economic deprivation): the EFA update their factors every 5 years, and this had an adverse effect for HNC for 2016-17, but difficult to tell whether this is anything particular about our locality or students in the whole national situation (£47k)
- Course weighing factor: this has decreased, but we are investigating why this has happened, now we have access to the funding ‘toolkit’ (£48k)
-Reduced students attracting additional disadvantage funding (-£21k).
-2 less high needs funding students (£12k)
Resolved:
- That the report be received.
- Financial Parameters 2016-19
The Committee was asked to consider the financial parameters for the next financial planning period 2016-19, in light of the current external environment, the changing college situation and the option to consider academy conversion:
Mr Shaw advised members that there are a number of funding and extra cost pressures that need to be taken into account from 2016-17, being:
- 44 less funded students, 2398 – 2354, (£191k less)
- Other adverse EFA funding factors: retention, disadvantage, course weighting, etc (£177k less)
- Extra employers’ NI costs from Apr 2016 of £131k/year, £40k in 2015-16 (£91k extra)
- Extra teachers pensions costs from Sept 2015: £101k in 1617, £96k in 1516 (£5k extra).
- 1% pay award allowed (£75k extra)
- New Teachers structure (£20k extra)
- Scale progressions (£92k extra)
- Other inflationary effects on costs
The major assumptions informing the draft forecast are:
- The EFA income decreases as above (£368k less)
- Staff costs decrease from 2016-17k (£43k less), including:
-Scale progressions (£92k)
-1% pay award (£75k)
-NI increases (£91k)
-Teachers’ pension cost extra in 2016-17 (£5k)
-New Teachers pay structure increase (£20k)
-Offset by staff change reductions (£269k)
-Lower cost new staff or further efficiencies (£42k)
-Other reductions (£32k)
- Other costs and income to remain the same with any inflationary increases to be absorbed by efficiencies
- Some capital replacement/ upgrade budgets for ILT, property, & equipment to be reduced to £410,000.
- One potential major capital project (Dining Area: total cost of £2.04million over 2 years) with a net College contribution of £100,000 in 2016-17 and £150,000 in 2017-18. (there is a slim chance of success, but notification is due to by the end of March 2016)
- Contingencies including £90k absence cover, £30k restructuring, £77k pay award, and £100k general contingency.
The Committee acknowledged that thecolleges current financial strategy is based around maintaining student numbers at around 2350; it was agreed that this approach should remain going forward given that there continues to be a demographic decline from current numbers in the local population of 2.9% in potential 2016-17 starters and 3.5% in 2017-18 (in comparison to 2015-16 figures), before numbers start to recover in 2018-19.
Members debated for some time the level of financial health that the College should maintain going forward, in light of the funding and extra cost pressures. It was agreed necessary for the college to continue to present robust financial management and strong financial discipline by aiming to retain outstanding financial health. As a committee, it was also acknowledged that reducing the college’s financial health rating from Outstanding to Good may alsoweakenany possible application for academy conversion at a later date.
Given the above, Members were of the opinion that for the period 2016-19, the parameters as set last year (March 2015) should remain:
-Not to have a budget operating deficit.
-Maintain Cash at the July 2016 budget figure of £2.1million, but allow this to reduce to £1.4million for agreed required potential major developments.
-Maintain the minimum criteria required for ‘Outstanding’ financial health
Mr Shaw informed the Committee that a financial return for the period of 2016-19 will be required to be submitted to the EFA by 31 July. Mr Shaw confirmed that he is to continue to develop the financial plan for 2016-19 around the proposed parameters, which will be presented to the Committee at its next meeting in June 2016.
Resolved:
- To recommend to the Corporation that the existing financial parameters are maintained for the period 2016-19:
-Not to have a budget operating deficit.
-Maintain Cash at the July 2016 budget figure of £2.1million, but allow this to reduce to £1.4million for agreed required potential major developments.
-Maintain the minimum criteria required for ‘Outstanding’ financial health
- BAF assurance Review: Failure to Maintain Financial Viability
The Committee remains confident in the different levels of assurances identified with the Board Assurance Framework for the riskas presented by Mr Shaw.
From discussions, the Committee agreed that an overall green assurance level shall be assigned to this particular risk.
Resolved:
- To assign green overall assurance to the risk
- For the Clerk to update the Master BAF
- Any other Business.
There was no further business.
11. Learner Impact Reflection
The impact of discussions and scrutiny of the committee’s work in improving the outcomes and experience for all earners was considered and the following agreed:
Resolved:
- Scrutiny of management accounts and assurance testing ensure the sustained financial viability of the college.
- Opportunity to review health and safety data and analysis assures governors that staff, student and visitors are physically safe in and around the campus.
- Ability to financially support all elements of the strategic plan for the college
- Strong financial management enables HNC to continue to fund and deliver all elements of student experience and outcome.
- Determination of confidentiality
All supporting papers for the Board Assurance Framework are to be deemed confidential.
Executive Summary and supporting papers presented for agenda item 7 - Financial Parameters 2016-19 - are to remain confidential until approval by Corporation.
13. Date of next meeting: Monday20th June 2016
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