Minutes of the Meeting of the Governing Body Of

Minutes of the Meeting of the Governing Body of

THE CITY LITERARY INSTITUTE held on 15th October2013 at

Keeley Street, London WC2

Present:

GOVERNORS

Key:+ Present

*Apologies tendered

# on sabbatical

In Attendance:Nick Moore (Deputy Principal)

Joe Manifold

Ms. K. Hanratty

Jo Matthews (until item 13/79)

Clerk/Company:Denise Gill

Secretary

PART ONE:STANDING ITEMS

13/66Declarations of Interest

There were no declarations of interest.

13/67Membership

The Clerk reported that the person the Search and Governance Committee had hoped to interview as a potential Governor had withdrawn her interest. Having recently retired she had decided to concentrate her energy on consultancy work and feared that she would not have sufficient time to dedicate to City Lit.

The Clerk also reported that as the terms of office of Carole Stott, Jonathan Armour and Marco Macchitella had come to an end, this had reduced the membership of the Quality and Standards Committee to just three Governors. The Search and Governance Committee had therefore recommended that Brenda Foulds (Staff Governor) and Thomas Hope (Student Governor) be appointed to the Committee for one year pending the review of the membership of all committees.

The Board agreed this recommendation.

13/68Minutes of Previous Meeting

The minutes of the meeting held on 9th July 2013 were approved and signed by the Chair.

13/69Matters Arising

13/49The Clerk reported that Sue Pember’s report on Governance commissioned by the AoC wasexpected to be published on 1st November.

13/70Annual Fire Evacuation Brief

The Principal gave a Fire Evacuation briefing to the members of the Governing Body which detailed action to be taken in the case of a fire and/or alarm.

13/71Principal’s Report

The Principal presented his report for the period August to October 2013. He gave an update on general activities and highlighted the following:

• The enrolments for the new academic year had started well.
• A reinvigorated Summer School extending into mid-August had run successfully offering 1,000 courses. Over 80% ran, many of which had been brand new, attracted over 6,000 students of which 3,000 were new to the College.
• The “Where London learns…” campaign continued. The campaign rolled out significantly in September; with a major Tube campaign, including “owning” the up and down escalators in Holborn; Hot Courses; and windows on Kingsway and the end of Keeley Street being rebranded.
• City Lit would be hosting the Annual General Meeting of the National Institute of Adult Continuing Education (NIACE), who, with the AoC, were the sector’s most influential body. It would be attended by 60 of the sector’s leading influencers, who would then attend one of four Curious Courses at the College.
• The Health and Movement Department’s issues continued into this academic year. Compounding the downward trend of recent years, the impact of student loans had had a major effect on the viability of this department. A major review of this area was being undertaken this term.
• The new Science Curriculum had been launched during the summer with a mini lecture series featuring guest speakers such as Fred Pearce and Dr. Marek Kukula.
• The Classics and Creative and Non-Fiction Writing departments were launched with new Heads of Programme joining in September.
• The 2012-13 end of year financials were in the process of being completed. A deficit of £503k occurred against an original budget of a small surplus. Whilst a deficit has been expected due to the poor enrolments of Term 1, it was worse than had been anticipated as it had been adversely affected by sessional pay costs and a bad debt provision.
• A new Director of Finance and Estates had joined City Lit and was restructuring the finance department and reviewing systems.

Members received a report giving a financial update on term one to 7th October. The Principal gave an oral update on developments since the report had been written. The report advised that for ‘pure’ fee income, the College had achieved £3.23m against a target of £3.56m for term one, which was 91% of the total for the term: since then, an additional £60K had been received. Members were advised that although fee income related to loans would reach at least £400K, it would not meet the £709K target. This was of concern, not only to City Lit, but nationally, where only 28% of available loans had been taken up. The Principal advised that City Lit’s Health and Movement area had suffered badly as the high cost courses run by this department had had the Government subsidy taken away and without this, few students could pay the fee without taking a loan. Members queried whether the Government would be reviewing the policy of requiring adult students to take out loans for courses not leading to a degree. The Principal advised that AoC would be lobbying Government on behalf of the sector, but realistically, the Government was saving money. The Principal was asked what action had been taken to overcome the problem and he advised that 12 out of 14 courses had been cancelled: savings were greater in this area than in other parts of the College. A strategic review of Health and Movement was underway with a view to radically overhauling the area.

The Principal advised that contract income was performing well which mostly came in the form of Community Outreach and Deaf Education contracts. Community Outreach in particular had confirmed more contracts for the year at this point than had been budgeted for, which was an excellent position to be in.

Overall, City Lit was on track to reach the SFA funding contract cap. It was intended to make-up any shortfall in revenue from the loan income with ‘pure fee income’.

The Principal was thanked for his report.

PART TWO:MATTERS FOR DECISION

13/72FRS 17 Assumptions

Joe Manifold introduced a report on the underlying assumptions for the FRS 17 calculations leading to the disclosures in the Annual Financial Statements. He advised that these had been recommended by the Finance and Employment Committee.

The report set out the balance sheet disclosures as at 31 July 2013 and gave a summary of the outcomes which included the Net Pension asset and the reconciliation of the opening & closing surplus. The summary of the assumptions gave the life expectancy from age 65 and the financial assumptions used for the purposes of the FRS 17 calculations. The expected return on assets was also detailed. Members were advised that the majority of these assumptions were relatively standard, consistent with previous periods and had been used across a range of pension schemes. A sensitivity analysis table was included in the report which set out the impact of a small change in the discount rates on the defined benefit obligation and projected service cost, along with a +/- 1 year age rating adjustment of the mortality assumption. Joeadvised that the External Auditors would review the assumptions when undertaking the external audit.

The Board discussed and agreed to accept the actuaries’ recommendation for underlying assumptions for FRS17.

13/73Bank Mandate

The Board received a report requesting that changes be made to the bank mandate. Members were advised that Joe Manifold was no longer directly employed by City Lit and therefore was not an officer of the company. Paul Evans had joined the Institute as Director of Finance Estates and therefore the Board was requested to appoint Paul Evans as a signatory and to remove Joe Manifold as a signatory. Members discussed the report and resolved:

1/13:All cheques, transfers or BACS payments drawn on any account of the Institute will be authorised by the following signatories.

• Mark Malcomson – Principal
• Paul Evans – Director of Finance and Estates
• Nick Moore - Deputy Principal
• Denise Gill – Company and Institute Secretary
• Brian Watts – Director of Human Resources and Organisational Development
• Liora Ives – Director of Marketing and Student Services.

Any one signatory is required for amounts up to £5,000.

Any two signatories are required for amounts over £5,000.

For payments to a single beneficiary, where the payment is not covered by an approved contract and the amount exceeds £25,000, two signatories are required, one of whom must be the Principal, Deputy Principal or Director of Finance and Estates. In the absence of the Principal, Deputy Principal and Director of Finance and Estates, the payment will be authorised by one of the other signatories listed above in line with a formal written delegation of authority.

Post meeting note: The mandate agreed at the meeting included Danny Smith who has since resigned from the Institute. In order to provide a signed copy of the resolution to the bank, Danny Smith has been removed from the list of authorised signatories.

13/74Museum of London Artefacts

The Clerk presented a report asking the Governing Body whether it wished to renew the Loan Agreement for the artefacts found on site during the construction of the Keeley Street building. Members were advised that in 2008 Governors agreed to donate the artefacts to the Museum of London (MOLAS) in exchange for a loan agreement to display certain items from the collection at City Lit. MOLAS had now asked City Lit whether it wished to renew the agreement citing that it believed in making its collections as widely accessible as possible and City Lit was helping it to achieve this objective.

The Principal advised that space was at the premium and that the area currently housing the collection could be put to better use. Moreover, the objects on display were not of sufficient importance to attract much interest. He recommended that the Loan Agreement should not be renewed and the objects be returned to the Museum of London.

The Board discussed the report and agreed not to renew the Loan Agreement.

13/75Attendance Records for 2012/13

Members received a report setting out the attendance records for the Board and Committee meeting. She explained that in accordance with advice from the Audit Inspector, individual members’ attendance rates were listed in the appendix. The Chair of Governors had been kept informed when members had had difficulty in attending meetings and Joanna Reynolds had been granted a sabbatical in May until November 2013.

The Clerk reminded members that she had been asked to record attendances at meetings called at short notice separately as this had previously adversely affected the statistics. There had not been any meetings called at short notice during 2012/13. The attendance target for the Board for 2012/13 had been set at 80% and actual attendance was 82%. The PFA Inspector had stated at the June 2011 Inspection that 80% was an appropriate target.

The Board agreed an 80% attendance target for 2013/14.

PART THREE:MATTERS FOR REPORT

13/76Management Accounts and Year End Variance against Forecast and Budget

Joe Manifold introduced a report on the management accounts and the year end variance against forecast and budget. Attached to the report was the:

• Income and Expenditure account;
• Comparison of current surplus/deficit against prior year (before FRS 17);
• Balance sheet as at 31st July 2013;
• Student Bursary fund as at 30th June 2013.

Members were informed that when the budget was set for 2012/13 it was expected that City Lit would effectively breakeven, with a small surplus of £120k. By January 2013, it had become clear that the take up of courses on offer was less than expected and a paper was presented to Governors predicting a shortfall in student fee income of £548k which would be partially off-set by more grants and contracts being received, amounting to £147k. At that time it was predicted that payroll costs while being over budget, would return to the budgeted number by the end of the financial year. The net result was an expected deficit of £290k by the financial year end.No further work was carried out on forecasting and the same predictions were presented to Governors at subsequent meetings.

Joe advised that the July management accounts, which included, a calculation of deferred income as well as grants and bursary spends, showed a deficit of £503k. Income was down on both budget and forecast with Term 2 being flatter than expected, which was not sufficiently offset by the significant increase in Term 3 and the success of the Summer School. Pay, in particular sessional pay, was up both against budget and against the drop in income. These costs were mainly incurred in the first term when City Lit was unable to contractually and actually react quickly enough to cancelled courses and did not sufficiently analyse the impact of new courses and subsequent costs on its actual contracted tutor numbers.

The Board was informed that the Interim Finance Director, Gavin Sturge, and the new Director of Finance and Estates, Paul Evans, were addressing the three major concerns that had arisen due to this. Firstly, the structure and systems of the Finance Department were being reviewed to ensure that the department was structured correctly for the on-going needs of the College and the five-year plan. Secondly, it would be ensured that the interfaces with payroll and management information systems would be robust and upgraded where necessary. Finally, the forecasting methodology for sessional pay was being reviewed and monthly variances would be produced and monitored. A report on progress and recommendations would be presented to the Finance and Employment Committee in November.

An analysis of the key revenue on student fees, other grants and contracts, and Adult Skills funding claim variances was detailed in the report. On expenditure, an analysis of pay and overheads was detailed.

Members discussed the report and were advised that the Finance and Employment Committee had been disturbed by the outturn figures and had asked that the five- year plan be revisited at the next meeting. The Committee had understood what had gone wrong and the actions that were being taken to ensure that the situation did not occur again. Progress would be actively scrutinised. The Chair of the Audit Committee advised that the internal audit programme for 2013/14 would be reviewed and action taken to identify concerns and ensure that resources would be put in place so that assurance could be provided to the Governing Body.

The Board also discussed the contractual arrangements for sessional staff and management was asked whether the contracts could be rewritten to make them more flexible when courses needed to be cancelled. The Principal advised that the Executive was having discussions on this whilst trying to avoid a zero hours contract situation.

Members expressed their disappointment and surprise at the outturn figures and stated that there was a lot to learn from the analysis of the situation.There were monitoring issues which the Finance and Employment Committee must lead on and issues of audit and risk management to examine.

13/77Department Fee Income 2012-13

Nick Moore introduced a report informing the Governing Body about departmental performance in relation to fee income targets for 2012-13 and to actual income in the previous year, 2011-12. He advised that 11% year on year fee income growth had been achieved whereas the original growth target for fee income had been 20%. The report set out comparative income by terms together with cumulative enrolments and comparative variance.

Nick stated that Term 1 had started very badly with weak enrolments in September. A significant number of year long programmes underperformed, particularly in Drama and in Health and Movement.The term recovered somewhat due to the success of shorter programmes but it had set the tone for the year.

The Executive and SMT had therefore taken substantial remedial action in October 2012 including:

• the revamp of a new and extended Summer School for 2013
• opening between Christmas and New Year
• revising the refunds policy
• put significant investment into additional marketing.

Governors were advised that Term 2 had plateaued, showing no significant change from the previous year in terms of growth. However, the actions had started to pay dividends in Term 3 with a substantial rebound occurring. For the first time in City Lit’s history, Term 3 enrolments had been greater than in Term 2. Moreover, the Summer school had more than doubled from a very small base, extending into mid-August and offering a huge number of new subjects as well as some more intensive delivery modes. The new Science programme was successfully launched.

Nick also presented a departmental commentary on Visual Arts, Languages, Humanities, Drama, Music, and Health and Movement.

Members noted the report.