Finance & Resources Committee held on Monday20th June 2016 from 5.00pm.
Confirmed Minutes:
Present:Mr J Dawson, Ms T Wright, Ms J Pryce, Mr P Cropper and Ms A Williams
(attendance 100%)
In attendance:Mr Shaw
Clerk:Mrs Coupland
- Apologies for Absence/ Declaration of Interest
No apologies were submitted
No declarations of interest were recorded.
- Minutes from Meeting held on7th March 2016
Resolved:
- That the minutes be accepted as a correct record.
- Matters arising
Treasury Management Policy: Management of short and long term investments.
Mr Shaw advised Members that the criteria for deposits agreed at the meeting for the Treasury Management Policy is indeed feasible.
- Latest Management accounts
Mr Shaw presented the management accounts for May 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 £2,288k, being £140k above budget. The reasons for the variance from the budget of £2,149k,mainly due to:
•The £77k underlying position as at 31 July 2015
•Extra £20k high needs income
•Reduction in staff cost budget by £50k as extra sets contingencies are not required.
•£80k of bursary funds rolled forward to 2016-17, for use when annual allocations reduce by £60k
•Offset by £10k more EFA Core Funds due last year rather than this year.
•Offset by Extra £32k set aside in the general contingency, due to the uncertainty around future funding
•Offset by £60k set aside for a staff inspection bonus
The Committee was also informed that the Income and Expenditure account shows that the surplus is expected to be to be £43k above the budget of £128k due predominately to the above factors. Mr Shaw also explained that £96k of contingencies still remains.
Mr Shaw confirmed that Student Recruitment at 2352, just exceeded the 2350 target by day 42 on 12 October. As at 1 June, this had dropped to2261 (96.1%), which is still above the target of 95.1%
The Committee was also informed that a Condition Improvement Fund bid was not successful for the dining area project. Some minor alterations to the dining areas are being discussed with the Caterers, with potential capital support from them. The smoking shelter canopy was installed at Easter at a cost of £12k. Some further outdoor canopy areas are being considered for Summer 2016. Other minor planned maintenance works are also being considered for Summer 2016 through the budget setting process for 2016-17.
Resolved:
•That the report be received.
- Annual Budget 2016/17 & Financial Forecast
Mr Shaw advised members that this year, only a 2 year forecast is required again.
The draft forecast has been formulated based on Day 42 student numbers and the £4000 per student & other known EFA funding factors. Mr Shaw presented the forecast figures in the EFA format as well as in the College management accounts format. A commentary on the salient features was also provided including a sensitivity analysis, which also mentions the options from the ABR process
There are also a number of funding and extra cost pressures (£682k in total)thatpossibly need to be taken into account from 2016-17, being:
-46 less funded students, 2398 – 2352, (£195k less)
-adverse EFA funding factors: retention, disadvantage,course weighting (£189k less
-Extra employers’ NI costs from Apr 2016 of £131k, £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 (£35k extra)
-Scale progressions (£92k extra)
Mr Shaw informed members that the figures also included the effects of the new method of accounting for F&HE education from 31 July 2016 year ends. Effectively, this makes the solvency of Colleges look worse, but a new financial health assessment method neutralises this effect. The forecast figures for the College still maintain an Outstanding rating for financial health across the period.
Ms Williams informed the Committee that she had received an email letter from Peter Lauener , Chief Executiveof the Education Funding Agency (EFA) and the Skills Funding Agency (SFA). The letter, shared with committee members, is to advise the college on how the EFA and SFA in partnership with the Association of Colleges/Finance Directors’ Group, have worked together to consider ways in which the financial planning information thatcolleges are required to submit to the EFA and the SFA by 31 July each year, can be strengthened and improved in an effort to move the FE Sector to become as financially robust as possible. The letter also asked for the Governing body to test assumptions of the financial plans and ensure that the commentary holds up against the checklist as provided within Financial Planning Handbook.
Mr Shaw confirmed that HNC’s financial commentary has historically been set to the checklist and provides detailed explanations of assumptions underpinning the financial plan to enable Governors and the Senior Leadership Team to take an informed view about the reasonableness of forecasts prior to approval.
Members took this opportunity to scrutinise the commentary on the salient features whilst ensuring that it also reflected the financial planning checklist. From the robust discussion had members sought clarification on only a few minor points in particular the reasonableness of the apprentice levy. The committee subsequently endorsed the major assumptions underlying the formulation of the financial forecast. The main driver being the allowance for student numbers to be funded at 2354 for 2016-17 (being the ‘lagged’ actual numbers for 2015-16) but enrolled students to be maintained at 2350 for 2016-17 and thereafter. Members were also satisfied that the other assumptions are driven to work within the agreed financial parameters from 2016-17 as set by the Corporation in March 2016:
-To maintain Outstanding financial health
-Not to generate an Operating Deficit; and
-To maintain cash levels at £2.1m but allow to reduce to £1.4m with agreed capital developments
Resolved:
- To recommend to the Corporation the approval of the 2 year financial forecast 2016-17 for forwarding onto the EFA by 31 July 2016
- To recommend that the Corporation assess the financial health of the College as ‘Outstanding’
- To recommend to the Corporation the approval of the annual budget for 2016-17, with:
income £10,967k
Expenditure £10,947k
Operating Surplus £20k
Capital expenditure £600k (with £nil capital support)
- For Mr Shaw to confirm to members the sum of apprenticeship levy for 2016 -17 and thereafter.
- 6th Form College Financial Benchmarking
Mr Shaw provided the Committee with analysis comparing the College financial information against the other 93 sixth form colleges for the year ended 31st July 2015.
Mr Shaw referred to the major trends in the annual benchmarking data. It was noted thatHNC’s compared favourably in level of operating surpluses by being £139k higher than the average. Furthermore, the number of learner computers is 50% more than the average. Members also noted that the average EFA cash protection was £350k – it is nil at HNC again demonstrating how financial efficient the college is.
Resolved:
- That the reports be received
- Financial Regulations
Mr Shaw advised the committee that there was only one amendment which was to increase the credit card limit to £10,000 for each of the 2 credit cards that the college holds. This is to allow the College to access value on line purchasing, whilst following all other purchasing regulation routines.
Resolved:
- For the Corporation to approve the recommended amendment to the Financial Regulations.
- Fees and Charges policy – annual review
The Committee considered the revised Fees and Charges Policy 2016-17.
Members endorsed the amendments proposed to include competitive post level 3 course fees, to clarify additional performance tuition costs and inform of the colleges approach to be taken for considerate usage of printing and photocopying.
Resolved:
•To approve the change to the Fees & Charges Policy
- Expenses policy – annual review
The Committee considered and endorsed the proposed changes to the Expenses policy. It was agreed to clarify that the expenses policy applied also to Governors.
Resolved:
- To approve the Expenses policy for staff and Governors.
- For the Clerk to distributethe policy to all Governors,
- Self Assessment of Committee Work/Business and annual review of terms of reference.
The Committee reflected upon its work throughout the academic year and agreed that it is fully covering its terms of reference.
Members also considered how the Committee’s work has impacted/ contributed to the overall work of Governing Body during this academic year and that of the leadership of the College. Members contributed their opinions for the Clerk to insert into the committee’s self-assessment report which will be distributed to all Governors.
Members were congratulated by the Clerk for achieving 100% attendance at all committee meetings throughout 2015/16.
Resolved:
- That the Committee has complied with its terms of reference
- Any other Business.
There was no other business
- . Learner Impact Reflection
The impact of discussions and scrutiny of the Committee’s work in improving the outcomes and experience for all learners was considered and the following agreed:
- Critical review of annual performance ensures that the Finance Committee has fulfilled its delegated responsibilities.
- Ability to financially support all elements of the Strategic Plan for the college
- Policy reviews enable the committee to be confident that the college is able to sustain services for students
- Annual review of the Financial regulations assures members that the college is able to fund all elements of student experience and outcome.
13.Determination of confidentiality
For the Financial Forecast and Commentary to be determined as confidential until approved by the Corporation.
14. Date of next meeting: to be agreed
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