Selby College Further Education Board
FINANCE COMMITTEE
TUESDAY, 22ndNovember 2016
Minutes of A Meeting Held in THE College Boardroom at 5.30pm
Present: Neil Marwood (Chair), Cliff Lunn, Allan Stewart, Vernon Wells and Ian White
In attendance: Richard Lewis (Audit Director, RSM UKAudit LLP), Pam Olbison (Director of Finance), Jeanne Woolford (Director of Governance)
1. / To Receive ApologiesThere were apologies from Jon Furniss. It was noted Cliff Lunn was unable to stay for the entire meeting due to another appointment.
2. / To Receive Declarations of Interest Relating to Any Items on the Agenda
There were no declarations of interest raised.
3. / Any Other Business
There was one item raised under Any Other Business concerning consideration of the acquisition of a business. It was agreed this item be taken and recorded under private business.
4. / To Receive and Approve Minutes of Previous Meeting Held on Tuesday,27th June 2016
Resolved Unanimously: The minutes from the meeting held on 27th June 2016 be approved as a true record and signed by the Chair.
5. / To Take Matters Arising from the Minutes of Tuesday, 27th June 2016
There was one matter arising under item 5 (3a) of the previous meeting held on Tuesday, 27th June 2016. Members requested an update on the position with the Apprenticeship Levy. Allan Stewart explained the new process advising it would commence on 1st May 2017.
6. / To Receive and Note SFA/EFA Financial Plan Letter 2016-2018
The Skills Funding Agency (SFA/EFA) letter dated 11th November 2016 and associated RAG-rated Dashboard report concerning the College’s Financial Plan 2016-2018 had been circulated with the agenda.
Members noted the score of “Good” financial health for the current budget year 2016-2017 was based on information and assumptions provided in the College’s Financial Plan.
Pam Olbison took members through the detail of the letter and accompanying data dashboard, which provided various key performance indicators and measures against both target benchmarks and benchmarks achieved in the sector. Members considered the dashboard, noting college performance was overall positive (all above the minimum).
Members queried the request by the SFA/EFA to model a range of potential scenarios to reflect where ESF income was as yet not secured. Pam Olbison advised this was not a concern for college due to the small ESF contribution. Also requested was a reflection of a sensitivity analysis and commentary showing the impact on income of the new employer routed funding for apprenticeships. Pam Olbison confirmed this was in hand.
7. / To Receive, Note and Approve the Draft Annual Report and Draft Financial Statements for the Year Ending 31st July 2016 for Recommendation to the Board
The draft Annual Report and Draft Financial Statements for the year ending
31st July 2016 had been circulated with the agenda.
Part of the discussion under the last two paragraphs of this item were recorded under private minutes.
Richard Lewis commenced by reiterating the differences in accounting treatment due to FRS102 and the new SORP before taking members through the report page by page. Key points were highlighted including changesto confirm compliance eg page 6 the new Reserves Policy. Emphasis was given to all references of the College as a Going Concern, which was a key discussion point.
Members’ attention was then brought to page 21 and 2 key statements, which included the opinion of the Audit Committee and the statement by the Corporation that college continues to adopt the going concern basis in preparing the financial statements. It was noted there had been no cases of irregularity during 2015-2016 (page 22).
Members’ attention was then brought to the unqualified opinion of the External Auditor on page 24:
Opinion on the Financial Statements
- give a true and fair view of the state of the College’s affairs as at 31st July 2016 and of the College’s surplus of income over expenditure for the year then ended; and
- have been properly prepared in accordance with United Kingdom Generally
Richard Lewis then took Members through the accounts and balance sheet outcomes responding to questions as raised before bringing attention to the conclusion of the External Auditors on the final page.
Discussion followed regarding the massive impact the introduction of the new SORP had on the financial results and the impact on college reserves in going forward. The deferred capital grants had previously been reported within the balance sheet reserves and under the new SORP had moved to liabilities.
Also discussed was the pension revaluation (LGPS) and the risk going forward in terms of the College’s ability to maintain a surplus. The total pension charge had hit income and expenditure and in the balance sheet the actuary valuation had resulted in aconsiderable movement.
Resolved Unanimously: to recommend the Draft Annual Report and Financial Statements to the Board for approval and signature on 6th December 2016.
Richard Lewis and Cliff Lunn left the meeting.
8. / To Receive and Consider Management Accounts for Period 2 and 3 for Budget Year
2016-2017
The Management Accounts covering period 2 and 3 which included performance from 1st August 2016 to 31st October 2016 had been circulated to members following the agenda.
a)Period 3 Management Accounts, 1stAugust – 31st October 2016
Pam Olbison took members through the Accounts advising the year to date operating outcome was slightly worse than the latest forecast profile. Pam continued by advising that a thorough review of the pay expenditure budget had taken place in October and the forecast had been adjusted accordingly.
It was reported a small provision had originally been included for the Triennial Review within the accounts. Pam Olbison confirmed further re-budgeting would now be undertaken to provide a larger provision and there was every confidence in plans to offset.
The financial status was reported as green and it was stated there was confidence the annual minimum approved contribution surplus was achievable.
Members accepted the Management Accounts.
9. / To Receive and Consider for Recommendation to the Board for Approval a Simplified 5-Year Financial Plan for Submission to Area Review Steering Group
Members considered a recommendation circulated with the agenda for the approval of a simplified 5-Year Financial Plan. Pam Olbison explained the plan had been prepared following a request linked to the Area Review.
Pam took members through the commentary and plan. A question was raised regarding whether protecting the annual surplus was achievable. Pam advised members of the many new college initiatives.
Discussion followed regarding pension schemes. It was explained that only the LGPS scheme (support staff) was a defined benefit and that college was exploring the implementation of a new pension scheme whereby salaries would be higher and college contributions to the scheme lower.
Members asked whether learners and income figures within the plan reflected the shortfall in numbers. It was confirmed they did.
Resolved: Unanimously to recommend the 5-Year Financial Plan to the Board for approval on 6th December 2016.
10. / To Receive for Recommendation to the Board the Reviewed Updated Budget 2016-2017
The reviewed budget 2016-2017 had been circulated with the agenda. Members considered the budget adjustments. Pam Olbison explained the updates which included the Local Government Employers contribution rate increase, the deficit lump sum annual payment increase and the shortening of the deficit repayment period. A summary of charges was outlined.
It was stated the Board had previously approved a decision to increase the College contribution. A full review had followed and the revisions had significantly improved the contribution figure. It was reported further possible savings were being investigated and further improvements to the Contributions surplus would be assessed, as financial performance was reconciled against college operations.
Resolved: Unanimously to recommend the Updated Budget 2016-2017 to the Board for approval on 6th December 2016.
11. / To Further Consider the Local Government Pension Triennial Valuation and Impact
A report had been circulated to members with the agenda providing an update on the Local Government Pension Triennial Valuation.
Members carefully considered the valuation and impact on college noting the College’s Risk Management Group were closely monitoring.
Pam Olbison outlined a North Yorkshire County Council employer briefing she had recently attended. Members noted it was likely to be the end of January 2017 before assumptions for the next 3 years would be available.
It was confirmed further updates would be provided to the Board/Finance Committee as more information became available.
12. / To Receive and Consider Student Recruitment 2016-2017 and the Impact on College Income
A report detailing Student Recruitment 2016-2017 and Impact on College Income had been circulated with the agenda.
Members carefully considered the detailed report noting the decrease in full-time 16-18 numbers, which wouldnegatively impact college income due to the lagged funding methodology andalso the 2017-2018 EFA allocation.
Whilst members accepted the reasons for the decrease they expressed concern at college earning significantly less than it was funded for in 2016-2017.
Members considered management’s approach of seeking growth and spreading risk in order to try to off-set some of the shortfall and funding reductions. Members noted:
- Using in-year part-time and substantial part-time startsto assist;
- 16-18 Apprenticeship numbers had increased and these would be funded in 2016-17;
- Higher Education numbers 2015-2016 had increased in line with growth targets;
- 19+ loans had increased and a growth request was being submitted to the Skills Funding Agency.
13. / To Receive and Consider Indicative Terms from Lloyds Bank to Fix a Further Sum of the Current Long Term Variable Rate Borrowings
A report on Indicative Terms from Lloyds Bank to Fix a Further Sum of the Current Long Term Variable Rate Borrowings had been circulated with the agenda.
The report included current college borrowings and a summary of the current fixed rate borrowing indications. Also provided was the Bank’s view of the current markets.
Members carefully considered 2 quotes and associated repayment schedules and agreed to no change at this stage but to review the college’s position again at the next scheduled Finance Committee meeting.
14. / To Receive and Consider Indicative Terms from Lloyds Bank to Enter into Further Borrowings in Respect of the Current LEP Part-Grant Funded Aspiration Building Extension
A report had been circulated with the agenda on Lloyds Bank Post Sanction Terms for Further Borrowings.
Members carefully considered the report which provided indicative terms from Lloyds Bank if college was to enter into further borrowings.
Pam Olbison advised it had become apparent during the Area Review financial interview that Selby College borrowings were significantly low as a percentage of income for year ending 2016. It was suggested colleges’ financial health would improve with the addition of loans to fund capital investment initiatives, rather than using college cash reserves.
Members considered two post sanctions provided by Lloyds Bank providing bilateral term loans, one a rolling five-year commitment and one a fixed five-year commitment.
Concern was expressed at the use of college’s 5 residential properties as security against the loans. It was agreed Pam Olbsion would discuss alternatives with the Bank and report the outcome to the next scheduled Finance Committee meeting.
15. / To Receive and Consider a Progress Update on the Aspiration Building Extension
A Progress Update Report on the Aspiration Building Extension had been circulated with the agenda.
Members noted progress of building works and that the project was on track to meet required deadlines to ensure maximum grant funding. It was confirmed by management pro-forma invoices would be requested if required.
16. / To Receive and Consider a Treasury Management Report
The Treasury Management Report had been circulated with the agenda and was considered by members who noted the current treasury deposits, interest rates and end of year status of college investments.
17. / To Agree Any Items of Private Business
It was agreed one item under Any Other Business and some minutes under item 7 be retained under “private business”. Reports also agreed as “private business” under items 7, 8, 9, 10, 11,12,13,14,15, and 16.
18. / To Agree Date of Next Meeting
The next meeting of the Finance Committee would take place on Tuesday,
14th March 2017 commencing at 5.30pm in the Boardroom.
The meeting closed at 7.15pm
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Finance Committee Meeting 22nd November 2016.JW