Reported loss does not reflect college finances
Hamish Hutchinson • Published 31 Oct 2012 17:00
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FORTH Valley College had the second biggest financial loss of all colleges in Scotland last year, according to the country's public spending watchdog.
Audit Scotland revealed in its latest report that Forth Valley had a deficit of £2.427 million in 2010/11 - 7.7 per cent of its income.
Excluding the City of Glasgow College, only Dundee College had a higher deficit of £2.532m (8.2 per cent of income).
Forth Valley College bosses say the report is not an accurate reflection of its "sound ongoing financial health".
The report revealed that 12 colleges reported operating deficits totalling £7.7 million in 2010/11, with only five having a deficit exceeding two per cent of
their income.
The watchdog attributed some of the losses to "management restructuring".
And Forth Valley College said its deficit was due to "planned estates
development" of the new Alloa and Stirling campuses.
Linda McKay, Principal for Forth Valley College, said, "Regrettably Audit Scotland has not reflected the exceptional 'one-off' nature of this position in
relation to Forth Valley in the way that their report clarifies the position for City of Glasgow College.
"If this exceptional item is excluded Forth Valley College delivered an
operating surplus and continued to deliver excellent learning to our students as evidenced by the recent Education Scotland review.
"Of more concern to our local communities is the impact of year on year financial cuts to the college sector which have seen our core college funding allocation reduced by 19 per cent over the last three years."
The Scottish Government has forecast
that its revenue grant support to the college sector will fall by 24 per cent in real terms between 2010/11 and 2014/15, from £545 to £471 million - capital support is projected to fall by 46 per cent over the same period.
It called for clarity from the government over structural reforms of the sector, including the creation of 13 college regions and mergers.
Under the reforms, Forth Valley College would be based in a 'Central' region and would not require to merge with other institutions.
Auditor General for Scotland, Caroline Gardner, said, "The overall financial standing of Scotland's colleges was sound in 2010/11.
"But most colleges operate to tight margins and there are major challenges ahead. The Scottish Government contributes around three-quarters of
colleges' combined incomes but this funding is set to reduce by around a
quarter over the next three years.
"The planned reforms have the potential to bring a more strategic and coordinated approach to the management of Scotland's colleges at a national level, and more robust planning of college provision within regions."
The report revealed of 37 colleges, only Forth Valley, West Lothian andLewis Castle had a deficit in their income and expenditure (I&E) reserves at the end of 2010/11.
Auditors say a a deficit "could indicate financial problems". However the report attributed the FVC results to cash advances by the Scottish Funding Council to support estate programmes.
It read, "Our analysis of West Lothian College's and Forth Valley College's accounts for 2009/10 and 2010/11 suggests their underlying financial health is reasonably robust and they appear capable of eliminating the I&E reserve deficit and repaying the advance from their own resources."
This article appeared in Alloa & Hillfoots Advertiser 31 Oct 12
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