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ETF Project – Management Course Costing & Finance Management

ETF Project – Management Course Costing & Finance Management. FRIDAY 6 TH JUNE 2014. Dr Tim Strickland – CEO, FE Sussex Dave Stokes – Deputy Principal, Plumpton College. EDUCATION AND TRAINING FOUNDATION ETF. Why are we here?. We are here to:

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ETF Project – Management Course Costing & Finance Management

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  1. ETF Project – ManagementCourse Costing & Finance Management FRIDAY 6TH JUNE 2014 Dr Tim Strickland – CEO, FE Sussex Dave Stokes – Deputy Principal, Plumpton College

  2. EDUCATION AND TRAINING FOUNDATIONETF

  3. Why are we here? We are here to: Gain an understanding of the ‘More for Less’ agenda Raise our understanding of effective and realistic course costing Assist you in costing courses against a background of continual funding reduction Assist in enhancing college financial performance

  4. Why are we here? Outcomes: Identify the costs associated with an educational establishment Estimate the costs of ‘income-generating’ staff time List potential sources of educational income Calculate approximate course costings for full recovery

  5. 1995 Average Level of Funding (ALF) reduced from £30 / unit to £17 / unit 2000 LSC created to encourage localism (stimulated growth) 2008 general recession hits – banks bailed out 2010 fiscal tightening in education starts School budgets (pre 16) protected University Fees increased up to £9,000 per annum FE experiences disproportionate cuts Typical College 2010 - £10.6m educational income 2014 - £10.0m (but 150 more full time students and £600,000 extra staff costs FE – 2010 - £6,500 per full time student (750 contact hours) FE – 2014 - £5,600 per full time student (600 contact teaching hours) So, why can‘t we just throw more staff at the increased numbers? Do you know?

  6. FE Sector Background Doom Gloom Recession Reduction Impact

  7. FE Sector overheads – the misconceptions and myths It only costs £35 per hour for a part time teacher My bit of the college is viable – it is everyone else’s that isn’t Why should I pay for ‘management’ In industry this wouldn’t happen…. This isn’t a business – it’s a college….

  8. Schools (Junior) • 14 – 16 • 16-18 (18year olds – 17.5%) • 19+ SFA • HE • Apprenticeships • Full cost • Grant supported – • Personal and community related • Research grants Income sources

  9. What costs comprise

  10. The overheads of colleges • If you were asked to identify overheads you might say • ? • ? • ?

  11. The commercial reality

  12. Separate out the teaching related costs from the commercial activity Cost identification Teaching related costs Staffing (£6m annually) Salary and range On costs – 20% (Employers NI and pension) Teaching staff – admin Teaching staff – teaching Admin support staff Resources (non staff) (£6m annually) - examples Wide ranging eg Heating and lighting - £320k Maintenance - £330k General running (admin related) - £240k Exam costs -£250k Marketing - £125k Interest - £135k Bursaries and buses £600k Teaching resources £1.1m Depreciation - £1.5m

  13. Calculating course costing – exercise 1 • Average member of staff spends 60% of their time contact teaching (900 hours annually) • Average annual salary for the teaching time (900 hours) is say £20,000 per year • (plus on costs at 20%) • The course lasts 450 hours What is the total income required for full contribution to the costs? If the income from the funding body is £6 per individual student teaching hour, how many students do we need on the course?

  14. Nuclear Physics College Calculating course costing – exercise 2 • Average member of staff spends 40% of their time contact teaching (600 hours annually) • Average annual salary for the teaching time (600 hours) is say £25,000 per year • (plus on costs at 20%) • The course lasts 200 hours • What is the total income required for full contribution to the costs? •  If the income from the funding body is £15per • individual student teaching hour, how many students do we need on the course?

  15. Costing a course Producing a standard costing sheet: Determine teaching costs – number of hours, hourly rate, support time, multiplier overhead (50%?, 75%?) Determine non-teaching overheads – materials, travel, expenses, materials – ie anything extra you will need. Apply overhead multiplier to non-teaching overheads Add costs together Divide by number of learners. Assist in enhancing college financial performance

  16. Costing a course Questions to ask yourself Is the final cost reasonable? Does it allow for contingency? Is there a profit in it for the college/department? Is it at a rate the market will stand?

  17. The standard costing form

  18. In summary Identify income Identify income sources Identify all overheads - teaching/non teaching Add on the appropriate margin for the college Calculate the return to the college Calculate the cost per learner

  19. That’s all folks Thank you Questions to tim@fesussex.org.uk

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