POOR planning and overly optimistic expectations for tuition fees led to financial troubles at a Scottish college, a watchdog has found.
Scotland’s Auditor General Caroline Gardner said New College Lanarkshire, given a £1.9 million advance from the Scottish Funding Council (SFC) in July 2017, is likely to need more money to achieve financial stability.
The college, formed from Motherwell, Cumbernauld and Coatbridge colleges, has forecast a deficit of £657,000 in 2017/18 but Gardner said the amount of extra funding likely required to achieve a stable position has not yet been finalised.
In a report, she attributed the institution’s cash-flow problems to bringing in £900,000 less than its “ambitious” tuition fee income target of £6.1 million and not budgeting any money for pay increases following the reintroduction of national bargaining, which cost £400,000.
The college’s underlying deficit for 2016/17 was £560,000, or one per cent of total income.
To tackle the situation the SFC has agreed to give the college £1.1m for a voluntary redundancy scheme which does not require repayment.
The report highlighted that the college had taken steps to improve its financial reporting and reduce estate and IT costs, saving around £2m.
Gardner’s report said: “It received an advance of its 2017/18 allocation from the SFC.
“The college also received additional strategic funding from the SFC in 2017/18 and expects it will require further additional funding to bring it to a stable financial position.
“At the time of this report, the SFC and the college had yet to agree the amount of funding.
“The college is continuing to work with the SFC to stabilise its financial position and I will be keeping its position under review.”
A plan to reduce cost pressures – a condition of the SFC advance – has yet to be finalised.
Gardner also published a report on Edinburgh College which she said had made “good progress” on its financial problems.
It has reduced its deficit from £7m to £2.5m and exceeded its teaching and learning target for the first time since 2012’s college merger.
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