Surplus doesn’t equal success: an analysis of Further Education college financial sustainability and learner outcomes

Author: Rosalind KennyBirch   |  

A particular focus of our research work is how places can take control of their economies and drive local growth. In that regard one of our current research projects is looking at how Further Education institutions can be more strategic, better aligned with local employment opportunities and turn out higher quality future employees.

One of the factors we are considering in our research is the relationship between a college’s finances and its students’ future employment prospects.

Our analysis of 134 colleges in England shows a mixed picture (see graph below). Some of the most financially stable colleges (we use surplus in the last financial year as a proxy for financial sustainability) perform worst on learner outcome (measured by sustained employment rate for all adult learners that completed an eligible further education learning aim in the 2011-2012 to 2013-2014 academic years) and vice-versa.

NB: Barnsley College is not included in this analysis because it is an outlier. Last year the college had a surplus of £15,049,000. The next highest surplus was Blackpool and the Fylde College at £7,276,000.

For instance Bradford College ranks ninth on financial stability (a net income of £5,579,000) and second last on learner outcome. Of 2011-2012 to 2013-2014 graduates, 35% were in sustained employment – fourteen percentage points below the average sustained employment rate (49%). In comparison Cambridge Regional College ran a deficit last year and yet is 10% above the national average on learner outcome at 59% sustained employment. Similarly, North Shropshire College ranks 134th in financial sustainability but 50% of its graduates are recorded in sustained employment, above the national average.

Our research shows there is no clear relationship between a college’s finances and its students’ future employment prospects. This has implications for reform. Firstly, successful reform is more complicated than just pumping more cash into the system. In many debates around funding of public services there is a general hypothesis that more money means better outcomes. Our analysis demonstrates this isn’t true.

Secondly, a focus on one – finances or outcomes – may detract the other. For instance, by focusing on creating multiple sources of revenue, some FE colleges may be paying insufficient attention to students’ needs.