The Chair wished it to be recorded that the items on the agenda for this meeting were in accordance with the Committee work plan agreed at its meeting held on 25 September 2019 (F&BO Min No. 35/19 refers).
48/19. Declarations of Interest
R. Heath declared a standing interest as an employee of Harper Adams University.
49/19. Minutes of Meeting Held 04 November 2019 (Appendix – Agenda Item 3)
Resolved: That the Minutes of the meeting held on 04 November 2019, be approved as a true and correct record, subject to the following correction –
41/19. Management Accounts to 30 September 2019
- The forecast outturn for HE recruitment had been reduced by $£40k. Similarly, the forecast outturn for International fees had been reduced by £57k to reflect actual amounts charged for the year.
50/19. Matters Arising
Minute Number 43/19 - Estates Report Termly Report.
It was confirmed that the communication referred to in the Confidential Minutes of the meeting held 04 November 2019, had been despatched.
51/19. Financial Statements Year End 31 July 2019 (Appendix – Agenda Item 5)
The Committee considered a report with respect to the draft year-end financial statements, including (previously circulated).
- Indicative year-end position;
- Cash balances;
- Net assets, including the impact of the reduced pension liability following the FRS102 actuarial re-measurement process; and
- The Financial Health Score of Good.
In the opinion of the auditors, the Financial Statements gave a true and fair view of the state of the College's affairs as at 31 July 2019 and of the College’s deficit of income over expenditure for the year then ended.
The Finance Director referred to this opinion and explained that, whilst the Statement of Comprehensive Income indicated a deficit, this reflected the Teachers’ Pension Scheme Re-evaluation. The Committee acknowledged the impact of this pension scheme revaluation and that, having adjusted for this, the financial position of the College at the end of the financial year was broadly as projected.
The Audit Committee had also considered the draft Financial Statements at its meeting on 27 November 2019 (Audit Min No. 27/19 refers) and had recommended them to Board. That Committee had observed that the Draft Financial Statements were well-prepared and comprehensive.
The Committee having reviewed the Statement’s commentary, requested that the final version submitted to the Board and, after approval, placed on the College’s website, incorporate a preface, explaining the College’s financial position and strong educational performance to provide context to the Statement of Comprehensive Income.
The Finance Director advised the Committee that governors were required to assess the College’s going concern and that the auditors needed to be satisfied that the assessment was robust. The Committee accordingly considered a paper (previously circulated) with assurance regarding the status of the College as a going concern. The 2018/19 draft year end accounts, 2019-20 financial plan and year to date operating outcomes demonstrate continuing good financial health. The Finance Director reminded the Committee that he had been granted delegated authority to seek an overdraft facility, should it be required, to cover the period from the end of February to the end of April. Whilst the Cash-flow forecast anticipated no immediate requirement for this, it was prudent to ensure that the College had sufficient facilities in place to ensure that there is no issue during this period.
Resolved:
That, having considered the draft Financial Statements and the report of the Finance Director on going concern, the Committee recommended to Board that:
- The Committee considered the Shrewsbury Colleges Group to be a going concern; and
- The draft year-end financial statements 31 July 2019, as amended at the request of the Committee, be recommended to the Board for approval subject to the minor amendments, clarifications and adjustments reported being made.
ACTION: RECOMMEND TO BOARD
52/19. Management Accounts - 1 August to 31 October 2019 (Appendix – Agenda Item 6)
The Committee considered a report (previously circulated) with respect to the management accounts for the two months to 31 October 2019, which highlighted the key results, measures and risks. All governors had been supplied with a copy of the Report.
The Committee reviewed the Accounts and particularly noted that the outturn year to date was broadly as anticipated. The risks facing the College due to the lack of Non-Levy Apprenticeship funding had been significantly mitigated, but the overall risk in this area remained material. A new risk had arisen as the result of a change to the allocation of advance learner loan facilities by the Education & Skills Funding Agency (ESFA) which the College was seeking to remedy.
The Committee reviewed the key changes to the forecast outturn –
- Due to Devolution of AEB budgets, the College’s AEB allocation had been reduced. However, as a result of higher than planned numbers of students on programme at the end of July 2019, the AEB allocation for 2019-20, was slightly higher than budgeted. All devolved authorities were expected to allow the same 3% tolerance as the ESFA before requiring a claw back of any under-delivery of funding. It was anticipated that the College would utilise slightly more than the current allocation but within the 3% tolerance. The Committee acknowledged that the growth in the College’s TU education work affected capacity for new subcontracting. The Committee agreed that, where at all possible, the College should continue to support and work with subcontract partners, and to ensure their own stability and access to funding for their delivery. The Committee discussed the impact of the introduction of the Digital Register on provision and agreed that the College would need to support SMEs through the process.
- All Apprenticeship providers were required to re-apply to the Register of Approved Training Providers (RoATP) by the end of 2019. The College had submitted its application and was awaiting an outcome from the ESFA. The Committee requested that the Key Financial Risks Section of the Management Reports also include the risk that SBC does not successfully re-apply for its RoATP registration.
- The Committee acknowledged that, despite the additional efforts to attract more students, enrolment numbers in HE were down on previous year’s levels. The Committee discussed the reasons for this, including the demographic ‘pinch point’ feeding through to higher education and increasing competition from other providers. It was noted that there were more students on part-time HE courses. The Finance Director was also investigating income levels from tuition fees for non-prescribed HE courses.
- The Committee discussed the College’s pay to income ratio and how it compared with other colleges in both the sixth form and general further education sectors. The College’s ratio was below the sixth form sector average but higher than the recommendation from the FE Commissioner for GFE colleges. This reflected the tertiary mix of provision of the College. It was also noted that the decline in sub-contracting had increased the pay: income ratio, though it had also increased the margin on the activity. It was finally noted that cleaning and catering are both in-house.
The Finance Director provided a verbal update on Advanced Learner Loans. It was expected that the College would now receive additional funding to cover demands on the facility. The College had communicated with affected students and the Chair sought assurance that students affected had not suffered financial hardship. - The Finance Director referred the Committee to the Cash flow & loan Covenant forecast produced in line with ESFA Guidance and confirmed that this would be included in the Accounts quarterly going forward.
Resolved: That, having considered the report, the Committee received the Management Accounts to 31 October 2019.
53/19. AoC Revised Note on College Solvency and Insolvency for Governors and Leaders (Appendix – Agenda Item 7)
The Committee received a revised Note on College solvency and insolvency for governors and leaders has been produced by the Association of Colleges (AoC) (previously circulated).
The July 2019 Board meeting had received a full presentation from Stone King LLP and RSM, LLP on the College Insolvency Scheme introduced for colleges by the Technical and Further Education Act 2017.
As part of that presentation, governors had received an update on –
- The current position;
- An overview of the Insolvency Regime, including the Special Administration process;
- Governor Liability; and
- Insolvency guidance, governance actions and behaviours to reduce the risk of insolvency through good financial management.
The Board had observed that already it carried out the majority of the advised actions and behaviours; however, it would keep under regular review going forward. (Board Min. No. 20/19 refers)
54/19. Risk
As part of the discussions on the College’s Risk Register and Board Assurance Framework agreed by Board (Board Min No. 67/17 refers), the Committee examined those risks within its remit to ensure that they have either been identified or adequately discussed at the meeting.
The Committee concluded that the risks connected with the Committee had been identified, particularly in the Management Accounts and that there had been sufficient discussion of the issues at the meeting.
55/19. Any Other Business
Launch of Integrated Financial Model for College
The Finance Director advised that the ESFA had launched the new Integrated Financial Model for Colleges (IFMC) with a deadline for completion of 28 Feb 2020. The ESFA required approval of the Return from the Board and, in order to accommodate this deadline, it was proposed to convene a Board meeting as part of the Strategic Planning Day scheduled to be held on 31 January 2020. The Board Chair sought assurance that the Finance Director had the capacity and resources available to complete the Return within this challenging deadline.
56/19. Date of Next Meeting – 25 February 2020 @ 5.30 p.m. Venue – Priory House, Welsh Bridge Campus.
Concluded at 7.40 p.m.