Minutes of the Finance & Business Operations - 5 April 2022
|Group||Minutes of Finance & Business Operations Committee|
|Location||P/CEO’s OFFICE, LONDON ROAD CAMPUS, SHREWSBURY|
|Date||5th April 22|
|Minutes Membership||G. Mills (Chair), D. Pulford, and R. Wilson.|
|In Attendance|| Member of the Senior Leadership Team: |
P. Partridge, Finance Director (FD)
Clerk to the Board, T. Cottee
|Apologies||J. Staniforth (Principal/CEO) and P. Tucker.|
10/22. Declarations of Interest
11/22. Minutes of Meeting Held 08 February 2022 (Appendix – Agenda Item 3)
Resolved: That the Minutes of the meeting held on 08 February 2022, be approved as a true and correct record. They were signed by the Committee Chair at the meeting.
12/22. Matters Arising
13/22. Period 7 Management Accounts and Mid-Year Budget Update (Appendix – Agenda Item 5)
The Committee considered a report (previously circulated) with respect to the Management Accounts to 28 February 2022, which highlighted the key results, measures, and risks. All governors had been supplied with a copy of the Report.
Regarding the 2021 – 2022 Outturn, the FD reported that there had been some significant adjustments to forecast since the Period 3 October 2021 management accounts (F&BO Min. No 58/21 refers) reflecting the challenges facing the college as in-year activity levels materialised.
The forecast outturn had weakened the Operating Surplus. The main reasons for this were
- The forecast outturn for Apprenticeship income had been reduced. However, some of this had been offset by a reduction in forecast subcontract costs included in the previous forecast (F&BO Min. No. 04/22 refers) and by improved forecast Higher Education (HE) and education contract income.
- Full cost and exams fees had also been reduced to reflect the prior year’s profile income and lower year to date income.
- The contingency placed in the Accounts for the costs of agency staff to cover unusual absences had been removed and forecast pay costs had been updated to reflect the current expected run rate.
- The forecast now reflected a series of additional non-pay costs reflecting both in-year growth and ongoing covid and cost inflations. Overall, forecast costs had been increased to reflect these costs pressures.
The main 2022 – 2023 outturn risks continued to be -
- The impact of lower than planned funded students numbers enrolling at the college in 2022-23. Whist this emerging risk was expected to be partially offset by continued growth in apprenticeships, and potentially lower than anticipated staffing costs (as the 2022-23 budget had assumed further staff increases to meet additional student growth), at this stage, this was not expected to reduce the surplus expected in 2022-23.
- Cost Inflation and in particular energy costs remained a significant risk area with inflation currently over 5% and anticipated to peak at 8%. The impact of these cumulative costs increases would further impact the college’s cost base for 2022/23. Student Travel and welfare costs were also ahead of budgeted levels
- The first seven months had highlighted an increasing concern with the college’s ability to deliver its Adult Education Budget (AEB) offer. The current forecast, therefore, anticipated a reduction of income. The significant adverse impact on distance learning activity due to the impact of AEB devolution had also been recognised with a discount in planned earned income this year against the original budget.
- Trade Union Studies activity continued below planned take up. The budget had expected a return to face to face activity with larger groups and greater engagement from GMB reps which had not materialised at the expected rate, due to the slower than anticipated return to pre-Covid 19 pandemic engagement levels. This area, therefore, remained under regular review as any further under-delivery below £750k would further increase the amount due to be clawed back and directly reduce EBITDA.
The Committee also acknowledged that Apprenticeship income remained significantly positive; however, the full year forecast had been reduced overall since Period 6. This reduced forecast still required additional income from extra new starts or from students who had started recently whose details were not yet fully on the student records system to meet the forecast outturn. It also assumed an average achievement rate of 80% of those who remained on program and who were planned to complete their apprenticeship by the end of the year.
The Committee also discussed ongoing capital and estates projects and the progress of grant bids. The college had a number of active bids in play, as well as participating in several funded projects in partnership with other colleges.
In response to a question, the FD explained that the college continued to monitor closely the impact of growing inflation on the budget and that the impact of upcoming pay awards was being modelled.
Resolved: That, having considered the report, the Committee received the Management Accounts to 28 February 2022.
As part of the discussions on the College’s Risk Register (previously circulated) agreed by Board (Board Min No. 19/20 refers), the Committee examined those risks within its remit to ensure that they had either been identified or adequately discussed at the meeting. The Committee agreed that it had been advised of and had considered risks with respect to rising energy costs and the impact on the College.
The FD advised that –
- Committee Risk Register F&BO 5 (Risk of Breach of Bank Covenants or Insolvency) had been removed from the Strategic Risk Register; and
- Strategic Risk Register No. 22 (Exclusion from Register of Accredited Training Providers (ROATP) in 2022, if reapplication process is not successful) had been removed as the college had been successful in its application for inclusion on the Register. The Committee congratulated the college on this achievement.
The FD reported that the college was in consultation with the Local Government Pension Scheme (LGPS) Fund Manager, following a recent request to put in place a Bond to secure liability, which could potentially increase the college’s contribution rate. This had also been reported to the Audit Committee. The Committee observed that, if the college did not obtain the Bond sought, the Fund Manager may require the college to pay more pension contributions and that this may need to be reflected in the Strategic Risk Register.
Following the recent appointment of Internal Audit and Financial Statements auditors (Board Min. Mo. 24/22 refers), the Committee Chair sought assurance that handover arrangements were in place. The FD reported that arrangements were already in hand and he was confident the college would receive a high level of service as the firms who had secured the appointments had demonstrated a good understanding of the issues affecting the sector.
15/22. Date of Next Meeting – 25 May 2022 at 5.30 p.m. Venue - tbc.
The meeting concluded at 6.38 p.m.