Report 98/36

Public resources for teaching and student numbers 1997-98

Executive summary

Purpose

1. This document presents the underlying data on which the Council's allocations of funds for teaching in 1998-99 were based.

Key points

2. In the 1998-99 academic year, we introduced a new method for allocating our teaching funds to higher education institutions (HEIs).

3. This report is a retrospective look at the teaching funds and student numbers in the 1997-98 academic year. We used this information to compare the actual level of resources allocated in 1997-98, using the previous method, with the resources expected under the new method. The result determined whether each institution's core funding rolled forward from one year to the next, or whether we adjusted its grant or student numbers.

4. This document does not cover further education colleges (FECs) directly funded by the HEFCE, as we have not yet applied the new method to these colleges.

Action required

5. No action is required.

Background

6. For the 1998-99 academic year we introduced a new method of allocating our teaching funds to HEIs. This document outlines the method, and presents the underlying data on which the funding allocations were based. It does not cover FECs directly funded by the Council.

7. This report is a retrospective look at the teaching funds and student numbers in the academic year 1997-98. In that sense it is similar to the reports on average units of Council funding (AUCFs), which described the actual outcomes of the previous funding method. Outcomes for 1998-99 will be published in the next report in this series, in summer 1999.

Structure and terminology of the new method

8. Full details of the new method and grant allocations for 1998-99 are in the following documents:

• 'Funding method for teaching from 1998-99' (HEFCE 21/96)
• 'Funding method for teaching from 1998-99: additional decisions' (HEFCE 10/97)
• 'Recurrent grants for 1998-99' (HEFCE 98/09).
  

9. Two broad principles underlie the new method:

a. That similar activities should be funded at similar rates, with variations from these based on previously determined factors.

b. That institutions should bid for additional student numbers.

10. Under the new method, we calculate a standard level of teaching resource for each institution, based on its profile of students. This covers both our grant and tuition fees. Students, expressed as full-time equivalents (FTEs), are weighted according to their membership of one of four price groups, which reflect the relative costs of provision in different subjects. A look-up table of cost centres and price groups is given in this document (Table 1); for more detail see 'Assigning departments to academic cost centres' HEFCE 97/25. The psychology cost centre is split between price groups B and D; the split is shown in Table 2.

11. Further weights, or premiums, are applied for part-time students, mature new entrants, and students on long courses. For detailed definitions of these student characteristics and price groups see the ' Higher Education Students Early Statistics Survey: HESES 97' (HEFCE 97/24). Student numbers refer to home and EC fundable - HEFCE fundable students. Institutional factors are also reflected through weights applied to student numbers. These are for the additional costs of provision in London, differences between the Universities and the Teachers Superannuation Schemes (USS and TSS), and for the extra costs of some specialist institutions.

12. For each institution we compare the calculated level of standard resource with the actual level of our funding and an assumed income from student fees (assumed resource). Where the difference from the standard resource is no more than 5 per cent, our core funding will roll forward from one year to the next, and this will continue so long as institutions remain within that ±5 per cent tolerance band. For other institutions, we will adjust grant or student numbers so that they move within the tolerance band. Initially this movement to within the band will take place over an agreed period, generally up to three years. We refer to this as migration towards the tolerance band.

Teaching grant 1997-98

13. The adjustments made to the 1997-98 baseline teaching grant are described in the tables below. Separate tables are given for HEIs and for directly funded FECs because the new method has not yet been used for allocating grants to FECs.

Summary of changes to the 1997-98 grant for teaching in HEIs

	£ Millions
Baseline 1997-98 teaching grant	2,293.4
1997-98 Non-consolidated teaching grant	33.3
Holdback	-1.1
1997-98 London extra costs transfer	52.8
1997-98 Postgraduate research transfer	-64.1
Miscellaneous grant adjustments 1997-98	Less than 0.1
1997-98 INSET adjustments	4.0
Clinical pay settlement	1.2
1997-98 Adjusted baseline teaching grant	2,319.5
1997-98 Total assumed fee income	1,173.6
Assumed teaching resource 1997-98	3,493.1

Summary of changes to the 1997-98 grant for teaching in FECs

	£ Millions
Baseline 1997-98 teaching grant	48.7
1997-98 Non-consolidated teaching grant	0.7
Holdback	-0.5
1997-98 London extra costs transfer	0.3
Miscellaneous grant adjustments 1997-98	Less than 0.1
1997-98 INSET adjustments	0.1
1997-98 Adjusted baseline teaching grant	49.3

Distribution of students and resources

14. Chart 1 shows the distribution of standard resources across the four price groups. Charts 2 and 3 show the distribution of students across the price groups by level and mode of study. Although there are more students in price group D, its total standard resource is below that of price group B, reflecting its lower unit price.

15. The aspects of diversity that are recognised by the funding method and given premiums can be summarised by the ratio of standard resource to base money. An institution's standard resource includes the premiums, while the base money is calculated from student full-time equivalents (FTEs) in the different price groups. This ratio is thus equal to 1.0 for those HEIs that receive no premiums - about 6 per cent of institutions. For most institutions (75 per cent) it lies between 1.01 and 1.11. The HEIs that have a ratio outside this range are specialist institutions.

16. Charts 4 and 5 show the difference between assumed resource (adjusted baseline teaching grant plus assumed fee income) and standard resource expressed as a percentage of standard resource. Each bar represents an institution. The specialist institutions are shown separately from the universities and general colleges because their variation is greater.

17. The table below shows the standard resource per student for each price group, and the base price allocated to that group in 1997-98 and 1998-99.

These base prices are calculated using student data from HESES collected in December 1997. They differ from those given in Circular 10/97 'Funding method for teaching from 1998-99: additional Decisions', published in June 1997, which were based on HESES data collected in December 1996. The base prices include assumed fees and these differed between the two years. The HEFCE grant component of the base price was increased by 2.75 per cent to allow for inflation.

18. The student premium weights used in the funding method are as follows:

a. 25 per cent of base price for those on long courses in price groups B, C and D.

b. 5 per cent for part-time students.

c. 5 per cent for full-time mature students, defined as 25 or over at the start of their course.

The price group weighting is taken into account in the long course premium but not in the part-time or mature student premiums, which are 5 per cent of the group D price. Clinical courses are assumed to be long, and this is reflected in the price group weightings rather than by giving the long premiums to all price group A students. For this reason the data on course length in price group A are not published.

19. The institutional premiums were:

a. 2 per cent to institutions contributing to the University Superannuation Scheme (USS).

b. 8 per cent for institutions in inner London and 5 per cent for those in outer London (see Table 3).

c. Premiums for specialist institutions, which are described in the report on 'Funding of specialist institutions' (HEFCE 98/10). The main recommendations of the report were:

• to recognise additional cost factors by applying a premium of 10 per cent of standard resource to all specialist institutions standing at more than 8 per cent above the standard resource
• to apply an additional premium for some institutions standing at more than 35 per cent above the standard resource
• to award premiums for three years initially, with a review of specialist institutions at the end of this period.
  

20. Annex A contains data on student numbers in 1997-98, details of the premiums awarded to each institution and a comparison of resources.

Tables

This Excel Workbook contains:

• Table 1 - Costs centres and price groups
• Table 2 - 1998-99 funding for teaching - psychology assignments
• Table 3 - Institutions receiving the London premium
  

Annex A - Student FTEs by level

This Excel Workbook contains:

• Student FTEs by course length
• Price group premiums
• 1997-98 resource comparisons
• Distribution of students across price groups