Ref 98/57

Further Education Funding Council

Higher Education Funding Council for England

KPMG

Study of the relative costs of HE provision in FE colleges and HE institutions

Published November 1998

This version of this document contains the Contents and Executive Summary only. The full document is available in Word or RTF formats.

Contents

1 Executive summary
1.1 Approach
1.2 Results: unit costs
1.3 Results: type of students, the student experience and course design
1.4 Conclusions

2 Introduction and background to the study
2.1 Introduction
2.2 Terms of reference
2.3 The general approach
2.4 Overview

3 Methodology
3.1 Introduction
3.2 Sample
3.3 Costing model and data
3.4 Availability of data
3.5 Student experience and course design

4 Observed unit costs: results and analysis
4.1 Introduction
4.2 Sample size
4.3 Observed variations in unit costs
4.4 Comparisons between unit costs in FE colleges and HE institutions
4.5 Sources of funding

5 Course design and the student experience: comparisons between FE colleges and HE institutions
5.1 Introduction
5.2 Client group profile
5.3 Student enrolments, progression and achievements
5.4 Organisational structure and content of programmes
5.5 Learning resources and accommodation
5.6 Student contact and observed unit costs

6 Main conclusions

Executive summary

This report presents the results of a study commissioned by the Higher Education Funding Council for England (HEFCE) and the Further Education Funding Council (FEFC). It looked at the relative costs of degree and Higher National Diploma (HND) programmes in Business Studies, Engineering and Art & Design provided in further education colleges (FECs) and higher education institutions (HEIs). The study also analysed differences in the student experience, differences in course design and student profiles between the two sectors.

1.1 Approach

The study involved the collection, through visits to the institutions and a questionnaire, of cost data and data relevant to assessing differences in course design and the student experience. Data were for the academic year 1996-97 from a matched sample of FECs with substantial HEFCE-funded provision, and HEIs. Cost data, collected at institutional, faculty/school and department level, were input to a costing model which allocates central institutional, faculty and departmental costs in a cascade to the level of individual programmes. As far as possible, a consistent set of cost drivers was used across all the institutions. The data on cost drivers were also collected from the institutions.

The model calculated the total costs by adding the allocated indirect costs to the direct costs, derived from the timetabled academic staff time for the programme in question and the average cost of timetabled academic staff. Unit costs were then derived using the student numbers returned to the HEFCE in November 1996, in the annual Higher Education Students Early Statistics (HESES) return.

1.2 Results: unit costs

The principal results in relation to the unit costs measured by the study are:

• significant variation within sectors as well as between sectors;
• on average, for HNDs in Business and degrees in Business Studies, very similar unit costs in the HEIs and FECs in the sample, which provided the largest number of data points for the three subject areas covered in the study;
• on average somewhat higher unit costs, attributable mainly to much higher central costs, in Engineering and in Art & Design courses in HEIs than in FECs (but this conclusion is based on a relatively small number of data points);
• the number of students on HNDs in Engineering is almost universally low across the sample, at least in part because of competition from degree programmes.

Sensitivity analysis suggests that much of the variation is real rather than as a result of assumptions in the model, although the analysis shows the importance of space data as a basis for allocating premises expenditure between different subject areas which have substantially different space requirements.

The analysis suggests that a significant source of the observed variation lies in the snapshot approach adopted, in that it picks up both decisions by individual resource managers to subsidise certain programmes, and shortfalls in student numbers for particular programmes which cannot readily be allowed for in-year.

The finding that, on average, the unit costs for HNDs in Business and degrees in Business Studies are very similar in HEIs and in FECs in the sample is of particular importance. Business Studies accounts for the highest proportion of all HE students in FECs funded by the HEFCE; it is the area where it was possible to collect most data points; and it is the area of greatest overlap of provision in the two sectors.

1.3 Results: type of students, the student experience and course design

The profile of students on HE programmes in FECs in the sample differs in certain key respects from the profile of those on similar programmes in HEIs in the sample:

• they are somewhat older on entry;
• they are more likely to reside within a 35 mile radius of the institution;
• they are more likely to enter with qualifications other than A-levels.

On completion:

• those on degree programmes are around 15 per cent less likely to achieve the qualification, but there is little difference in completion rates for HNDs;
• they are significantly more likely to have entered employment, and slightly less likely to have progressed to further study three months after completion.

The principal comparisons between the student experience in FECs and HEIs on similar courses are:

• student taught hours and staff timetabled hours are higher in FECs;
• there are on average (in the sample of institutions) more computer workstations per 1,000 students in the FECs, but fewer open access workstations;
• there are fewer library study spaces per 1,000 students and significantly fewer quiet study spaces in FECs.

Perhaps the most striking difference in the delivery of similar programmes in FECs and HEIs in the sample is the pattern of teaching to different sized groups:

• in HEIs in the sample, for courses both at HND and degree level, the standard pattern is for large group lectures supported by a number of smaller tutorial or seminar groups, on the assumption that students will take a degree of responsibility for their own learning;
• in FECs in the sample there is no such clear distinction between lectures and tutorials; tutorials are more usually used for personal counselling than supporting lectures. The different pattern of teaching has been driven to some extent by the lack of large lecture theatres in most FECs. The pattern is also consistent with the organisation of FE teaching, where larger cohorts are generally catered for by increasing the number of groups receiving parallel teaching;
• a few of the FECs in the sample have sought to bring their approach to teaching more into line with that in HE, in some cases establishing HE faculties, but they are hampered by the absence of suitable large spaces.

1.4 Conclusion

The principal finding of the study is that the unit costs of HNDs in Business and degrees in Business Studies are on average similar in HEIs and in FECs in the sample. This result is of particular significance because students on Business Studies degrees and HNDs in FECs are the largest single group of HE students currently funded by the HEFCE in these colleges. The average unit costs for Engineering and Art & Design programmes are higher in HEIs than in FECs in the sample, principally due to higher central costs.

The pattern of teaching in FECs, with its higher timetabled teaching hours, is the main explanation for the similarity of unit academic staffing costs in the two sectors, even though on average the cost of academic staff is higher in HEIs than in FECs. The higher overall unit costs for Engineering and Art & Design programmes reflect the extra provision of specialist space and the provision of more technician support in the HEIs in the sample.