June 2004/24
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| To: | Heads of HEFCE-funded higher education institutions Heads of HEFCE-funded further education colleges Heads of universities in Northern Ireland |
| Of interest to those responsible for: | Finance, planning |
| Reference: | 2004/24 |
| Publication date: | June 2004 |
| Enquiries to: | HEFCE higher education advisers |
Executive summary (read on-line)
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Executive summary
Purpose
1. This document sets out the changes to the funding method for teaching that have been implemented following responses to the consultation announced in HEFCE 2003/42, 'Developing the funding method for teaching from 2004-05: consultation'. Annex A summarises the responses that we received to the consultation.
Key points
2. Following the consultation, we have made a number of changes to our teaching funding method for 2004-05. These have been incorporated in the allocations announced in HEFCE 2004/12 'Recurrent grants for 2004-05' and are listed below:
- We continue to have just four price groups: we have not split price group B as we had proposed in the consultation.
- Media studies provision continues to be funded according to the existing attributions to price groups B, C and D, pending a review to assess the relative cost of different types of provision.
- Sports science provision continues to be funded according to the existing attributions to price groups C and D, pending a review to assess the relative cost of different types of provision.
- Psychology is now funded entirely within price group C as proposed in the consultation.
- Computer software engineering is now funded entirely within price group C as proposed in the consultation. We are reviewing the criteria for assigning activity to Computer software engineering and Electrical, electronic and computer engineering.
- The price group weightings for 2004-05 are 4 for price group A, 1.7 for price group B, 1.3 for price group C and 1 for price group D.
- The assumed fees per part-time undergraduate full-time equivalent student match those for full-time undergraduates.
- The assumed fees for full-time postgraduate taught students have been increased to the level of the base price, and for part-time postgraduate taught students to the level of the base price plus 10 per cent.
- We have introduced a 10 per cent premium for all part-time students.
- We have introduced a 10 per cent premium for all students on foundation degrees.
- All sandwich year-out students are funded at price group C.
- After transfers to and from other funding bodies, compensation for increases in the costs of the Teachers' Pension Scheme has been reallocated pro rata to 2002-03 financial year data on employers' contributions and incorporated in individual institutions' teaching grant.
- The pensions premium for institutions in the Universities Superannuation Scheme is ending after 2003-04.
- We have reviewed the size of specialist institution premiums so that such institutions remain within the ±5 per cent tolerance band following the above changes to the funding method. We expect any migration for other institutions above the band to be achieved in the first instance by increases in student numbers over a time-scale to be agreed with the relevant HEFCE regional team; and for those below the band, by additional funding phased over three years.
- Formula funding for widening access is now being based on a method that weights undergraduate new entrants according to quintiles that reflect young higher education participation by ward for full-time undergraduates under 21 on entry; and average educational achievement by ward, derived from the 2001 census, for part time and mature full-time undergraduates.
- We have incorporated London weighting of 8 per cent for inner London and 5 per cent for outer London in the formula allocations for widening participation. The funding for improving retention continues to be allocated according to non-continuation risk factors associated solely with entry qualifications and age, and does not incorporate other weightings that are used in the main teaching funding method.
- Formula funding for widening participation for both full-time and part-time students has been split at 19 per cent for widening access and 81 per cent for improving retention.
- We are giving institutions an opportunity in 2004-05 to recover funding deducted from their baseline as a result of the consolidation of 2003-04 contract range holdback.
3. Further changes to the funding method after 2004-05 will be kept to a minimum for at least three years. During this time we will conduct a fundamental review of the funding methodology, which will be informed by a study to identify the full economic costs of different types of teaching activity. The study will be based on the Transparent Approach to Costing methodology,
Action required
4. No action is required.