Colleges 'Hid' Money From Government

Scottish colleges moved £100 million of cash reserves into their own savings while cutting jobs and student funding.

Freedom of information (FoI) requests showed 26 Scottish colleges, including Fife, either set up their own subsidiary to hold the money or stashed it in the national Arms Length Foundation.

Unions say the funds could have been spent on teaching or student bursaries.

The Scottish Government requested institutions hand over any cash reserves so that officials could redistribute it to other parts of further education sector that needed it.

Fife College set up its own arms length foundation and invested £1.2 million into it, the fifth lowest of the 26 institutions to move money.

Educational Institute of Scotland General Secretary Larry Flanagan said it raises "significant concerns".

He said: “Shifting these reserves into ALFs removes the option of this funding being pooled by government for reinvestment across the FE sector. Given that these substantial cash reserves have been built up at a time of significant austerity and cuts to FE provision, this raises serious questions about whether this money is being put to best use to support learning and teaching across Scotland.”

Mr Flanagan added: “The figure of £99 million moved into ALFs is clearly substantial, especially when considering that the total annual funding for Scotland’s colleges for the year 2014-15 amounted to £521 million.

While significant sum of cash reserves were reclaimed from colleges, both the Scottish Funding Council and the Scottish Government have allowed, and in some cases even supported, the transfer of college cash reserves into ALFs. At a time when lecturer and support staff jobs have been cut, courses have been withdrawn and student places and support have been slashed, we must question if these cash reserves could have been put to much better use to support learning and teaching across Scotland.”

'Shocking'

Student union NUS Scotland said the findings are "shocking" given there have been "severe shortages" in money available for bursaries.
 
Gordon Maloney, the body's president, said: “When college students don’t have enough financial support to make ends meet, it’s shocking that millions of unspent college funds have been squirrelled away into arms-length foundations. Our colleges are right to demand more funding to ensure they can carry on their great work, but there’s no excuse for colleges and government not working together to ensure this money was spent.

“The college sector has undergone some difficult changes over the past few years, and students and staff have taken on much of the burden. Hiding away cash in secretive foundations, with little transparency, is no way to make sure that our public money is spent where it’s needed most.

“At a time when we’ve seen severe shortages in the cash available for student bursaries, having tens of millions of pounds sitting in arm’s length bodies is simply wrong. We need to open up these foundations to scrutiny and accountability, and make sure the tens of millions of pounds sitting in them go where it’s needed most – across all our colleges, ensuring the necessary funding for bursaries, teaching and places.” 

Workers union UNISON Scotland condemned colleges for 'evading money being clawed back' to Holyrood to be used elsewhere. It has urged Education Secretary Angela Constance to investigate how the arms length foundations work, and to award further education staff a "long overdue pay rise".

Chris Greenshields, chair of UNISON Scotland’s further education committee said: "We’ve seen big cuts in student services and the sector has over 300 staff languishing below the Living Wage. So while managers hide millions in off campus accounts they claim they cannot find money to pay a decent wage rise to college staff or stop cuts to student services.

"This £99m should be used to ensure that Scotland’s colleges are accredited Living Wage employers and to  restore student services to an acceptable level across our colleges. If the current rules mean this money has to sit in a foundation while colleges are in trouble then we need to look again at how college funds operate.

"Staff have worked hard to make the substantial restructuring of Scotland’s colleges work for students. They deserve decent pay and working conditions in return." added Mr Greenshields.

Kingdom FM News have approached Fife College for comment, and are awaiting reply.