Further Education and Training Colleges Act, 2006 (Act No. 16 of 2006)National Norms and Standards for Funding Further Education and Training Colleges (NSF-FET Colleges)D. Formula funding of programmes |
What the funding system is designed to do
| 27) | Formula funding of programmes, as captured in the formula funding grid, is designed to promote particular goals in service delivery. The intention is for the formula funding grid to be only as complex as is necessary for the promotion of these goals. The goals are as follows: |
| a) | To promote transparency and easy comparability between provinces and colleges in terms of what programmes are being offered, the number and categories of people reached by programmes, how programmes are funded and success rates. |
| b) | To promote predictability over the medium term whilst providing the necessary space for flexibility. It is important to interpret the formula funding grid together with the paragraphs in this policy that allow for flexibility in the implementation process, particularly during the transition to the new system (see paragraphs 120 -126). The funding system should promote good planning, whilst not stifling effective management. |
| c) | To promote equity through the provision of bursary funding to colleges for students who are academically capable but cannot afford to pay college fees. |
| d) | To promote quality and efficiency in a manner that is sensitive to historical inequities through an incentive system that takes into account both absolute success rates and improvements over historical success rates. |
| 28) | Formula funding of programmes is intended to cover the recurrent costs of delivering programmes, but also certain capital costs associated with those programmes, specifically costs relating to the replacement of the facilities and equipment used. Moreover, the formula funding of programmes is intended to cover college overhead costs, specifically those relating to administration and student support. Overhead costs have been incorporated within the formula funding of programmes based on the understanding that most overhead costs are sensitive to college size. The approach taken in the policy is aimed at encouraging efficient practices with respect to the organisation of administration, student support services, college marketing, management and other activities associated with overhead costs. An exception from this approach is accommodated within the earmarked recurrent funding stream (see paragraphs 67-69). |
| 29) | The funding system does not envisage a different level of funding for distance education. This position is in line with White Paper 4, which stipulates that funding should not be differentiated by mode or locus of training. Where the offering of distance programmes by a college results in financial savings, this should be adequately reported on, and the alternative utilisation ofthe funds should be made clear in the relevant reports. |
| 30) | It is recognised that delivering services to special needs students may entail a higher unit cost. This additional cost is not explicitly linked to enrolment figures by special needs categories and per college, partly because of the information difficulties associated with such an approach. Instead, the cost of an expected level of special needs coverage is incorporated within the national funding base rate referred to in paragraph 88 and used where enrolment targets for these students are set. Moreover, attainment of enrolment targets by colleges, including enrolment targets for special needs students, receives explicit attention in the annual PED-college planning process referred to in paragraphs 93-98). |
| 31) | Whilst this policy does provide an explicit set of rules for the formula funding of programmes, in order for the implementation of these rules to be totally successful, this policy should lead to the formulation of user-friendly operational manuals for use by FET Colleges and PED managers, in which real-life examples and implementation advice are provided. The DoE will provide these manuals to ensure that a uniform approach and understanding is developed. |
General definitions
| 32) | Programme: This refers to a nationally approved programme and is contained in the national register of programmes (see paragraph 37) approved by the Minister in terms of section 43(1) of the Further Education and Training Colleges Act, 2006. The definition of programme used in the formula funding grid and applicable to FET Colleges is specific to this policy and is not necessarily the equivalent of the NQF definition of a programme. |
| 33) | Formula funding of programmes: This is the system for funding the nationally approved FET College programmes introduced in 2006. These programmes will consume the great bulk of public funding destined for FET Colleges. The system works basically as follows: The DoE sets a national funding base rate, in rand terms, describing the cost of delivering a basic FET College programme. The DoE also sets a funding weight for each programme eligible for formula funding, where this weight indicates how much more than the national funding base rate it costs to deliver a particular programme. Each programme is also assigned an assumed fee level representing the cost that college fees can be expected to cover. The PED is permitted to adjust the national funding base rate upward or downward within a margin, to suit provincial circumstances. This results in an applied funding base rate in each province. For each programme within a college, individual students are multiplied by the programme duration in order to obtain the full-time equivalent students. An applied total funding weight is calculated for each programme in each college, representing public funding to be received for each full-time equivalent student. This weight takes into account expected fees. The weight is multiplied by the full-time equivalent students to obtain the programme weight of each programme. The sum of all programme weights, the college programme weight, is multiplied by the province'S applied funding base rate in order to obtain a college allocation. To this allocation is added an output bonus, giving the final amount to be transferred to the college. |
| 34) | Formula funding grid: This is a schema used to organise formula funding of programmes. The formula funding grid appears in Annexure A of this policy. The schema, which appears in a blank version and a version with dummy data, should be used to illustrate the funding policy contained in the paragraphs that follow. The same formula funding grid applies to all public FET Colleges in the country. One formula funding grid, as presented in Annexure A, is designed to cover the formula-funded services of one institution during the course of one academic year. Several versions of the grid should be used to cover several years in the planning cycle. The formula funding grid does not deal with the private income of colleges or public funding other than formula funding of programmes. The formula funding grid is a tool for the planning of public funded FET services delivered by a college, plus a tool for determining how much formula funding of programmes a college should receive. Further details on how the formula funding grid should be used are provided from paragraph 27 onwards. |
| 35) | In-line issues: These are planning issues relating to individual programmes offered by a college. They are captured in the top part of the formula funding grid. Each line in the top part of the formula funding grid would normally contain a different programme. Only where the same programme is being offered to different groups of students on different time bases, for example part-time and full-time, maya programme be repeated. All programmes on the national register offered by a college within a year must be entered in the in-line part of the formula funding grid. |
| 36) | Bottom-line issues: These are global planning issues that apply to a college as a whole. They are captured in the bottom part of the formula funding grid. |
The register of nationally approved FET College programmes
| 37) | The formula funding grid uses information provided in the register of nationally approved FET College programmes titled "Formal Further Education and Training College Programmes at Levels 2 to 4 on the National Qualifications Framework (NQF'). The national register must contain certain details relating to the nationally approved FET College programmes. The DoE maintains this register, and makes it available to the public and stakeholders in the FET College sector on an annual basis. |
| 38) | The register of nationally approved FET College programmes must, as a minimum, include the following information relating to each programme (see paragraphs 39-62) for definitions of the various pieces of information): DoE programme code; NQF organising field; NQF level; Programme type; Programme name; SAQA credits; Funding weight for personnel; Funding weight for capital expenditure; Funding weight for non-personnel non-capital. (Details on the determination of funding weights are provided in paragraph 89). In addition, the national register should indicate the typical programme duration, for example whether the programme is typically a one-year programme. The national register does not indicate hard and fast programme duration, as this aspect of service delivery requires some flexibility. |
The in-line part of the formula funding grid
| 39) | The following paragraphs describe the meaning of each of the columns, from left to right, of the in-line part of the formula funding grid appearing in Annexure A. The in-line part of the formula funding grid indicates the programme choice and information from the national register of approved FET College programmes. The information in the columns influences the formula funding of the college. |
| 40) | DoE programme code: This is the unique identifier of a programme included in the register of nationally approved FET College programmes. |
| 41) | National Qualifications Framework Organising field: This is the organising field of the programme. (i.e. 06: Manufacturing, Engineering and Technology). |
| 42) | National Qualifications Framework level: This is the NQF level of the programme. (i.e. NQF Level 02). |
| 43) | Programme name: This is the name of the programme as listed in the register of nationally approved FET College programmes. (i.e. Engineering and Related Design). |
| 44) | SAQA credits: This is the number of credits that the programme carries within the NQF. This is indicated in the register of nationally approved FET College programmes. (i.e. 130 credits) |
| 45) | Programme duration: This is the duration of the programme in terms of the academic year. The value is a number expressed to two decimal places, and may be 1.00 or less than 1.00. A value of 1.00 indicates that the programme covers one academic year on a full-time basis. In the case of the nationally approved FET programmes, each programme has by definition a programme duration of 1.00. With respect to other programmes, SAQA specifications, relating for instance to the contact time required for the programme, should guide the determination of the programme duration wherever possible. In the absence of some other benchmark stipulated in policy, the applicable benchmark is that a full-time programme is one that involves 1200 hours of contact time. For example, a programme that covers only 300 hours of contact time would have programme duration of 0.4. A programme with programme duration of 1.00 in one line of the formula funding grid may reappear in another line with lower programme duration, if the same programme is also being offered part-time to another group of students. |
| 46) | Funding weights (by economic category): This is a weight attached to each economic category of each nationally approved FET programme to represent the cost of delivering the programme relative to the national funding base rate (explained in paragraph 89). The economic categories to be used are (1) personnel cost, (2) capital infrastructure cost and (3) non-personnel non-capital (or 'npnc' or non-personnel recurrent) cost. A specific programme may therefore have the funding weights 1.0, 1.1 and 1.3 for the personnel, capital and 'npnc' categories respectively. The funding weight is always expressed to one decimal point. A funding weight' of 1.0 means that the cost of delivering the programme with respect to the economic category in question is equal to the national funding base rate value for that category. A personnel funding weight of 1.1, to take an example, would mean that the actual delivery cost with respect to personnel is 10% higher than what is indicated in the national funding base rate for personnel. Funding weight values are specified on the register of nationally approved FET College programmes. All programmes would have funding weights specified. When a funding weight is multiplied by the corresponding economic category of the applied funding base rate (described in paragraph 57), the expected cost as determined by the PED is obtained. |
| 47) | Assumed fee level: This is an indicator ranging in value from 0.00 to 1.00 that indicates the expected level of fee-charging for each programme on the register of nationally approved FET College programmes. A value of 0.20 would indicate that the DoE expected 20% of the full cost of the programme to be covered through college fees. The assumed fee level must be informed by clear analysis of historical trends with respect to college fees and the education and training market in general. |
| 48) | Actual total funding weight: This is the weight that indicates the allocation that will be transferred to the college per programme and per full-time equivalent student, relative to the overall applied funding base rate (explained in paragraph 57 below). A value of 1.00 indicates that the allocation is expected to be equal to the overall applied funding base rate. The actual total funding weight takes into account several things: programme cost as reflected in the funding weights (FWp, FWc and FWn); the applied funding base rates per economic category as determined by the PED (AFBRp, AFBRc AFBRn and their sum AFBRTot); and the assumed fee level for the programme (AFL). Each funding weight is multiplied by the corresponding applied funding base rate, and the sum of the three values is then adjusted downwards according to the assumed fee level. The formula is as follows: |
ATFW = (FWp x AFBRp) + (FWc x AFBRc) + (FWn x AFBRn)
AFBRTot
x (1-AFL)
| 49) | Individual students: This is the number of actual students enrolled in each programme entered in the formula funding grid. The determination of these numbers constitutes a crucial part of the PED-college planning process. Where a student is enrolling for a number of subjects less than the total required by the programme (i.e. seven subjects), a value of 117 per subject will be applied. |
| 50) | Full-time equivalent students: This is the number of full-time equivalent students in a programme entered in the formula funding grid. Full-time equivalent (FTE) students are the number of individual students multiplied by the programme duration. The formula is as follows: |
FTE students =Individual students x Programme duration
The number of PTE students per programme is a key determinant of the funding that should flow to each programme that is offered by a college.
| 51) | Programme weight: This is the total weight of the programme, after the actual approved cost of service delivery, enrolment numbers and programme duration have been taken into account. The programme weight (PW) is expressed to one decimal place, and is the actual total funding weight (ATFW) multiplied by full-time equivalent students (FTE): |
PW = ATFW x FTE
| 52) | Labour market segment: This is the segment of the labour market receiving the chief focus of a programme entered in the formula funding grid. This specification occurs in the formula funding grid to encourage a focus on labour market imperatives. It does not influence the funding formula directly. The values in this column would refer to the following labour market segments: employed persons; unemployed persons 15-24 years of age, unemployed persons 25-34 years of age; unemployed adults over age 35. Values are entered in the column to represent the most prevalent labour market status of enrolled students. If the same programme is being offered to different groups of students that are clearly distinct in terms of their labour market status, the same programme should be repeated in the formula funding grid. The determination of the labour market segment, which would often relate to anticipated, not actual, enrolment, must occur during the PED-college planning process described in paragraph 93 below. |
| 53) | Past successful completions: This is the number of students who successfully completed the programme in question during one or more past years. The precise number of past years to be considered is determined during the annual PED-college planning process. Past successful completions, together with past enrolments (see the next paragraph) are used to gauge the efficiency of service delivery during previous years, and hence the eligibility of the college for output bonus funding in the bottom-line determinations. |
| 54) | Past enrolments: This is the number of students who could have completed the programme in question, in other words the number of enrolled students, during the past one or more years. The years considered and the rules for counting students would be the same as for the past successful completions (see previous paragraph). |
The bottom-line part of the formula funding grid
| 55) | College programme weight: This is the sum of all the programme weight values in the formula funding grid. This forms the basis of the formula funding for a college. |
| 56) | Sum of past successful completions and enrolments: This is the sum of the values referred to in paragraphs 53 and 54. These totals are important inputs into the determination of the output bonus referred to in paragraph 61 |
| 57) | Applied funding base rate: This is a rate, expressed in monetary rand terms, indicating what the PED actually intends spending on the basic low-cost programme underpinning the national funding base rate (described in paragraph 89). The applied funding base rate may be equal to the national funding base rate, or may deviate slightly from it. The applied funding base rate is set by the PED, and is updated on an annual basis, taking into account the annual changes to the national base rate. It must be expressed as one total, but should also be broken down into the three economic categories used for the national funding base rate. A PED may set an applied funding base rate that deviates from the national funding base rate without approval from the DoE if the deviation is within a 5% limit for all the three economic categories. Deviations that exceed this limit may be made after adequate reasons tor the deviation have been supplied to the DoE and the DoE has approved of the deviation. These controls are aimed at promoting national conformity to minimum quality standards in the FET College services. However, they need to be applied in conjunction with more direct quality controls focussing on the competencies of graduates against standard benchmarks, in particular inter-provincial differences in this regard. |
| 58) | Assumed value of fees charged: This is a calculated value using values from the in-line part of the formula funding grid as well as the total applied funding base rate of the PED. Specifically, the programme weight values and the assumed fee level values from the in-line part of the grid are needed. The assumed value of fees charged should reflect the total monetary value of the assumed fee level, and is used as an important benchmark against which to measure the correctness of the fee-setting processes described in paragraph 72. |
| 59) | Assumed value of fee income: This is the expected monetary value of college fee income. |
| 60) | College allocation before output bonus: This is the total monetary allocation for the college before the addition of a possible output bonus. The college allocation before output bonus (CAI) is the college programme weight (CPW) referred to in paragraph 55 multiplied by the total applied funding base rate (AFBRTot) of the PED. |
The sub-totals for each of the three economic categories should be calculated using the category-specific applied funding base rate from the bottom-line part of the grid and the assumed fee leveL full-time equivalent students and category-specific funding weight from the in-line part of the grid. The sub-totals for the three economic categories should not be the total college allocation simply split up in proportion to the category-specific applied funding base rates, as this would not yield an accurate result.
| 61) | Output bonus: This is a monetary bonus which the college receives in recognition of efficient or outstanding service delivery. The methodology for calculating the bonus is a PED determination. However, in arriving at the methodology, the following should be considered: |
| a) | The ratio of past successful completions to past enrolments, and previous versions of this ratio, applicable to previous years (see paragraphs 53 and 54). Both absolute levels of this ratio, and improvements in this ratio over time, should be taken into account. |
| b) | Attainment of development targets in the strategic plan of the college, including targets relating to the representivity of students. |
| c) | Average examination scores attained by students. |
The methodology must be transparent to all colleges within a province. Moreover, it should be determined at a sufficiently early point in time to allow colleges to adjust their planning and management towards the attainment of the identified outputs.
| 62) | College allocation: This is the total allocation to the college after ail adjustments have been made. This is the final allocation provided by the formula funding grid. However, it may not be equal to the total funding for the college received from the PED if (1) there is funding other than formula funding that is to be paid to the college (see Section E) or (2) there are funds allocated during a previous year that were not utilised and should thus be deducted off the allocation (see paragraph 105). |