Use of Resources
The Use of Resources Key Performance Area (KPA) will assess how effectively a provider manages its financial and other resources to provide best value from public funds. It will encompass two performance indicators during the pilot stage:
- a revenue performance indicator comprising five measures relating to funding and expenditure
- a capital performance indicator
The pilot will explore whether all of the five proposed measures for revenue should be included in the overall revenue performance indicator and how this should be combined with the capital performance indicator.
The combined score for the revenue and capital performance indicator will result in an overall grade for Use of Resources.
This final grade for Use of Resources will then be combined with the KPA grades for Financial Health and Financial Management & Control to produce an overall grade for the Finance dimension of outstanding, good, satisfactory or inadequate.
Deriving the KPA score for Use of Resources
The derivation of the Use of Resources key performance area from the two performance indicators for revenue and capital will be developed during the pilot. It is possible that performance indicators may carry a differential weighting. For the capital performance indicator, it is likely that a zero-weighting will apply to all providers except FE colleges and sixth-form colleges.
The Use of Resources KPA looks at how effectively a provider manages its financial and other resources to provide best value for taxpayers and customers. The revenue performance indicator covers five areas:
Funding
• Proportion of LSC funds devoted to LSC priorities
• Delivery against funding allocation
• Funding for a successful outcome
Expenditure
• Expenditure benchmarked across colleges and providers
The four revenue areas are defined as follows:
1. Proportion of income spent on priority provision
This is the proportion by value of LSC funds received by providers that is applied to achieve a contribution to either national or regional LSC priorities. T2G provision will be excluded.
2. Delivery against funding allocation
The monetary value of LSC funds that are allocated and paid to a provider that have been earned by actual delivery by the provider.
3. Funding for a successful outcome
Unit funding is the relative cost to the LSC of a successful outcome in a programme area between different providers.
4. Expenditure benchmarked
All data for the five revenue areas will be collected through existing returns/channels (for example financial returns and learner data returns) and analysed within the LSC.
Capital Performance Indicator
This capital performance indicator will recognise the extent a provider has addressed its capital and learning infrastructure needs and in particular whether colleges have responded to the LSC’s capital agenda. The scope of this performance indicator will initially be restricted to colleges and the possibility of covering other providers will be explored during the pilot.
The performance indicator aims to reflect the quality of colleges’ learning environments and, given the extent to which they do not meet high standards, the steps that colleges are taking to improve them.
The pilot will look at where colleges are in building condition terms and a scoring matrix will be developed to take account of where they are now, where they need to be, and what they are doing to achieve this.
Data for the capital performance indicator for colleges will be collected from the E-mandate return and analysed by the LSC Property Team.
No capital data is currently collected from other providers and the capital performance indicator is unlikely to be applicable to other providers for the foreseeable future.
