OVER-OPTIMISTIC financial forecasting by the former principal of Stratford-upon-Avon College led to its near collapse, it has been revealed.
The findings of an investigation carried out by FE Commissioner, Richard Atkins, have now been published.
The report said ousted principal Nicola Mannock was not questioned enough by governors or her senior management about the cash-strapped college’s financial position, and criticised her regime’s over-reliance on borrowing from banks and the selling-off of assets.
It lifts the lid on the high turnover of staff under Mrs Mannock, revealing that the college has had nine finance directors in the past four years, and a finance team of just four people, one of whom was an apprentice.
Mr Atkins suggested they simply could not cope with the demands placed upon them, something he says contributed to its poor financial state.
He said decisions on what courses to offer were driven by the requirement to reduce costs and increase efficiencies, but that a ‘limited curriculum’ had a severe effect on income.
Although the college had repaid its £1million bailout from 2013, its Financial Notice of Concern from then was only lifted in January of this year — a month before Mrs Mannock
was forced out of her job as a condition of further emergency funding from the Department for Education.
That came following months of public personal criticism about her management style amid the sudden cancellation of courses and staff departures.
The report also points to the latest accounts, which show the college is facing a £900,000 operating deficit for the current financial year — £800,000 worse than had been predicted by the previous regime.
The report said: “Over-optimistic forecasting in the budget has gone unchallenged by both the board of governors and the senior management team.
“Too much emphasis was placed on the assertions of the former principal and the vice-principal (finance and estates) that the finances were on track and that additional income would be found to mitigate against a potential shortfall.
“Standard checks and balances, such as challenge by the board and senior management team, were not happening.
“Cash flow forecasts failed to identify the scale and speed of the decline in working capital, which led to the short notice requirement for significant Exceptional Financial Support from the Skills Funding Agency.”
The commissioner praised the creative arts and media courses, but the said the ‘limited’ of the range of other courses at the college had contributed to its financial downfall.
The main campus was said to be ‘attractive and well-resourced’ but also ‘significantly under-used’.
Concluding that merging with a bigger college group was the only way forward, Mr Atkins wrote: “The college’s cash position has been exceptionally weak for most of the last four years.
“Governors appear to have placed too much focus on achieving a satisfactory financial health grade, removing the college from SFA intervention, and protecting the independent status, rather than testing the credibility of income targets and the cash flow forecast, which have since proved to be far too optimistic.
“The warning signals in the 2015-18 financial plan and the risks to sustainability flagged by the area review financial assessment have been given insufficient weight by both the former principal and governors.
“Without major corrective action the college faces a further year of substantial operating losses which will increase the shortfall of cash further.”
Tony Jefferson, who was chairman of governors in mid-2014, during Mrs Mannock’s early days as principal, said: “Having read the FE Commissioner’s report I am stunned by the speed and scale of the deterioration in the college’s financial position.
“I also wonder how the Skills Funding Agency could have lifted their Notice of Concern regarding finances in January 2017 when, in less than a month, the disastrous situation was all too clear. I hope that whoever the merger partner ultimately is they can restore Stratford College to a healthy position.”
Former Warwickshire College deputy principal, Andrew Cropley, was installed as interim principal and chief executive following Ms Mannock’s departure in March.
In a statement, Mr Cropley said: “Stratford-upon-Avon College has welcomed the support given over recent weeks by the FE Commissioner’s team and the funding agencies, which has been understanding, positive and solution focused.
“Governors and executive are all determined to ensure that Stratford-upon-Avon College moves to a position from which it can thrive. We fully accept the recommendations and are working with the FE Commissioner and the funding agencies to deliver against them.
“The college has now formally commenced the process of securing a merger partner. This process will be run in partnership with and supported by the Further Education Commissioner.
“A three-stage process has begun, which, all being well, will result in the chosen partner being identified before the end of May.
“The college is delighted that a good number of organisations have shown an interest in being its merger partner. They have visited the college and are aware of the challenges and opportunities presented.
“They would all bring strengths to the merged college and each has already described a number of benefits that could emerge from the partnership.
“The college has engaged with its staff, students and external stakeholders to craft a vision document, which will form a key part of the assessment criteria for the proposals.
“In this document we stress the importance of maintaining the identity of Stratford-upon-Avon College and the provision of a broad further education offer on the site. We ask potential partners to show how they will develop their understanding of the unique character of the town and to demonstrate that they will support businesses and communities throughout the district.
“Whilst individual governors are willing to stand down, including the chairman, we believe it important that the governing body of the merged college understands and embraces the unique character of Stratford-upon-Avon.
“The college continues to operate as normal and is recruiting students and apprentices now onto its full range of courses due to begin in September.The new merger partner is due to be announced later this month following talks with at least four undisclosed, interested parties.”
Pick up a copy of this Thursday’s Herald for more on the timetable of the takeover and the contents of the college’s vision document. Download a copy tomorrow HERE