South west college has ‘no financial concerns’ says chief executive michael mcalister impartial reporter west la junior college

The chief executive of the south west college (SWC) has said there are “no financial concerns in the college whatsoever”, despite internal worries about cash reserves being at their lowest in five years.

An email from the SWC’s finance department to senior managers, seen by the impartial reporter, voices increasing concern about cash reserves which currently sit at £3.8 million.

The email stated: “given that approximately £1 million of [the £3.8 million] comprises advance income from european projects, we have currently £2.8 million of cash reserves which is the lowest in the last five years. To put this in context our wage bill for november 2017 was £1.98 million.”

The finance official told colleagues: “between now and march 2018, the college needs approximately £2 million of this cash reserve to fund ongoing minor works capital projects and the erne campus development – although this cash will be repaid there will be a time lag between the expenditure and the funding being claimed.”

erne campus

Speaking to the impartial reporter about the email this week, mr. McAlister could not specify what items of spend have been restricted but he insisted: “none of them will impact the college delivering its programmes.”

He added: “we are in a very financially sound position. We are engaged in prudent management of our finances as any sensible college would do. Every year we absolutely bring in a balanced budget which leaves us in no difficulties or expose in any way, shape or form. So, we have no concerns about our finances whatsoever.”

The chief executive said cash reserves have been impacted by “enforced budgetary cuts, general running costs, increased rates, apprenticeship levies, pension costs and other inflationary increases.”

Further education colleges in northern ireland are arm’s length bodies of the department for the economy (dfe).Northern ireland as such they are required to meet targets which stipulate that non-departmental public bodies (NDBP) must have cash reserves that are between five and 10 per cent of income. The SWC cash reserves are currently at 8.75 per cent of income, which mr. McAlister said “is well within departmental targets of between five and 10.”

Mr. McAlister said that when colleges were incorporated in the past, “they tended to run up big cash reserves.” he continued: “but now, with the fact that we are a ndpbs, we are required to keep our cash reserves very low.”

He pointed out that no college in northern ireland has received a budget yet and referred to the december budgetary outlook document from the department for finance. That document includes cost reducing scenarios for the dfe that could cut skills programmes that offer entry level qualifications through further education colleges and the training for success programme.Cash reserves that document also outlines that the dfe currently faces pressures of at least £40 million in 2018-19 and £39 million in 2019-20.

He said the college has operated in uncertain financial times before, stating: “you know what it is like in northern ireland – there are gaps in communication from central and regional government about budgets.”

Whilst “the lion’s share” of the college’s core funding comes from the department, mr. McAlister explained that SWC is “very effective” at securing european funding also.

He is positive about the £29 million erne campus development on the former erne hospital site, which, he says, is attracting interest from across the globe.

Asked if he is concerned about the time lag between spending £2 million on the erne campus and claiming it back, mr.Cash reserves mcalister replied: “that’s not a concern at all. Deposits are made in our account every month by the department to meet the needs of the college. We have an on-going discussion briefing that takes place between our head of finance and the head of finance at the department. That’s just to make sure that we have enough cash – some months it’s a wee bit higher, some months it’s a wee bit lower, depending on needs and the fact that we get the fluctuation now is because of the new erne campus. There’s a spend that has to go out every month for the erne campus and that comes to us and obviously there are times when expenditure will be a bit higher and times when it will be lower – that’s just standard budgetary reporting between us and the department.”