This post follows up from posts on ITP, wananga, university and OTEP over-delivery in 2009 over the last four days – the university post explains the context. The short version is that providers are supposed to be in the 97-103% range, if 100% is their funding allocation. I’m thinking of doing some more analysis on these figures next week.

There were 199 Private Training Establishments (PTEs) with SAC funding in 2009, and TEC gave me a PDF as an image, so I couldn’t cut and paste. Rather than retype all 199 entries, I decided to take every 15th PTE, as well as providing the total figures for PTEs and results for the average PTE. The PTEs sampled were a good mix, ranging from 16 to 669 EFTS.

As you can see from the table below, PTEs varied enormously in their achievement against target, from 84% to 239% (and that’s just a sample), with an average of 128%. Why? Well, there are three main reasons.

1. PTEs have the smallest organisations of any sector, so small swings can have a big effect – the one with 84% achievement had 38 EFTS, so 100% would have meant 45 EFTS, only 7 more EFTS;
2. In 2002 PTEs were told that their 2003 funding would be based on their 2001 EFTS and since then their base funding has remained at that level, albeit PTEs have gained or lost as some funding has been redistributed (happy to be corrected on that – working off memory). In 2003, many PTEs started the year with an overhang as they had grown strongly in 2002, but would be funded for fewer EFTS in 2003. That overhang has continued to the present day for many PTEs.
3. Putting aside any overhang in 2003, a key way for PTEs to expand since 2003 has been to enrol unfunded students, relying on just their tuition subsidies to fund the student. This works better in some areas than others – a travel college below has 239% achievement while a teacher education PTE (Bethlehem) has 101% achievement.

Those reasons left TEC in a difficult position when it started to implement 97-103% caps for PTEs in 2008, as the horse had well and truly bolted. While there was talk of bringing the over-delivery down, it is still high. And that is a pretty sensible approach, as the purpose of the over-delivery policy was really to provide predictability for government spend and get tighter control over wayward providers (then ITPs and wananga). Since PTEs were already over-delivering, the student loans and allowances for those students were factored into the baseline. Control is not really a big issue for TEC with PTEs, as they are not a bailout risk for the government (as TEIs are) and student fees are now well protected (it has been 5 or more years since the last big problem on that front). TEC also talked about a quality control rationale for the cap, but they never really had any evidence to back that one (and NZQA could pursue it anyway).

My analysis above assumes that PTEs had 128% over-delivery or more in 2007, and have stayed at the same level or a bit less. I suspect, however, that over-delivery has actually increased. Back in 2006, there were many PTEs that performed well under their funding caps but kept that cap for future years. Those PTEs have been progressively stripped of their EFTS and the funding has been reallocated to better performers, so the tail end has gone, while many of those with high over-delivery have continued on. As a result, the over-delivery percentage has gone up in the PTE sector. That could excite some people, but tuition funding has stayed constant in real terms and student loans have stayed about the same so it’s just a statistical artifact really. That’s my theory anyway and I don’t have time right now to work it through in detail.

Over/Under Delivery percentage is derived from data supplied by the TEC.