Details for the ITO sector
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The Educational Performance Indicators are weighted equally at each of the grouped qualification levels.
| Grouped qualification level | Indicator 1:
Credit completion rate | Indicator 2:
Programme completion rate |
| Level 1-2 | 50% | 50% |
| Level 3+ | 50% | 50% |
ITO performance scores
The weighted performance of each ITO at each grouped qualification level will be combined into a score out of ten.
For example, at the grouped qualification levels 1 to 2, an ITO that has a 40% credit completion rate (Indicator 1) and a 30% programme completion rate (Indicator 2) will have a score of 3.5.
| Performance Score Level | Calculation of score for level 1-2 |
| 3.5 | ((40% x 0.5) + (30% x 0.5)) x 10 |
ITO thresholds
The ITO’s performance score will then be measured against fixed thresholds:
- Upper threshold: set at the 50th percentile based on 2009 performance. If an ITO’s performance score is at, or above, the upper threshold score, the ITO will retain 100% of their funding at that grouped qualification level.
- Lower threshold: set at the tenth percentile score based on 2009 performance. If an ITO’s performance score is at, or below, the lower threshold score, they will lose 5% of their funding at that grouped qualification level.
- Sliding scale: if an ITO’s performance score lies between the upper and lower threshold scores, they will lose between 0 and 5% of their funding on a sliding scale at that grouped qualification level. The closer an ITO’s score is to the upper threshold score, the more funding they will retain.
The fixed threshold scores against which 2011 performance will be measured have now been determined.
| Grouped qualification level | Upper threshold | Lower threshold |
| Level 1-2 | 2.3 | 1.0 |
| Level 3+ | 4.7 | 2.3 |
An ITO's score at each grouped qualification level, compared with the thresholds, determines its proportion of funding at each grouped qualification level. Using the earlier example, if a provider were to achieve a score of 3.5 for the grouped level 1-2 in 2011, it would retain 100% of its funding for this group in 2012.
The proportion of overall funding that an ITO will retain depends on the amount and type of education the provider delivers at a grouped qualification level. For example, an ITO could perform poorly at one grouped qualification level at which they deliver little provision, and very well at the other grouped qualification level at which they deliver most of their provision. As a result, the ITO will retain most of the overall funding it has at risk.
Each ITO can access a performance-linked funding calculator from their workspace to work out the impact of performance-linked funding on their own funding.
Following an assessment of the sector's performance in 2010, a decision will soon be made about whether or not to increase the threshold levels for measuring 2012 performance.
Note: Thresholds scores against which 2011 performance will be measured, have been calculated from the 2009 performance information as at 19 November 2010.
Note: Performance Linked Funding for the ITO sector includes both the Industry Training Fund and the Modern Apprenticeships fund (STM component only).
Sector feedback
The TEC sought feedback towards the end of 2010 on two issues: how the impact of performance-linked funding on payments might be managed, and options for measuring the qualificaiton completion rate. Feedback was sought through the following two discussion documents:
Qualification and programme completion rates
Feedback was received from 25 separate organisations, including peak bodies, on options for measuring the qualifications completion rate.
Option C: measuring the qualification and programme completion rates on a three year weighted rolling average was the preferred option by 48% of respondents. A further 20% of respondents preferred Option A: continue to measure qualification and programme completion rates from the previous year’s performance, and 12% favoured Option B: measure qualification and programme completion rates on a three year rolling average (not weighted). 20% of respondents did not state a preferred option.
The TEC Board of Commissions confirmed on 25 January 2011 that SAC qualification completion rates and ITO programme completion rates will be measured on a three year weighted rolling average for use in performance-linked funding (Option C). However, in consideration of the feedback received, a phased approach has been agreed: a zero weighting will be applied to the 2009 performance data, a 25% weighting on 2010 and a 75% weighting on 2011 data; which means that the full impact of the three year weighted rolling average would not take effect until 2013. From 2013 a 20% weighting will be applied to the 2010 performance data, 30% weighting on 2011 and 50% weighting on 2012 data.
Managing payments
19 responses on options for adjusting payments were received from individual providers and representative organisations.
The majority of sector feedback supported Option 3, a single payment adjustment in December.
The TEC has decided to manage adjustments to payments for performance linked funding, if applicable, by adjusting the December payment. The same method of adjusting payments will be applied across the sector.
This means that providers will receive 100% of their funding, pro-rated across monthly payments, from January to November. Any adjustment for performance linked funding will be made in the final payment for the year.
Timeframes
It is expected that providers will be advised of the impact of performance linked funding on their 2012 funding in September this year.
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Last changed:
8 February 2012