Podcast transcript: Scotland's Colleges 2015 
Published 2 April 2015 
I'm speaking together with audit manager Susan Lovatt about Audit Scotland's latest report, Scotland's Colleges 2015.
Susan, what is the report about?
Our report looks at the various and significant reforms under way in the college sector and how well they have been managed and delivered. As part of these reforms, the number of incorporated colleges in Scotland has reduced from 37 in 2011/12 to 20 in 2014/15, and these colleges are now spread across 13 regions in Scotland. These and other changes have had implications for college funding, the provision of learning and how colleges are run, managed and scrutinised. 
Colleges have had to manage these changes, whilst also dealing the same reductions in budgets that most of the public sector has experienced in recent years. Our report also provides an update on the financial standing of the sector between 2011/12 and 2013/14, and the ongoing challenges that colleges face as they continue to undertake a significant programme of reform.
And what did you find?
The last few years have placed significant demands on colleges in Scotland as they underwent a complex programme of reform. In the main, colleges coped well with substantial changes to the way they work, maintaining sound finances and completing mergers on time, without negatively affecting students' learning experience during the process. 
However, we did identify weaknesses in some areas, including how certain colleges managed and approved severance payments for departing senior staff, and how the Scottish Government and the Scottish Funding Council will measure some of the expected benefits of the reform programme such as better engagement with employers. 
It's important to note that many of the effects of the merger process are still taking place, and there are ongoing challenges ahead for the sector. 
And how has the reform programme changed the way that colleges' finances are managed?
Scottish Government funding is expected to decrease by over three per cent, in real terms, between 2013/14 and 2015/16. In response to this, colleges have reduced their spending, mainly through reducing staff costs.  Alongside this, reclassification of colleges as public sector bodies has changed how they manage their finances and as well as increasing accountability, they can no longer build up significant reserves within a financial year.
It's important to note that despite a reduction in funding, colleges’ finances continued to be generally sound, though we're recommending that colleges now look at developing longer-term plans to ensure they can meet the future needs of their region.
How has the merger process in particular impacted on students?
We found that the changes to date have had no significant detrimental effects on students;
However, it is too early to provide a comprehensive assessment as some aspects of the merger process are still under way. Most of the remaining activities, such as reviewing the curriculum review and integrating ICT systems, will directly affect students. 
It is critical, therefore, and we highlight this in the report, that colleges continue to monitor the effect of ongoing changes and minimise any negative impact on students as these activities progress. 
As you've mentioned, and as the report highlights, the main way that colleges reduced their spending in recent years was to reduce staff costs and as a result, the numbers of staff; how has that impacted on existing staff workloads and their ability to continue to deliver learning? 
Reductions in staff numbers, which were achieved mainly through the merger process have resulted in reductions in staff costs. This has contributed to increased workloads for remaining staff and some loss of key skills and knowledge. 
As part of its six-month post-merger evaluations, the SFC gathered feedback from staff on a range of issues and we highlight in the report that through those evaluations some college staff have expressed concerns about additional work pressures;
This is why we're recommending that colleges continue to review their workforce, and ensure that they take into account existing good practice and guidance with regards to severance packages for staff. 
So what are the other areas highlighted in the report that Audit Scotland wishes to see further improvement and work undertaken in?
We've made a number of recommendations for the Scottish Government, the Scottish Funding Council, colleges and their boards, which we hope will support these bodies in learning from recent experiences and addressing areas that need to improve as the impact of the merger process continues.
As well as the recommendations I've touched on earlier, we are recommending that the Scottish Government and Scottish Funding Council specify how they will measure and publicly report progress in delivering all of the benefits that were expected from mergers, and publish financial information on the costs and savings achieved through the merger process. 
We'd also like to see the Scottish Government and the Scottish Funding Council work with college boards to roll out and encourage take-up of severance training, and ensure severance proposals are managed and approved in line with good practice and guidance.   
Susan, thank you.