Funding and payments

Funding and payments

Last updated 21 June 2017
Last updated 06/21/2017

This page provides information about how Student Achievement Component level 3 and above (SAC level 3 and above) funding is set, funding allocation, funding for additional delivery, funding calculation, and funding recovery.

See also the SAC funding rates tables for a view of the funding rates available by category and year.  

Funding

The SAC level 3 and above funding mechanism is issued by the Minister responsible for tertiary education. The funding mechanism outlines the general form and essential components of the fund. It provides the mandate for us to allocate the funding and what the funding can be used for, and details how we administer the fund.

Funding is agreed through a tertiary education organisation's (TEO’s) Investment Plan (Plan).

A TEO that receives SAC funding is required to:

Funding for SAC level 3 and above is set through the Government’s annual budget process. We determine the appropriate amount of SAC level 3 and above funding for a TEO. When allocating funding, we consider:

  • whether the TEO is eligible for SAC level 3 and above funding
  • the nature of the qualifications offered by the TEO
  • the region of delivery of the TEO
  • the TEO’s historical delivery volumes compared to delivery commitments
  • pastoral care arrangements for students made by the TEO
  • the TEO's past performance with respect to SAC level 3 and above, and
  • the TEO’s performance against SAC level 3 and above policy settings.

Through each TEO’s Plan, we agree the mix of provision (MoP). This includes the qualifications that the funding can be used for, and the allocation of funding towards, and the volume of delivery expected for, each qualification.

Funding allocation

SAC level 3 and above is funded using the equivalent full-time student (EFTS) funding model. One EFTS means the student workload that would normally be carried out by a student enrolled full-time in:

  • a single academic year, or
  • a single calendar year.

One EFTS is equivalent to 120 credits, i.e. 1200 notional hours of learning or 100% of a full-time, full-year student workload.

See Condition: Funding.

Overseas travel

A TEO must not use SAC level 3 and above funding to meet the costs of overseas travel for students, or require students to meet the cost of the travel by accessing the Student Loan Scheme, unless the overseas travel is academically essential. See Condition: Use of SAC3+ Fund Funding for overseas travel.   

When overseas travel is a legitimate academic requirement of the course of study or training it reduces the likelihood that students enrol in a course in order to access subsidised overseas travel, and ensures public funds are used appropriately.

To include overseas travel within a course, a TEO must submit an application to us demonstrating that the travel is academically essential.

We will consider the following factors.

  • Whether the overseas travel is integrally linked to the stated outcomes of a course
  • Whether the course is a compulsory requirement of a qualification and/or major
  • Whether the academic outcomes for the course are achievable in any other manner in New Zealand
  • Whether the course or qualification is aligned to the Tertiary Education Strategy

Funding calculation

Refer to SAC level 3 and above funding conditions including, but not limited to:

We calculate a TEO’s consumed funding using:

  • the number of valid domestic student enrolments, measured by equivalent full-time students (EFTS)
  • the qualifications, and their component courses, in which a valid domestic student is enrolled.

To calculate a TEO’s consumed SAC level 3 and above funding, we use the following elements:

  • the metric (EFTS value)
  • course classification
  • funding category
  • funding rates for 2017 
  • student enrolments. 

Example:

Step Funding calculation Example
1 Assign the qualification an EFTS value A TEO’s Certificate in Communication Studies obtained through one full-time academic year’s study has a value of 1.0 EFTS.
2

Disaggregate the qualification into courses

Calculate the EFTS factor of each course


Classify the courses

It comprises four courses.


The EFTS value of the qualification is disaggregated among the four courses. For this example, each course has an EFTS factor of 0.25 EFTS.

The course classification prescription in the funding mechanism classifies this subject as # 03 (e.g. arts, humanities, language).
3 Apply the funding category

The funding category alphabetic code in the funding mechanism gives the category of the course as A (arts and social sciences).

The funding category numeric code in the funding mechanism gives the category of the course as 1 (non-degree course with no research requirement). 
3 Apply funding rates The funding rates table in the funding mechanism states that the rate for A1 courses is $6,135 (excl. GST) per EFTS. 
4 Multiply the funding rate by the number of valid enrolments For 100 students on each of the four courses, each course attracts SAC level 3 and above funding of $153,375 (excl. GST) (0.25 x $6,135 x 100).

Performance-linked funding

Performance Linked Funding (PLF) element is applied to SAC level 3 and above funding.   

Recognition of prior learning / prior achievement

Recognition of prior learning (RPL) relates to previous study or experience (prior achievement) relevant to a programme that a student is currently undertaking. RPL enables a student to proceed with his or her study without repeating aspects of the qualification previously studied, or re-learning skills the student has already achieved through past work or other experience.

RPL for SAC level 3 and above students

Students may have already achieved some courses or course content prior to enrolment in a SAC level 3 and above funded qualification. The TEO must not claim funding where this is the case.

The TEO must recognise this prior learning and adjust the courses in the learner’s programme. The TEO must not claim SAC level 3 and above funding for recognising this prior learning, or for delivering tuition where the student already has this prior learning (i.e. skills and/or knowledge). See Condition: Recognised prior learning. 

If the student has achieved course content previously, the TEO must work out the EFTS factor of prior learning of the student (relative to the standard course). The TEO must then subtract this from the standard course EFTS factor. The revised EFTS factor is the value that the TEO should then submit in the enrolment file of the SDR, in the FACTOR field, for that student.

Re-enrolling a SAC level 3 and above student

Where a SAC level 3 and above student requires further study to complete their qualification, their study can only be to complete courses that they have not yet passed. This can include content not yet studied or content studied and assessed, but requiring a re-sit.  See Condition: Exceeding the total annual EFTS value of the qualification.

For example:

A TEO enrols a student in all courses linked to a 60 credit (0.5 EFTS) qualification. The sum of the course EFTS factors is 0.5 EFTS.

The student passes/achieves 30 credits from the 60 credit course enrolments. The TEO is funded 0.5 EFTS, for the 60 credits of courses the student was enrolled in.

The TEO re-enrols the student in a second period of study for the remaining 30 credits not yet achieved. The TEO is funded 0.25 EFTS for the 30 credits of courses the student was re-enrolled in.

The student successfully completes the courses and is awarded the qualification.

The student will have received 0.75 EFTS worth of provision (90 credits), and the TEO will be funded for 0.75 EFTS delivery (0.5 + 0.25 EFTS) (assuming funding conditions are met for each course enrolment). Note: the TEO will report 0.25 EFTS (30 credits) unsuccessful course completions, and 0.5 EFTS (60 credits) successful course completions.

Calculating EFTS remaining vs consumed

To determine the exact value of the EFTS remaining for a returning student, the following formula should be used:

Qual EFTS value - (credits completed/total qual credits x qual EFTS value) = remaining EFTS

For example:
0.5 - (30/60 x 0.5)

= 0.5 – 0.25

= 0.25 remaining EFTS

Claiming funding once for the EFTS factor of a course

See Condition: Funding for EFTS factor of a course.

Payment

SAC level 3 and above funding is paid in monthly instalments. The payment amounts are in equal instalments from January to June, and in equal instalments from July to December (subject to Performance Linked Funding adjustment).

Flexible funding

We fund eligible TEOs for eligible SAC level 3 and above provision above the amount the TEO has been approved to deliver. This is to provide TEOs with flexibility to meet additional student demand. See Condition: Flexible funding for further information.

 

Flexible funding:

  • is payable for provision towards:
    • for private training establishments, qualification courses that we have agreed to fund in your MoP, or
    • for tertiary education institutes, NZSCED volumes of provision that we have agreed to fund in your MoP
  • does not mean we have changed your approved funding allocation, and
  • is subject to the conditions that we have imposed on your funding.

The external evaluation and review (EER) category that will be applied is the category that is current on 31 December of the funding year to which flexible funding is being applied.

Flexible funding is calculated using the December SDR. Payment is made in March of the following year.

For the purposes of calculating flexible funding, the value of 10 EFTS of delivery is calculated using the average EFTS rate of a TEO’s total actual delivery (funded and unfunded), as determined by us.

The table below shows examples of how flexible funding is calculated (assuming a generic funding rate of $10,000 per EFTS to illustrate).

Note: To view the full width of the table, use the scroll bar at the bottom of the table.

Funding allocated Plan-agreed EFTS Delivered EFTS Delivery value Flexible funding calculations Proportion of Plan agreed commitments
$200,00 20 22.6 EFTS $226,000 1. The TEO delivered 22.6 EFTS (value $226,000). 113% delivered

2. Calculation

a)   2% of funding ($200,000 X 2%) equals $4,000

b)   10 EFTS ($226,000 / 22.6 X 10) equals $100,000.

 
3. $100,000 (10 EFTS) is greater than $4,000 (2%) which shows we can pay up to $100,000.
4. The dollar value of the over delivery is $26,000. We pay $26,000 in flexible funding 113% funded
$200,000 20 20.2 $202,000 1. The TEO delivered 20.2 EFTS (value $202,000) 101% delivered
2. Calculation:

a)  2% of funding ($200,000 X 2%) equals $4,000

b)   10 EFTS ($202,000 / 20.2 X 10) equals $100,000.

 
3. $100,000 (10 EFTS) is greater than $4,000 (2%) which shows we can pay up to $100,000.  
4. The dollar value of the over-delivery is $2,000. We pay $2,000 in flexible funding. 101% funded
$2,000,000 200 226 $2,260,000 1. The TEO delivered 226 EFTS (value $2,260,000). 113% delivered
2. Calculation:

a)   2% of funding ($2,000,000 X 2%) equals $40,000

b)   10 EFTS ($2,260,000 / 226 X 10) equals $100,000.

 
3. $100,000 (10 EFTS) is greater than $40,000 (2%) which shows we can pay up to $100,000.  
4. The dollar value of the over-delivery is $260,000. We pay $100,000 in flexible funding. 105% funded
$5,500,000 550 570 $5,700,000 1. The TEO delivered 570 EFTS (value $5,700,000). 103% delivered
2. Calculation:

a)   2% of funding ($5,500,000 X 2%) equals $110,000

b)   10 EFTS ($5,700,000 / 570 X 10) equals $100,000.

 
3. $110,000 (2%) is greater than $100,000 (10 EFTS) which shows we can pay up to $110,000.  
4. The dollar value of the over-delivery is $200,000. We pay $110,000 in flexible funding. 101.8% funded

$5,500,000 funded

$2,000,000 unfunded (derived funding rate)

$7,500,00 total

550 funded plus 200 unfunded 680 $6,800,000 1. The TEO delivered 680 EFTS (value $6,800,000). 90.7% delivered
2. Calculation:

a)  2% of funding ($5.500,000 X 2%) equals $110,000

b)   10 EFTS ($6,800,000 / 680 X 10) equals $100,000.

 
3. $110,000 (2%) is greater than $100,000 (10 EFTS) which shows we can pay up to $110,000.  
4. However, the dollar value of the under-delivery against the dollar value of the funded and unfunded commitment is $700,000. We will not pay any flexible funding. 90.7% funded

$5,500,000 funded

$2,000,000 unfunded (derived funding rate)

$7.5m total
550 funded plus 200 unfunded 753  $7,530,000 1. The TEO delivered 753 EFTS (value $7,530,000). 100.4% delivered
2. Calculation:

a)   2% of funding ($5,500,000 X 2%) equals $110,000

b)   10 EFTS ($7,530,000 / 753 X 10) equals $100,000

 
3. $110,000 (2%) is greater than $100,000 (10 EFTS) which shows we can pay up to $110,000.  
4. However, the dollar value of the over-delivery against the dollar value of the funded and unfunded commitments is $30,000. We pay $30,000 in flexible funding. 100.4% funded

Over-delivery and under-delivery

We approve SAC level 3 and above funding as a total dollar value (not an EFTS volume). A TEO is expected to manage its enrolments effectively and in accordance with its Investment Plan (Plan). 

We have a tolerance band for over-delivery and under-delivery, which is currently set at 99% to 105% of each year’s funding. This is to acknowledge that the dollar value of enrolments may vary from the dollar value of the allocation approved by us.

Over-delivery

Even though we can fund over-delivery as set out in the Flexible funding section above, our tolerance threshold for over-delivery is 105%. If a TEO is not eligible for flexible funding and it delivers above 105% threshold in year n, we reduce the TEO’s baseline funding from year n+2 onwards.

Delivery above the 105% threshold is calculated using the TEO’s combined:

  • approved allocation, and
  • dollar value of its Plan-agreed unfunded provision (if any).

Each TEO is responsible for notifying us at the earliest possible opportunity to discuss this if it has actual or anticipated delivery above agreed levels. 

Under-delivery

If a TEO delivers less than 99% of its SAC level 3 and above funded provision during the year, we will recover funding (see below for recovery details).  We may also reduce SAC level 3 and above funding to the level of actual delivery within the Plan period by making a significant Plan amendment, or by revoking or suspending some funding. 

We will also consider the level of delivery achieved when determining future funding allocations.

Funding recoveries

We are required to recover funding where the results of an audit, reporting or statistical return show a TEO has under-delivered against expected performance targets as described in their agreed Investment Plan. See Condition: Repayment of SAC level 3 and above Fund Funding.

Recovery of SAC level 3 and above funding is calculated on dollars consumed and funding is recovered for delivery below 99% of the TEO’s approved allocation. In practice, this means funding consumed is calculated based on delivery volume data at the course level, submitted through the December SDR.

The difference between the total funded (dollar) amount in the approved Plan and the total delivered (dollar) amount will be recovered. In addition, funding is recovered for reported delivery that is ineligible for funding.

TEOs are expected to maintain sufficient cash reserves so they are able to repay any recoveries due on demand.  

Recovery is based on the December SDR and occurs early in the following year. 

Suspending or revoking funding

Under section 159YG of the Education Act 1989 (the Act), we may suspend or revoke some or all funding given under section 159YA of the Act if we are satisfied on reasonable grounds that:

  • when measured against performance indicators, the TEO has not achieved, or is not achieving an outcome anticipated in its Investment Plan for a tertiary education programme or activity in relation to which funding has been given under section 159YA of the Act
  • the TEO has not complied, or is not complying, with a condition on which funding has been given under section 159YA of the Act, or
  • the TEO has not provided, or is not providing, adequate and timely information required by the TEC or Ministry of Education under section 159YC of the Act.   

If a TEO has its funding approval revoked in accordance with section 159YG of the Education Act 1989, the unspent portion of funding is repayable to the TEC (see Condition: Suspension or revocation of SAC3+ Fund Funding). We may arrange to off-set the amount against any funding payable to the TEO.