2023 Funding Conditions Changes – Unified Funding System
2023 Funding Conditions Changes – Unified Funding System
Non-degree Delivery at Levels 3-7 and all Industry Training up to Level 7 on the NZQCF Fund (DQ3-7)
The Non-degree Delivery at Levels 3-7 and all Industry Training up to Level 7 on the NZQCF (DQ3-7) Fund comprises two components:
- the delivery component: The purpose of the delivery component is to contribute towards the costs of providing vocational education and training; and
- the learner component: The purpose of the learner component is to support tertiary education organisations (TEOs) to put learners at the centre of their organisation and to improve outcomes for learners. It supports all learners, particularly those learners who have traditionally been underserved by the education system. It recognises that there are higher costs involved in adapting education delivery and support to meet all learners’ unique needs.
|Eligibility – Learner||Limit on equivalent full-time learner (EFTL) values for qualifications||
No changes to the 1.0 EFTL/EFTS (equivalent full-time student) limit for provider-based learners.
There is a soft credit limit of 1.0 EFTL/STM (standard training measure) for work-based learning, in that TEOs cannot exceed these limits unless they:
|Maintaining existing operational policy settings for UFS.|
|Eligibility – Learner||Verification of learner identity||
The following IDs have been added to the methods of verification for:
* Expired is when the passport has not been replaced with a new passport. Cancelled passports are noted as such with a stamp.
Operational policy decision to allow existing verification methods used under the Industry Training Fund (ITF).
|Eligibility – Learner||Inducements||
The inducement policy generally remains the same but was updated to specify that the following are not considered inducements:
|Required to implement Unified Funding System (UFS) policy settings and retain free tools for apprenticeship programmes.|
|Eligibility – Learner||Recognised prior learning||Policy settings are a consolidation of what was in place for SAC3+ and ITF funds in 2022. A new condition was added to ensure TEOs pro-rate the EFTL value of a programme or credential component parts that were recognised as prior learning.||
Updated to provide better clarity of the existing requirements.
|Eligibility – Programme||
Literacy and Numeracy for Adults Assessment Tool (LNAAT) for industry training
|Removed direct reference to the LNAAT and replaced with the need to assess literacy and numeracy needs in line with the guidance on our website. Note: Removing the specific detail of LNAAT use from our funding conditions does not signal a move away from using LNAAT but instead moves our documented expectations to the guidance.||
To give the ability to adjust guidance more quickly in response to feedback and any shifting understanding of best practice.
|Eligibility – Programme||Not eligible for funding through UFS||
Generally, the same programmes covered under ITF and SAC3+ will be funded under UFS, except for the following:
Policy decision as part of UFS that all Certificates of Proficiency (CoPs) will be funded under DQ7+ regardless of level. Reflective of most CoPs being provided by universities linked to degree-level programmes.Certificates of Personal Interest (CPIs) are not eligible for funding as no assessment takes place. Where the learners are assessed, the study should be classified as a CoP.
|Eligibility – Programmes||New Zealand Apprenticeships (NZAs)||NZAs are funded at the relevant work-based rate. TEOs are still required to report NZAs and from 2023, learners enrolled in an NZA or existing MA programme on 31 December 2022 will be reported as an NZA.||Reflecting UFS changes to fund by mode of delivery.|
|Eligibility – TEO||Eligible providers||TEIs (universities, Te Pūkenga and wānanga) and private training establishments (PTEs) that are quality assured by the relevant body are eligible for funding.||Alignment with SAC3+ and ITF eligibility.|
|Eligibility – TEO||Rural Education Activities Programme (REAP) providers||Removed reference to REAP providers as they need to be registered as a private training establishment (PTE) with the New Zealand Qualifications Authority (NZQA) to offer delivery of qualifications on the New Zealand Qualifications and Credentials Framework (NZQCF) so including them (in addition to PTEs) would be duplicative.||Updated to reflect change in funding mechanism to remove unnecessary duplication.|
|Eligibility – TEO||Transitional Industry Training Organisations (TITOs) removed||TITOs no longer exist as transitions were completed in 2022.||TITO transitions completed as part of the Reform of Vocational Education (RoVE).|
|Funding||Flexible funding (additional funding for over-delivery)||
When determining if a provider is eligible for flexible funding based on a course and/or credit completion rate of 70% or higher, the completion rate will be calculated separately by provider-based modes and work-based modes.
Grandparenting arrangementsExceptions to the 70% completion rate will be considered when determining if a TEO is eligible for flexible funding if a TEO has received arranging training functions from a TITO in calendar year 2022 and their completion rate is lower than 70% for provider-based modes.
|Maintaining existing operational policy settings for UFS with additional grandparenting arrangements.|
|Funding||Full-time equivalent measure (for funding purposes)||
EFTL = equivalent full-time learner, used when referring to learners generally (includes learners reported in both the Single Data Return [SDR] and Industry Training Register [ITR]). This is the naming convention of the unified fundable unit.
EFTS = equivalent full-time student, used when referring to learners in provider-based modes (and reported in the SDR only).
STM = standard training measure, used when referring to learners in work-based modes (and reported in ITR only).1 EFTL = 1 EFTS/1 STM = 120 credits.
|Unifying EFTS and STMs into EFTL for UFS funding purposes.|
|Funding||Payments to TEOs||
On-Plan, volume-based funding based on funding allocation and paid out monthly.
On-Plan, funding based on the funding allocation. The allocation is determined by the number of valid domestic enrolments in the prior year that represent the following learner groups:
80% of the learner component funding allocation (by learner group) is included in the monthly payments made to TEOs.
20% of the learner component funding allocation (by learner group) is paid either monthly or upon meeting agreed performance expectations.**
* Low prior achievement is someone who at the date of enrolment has not previously achieved a qualification on the NZQCF at Level 3 or above or equivalent.** In 2023, only nine TEOs are required to meet performance expectations. The Funding Confirmation Letter for TEOs required to meet performance expectations will include milestones agreed with the provider that demonstrate how they are meeting the performance expectations. Payment of the remaining 20% will be based on the Tertiary Education Commission’s (TEC’s) satisfaction that the milestone has been met.
|Implementing payment approaches for UFS delivery and learner component funding in line with current TEC payment approaches.|
|Funding||Study measure (for funding purposes)||
Programme refers to a programme of study and includes industry training programmes.
Credential refers to micro-credentials.Component part is used as a catch-all phrase and includes part of a programme or micro-credential leading to a qualification, and includes single courses, limited credit programmes (LCP) and supplementary credit programmes (SCP). This is now a defined term in the Funding Conditions Catalogue.
|Combines study measures terms used in ITR and SDR.|
|Recovery (including repayment, suspensions, revocation, or withdrawal of funding)||Deviations between commitments and delivery (new)||The Minister has agreed to include a condition attached to funding from the DQ3-7 fund that enables the TEC to recover funding based on a material and substantial deviation to a TEO’s commitments in relation to the delivery of specific subject areas, programme, or credential level and/or the mode of delivery. The scope of this condition will be limited to specific mixes of provision and will form part of TEC’s existing performance framework. TEC intends to take a phased approach in the implementation of this condition, with the threshold for ‘material and substantial deviation’ starting high and lowering over time.||Required to enable TEC to implement Workforce Development Council (WDC) advice.|
|Recovery (including repayment, suspensions, revocation, or withdrawal of funding)||Offsets, also referred to as wash-ups (previously applicable to the ITF)||
The below offsets have been removed from DQ3-7; instead recovery of delivery component funding will be volume-based, as done previously under SAC3+, or in line with the new recovery condition (referred to above):
|Reflects operational policy decisions to manage recoveries for delivery component funding on a volume basis (instead of continuing with an offset approach). This reflects that delivery will be mixed-mode.|
|Withdrawals||How withdrawals are calculated for learners||There are no changes to the way TEC calculates withdrawals, and withdrawal calculations for provider-based learners will align with the current SAC3+ calculations and work-based learners will align with the current ITF calculations.||Reflects UFS operational policy decision to align withdrawal conditions to previous SAC3+ and ITF settings.|
|Policy change||Learner Success Plans (LSPs)||Added condition for required TEOs to submit an LSP and any subsequent progress reports in accordance with the Education (Proposed Investment Plans: Content and Submission; Assessment Criteria; and Plan Summaries) Notice 2022.||Updated to reflect the introduction of LSPs.|
|Policy change||Student services fees||Removed the word ‘compulsory’ from student services fees and made updates to align with changes to fee regulation settings for 2023. Student services fees are optional for industry trainees who can opt-in or opt-out of the services covered by these fees.||Updated to reflect the Gazette notice for 2023.|
|Terminology||Domestic student||Ensured ‘domestic tertiary student’ was changed to ‘domestic student’.||Updated to reflect change in funding mechanism and Gazette notice for 2023, to copy the definition of the term in the Education and Training Act 2020.|
|Terminology||Industry training||Refers to training undertaken in the work-based: pathway to work, work-based, and assessment and verification modes of delivery and includes all levels on the New Zealand Qualifications and Credentials Framework (NZQCF).||Maintaining this term to refer to all work-based modes.|
|Terminology||New Zealand Qualifications Framework (NZQF) replaced by New Zealand Qualifications and Credentials Framework (NZQCF)||Changed New Zealand Qualifications Framework to New Zealand Qualifications and Credentials Framework.||Updated to reflect the Education and Training Amendment Act 2022.|
|Terminology||Training schemes removal||Removed ‘training schemes’ as these no longer exist and have been replaced by ‘Micro-credentials.’||Updated to reflect the Education and Training Amendment Act 2022.|
Strategic component of the Unified Funding System for Vocational Education and Training Fund
The strategic component of the Unified Funding System for Vocational Education and Training Fund is unique to UFS in that it doesn’t replace or change a fund that existed prior to 2023. The purpose of this fund is to support the tertiary sector to progress strategic priorities for vocational education and training. The funding is not linked to learner enrolments. This fund comprises two elements:
- Element 1: Responding to national and regional skills priorities, informed by advice from Workforce Development Councils (WDCs) and Regional Skills Leadership Groups (RSLGs); and
- Element 2: Supporting programme development and maintenance aligned with the Reform of Vocational Education objectives. For 2023 and 2024, element 2 includes funding to support PTEs to transition and adapt to the new incentives of the Unified Funding System (PTE transition support).
|Eligibility – TEO||Eligible providers||
Te Pūkenga and private training establishments (PTEs) are eligible for funding under elements 1 and 2.Wānanga are eligible for funding under element 2 only.
The funding for each element is pre-allocated to the eligible sub-sectors as broken down below:
Whether the entire amount of funding is allocated to each sub-sector will be determined as part of the investment plan decisions. There are no guarantees that a sub-sector will receive their full allocation.
* Funding decisions for PTEs will be based on the outcomes of a contestable application process.
More information about the 2023 contestable application process can be found at 2023 PTE Strategic Fund.A portion of element 2 funding can be used for PTE transition support. There are specific eligibility criteria for PTE support. More information about PTE transition funding support can be found at PTE transitions funding support.
|Funding||On-Plan funding||Te Pūkenga and wānanga receive on-Plan funding. Funding will be paid monthly. On-Plan conditions will be included in the 2023 Funding Conditions Catalogue.|
|Funding||Off-Plan funding||PTEs receive off-Plan funding which will be paid based on TEC’s satisfaction that agreed milestones are met. Contracts will be managed by the Contract Management team. Off-plan conditions will be included in the PTE’s funding confirmation letter.|
|Recovery (including repayment, suspensions, revocation, or withdrawal of funding)||On-Plan funding||
These processes are predominately unchanged with the following exceptions.
Repayment of funding
TEC will use the final expenditure report to identify whether a TEO needs to repay funding.
Suspension, revocation, or withdrawalTEC can suspend or revoke funding if we are satisfied that a TEO hasn’t achieved the milestones set out in their funding confirmation letter or their expenditure report indicates issues with compliance with the conditions.
|Recovery (including repayment, suspensions, revocation, or withdrawal of funding)||Off-Plan funding||
These processes are predominately unchanged with the following exceptions.
Suspension, revocation, or withdrawalTEC can suspend or revoke funding if we are satisfied that a PTE has not achieved the milestones set out in their funding confirmation letter or their report indicates issues with compliance with the conditions, or if the PTE receives transition support funding and they cease delivering the provision that made them eligible to receive support funding.
TEOs that receive on-Plan funding are required to submit the following reports:
|Reporting||Off-Plan funding||As defined in the PTE’s funding confirmation letter to enable TEC to ensure funding is used for its intended purpose.|