Consequences for delivery over 105% of SAC3+ funding

We have set out the consequences for providers that deliver over 105% of their allocated SAC3+ funding. This ensures that our expectations and the consequences for providers in the event of over-delivery are transparent and consistent.

What is over-delivery?

Over-delivery refers to any delivery over 100% of a TEO’s SAC3+ allocation.

In 2013, Cabinet set the delivery tolerance bands for SAC3+ at 99-105%. These bands provide flexibility within an approved range which TEOs can over- or under-deliver without consequences. The bands are based on the SAC3+ dollar value, not EFTS volumes.

Even though over-delivery does not automatically attract TEC funding (beyond the relevant Flexible Funding threshold for eligible TEOs), delivery over 105% is a concern as it imposes significant costs on the Crown through the Student Loan Scheme, in addition to risks to the quality and potentially financial sustainability of education.

What over-delivery is allowed?

The tolerance bands allow for over-delivery up to 105%[1] of the SAC3+ allocation. There are no direct penalties for over delivery up to 105% but all delivery is subject to ongoing performance and prioritisation conversations with TEC.

[1] This includes Flexible Funding delivery of up to 102% or 10 EFTS (whichever is larger) for eligible TEOs. For some small PTEs, 10 EFTS of Flexible Funding is greater than 105%. In these instances, the TEO would not be penalised for the Flexible Funding portion of delivery over 105%.

What are the consequences of delivery over 105%?

In our 2023 Plan Guidance we advised we would use past delivery, including under and over delivery (above 105% where relevant) as part of our assessment against your Plan.

In terms of direct consequences, our response to over-delivery will be proportionate to the circumstances of each case to ensure that we are flexible and take a measured approach. Factors such as the extent of the over-delivery and its frequency would be taken into account.

We will contact you if interim data shows that you are trending towards over-delivery so that you can make the necessary adjustments for the remainder of the year to bring your delivery within the allowable threshold.

The table below represents the range of actions we may take if a TEO delivers over 105% of its SAC3+ allocation:

In the event of:	TEC will…
Over-delivery is confirmed for TEOs funded less than $5m: More than 105% but less than 110% (106-109%)	Engage/ written warning where over-delivery is a small EFTS value; or Removal of flexible funding privileges.
Over-delivery is confirmed for TEOs funded less than $5m: More than 110%	Engage/ written warning where over-delivery is a small EFTS value; or Removal of flexible funding privileges; and/or Removal of access to additional funding.
Over-delivery is confirmed for TEOs funded $5m or more: Any delivery more than 105%	Removal of flexible funding privileges; and/or Removal of access to additional funding.

If you have any questions regarding over delivery, please contact us on 0800 601 301 or email customerservice@tec.govt.nz.