Unified Funding System

Unified Funding System

Last updated 4 August 2021
Last updated 4 August 2021

A unified funding system (UFS) will apply to all provider-based and work-integrated education at certificate and diploma qualification levels 3 to 7 (excluding degree study) and all industry training.

July 2021 update  

Over the last month, the team has been busy creating detailed definitions for the modes of delivery within the Funding Category Component, and have been testing the detailed definitions with a small group of experts in the sector. The proposed four modes of delivery are: provider-led; work integrated for learners brokered into employment; work integrated for learners who are employed; and employer-led.  

The findings from these sessions will help inform further shaping of the detailed definitions of the modes of delivery for wider sector engagement. Following this the team will be able to analyse the current definition settings for things like unnecessary duplication, gaps and unintended consequences. They want to ensure that they have clearly defined the boundaries between each mode, and ensure they align with the policy intent.

The team is also looking forward to continuing engagement with the wider sector on a range of operational design matters on the UFS later in the year. If you have any questions about the modes of delivery, or if you would like more information on the UFS email us at ufs@tec.govt.nz.

May 2021 update 

  • The unified funding system (UFS) project has developed a range of policy proposals and a number of these are now in the detailed design phase. We have worked with sector representatives from Tē Pūkenga and its subsidiaries, Private Training Establishments (PTEs), wānanga, transitional Industry Training Organisations and universities since the end of 2019. We will continue to work with the sector to develop the detailed policy design.
  • Our engagement with the sector is helping us collect new data to inform the detailed design work. This collection will also enable us to model and test funding rates and the distribution of funding between the proposed components of the UFS. We will undertake modelling in late 2021.
  • This means that information on UFS funding rates is expected to be available in mid-2022. Ahead of this, we intend to provide clarity on the approach for transitioning into the new system.
  • The aim of any arrangements to support transitioning to the new system is that providers will be supported to shift to new funding rates in a smooth and managed way, with time to adjust to the UFS, while minimising disruption to the network of provision.
  • We will continue to work with, and update, the sector as the UFS work develops.

March 2021 update

As part of the Reform of Vocational Education we will combine two parts of the current funding system to create a new unified funding system that:

  • Rewards and encourages the delivery of high-quality education and training which meets the needs of learners, communities and employers.
  • Supports access to work-based education and training and encourage the growth of work-integrated delivery models.
  • Supplies strategically important delivery to meet national priorities, address regional labour-market demand, and be highly responsive to employer skill needs.
  • Allocates funding through simple and transparent funding mechanisms which ensure provider accountability, and provide for greater stability as a platform to invest in innovation and growth.

The scope of the project covers all Student Achievement Component and Industry Training funded learning at certificate and diploma levels 3-7 (excluding degree study) regardless of the setting in which this learning takes place. This includes learning delivered and arranged by the New Zealand Institute of Skills and Technology, wānanga, private training establishments and universities.

How the new system will look

It is proposed that there will be three funding components in the new system. The components will be designed to work together so tertiary education organisations (TEOs) can deliver education and support work-integrated learning which is responsive to regional and national skills needs, supports learners and employers in ways that best meets their needs, and drives new and innovative ways of delivering learning.

Unified Funding System (PDF, 647 Kb)

 Unified Funding System diagram

The new system will need to be flexible and adaptable. We are developing something with fundamental differences to the current system (especially in relation to learner success and work-integrated learning), and we will need to be open to adjusting the UFS as we learn about the effects of the new system on achieving our outcomes.

The three components

Funding Category Component:

  • It is proposed that the funding category component will support volume based education delivery and support for work-integrated learning in a new way. It will consider not only the subject of the delivery, but also how it is delivered.
  • This component aims to support shifts in delivery so that more learners have opportunities to be exposed to the workplace, including opportunities to earn while they learn. This shift will also ensure that both learners and employers are supported through the vocational education system regardless of the setting they are in.
  • Learners will be supported to train both in educational settings and the workplace. There will be different rates to reflect the setting they are in and the kinds of support they receive, and single learner could be funded from more than one mode. .
  • The Minister has agreed to further development of four modes of delivery. These are:
    • Provider-led – A learner completes a course without any formal on-the-job learning. The provider undertakes all teaching and learning, and is responsible for all learning support and pastoral care.
    • Work integrated for learners brokered into employment: The provider brokers learners into paid employment in the relevant field of study with a training agreement. Learners are taught in the workplace for this part of their study, and the provider is responsible for making sure each learner and employer is appropriately supported.
    • Work integrated for learners who are employed: Learners are taught in the workplace for this part of their study, and the provider is responsible for making sure each learner and employer is appropriately supported.
    • Employer-led: An employer creates or commissions and delivers an in-house training course for employees. Providers support employers to match training to NZQF standards, and also have oversight of assessment.
  • We have completed the work to understand the components that comprise vocational education delivery, and how these could be sensibly grouped to describe coherent modes of delivery. The next step for the project team is to engage with sector experts to develop the operational definitions (what the system looks like in practice) and relative costs of each of these modes.

Learner Success Component:

  • The proposed learner success funding approach will recognise the significant requirements on TEOs to understand and respond to the range of learner needs, to work with their communities, iwi and employers, and to incentivise improved system performance for traditionally underserved learners.
  • It proposes increasing the proportion of funding that is used to encourage learner success.
  • We will be testing and refining this approach with the sector, including connecting with underserved learner representatives, and determining how best to ensure tailored learning for disabled learners and people with additional learning support needs. 

Strategic Component:

  • This proposes a  new flexible funding approach for strategically important delivery to support national and regional priorities, increase responsiveness to regional labour-market demand, and address the issues associated with geographic isolation.
  • We are proposing this component would incorporate two main elements:
  • TEOs would apply for time-limited funding to trial new approaches, learn what works and share best practice. Proposals could come from individual TEOs, partnerships between TEOs, or collaborations between TEOs and third parties, such as industry, employers or iwi. This funding would be for the life-cycle of the specific project.
  • Funding to create a sustainable network of vocational education. It is likely this will be allocated on a longer-term basis than the funding for new approaches.
  • We will be testing and refining this approach with the sector, and we need to do more operational design to determine how this will work in practice.