Several north and north-east colleges are forecasting deficits over the next five years, according to a report warning further education faces a widening funding gap.
Scotland’s public spending watchdog has told colleges they must do more to tackle the multi-million-pound financial challenges facing them.
Caroline Gardner, the Auditor General for Scotland, found North East Scotland College, North Highland College, Lews Castle College and Inverness College were among 12 Scottish institutions facing a five-year recurring deficit.
A growing gap between college income and expenditure was identified by her report as well as a fall in capital funding for maintenance of buildings.
Colleges’ expenditure increased by £11.8 million to £741 million in 2017-18.
As a result, the sector’s operating deficit increased to £29.8 million, a £12 million increase from 2016/17.
The Scottish Government increased its funding for the sector by 1% in 2019-20 to cover a £50 million-a-year pay rise for staff.
But general capital funding has been cut from £33.6 million in 2018-19 to £21 million this year.
North East Scotland College had an operating deficit of minus 8.1%. The equivalent figure for North Highland College was minus 6%. Lews Castle recorded minus 5.1% and Inverness minus 5.2%.
The document reported that North East Scotland College had narrowly missed its four attainment targets for full-time and part-time students in further and higher education.
North East Scotland, Lews Castle and Orkney were among five colleges to miss targets for obtaining learning credits.
Peter Chapman, North East Tory MSP, said: “Our colleges are being squeezed by this SNP government.
“These figures suggest that in the case of North East Scotland College, the funding pressures are having an impact on attainment levels.”
The finances of North Highland College were singled out by the report, which said there were “several risks” to its financial sustainability.
Although there was a “small” surplus of £0.1 million in 2017-18, the college forecasts an underlying deficit of £2.5 million by 2022-23 and a negative cash-flow position from 2019-20 onwards.
The report noted the college has loans of £1.3 million and in 2017-18 relied on waivers from its bank to avoid breaching loan covenants.
North East Scotland Vice Principal Pete Smith said government funding had reduced and added that if no action were taken the college will “likely” post a deficit.
“That said, college management and the regional board are confident that actions taken in 2018-19 will enable a balanced budget and sustainable financial position to be reached for each of the next five years,” Mr Smith said.
He admitted the college was “concerned” at missed attainment targets, but said action to improve the financial position would improve levels.
Inverness College Principal Professor Christopher O’Neil said a “robust” financial strategy had been developed to minimise the impact as central funding fails to keep pace with costs.
Further Education minister Richard Lochhead said more than £7 billion had been invested in colleges with over £810 million to capital projects.