College Financial Forecast Return (FFR) 2025–26 to 2028–29

4. The Financial Forecast Return (FFR) is an established part of SFC’s financial health monitoring framework. Financial projections are a key source of information in enabling SFC to monitor and assess the medium-term financial planning and health of colleges.
5. SFC’s Financial Memorandum with colleges and the RSB for the Highlands and Islands requires colleges to plan and manage their activities to remain sustainable and financially viable.
6. It is therefore critical that colleges take the necessary actions to balance their adjusted operating position, reflect these actions in their FFRs, and provide a full description of their financial plans in the FFR commentary.It is important for colleges to present a balanced budget and clearly outline mitigating actions that they would need to take to deliver a break-even position across the next three years, including any that may result in reduced delivery of strategic objectives.
7. The colleges should also present an alternative scenario indicating how their break-even position would change if some or all mitigating actions required to achieve a balanced budget could not be delivered. In this alternative scenario, where a deficit is forecast in any year, colleges should provide a narrative which clearly sets out the mitigating actions that will be required to achieve a break-even position and address financial sustainability challenges, including any resulting in adverse impact on staff and students.
8. Please also provide copies of relevant Board or Finance Committee papers. If these papers include the narrative requested a separate commentary is not required.
9. We expect colleges to continue reviewing their business models and strategic plans. Please provide a summary of changes made and/or under consideration. If no review has taken place, please provide the reason for this.
10. It is important to note that we have no information on Scottish Government funding beyond Financial Year 2026-27 (year to 31 March 2027) so these assumptions are indicative.
11. This year’s return follows the same format as last year’s FFR and 2024-25 annual accounts return. In line with last year, we have added a sheet to the return to capture the impacts of an alternative funding scenario that we are asking colleges to model. If colleges wish to capture more than one alternative scenario, please do so using the blank FFR template provided on the SFC website. The basis of the alternative scenario is the decision of the college.

Arms-length foundations

12. Arms-length foundations (ALFs) were established to mitigate the impact of incorporated colleges’ reclassification as arms-length central government bodies. Colleges are encouraged to maximise ALF funding to support their financial position, where appropriate. Any donations to ALFs should only be made where budget cover is available from net surpluses arising from commercial activity during the Financial Year to 31 March. Government funds cannot be donated in this way. Please contact SFC if your college is considering an ALF donation.

13. Finance Directors will receive an individual spreadsheet which we have pre-populated with the 2024-25 annual accounts figures. For assigned colleges in the Highlands and Islands region, we will send the pre-populated return to the RSB. Colleges should not change or amend the pre-populated figures or formulas.
14. Guidance for completion of the return can be found in Annex B below. A blank copy of the spreadsheet return template is published on our website along with this Call for Information. The template is unlocked so that it can be used in preparing the figures for the return. We request that colleges complete the pre-populated return provided for submission to SFC.
15. Colleges are required to complete the forecast figures for the period 2025-26 through to 2028-29. Please note that the guidance in Annex B requests a commentary on the financial forecasts which should cover the context in which the forecasts have been prepared. Your commentary will be as important as the figures you submit, as this will help us better understand the issues facing your college and will support follow-up engagement.
16. Please also include commentary on any additional scenario planning, working through a range of assumptions and options to show choices you could make to reach an optimal position for your college.
17. Please enter explanations for significant variances (+/- 5% or over 2% of total income/expenditure) on the spreadsheet. As with previous forecast exercises, we may come back to colleges with queries and requests for further details following our analysis of the forecast information.
18. If sections of the return are incomplete or partially complete, we will request an updated return. For example, if the breakdown of staff costs does not match total staff costs, colleges will be asked to update the return so that these align.

19. Please provide the following information by 30 June 2026 (as noted earlier, colleges assigned to UHI should submit their returns to UHI no later than 22 June 2026):
    • An electronic copy of the return in Excel format and the financial commentary.
    • Copies of the relevant Committee and Board papers, which should include details of any additional planning scenarios that have been considered by the Board.
    • If the schedule of Committee/ Board meetings makes it difficult to achieve this deadline, please provide a draft return, the dates of the Committee/ Board meetings, and the proposed date for the submission of the final approved return.
    • Where staff restructuring costs are included in 2026-27, a copy of the proposed voluntary severance scheme and details of planned restructuring (where not already submitted to SFC). Colleges should also outline in the financial commentary any restructuring plans beyond 2026-27.

20. It is important that returns are submitted to SFC by the deadline to allow SFC to monitor colleges’ financial health and report to the SFC Finance Committee in the required timescales. The returns should be completed fully, and the forecasts should be as accurate and dependable as possible.
21. Electronic copies of the return and supporting documents should be sent to isg‑returns@sfc.ac.uk.

1. We have worked with the College Finance Development Network Lead Group and the Technical Accounting Group in developing income and expenditure assumptions that should be used in preparing the FFR. These assumptions are provided to support planning consistency across the sector.
2. We have no information on Scottish Government funding beyond Fiscal Year 2026-27. These assumptions are therefore indicative, and, as noted above in paragraph 7, colleges should develop any additional planning scenarios with alternative assumptions they consider appropriate for their operating environment/circumstances.
3. Forecasts should be prepared in line with the Statements of Recommended Practice (SORP). The most recent SORP, effective for financial periods beginning on or after 1 January 2026, was published on 3 November 2025 and incorporates recent changes to the underlying FRS 102 standard. Statement of recommended practice 2026 edition

4. Guidance on SFC grant funding assumptions reflects Scottish Government funding for the college sector confirmed at the time of writing. SFC will notify colleges separately if any further funding is allocated.

Credits and teaching income

5. Core funding for AY 2026–27 should be based on the final college sector funding allocations for AY 2026–27, announced on 3 June 2026. Forecasts should factor in the uplift in funding for AY 2026–27. For AY 2027–28 and AY 2028–29, institutions should assume no further uplift in funding. To be clear, this does not reflect SFC policy and is not an indication of future funding allocations. These assumptions are provided to support sector-wide planning consistency.
6. If it is anticipated that core credit thresholds will not be met, funding should be reduced accordingly, after mitigations of a 2% tolerance and recovery based on 80% of teaching funding permitted to reduce planning volatility. Funding does not need to be reduced for the approved reduction in credit thresholds under the agreed College Transformation Framework.
7. The Regional Strategic Body for the Highlands and Islands region must advise its assigned colleges of their funding assumptions over the forecast period to AY 2028-29.

Capital maintenance

8. SFC Capital Maintenance funding should be based on the AY 2026–27 final funding allocations announced on 3 June 2026. For AY 2027–28 and AY 2028–29, institutions should assume no further uplift in capital maintenance funding for the purposes of planning. Unless previously agreed, support for the highest priority capital/estate needs should not be included in funding assumptions as it will be allocated through a separate process.
9. Colleges should assume that this funding must be used for capital expenditure only. The Scottish Government has confirmed that, given the increased resource budget for 2026-27, colleges should no longer seek to switch funds from capital to resource. Colleges should therefore prepare forecasts based on the allocated capital and resource funding.

1. The FFR takes the form of an Excel spreadsheet which has fourteen worksheets. A copy of the spreadsheet is published along with this Call for Information.
2. Thirteen of the sheets require input by the college. We suggest the order of completion is:
   1. Pension assumptions.
   2. Arms-Length Foundation (ALF) funding.
   3. Income.
   4. Expenditure.
   5. SoCIE.
   6. Adjusted operating result.
   7. Balance Sheet.
   8. Liquidity analysis.
   9. Cashflow.
   10. Capital expenditure.
   11. Efficiencies.
   12. Alternative funding scenario.
   13. Declaration.

3. The Summary sheet does not require to be completed. This summarises various key figures from the spreadsheet and is calculated automatically.

Input of financial forecast figures

4. The worksheets in the spreadsheet contain blue highlighted boxes for the input of the actual and forecast figures.
5. Please note that only whole numbers can be input into the return. Please do not link the spreadsheet to another document or change the formatting in the spreadsheet.
6. Please do not alter any figures that are pre-populated.
7. Please enter explanations for any significant variances (+/- 5% or over 2% of total income/expenditure) where appropriate.