College Mid-Year Financial Forecast Return 2025–26

Call for Information

SFC/CI/02/2026

Issue Date

19 February 2026

Summary

This Call for Information requests colleges / Regional Strategic Bodies to provide an updated financial forecast return for Academic Year 2025–26.

FAO

Principals, Finance Directors and Board Secretaries of Scotland’s Regional Colleges, non-assigned non-incorporated colleges, University of the Highlands and Islands; and the general public.

Further Information

ISG Returns
Finance
0131 313 6500
isg-returns@sfc.ac.uk

This Call for Information requests colleges and Regional Strategic Body (RSB) for the Highlands and Islands, University of the Highlands and Islands (UHI), to provide an updated financial forecast return for Academic Year 2025-26.
Regional colleges and non-assigned non-incorporated colleges should send their returns to the Scottish Funding Council (SFC). UHI) should provide SFC with assigned colleges’ spreadsheet returns and associated documents.
Returns should be sent to SFC no later than 27 March 2026. Earlier returns are encouraged where this is possible. Those colleges assigned to UHI should submit the returns to UHI no later than 19 March 2026.

Mid-year financial forecast return

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 institutions. The FFR submitted by institutions in June 2025 included forecasts for 2024-25 to 2027-28.
The mid-year return (MYR) enables SFC to obtain a meaningful revised forecast of institutions’ financial position in terms of income and expenditure, adjusted operating position, balance sheet and liquidity part way through the current academic year. It also draws comparisons with the previous 2025-26 forecast provided in the June 2025 FFR.
We have worked with college Finance Directors to agree income and expenditure assumptions that should be used in preparing the financial forecasts (see Annex A).

Guidance and format of the mid-year financial forecast return

Guidance for completion of the return can be found in Annex B. A blank copy of the spreadsheet is published along with this Call for Information on the SFC website. The return follows the same format as the June 2025 FFR.
Finance Directors will receive an individual spreadsheet which we have
pre-populated with the 2025-26 forecast from the 2025 FFR. Institutions are required to complete the 2025-26 MYR figures. For those colleges assigned to UHI, we will send the pre-populated returns to UHI.
Where a variance between the FFR and the revised MYR forecast is significant (variance +/- 5% or over 2% of total expenditure), explanations must be included on the spreadsheet and in the accompanying financial commentary. As with previous forecast exercises, we may come back to institutions with queries and requests for further details following our analysis of the forecast information.

Important changes in the return

There are no changes to our information request. This year’s return follows the same format as the June 2025 FFR.

Information requested

Please email an electronic copy of the return in Excel format, along with a financial commentary and any relevant recent papers presented to your Governing Body, to isg-returns@sfc.ac.uk by 27 March 2026.

Further information

Please contact Finance, tel: 0131 313 6500, email: isg-returns@sfc.ac.uk, to discuss any aspect of this letter.

Ursula Lodge CPFA
Deputy Director, Institutional Financial Health

Annex A: Key planning assumptions

Key planning assumptions

We have worked with the college Technical Accounting Group in developing income and expenditure assumptions that should be used in preparing the MYR. These assumptions are provided to support planning consistency across the sector.
Institutions should also develop any additional planning scenarios they consider appropriate to their own operating environment and circumstances.

SFC grant assumptions

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

Credits and teaching income

Core funding for 2025-26 should be based on the final college sector funding allocations for AY 2025-26 announced on 29 May 2025 (College Final Funding Allocations 2025-26 – Scottish Funding Council).
If it is anticipated that core credit thresholds will not be met, funding should be reduced accordingly, after mitigations of 2% tolerance and the recovery based on 80% of teaching funding permitted to reduce planning volatility. All other funds should also be considered as subject to recovery unless agreed directly with SFC.

Capital Maintenance

SFC Capital Maintenance funding should be based on the final 2025-26 funding allocations announced on 29 May 2025.
SFC has agreed colleges’ requests to switch FY 2025-26 capital maintenance budget from CDEL to RDEL and wrote to individual colleges and UHI to confirm the amounts that are reclassified as RDEL. Colleges should reflect the revised budget splits in the MYR forecast.

Other SFC grants

Additional funding of £8.3m, allocated separately from core teaching funding, is being provided to cover the cost of increased employer contributions to the Scottish Teachers’ Pension Scheme.
Scottish Government has also confirmed £5.5m funding would be made available in FY 2025-26 to support pressures from the increase in National Insurance rates. For the purposes of this MYR, colleges should assume no additional funding will be made available for the period April 2026 to July 2026 at this time.
Additional funding of £4.5m has also been allocated to support lecturers’ pay during AY 2025-26. We are currently considering allocation of additional funding of £1.7m for AY 2025-26 support staff pay.

Other assumptions

Non-SFC income

Non-SFC income projections should be prepared taking account of local circumstances. Institutions will need to take account of the latest available information from staff with responsibility for securing and delivering non-SFC funded activity while taking account of anticipated levels of demand.

Staff costs

The impact of National Bargaining harmonisation/job evaluation costs for all staff and any workforce planning requirements should be incorporated in the MYR.
Colleges should continue to accrue for the costs of implementing support staff job evaluation as per the detail provided by Colleges Scotland. Scottish Government has confirmed that responsibility for job evaluation funding commitments now rests with the Scottish Government until the process is complete. Colleges should continue to follow the agreed accounting treatment set out in the 2024-25 Accounts Direction.
Institutions should also reflect in the MYR 2025-26 cost of living pay award increases for lecturing and support staff. An increase of 4.14% has been agreed for lecturing staff for 2025-26 of which 1.14% is funded by Scottish Government while support staff secured an increase of 4.25% of which £1.7m is being funded by Scottish Government (see paragraph 10 above). Incremental increases should also be reflected.
Institutions should assume that funding will not be provided for severance costs.
FRS 102 pension adjustments should be excluded from the forecasts.

Non-staff costs

Non-staff cost projections should be prepared taking account of local circumstances. Colleges should use actual expenditure to date and extrapolate costs for the remainder of the academic year as appropriate.

Annex B: Guidance for completion

Structure of the MYR

The MYR takes the form of an excel spreadsheet which has eleven sheets.
Ten of the sheets require input by the institution. We suggest the order of completion is:
1. Capital expenditure.
2. Income.
3. Expenditure.
4. Efficiencies.
5. SoCIE.
6. Adjusted operating result.
7. Balance Sheet.
8. Liquidity analysis.
9. Cashflow.
10. Declaration.

Sheets not requiring completion

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

Completion of the MYR

Input of financial forecast figures

The sheets in the spreadsheet contain blue highlighted boxes for the input of the updated forecast figures. Please note that only whole numbers should be input into the spreadsheet. It is very important that you do not link the spreadsheet to another document or add additional columns or rows in any of the sheets in the workbook.
If the movement in an item on last year’s results or on the June 2025 FFR forecast is of a significant amount (variance +/- 5% or over 2% of total expenditure), please provide details of the reason for the variance in the explanation column.

Financial commentary

Please note that a commentary is required on the financial forecast to cover the context in which the forecast has been prepared and enable a proper understanding of key aspects of the financial forecast. The commentary should cover any significant variances from the original FFR, including any changes in the assumptions, and provide details of the key risks identified when preparing the forecast.
You should also provide copies of recent papers presented to your institution’s Governing Body relating to the revised forecast if they cover the areas highlighted above.
As with previous forecast exercises, we may come back to institutions with queries and requests for further details following our analysis of the forecast information.