The financial challenges facing Scotland's college sector have increased, says the spending watchdog.
An increase in Scottish Government funding to colleges will cover only the costs of making staff pay and conditions consistent across the sector. Meanwhile, money allocated for buildings and infrastructure will fall short of the estimated costs of maintaining the college estate.
Most colleges are forecasting deficits in the next five years, as the gap between their income and expenditure continues to widen. Only a small number of these colleges were found to have identified specific actions to deal with shortfalls.
Despite these challenges, student numbers have increased, and the sector continues to exceed its learning activity targets. However, there is wide sector variation in measures of student success, such as numbers completing their course or getting a job. And there is room for clearer Scottish Funding Council reporting on colleges' peformance, including around student satisfaction figures.
Caroline Gardner, the Auditor General for Scotland, said:
"Colleges are increasingly dependent on public funding to cover their costs, and it is likely that the gap between their income and spending will continue to widen without action.
"Tighter budgets make financial planning even more important. Colleges and the Scottish Funding Council need to do more to ensure they are as well-prepared as possible to deal with ongoing pressures."