The Department of Further and Higher Education has acknowledged that the surplus in the National Training Fund (NTF) is in excess of levels required to maintain funding in a period of economic decline and the continuous increase in surplus is not sustainable.
That is according to the Comptroller and Auditor General (C&AG)'s annual report.
It found that that despite this, plans to spend the accumulated surplus may be constrained in the context of budgetary and EU fiscal policies, despite a plan for increased spending put forward by the department.
At the end of December, the NTF had an accumulated surplus of €1.372 billion, the C&AG's Report on the Accounts of the Public Service 2022 found - a considerable increase on 2015.
It added that the department has projected that the surplus will continue to increase, to €1.5 billion at the end of 2023 and potentially €2 billion by 2025, based on current projections.
"A prudent level of reserves in the NTF is necessary to guard against the uncertainties of the economic cycle and to ensure sufficient resources are available to deliver programmes when required," the report said.
"However, the level of surplus of almost €1.4 billion at year end 2022 would be sufficient to fund total 2022 expenditure twice over, and exceeds the amount required for a prudent reserve," it added.
The report said NTF income has increased in recent years due to the impact of higher numbers in employment, increases in the levy rate and rising incomes.
"The levy rate was increased over the period 2018-2020, but associated planned reforms to the NTF have taken longer to implement than originally intended," it said.
Several groups, including employers’ group Ibec, have argued for the surplus in the NTF to be used for other purposes.
The C&AG said that the NTF has been subject to a comprehensive external review which made a number of recommendations.
It said the bulk of these have been implemented through the annual estimates process and the allocation of funding.
But it added there has been little progress on the recommendations aimed at improving the monitoring and evaluation of the NTF.
"The NTF does not have a standard approach or a standard set of performance metrics to assess the effectiveness of its own performance or that of its grantee bodies," it said.
"The performance metrics currently used by the NTF are input or activity based rather than results/output based," it added.
The C&AG recommends that the NTF should develop a series of standard metrics against which to evaluate the effectiveness of its overall performance and the performance of the bodies it funds.
It said these metrics should focus on the effectiveness of the NTF spend by measuring outcomes rather than levels of activity in schemes and programmes and numbers participating in schemes.