Money worries in Scotland's remote island colleges have prompted a review of financial support by the Scottish Further Education Funding Council.
SFEFC representatives were due to meet college principles from the Western Isles, Orkney, Shetland and Argyll earlier this week to examine the funding methodology applied to far-flung Scottish colleges.
Many working in higher and further education in the Highlands and Islands region feel the system fails to take account of the additional costs faced by colleges serving geographically remote communities.
A circular issued by the SFEFC before the new year says that the review is taking place using new information relating to the costs of educating students in remote areas. It includes improved data on population sparcity, student travelling distances and other geographical considerations affecting remote colleges, as well as considerations of widening access and promoting social inclusion, a SFEFC spokesman said this week.
The SFEFC review process starts in a week when Lews Castle College, based on the Isle of Lewis, made two redundancies and axed several other vacant non-teaching posts to meet SFEFC demands that it balances its accounts by the 2005-06 academic year.
The college provides education to the remote communities of the Outer Hebridean island chain off the west coast of Scotland, incurring high costs as a result.
The SFEFC is providing Lews Castle with additional funding totalling Pounds 500,000 over the next two years, but has told the college that it must cut overheads.
College principal David Green said: "So far this has meant that we have had to make two compulsory redundancies, but this situation would have been a lot worse had we not had an unusually high number of posts becoming vacant due to natural wastage.
"In all honesty, this means that in some areas of our activity the college will not be able to provide as much of a Rolls-Royce service as we did before, but we can't afford to run that service."
A spokesperson for the SFEFC said: "The council has been in discussions with the management at Lews Castle College, with a view to helping the college address the financial pressures it faces. The SFEFC is funding Lews Castle College appropriately and the college itself is working to reduce its cost base."
The auditor-general for Scotland last year singled out Lews Castle as the only college in Scotland whose finances were, in the medium term, a serious cause for concern.
The auditor's report also criticised the college's management for failing to have an adequate rescue plan in place.
The college management rejected this claim, highlighting independent reports in 2001 and 2002, which revealed that the college had been seriously under-funded, leaving it incapable of putting a rescue plan in place.