The new core funding system announced in budget 2022 amounts to €221 million in full-year costs. Of that, €173 million represents new investment. From the work we have done on this, we see no evidence that suggests services will face viability issues as a result of this significant increase in investment. However, I am engaging with representative groups to understand their concerns and will continue to do so.
The vast majority of services, including full-day, part-time and sessional services, will see a substantial increase in funding under the new scheme. A small percentage of services, about 1%, will not see an increase in funding. These services, which are primarily ECCE sessional services that are already on the higher capitation rate, are currently in receipt of some of the highest levels of public funding of at least €110 per hour of provision, with two adults required to be working with children under the ratios in place.
In addition to a funding guarantee that ensures no service will receive less under core funding, a new strand of the sustainability fund is being designed to provide an extra safety net for providers who have financial difficulties. This new sustainability fund will be open to both private and community providers.
Core funding is distributed in a fair and reasonable manner that is related to services' costs of delivery. Core funding intentionally addresses some of the existing disparities in funding approaches across ECCE and non-ECCE provision. The significantly increased investment through core funding provides a mechanism to control parental fees and improve pay and conditions for staff through supporting the drawing up of the employment regulation order, ERO. This will ensure that early years educators and staff are paid properly for the very important work that they do.
Every year a number of services close and others open. The current data on service closures and openings are not markedly different to the trend in previous years. Services close for a wide range of issues, such as retirements etc. Only a small minority close due to sustainability issues.
To conclude, the new funding model will benefit providers by improving the level and stability of funding, as well as deliver significant improvements for children, parents and staff.