Dáil Éireann Debate, Tuesday - 25 October 2022
489. Deputy Kathleen Funchion asked the Minister for Children, Equality, Disability, Integration and Youth the level of profitability for sessional services funded via the Early Childhood Care and Education scheme; and if he will make a statement on the matter. [53923/22]
View answer515. Deputy Catherine Murphy asked the Minister for Children, Equality, Disability, Integration and Youth the level of profitability for sessional services funded via the early childhood care and education scheme; and if he will make a statement on the matter. [53414/22]
View answerI propose to take Questions Nos. 489 and 515 together.
On 15th September, I launched Together for Better, the new funding model for early learning and childcare as recommended by an Expert Group in their report ‘Partnership for the Public Good: A New Funding Model For Early Learning and Care and School-Age Childcare’. This new funding model supports the delivery of early learning and childcare for the public good, for quality and affordability for children, parents and families as well as stability and sustainability for providers.
Together for Better brings together three major programmes, the Early Childhood Care and Education (ECCE) programme, including the Access and Inclusion Model (AIM), the National Childcare Scheme (NCS) and the new Core Funding scheme.
For the programme year 2022/2023, services that deliver the ECCE programme will receive standard capitation in respect of registered children and will have the option to also avail of Core Funding.
ECCE provides funding on the basis of registered children at the rate of €69 per child per week. Services can have up to 11 children per one staff member in line with the statutory regulations for this type of provision.
Core Funding provides funding based on a service's capacity (opening hours, number of places and age group of children), and graduate premiums for lead educators and managers. Base rate allocations for capacity at the sessional pre-school rate offers €0.65 per child place per hour and the graduate lead educator premium allocation is €4.44 per hour. Core Funding is paid based on child places, whether or not those places are filled.
Core Funding operates in addition to and alongside ECCE, AIM, CCSP and NCS. It replaces the approach to paying for graduate lead educators through ECCE that operated under the previous funding model (higher capitation) and incorporates funding previously allocated to the discretionary Programme Support Payments (PSP) from September 2022. These developments allocate funding more fairly in respect of graduates and administration.
Services whose sessions did not have a graduate lead educator in 2021/22 will see capitation increase by at least 9.5% through the Core Funding base rate. This is before any potential Graduate Manager Premium is awarded to the service, which is worth an additional €2,530.80 per ECCE session. In addition, any provision offered outside of the 15 ECCE hours per week will further increase Core Funding income to the service.
A full comparison of income under the previous funding model (ECCE standard capitation plus PSP) and the new funding model (ECCE standard capitation plus Core Funding) is published online and outlined below in tabular form. The data provided below is stylised for typical service models and makes assumptions about service capacity in order to estimate income. It also includes income from ECCE and Core Funding for ECCE hours only and does not include income available to services through the Access and Inclusion Model or other income such as from parental fees for extra services.
|
- |
Standard Capitation services |
||
|
Number of children |
Previous hourly service income (ECCE plus PSP) |
Core Funding hourly service income |
Difference |
|
8 |
€38.35 |
€43.95 |
14.6% |
|
9 |
€43.14 |
€48.55 |
12.5% |
|
10 |
€47.94 |
€53.15 |
10.9% |
|
11 |
€52.73 |
€57.75 |
9.5% |
|
12 |
€57.52 |
€69.50 |
20.8% |
|
13 |
€62.32 |
€74.10 |
18.9% |
|
14 |
€67.11 |
€78.70 |
17.3% |
|
15 |
€71.91 |
€83.30 |
15.8% |
|
16 |
€76.70 |
€87.90 |
14.6% |
|
17 |
€81.49 |
€92.50 |
13.5% |
|
18 |
€86.29 |
€97.10 |
12.5% |
|
19 |
€91.08 |
€101.70 |
11.7% |
|
20 |
€95.87 |
€106.30 |
10.9% |
|
21 |
€100.67 |
€110.90 |
10.2% |
|
22 |
€105.46 |
€115.50 |
9.5% |
ECCE services with a graduate lead educator will almost all see increases in income, although it may be smaller proportionally given the significant level of funding available under the old funding model. A very small percentage of services will see no increase. These are larger ECCE-only services – with 20+ children in a session. In 2021/2022, ECCE sessional services with 22 children received income of €1,829.30 per week under ECCE higher capitation and PSP. This will be matched in Core Funding. I have issued a Funding Guarantee in order to ensure that no service will see a decrease in funding. Very few services will require this Funding Guarantee.
A comparison of income for services with a graduate lead educator under the previous funding model (ECCE higher capitation plus PSP) and the new funding model (ECCE standard capitation plus Core Funding) is published online and outlined below. The same assumptions about typical service models, capacity and income apply as in the data provided above. Also as above, the Graduate Manager Premium and any non-ECCE provision are not included and would be additional income to the service.
|
- |
Higher Capitation services |
||
|
Number of children |
Previous hourly service income (ECCE plus PSP) |
Core Funding hourly service income |
Difference |
|
8 |
€44.35 |
€48.39 |
9.1% |
|
9 |
€49.89 |
€52.99 |
6.2% |
|
10 |
€55.44 |
€57.59 |
3.9% |
|
11 |
€60.98 |
€62.19 |
2.0% |
|
12 |
€66.52 |
€73.94 |
11.1% |
|
13 |
€72.07 |
€78.54 |
9.0% |
|
14 |
€77.61 |
€83.14 |
7.1% |
|
15 |
€83.16 |
€87.74 |
5.5% |
|
16 |
€88.70 |
€92.34 |
4.1% |
|
17 |
€94.24 |
€96.94 |
2.9% |
|
18 |
€99.79 |
€101.54 |
1.8% |
|
19 |
€105.33 |
€106.14 |
0.8% |
|
20 |
€110.87 |
€110.74 |
-0.1% * |
|
21 |
€116.42 |
€115.34 |
-0.9% * |
|
22 |
€121.96 |
€119.94 |
-1.7% * |
* All services will have their current income matched if they are operating on the same basis as last year.
With regards to profitability, the 'Independent Review of the Cost of Providing Quality Childcare Services in Ireland', published in October 2020 and the 'Analysis of the Rate of Surplus for Early Learning and Care and School-Age Childcare Services in Ireland' , published in October 2021, provide relevant information and insight into sector level data.
The sectoral information on rate of surplus in ELC and SAC in Ireland suggests that, on the whole, there are not excessive profits in the sector.
There is no evidence that the new funding model will render pre-school services unsustainable. My Department has extensive data on providers’ existing and projected income and delivery costs through data from Revenue, surveys and demographic and macro-economic information and has extensively analysed the question of sustainability.
Data available prior to the additional investment of Core Funding in the sector showed that the median surplus (income in excess of cost) for sector as a whole of 4%. However, services with the characteristics correlated with ECCE-only provision had higher levels of surplus than other types of provision – ranging from 14% to 23% depending on the characteristic.
- Do not offer full day: 17% income in excess of cost
- Do not offer wrap-around care: 16% income in excess of cost
- Open exactly 38 weeks each year: 19% income in excess of cost
- Low total numbers of childcare hours: 23% income in excess of cost
- Single-site services: 14% income in excess of cost
- Those whose only income source is ECCE funding: 19% income in excess of cost
Separately Sole Traders, which constitute a large proportion of ECCE-only provision had an average income in excess of costs of 23%.
This evidence suggests that ECCE-only services had the highest levels of income in excess of costs compared to other types of provision.
The collection of information on income and costs is essential for the full understanding of this complex and diverse sector in order to inform the development of policy. As recommended by the Expert Group, there needs to be full visibility and understanding of financial information in the sector in order to better understand the impact and interaction of income, costs, surplus and profit in the sector.
I am pleased therefore that the recent data collection for the 2021/2022 Annual Sector Profile, including questions on income and costs, has been completed by 93% of services. This new and emerging data will allow the Department to rerun income and cost analysis and ascertain the latest available financial position to inform the next policy developments.
Budget 2023 allocates €1,025m to early learning and childcare – a clear demonstration from Government of the value of the sector. Further interrogation of the new Core Funding application and income and cost data is required in order to most effectively design developments in Year 2 of Core Funding.
For any services that are experiencing difficulty and who would like support can contact their City/County Childcare Committee (CCC) to access case management supports. Services can be assisted on an individual basis through this route and it also allows for trends and themes across the country to be identified that can inform a more systematic response if necessary. My officials are not receiving any indications from CCCs that there have been providers reporting financial difficulties and in need of support. This case management process through the CCCs is the route to access additional sustainability funding if required.
Together for Better aims to transform the sector and my Department and I are committed to working constructively, collaboratively and positively with Partner Services towards a goal of delivering early learning and childcare for the public good.
