Together for Better, the new funding model comprised of 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, is about getting the most out of the three early learning and childcare programmes, for children, parents, providers, the workforce, and society overall, and ensuring stability and sustainability in the sector. I do not want any services to be faced with financial sustainability issues and I am fully committed to working with any such service to support them in delivering early learning and childcare for the public good.
I am delighted that to date, 94% - well over 4,100 - providers have signed up.
Under Core Funding, the overwhelming majority of services will see an increase in their funding, most will see very substantial increases, and no services will see a decrease in funding if their circumstances remain the same.
ECCE services without a graduate lead educator will see capitation increase by at least 9.5% through Core Funding.
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 number of services, approximately 60 of the over 4,100 signed-up, will see no increase with their income matched to 2021/2022. For this small number of services who do not experience an increase, a Funding Guarantee will apply. This will top-up Core Funding payments to match the difference in ECCE higher capitation and PSP from last year, provided they offer the same amount of graduate led provision as last year.
With regards to financial viability, there is no evidence that the new funding model will render ECCE 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 95% of services. This new and emerging data will allow my Department to rerun income and cost analysis and ascertain the latest available financial position to inform the next policy developments.
Early learning and care services will be able to apply for the Temporary Business Energy Support Scheme (TBESS). Under TBESS, businesses engaged in early learning and childcare services who have suffered an increase of at least 50% in the average unit price of electricity and/or natural gas for the relevant billing period in 2022, as compared with the average unit price for electricity and/or gas for the corresponding reference period in 2021, will be eligible under the scheme.
In Budget 2023, I secured an additional €28 million full year costs for Core Funding. Approximately €4m of the €28m will be used to remove the experience requirement on both graduate premiums under Core Funding. The experience requirement attached to the two premiums has received much criticism from the sector and this development was warmly welcomed. The remaining €24m will be used for further developments to the scheme, informed by the emerging data from Year 1 of operation. Further interrogation of the new Core Funding application data and other available evidence is required in order to most effectively design developments in Year 2 of the scheme.
Stability and sustainability of early learning and childcare services is a top priority for Government, as demonstrated by the significant additional investment in the new funding model plus the wider whole-of-government supports for providers throughout the pandemic and now offered through TBESS.
Any provider who is experiencing challenges is encouraged to contact their CCC. I have been and will continue to meet provider representatives on these important issues.
