24 November 2004

Funding rates rise for early childhood education

More than one thousand early childhood education centres are to benefit next year from the first stage of a new funding system aimed at making top quality early childhood education more affordable and accessible, Education Minister Trevor Mallard announced today.

“An estimated 1370 non-profit and private services will benefit from the first stage of rates rises that flow out of a $307 million four-year package. More and more services will see the benefits of the new funding system over the next three years, as services increase their numbers of registered teachers,” Trevor Mallard said.

“The new rates are designed to treat all teacher-led services, private and non-profit, on an equal basis. Costing an estimated $11 million, they will be effective from 1 April 2005 to June 2005. Ongoing rates will be subject to next year's budget decisions but are expected to be higher to reflect increased salary costs.

“The increases reflect the Labour-led government's commitment to get more children involved in intensive and regular quality early childhood education, which research shows has long-term educational benefits. They are in addition to increased childcare subsidies that parents can also access.

“The new funding rates will recognise the costs of having qualified staff and also provide funding incentives for centres to lift the qualifications of their staff, and therefore improve the service that families receive. The new rates will keep early childhood education affordable for parents as quality increases."

Under today's announcement, rates will change the most for teacher-led, centre-based education and care services, because they are being offered an incentive to meet the teacher registration targets of the early childhood education strategic plan: A higher funding rate will apply to services employing a greater proportion of registered early childhood education qualified teachers. Full-day services will receive more funding than sessional services, in order to reflect the higher cost of operating all day, including higher teacher costs for better adult:child ratios. Funding is more flexible and targeted as it is based on the different costs that each type of early childhood service faces. The current five rate scale is increased to 17 rates to enable this. The new funding system also includes a grant to help provisionally registered teachers get fully registered - either by covering the cost of study release time or other support. It is payable for up to two years and is worth $3410 per year for every provisionally registered teacher employed. Further details are attached, including examples of how services might benefit.

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The existing caps of funding up to a maximum of six hours a day, with a limit of 30 hours per child-place over seven days remains.

Teacher-led Centre-Based Services (these are education and care centres and kindergartens)

The following rates will apply from 1 April 2005:
2 & Over Under 2
All-day Teacher-led: Centre-based Services
100% Registered ECE Teachers $4.37 $8.08
80-99% Registered ECE Teachers $4.10 $7.84
50-79% Registered ECE Teachers $3.66 $7.29
25-49% Registered ECE Teachers $3.35 $6.68
0-24% Registered ECE Teachers $3.14 $6.25
Protected Rate (current Rate 2) $3.26 $6.51
Sessional Teacher-led: Centre-based Services
100% registered ECE Teachers $4.34 $7.51
80-99% registered ECE Teachers $3.50 $7.30
50-79% registered ECE Teachers $3.22 $6.78
25-49% registered ECE Teachers $3.03 $6.22
0-24% registered ECE Teachers $2.90 $5.82
Protected Rate (current Rate 2) $3.26 $6.51

Teacher-led, Centre-Based, education and care services face the largest cost increases over the next seven years. Increased costs will vary depending on the proportion of registered teachers in each service, and when a service employs additional registered teachers. The transition to the new funding system will be fully supported with training at Ministry of Education workshops for all services in February and March 2005.

Kindergartens will be funded at either an all-day or sessional 100% rate, depending on whether they are licensed as all-day or sessional.

Teacher-led Home Based Care Services The following rates will apply from 1 April 2005:
Home Based Care Networks
2 & Over Under 2
Quality Rate $3.38 $6.63
Standard Rate $2.98 $5.82

Parent/Whanau-led Services: Playcentres and Nga Kohanga Reo The following rates will apply from 1 April 2005:
Licensed Parent/Whânau-led Services
2 & Over Under 2
Quality Rate $3.26 $6.51
Standard Rate $2.86 $5.70

Childcare Subsidy Eligibility and Rates

The income eligibility thresholds and rates of the Childcare Subsidy both increased from 4 October 2004.

The amount of subsidy families can get depends on their income and the number of children they have.

Families on higher incomes are now eligible for a Childcare Subsidy, and parents are able to earn more before the subsidy reduces.

That means a family with three or more children is able to earn up to $1,330 a week and be eligible for a Childcare Subsidy. This is a change from the old system where families were not eligible for the Childcare Subsidy if they earned over $850 a week.

When calculated on a yearly basis, this means a family can earn up to $69,160 income a year while receiving the subsidy.

The rate of Childcare Subsidy increased by 10% in October 2004 and will increase a further 10% in October 2005.

The rates went up to a maximum of $2.84 an hour per child in October 2004, and will go up to $3.12 an hour per child in 2005 - depending on income and number of children in the family. That’s up from a maximum of $2.58 an hour per child before the changes.

The table below sets out the new Childcare Subsidy income eligibility thresholds and rates.
Families with one child
And a weekly income before tax of less than $770 $850 $930
The hourly rate of childcare assistance per child increases to
from 4 October 2004 $2.84 $1.98 $1.10
from 3 October 2005* $3.12 $2.18 $1.21

Families with two children
And a weekly income before tax of less than $950 $1,040 $1,130
The hourly rate of childcare assistance per child increases to
from 4 October 2004 $2.84 $1.98 $1.10
from 3 October 2005* $3.12 $2.18 $1.21

Families with three children
And a weekly income before tax of less than $1,110 $1,220 $1,330
The hourly rate of childcare assistance per child increases to
from 4 October 2004 $2.84 $1.98 $1.10
from 3 October 2005* $3.12 $2.18 $1.21
* The rate from 3 October 2005 does not take into account the annual Consumers Price Index adjustment from 1 April 2005.

EXAMPLE SERVICES: ALL-DAY TEACHER-LED CENTRE-BASED

EXAMPLE 1: 30-PLACE CENTRE
This centre is a small centre, with a mix of children 2 years and over (20 children) and under 2 (10 children).

To meet the Ministry ratio requirements, it has four full-time equivalent teachers. It is a Rate 2 service, so that it already receives a quality funding rate to reflect the cost of having one or two qualified teachers.

The centre currently receives $156,000 per annum from the ECE funding subsidy.

If the centre has half its full-time equivalent teachers registered, it stands to gain almost $19,000 per annum, a 12 per cent funding increase.

If the centre has a quarter of its full-time equivalent teachers registered, it would gain just over $4,000 per annum, a 2.5 per cent funding increase.

EXAMPLE 2: 50-PLACE CENTRE

This centre is a large centre, with a mix of children 2 years and over (40 children) and under 2 (10 children).

To meet the Ministry ratio requirements, it has six full-time equivalent teachers. It is a Rate 2 service, so that it already receives a quality funding rate to reflect the cost of having one or two qualified teachers.

The centre currently receives $234,000 per annum from the ECE funding subsidy.

If the centre has half its full-time equivalent teachers registered, it stands to gain almost $29,000 per annum, a 12 per cent funding increase.

If the centre has a quarter of its full-time equivalent teachers registered, it would gain over $6,000 per annum, a 2.5 per cent funding increase.

NOTE These examples assume 80 per cent occupancy in the services, and that the services operate 50 weeks a year.

Questions and answers: early childhood education funding rates

What are the current rates?

Under Twos Over Twos
Licence-Exempt 1.18 1.18
Rate 1 5.70 2.86
Rate 2 6.51 3.26
Kindergartens 4.34

What do the rates mean for private and non-profit education and care services? Teacher-led centre-based services (except kindergartens) face the largest cost increases because of the requirement of 100 per cent teacher registration by 2012.

Increased costs will vary depending on the proportion of registered teachers in each service, and when the service employs registered teachers. The new rates will provide incentives to reach the teacher registration targets. Funding rates will apply equally whether the centre is private or non-profit, and will increase when a service reaches each target.

What do the rates mean for kindergartens? All teachers in kindergarten are registered, so the cost of registered teachers is already factored into Rate 3. Because kindergartens can only employ registered teachers by law, they will receive the 100 per cent rates. Kindergartens that have all-day licences will receive a higher rate of funding, to recognise that all-day early childhood education is more costly than sessional.

What do the rates mean for home-based care services? Home-based services face costs from 100 per cent teacher registration for coordinators from January 2005, so rates will increase under the new funding system. Home-based care services will be funded at either “standard” (previously known as Rate 1) or “quality” funding rates (previously Rate 2). Home-based care networks where all care-givers/educators meet certain minimum qualifications, combined with certain limits on Network size, are eligible for quality funding rates.

What do the rates mean for kohanga reo? As parent/whanau-led services, kohanga reo do not face any additional costs at this stage, so funding rates will not increase due to the new funding system. They will continue to be funded at either “standard” or quality” funding rates. Kohanga reo are eligible for quality funding rates with enhanced adult:tamariki/mokopuna ratios, and/or with kaiako/whânau with certain qualifications. The research and later policy work on quality in parent-led services may lead to quality improvements and rate increases to compensate for the cost of quality improvement.

What do the rates mean for playcentres? As parent/whanau-led services, playcentres do not face any additional costs at this stage. Parent/whanau-led services will continue to be funded at either “standard” or "quality” funding rates. Playcentres are eligible for quality funding if adults present have certain qualifications. The research and later policy work on quality in parent-led services may lead to quality improvements and rate increases to compensate for the cost of quality improvement.

What about licence-exempt groups (including puna kohungahunga, playgroups) Licence-exempt services do not face any additional costs due to the Strategic Plan at this stage, so funding will not increase from 1 April 2005. The research and later policy work on quality in parent-led services may lead to quality improvements and rate increases to compensate for the cost of quality improvement.

What are the targets for teacher registration as set out in the early childhood education strategic plan? Teacher-led early childhood education services must meet teacher registration/qualification targets in the strategic plan. Exceptions to the 2010 and 2012 targets were announced in May 2004. The targets are:

By 2005: All "persons responsible" in teacher-led services are required to be registered teachers.

By 2007: 50 per cent of regulated teachers in teacher-led services are required to be registered teachers.

By 2010: 80 per cent of regulated teachers in teacher-led services are required to be registered teachers OR a minimum of 70 per cent of regulated teachers in teacher-led services are required to be registered teachers and at least 10 per cent of other regulated teachers are required to be enrolled in a teacher education programme that is approved for teacher registration by the New Zealand Teachers Council.

By 2012: 100 per cent of regulated teachers in teacher-led services are required to be registered teachers OR a minimum of 70 per cent of regulated teachers in teacher-led services are required to be registered teachers and all other regulated teachers are required to be enrolled in a teacher education programme that is approved for teacher registration by the New Zealand Teachers Council.

ENDS

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