Ivana Bacik (Dublin Bay South, Labour)
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749. To ask the Minister for Children, Equality, Disability, Integration and Youth the level of profitability for sessional services funded through the early childhood care and education scheme; and if he will make a statement on the matter. [54310/22]

Roderic O'Gorman (Dublin West, Green Party)
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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.

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.

* 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.

Ivana Bacik (Dublin Bay South, Labour)
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750. To ask the Minister for Children, Equality, Disability, Integration and Youth the circumstance of the closure of an early year's facility (details supplied); and if he will make a statement on the matter. [54311/22]

Roderic O'Gorman (Dublin West, Green Party)
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The Government is investing significantly in the early learning and childcare sector and there is an ambitious new funding model being introduced to improve stability and sustainability for providers. There are supports, financial and otherwise, available to services who need them. Services are independent operators and may close for a number of reasons. Services that wish to deliver early learning and childcare for the public good will be supported to remain open to do so.

On 15th September, I launched Together for Better, the new funding model for early learning and 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.

While I note that the service in question has been cited in media reports, I will refrain from disclosing the financial and operational detail of any individual service in this reply. It is however in the public interest that the new funding model is understood and that there is not misleading or inaccurate information circulating and so the information provided in the course of this reply broadly covers issues of relevance.

ECCE-only services across the country form an integral part of the early learning and childcare system. Their exact operations can vary but typically, they open to children for 15 hours per week, 38 weeks per year. The funding model for sessional services is now primarily a combination of the ECCE capitation they receive per child registered with them, (potentially including a top up AIM capitation if there is a staff member with the necessary qualification undertaking an inclusion role, plus additional AIM funding to employ additional staff or reduce adult child ratios if required to support the inclusion of all children), and the Core Funding grant services receive based on the capacity of their service and the qualifications levels of staff, as well as any optional extras they may charge parents.

A significant feature to be aware of is that ECCE subsidies are paid based on the number of children registered in the service. This means that a service’s income could reduce considerably if they do not maintain the number of children attending their service. Core Funding operates alongside ECCE (and NCS) and by contrast to the other funding streams, provides payment in respect of the number of child places rather than based on child registrations or attendance. This intentional and deliberate differentiation of approach in the new funding model means the Core Funding element of a service's income is a more stable income source that will not fluctuate year on year. This idea of funding capacity is a key new approach in Core Funding, which many providers advocated for through stakeholder consultation during the design of Core Funding. This mixture of supply-side and demand-led public funding provides a welcome balance to the funding model, and assists services who may be experiencing lower than anticipated child registrations for a number of reasons.

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, less than 100 of the over 4,000 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. These are larger ECCE-only services – with 20+ children in a session.

Core Funding is distributed in a fair, reasonable and transparent manner that is related to services’ costs of delivery, contributing to both staff costs and non-staff overheads. Consequently, services opening longer hours or offering more places will receive a higher value of Core Funding than other services as they have higher delivery costs. This is connected to the staffing requirements of ELC and SAC as set out in Regulations.

The staffing requirements for ECCE sessions are an adult child ratio of 1:11. The value of Core Funding is weighted in favour of sessional services for 2.5-6 year-olds. ECCE services receive proportionately more than other types of services relative to the staffing requirements of sessional pre-school provision.

Through a combination of Core Funding and ECCE capitation, sessional services can now avail of weekly funding of at least €78.75 per child in ECCE (€69 ECCE capitation plus €9.75 per week in Core Funding base rate). Where a service has less than full occupancy, the funding on a per child basis is even higher.

Core Funding is particularly beneficial to services who have seen significant reductions in child registrations by bolstering their income but it is important to note that Core Funding is intended to be a contribution to a service's income, alongside income from other funding schemes or parental income.

The logic underpinning the funding approach through ECCE and Core Funding is based on the staffing levels required by regulation. Services may choose to operate with staffing levels above the adult child ratio requirements, but it would not be appropriate for additional public funding is provided in these circumstances, save for circumstances of evidenced need as in AIM as this would risk overstaffing and the investment of substantial public money for unfilled places.

Together for Better is about getting the most out of the three early learning and childcare programmes, and ensuring stability and sustainability in the sector. I have been unequivocal that 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.

We are not seeing evidence of a significant lack of sustainability for ECCE-only services or to suggest that services will face closure as a result of Core Funding. Services that are experiencing difficulty and who would like support are encouraged to 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.

We are not receiving any indications from CCC that there have been providers reporting financial difficulties and in need of support. This case management process through the CCC is the route to access additional sustainability funding if required.

Data from Tusla on numbers of closures in recent months show that the number of closures this year is broadly in line with other years, and reasons for closure (given to Tusla by providers that have closed) suggests considerable diversity in the reasons for closure. While some services have closed for financial or regulatory reasons, many have closed for other reasons (e.g. retirement of the owner/manager).

As indicated above, I will refrain from commenting publicly on the particulars of this case but I can confirm that Galway CCC has reached out to the service in question to offer support and guidance. For any service that does experience financial difficulties, financial and other supports are available, including a Sustainability Fund. This new strand of the Sustainability Fund, linked to Core Funding, is designed to provide an extra safety net for providers. This will be open to both private and community providers.

To date, with the Core Funding scheme in operation for less than eight weeks, 93% or well over 4,100 providers have signed up for Core Funding. Already there is very significant evidence of success:

- Core Funding has delivered improved pay and conditions for staff, through enabling Employment Regulation Orders to be agreed by employer and employee representatives in a landmark pay deal for the sector.

- Core Funding has increased affordability for parents with a fee freeze in place and guaranteeing access to NCS subsidies, particularly the extension to the age eligibility for the universal subsidy which became available in August, the value of which will increase substantially from January 2023

- Core Funding offers greater stability and sustainability for providers by substantially increasing the overall investment in the sector, particularly through a supply-side funding approach and in providing funding for spaces rather than participating children.

Due to the level of support provided for the past through years through Covid-19 funding - estimated to be in excess of €1 billion - as well as the recent Transition Fund, many early learning and childcare services are in a strong financial position. Available funding included the Temporary Wage Subsidy Childcare Scheme, Covid-19 capital grants, Reopening Support Payments, Ventilation grants, and Playing Outside Grants, in addition to the very substantial funding through the Employment Wage Subsidy Scheme which covered the large majority of the wage bill for most services.

The overwhelming majority of services will benefit substantially from higher funding under Core Funding, supporting their sustainability. The Department, Pobal and the CCC continue to closely monitor trends concerning services entering case management and will continue to maintain the availability of Sustainability Funding for individual services at risk.

Budget 2023 allocates €1.025 billion to early learning and childcare – a clear demonstration from Government of the value of the sector. Together for Better aims to transform the sector and I am committed to working with Partner Services delivering early learning and childcare for the public good.