Bríd Smith (Dublin South Central, People Before Profit Alliance)
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512. To ask the Minister for Children, Equality, Disability, Integration and Youth if he has plans to review the operations and workings of the core funding model and ECCE funding to childcare providers, especially in relation to the current cost-of-living crisis impact on smaller and local community providers, specifically if he has considered any increases or additional supports in funding to small providers who may be struggling to stay in business in the current climate; and if he will make a statement on the matter. [59361/22]

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

Bríd Smith (Dublin South Central, People Before Profit Alliance)
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513. To ask the Minister for Children, Equality, Disability, Integration and Youth if he will re-examine the position of providers who have not signed up to the core funding model in view of the current cost-of-living crisis and the difficulties faced by small providers of childcare services, and specifically the possibility or revisiting the issues around higher capitation and the PSP for those services not currently engaged in the core funding model; if his Department has met or will meet with representatives of small providers; and if he will make a statement on the matter. [59362/22]

Roderic O'Gorman (Dublin West, Green Party)
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Government is investing significantly in the early learning and childcare sector. In September, I launched Together for Better, an ambitious new funding model to support 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.

The original allocation for year 1 of Core Funding was €207 million. I grew this to €221 million in response to cost pressures, and increased that again to €259 million based on significant capacity growth in the sector.

The significant allocation on offer through Core Funding in year 1 is conditional on a fee freeze, support for new wage rates through an ERO and financial and operational transparency. These are central objectives of Core Funding and it is entirely appropriate that the substantial additional investment in the sector delivers for parents and for workers and allows the State to be assured that its funding is being spent appropriately.

For Core Funding year 2, I have secured a further €28 million, which will be designed and informed by emerging data from year 1 and other available evidence.

I am delighted that to date, 94% - well over 4,100 - providers have signed up to Core Funding.

Early learning and childcare services are diverse. While it was my ambition to have as high take-up as possible, at this moment in time 6% early learning and childcare services, less than 300 services, have chosen not to join Core Funding. 97% of community not-for-profit services have signed up. 92% of private for profit services have signed up.

Core Funding is distributed in a fair and reasonable manner that is related to services’ costs of delivery. Core Funding is allocated to services based on the number of child places being made available (whether filled or not), the age group of children for whom the places are available and the number of hours the places are available for, as well as the graduate qualifications of leaders in the service. These are the primary drivers of services costs and this is therefore the most proportionate and transparent manner to allocate funding.

Core Funding addresses some of the existing disparities in funding levels across ECCE and non-ECCE provision, providing funding proportionate to the age ratio of children being cared for and supporting the employment of graduate Lead Educators across ELC provision. While Core Funding operates in addition to and alongside ECCE (standard capitation), AIM, CCSP and NCS, it replaces ECCE higher capitation and incorporates funding previously allocated to the discretionary Programme Support Payments (PSP) – as recommended by the report of the Expert Group, Partnership for the Public Good.

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.

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).

CCCs are receiving very small numbers of services reporting cases of financial unsustainability due to Core Funding. Just two services have applied for sustainability funding in 2022 and their difficulties predate Core Funding becoming available. Any provider who is experiencing challenges is encouraged to contact their CCC.

The new funding model was designed with extensive stakeholder consultation and engagement. Since Core Funding was announced, my Department has hosted eight meetings of the Early Learning and Childcare Stakeholder Forum and frequent meetings with provider representative groups on Core Funding since August. I have had further meetings with individual provider representative groups, and have also visited numerous 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.

Moreover, in preparation for developments to Core Funding, my officials will draw on evidence – existing and new - to determine on how best to structure the additional funding I secured for year 2 of this scheme.