Duncan Smith (Dublin Fingal, Labour)
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195. To ask the Minister for Children, Equality, Disability, Integration and Youth the steps that he is taking in ensuring that funding for sessional childcare facilities and those wholly reliant on ECCE fees will be restructured to provide for the continued viability of these services; and if he will make a statement on the matter. [62627/22]

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.

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, 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.

Core Funding has a budget of €259 million in full year costs for year 1 of the programme (September 2022-August 2023). Core Funding is designed specifically as a supply-side funding stream, paid directly to providers, related to the costs of delivery. Core Funding is based on operating hours, number of places offered by services, and the age group of children for whom the places are offered, given the staffing requirements determined by the regulatory ratios for different care categories, as well as allocations for graduate leaders in services. Structuring Core Funding primarily based on capacity means that Partner Services have an allocation each year that does not fluctuate in line with children’s attendance. Core Funding allows for substantial increases in the total cost base for the sector, related both to pay and non-pay costs, without additional costs being passed on to parents.

Core Funding contributes to services’ sustainability and significantly increases income for the overwhelming majority of services and provides greater funding stability. Already 94% of services have signed up to Core Funding and the scheme remains open for applications.

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.

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, approximately 60 of the 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 applies. This tops-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.

To date, the sector level data available to my Officials has not indicated widespread financial viability issues connected to these services. Likewise, my Officials have not seen other indications, such as increased closures or call on sustainability funding, to indicate financial viability issues for small, sessional services. However, I have been unequivocal that I do not want any services to be faced with financial sustainability issues and am fully committed to working with these services to support them in delivering early learning and childcare for the public good.

I have secured an increase in the Core Funding envelope for year two of operation (September 2023-August 2024) of €28 million (11% increase), the precise allocation of which will be determined by evidence and analysis emerging from year one of the operation of the scheme.

Given the concerns raised by some small, sessional services, and in order to provide additional timely and robust data in preparation for developments to Core Funding in year 2, I will be undertaking an independent financial review of small, sessional services.

The review will involve services volunteering to participate in the research project that aims to gather evidence on financial viability to underpin policy development and possible targeted measures through the new funding model.

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.

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

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.