Denis Naughten (Roscommon-Galway, Independent)
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589. To ask the Minister for Children, Equality, Disability, Integration and Youth if he will review the core funding model which is presently undermining the viability of sessional providers, some of whom are now being forced to close; and if he will make a statement on the matter. [25664/23]

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.

In September 2022, I launched Together for Better, the new funding model for early learning and childcare. 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.

Core Funding contributes to services’ sustainability and significantly increases income for the overwhelming majority of services and provides greater funding stability. Already 95% of services have signed up to Core Funding and the scheme remains open for applications.

Core Funding operates alongside ECCE and NCS and by contrast to the other funding schemes, 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.

For year 2 of Core Funding, I secured an increase of €28 million (11% increase). This brings full year budget of Core Funding year 2 to €287 million. This substantial increase in the Core Funding budget has allowed for important changes in the Core Funding allocation model, in order to further the objectives of the scheme. The full allocation for year 2 allows for the continued success of the Core Funding scheme as the mechanism to provide public funding directly to early learning and childcare services to support increased quality, affordability, and sustainability for the sector.

The new allocation model was determined by evidence and analysis emerging from year one of the operation of the scheme. €7.22m of the €28m is allocated towards new targeted measures. A flat rate top-up payment of €4,075 will be given to all services registered on the Tusla Register of Early Years Services as sessional only. This top-up payment is in addition to the services base rate and graduate premium. This flat rate top-up payment will be made to sessional services regardless of the level of Core Funding they receive. This measure will benefit approximately 1,700 sessional only Partner Services.

Sessional services often attract less Core Funding in total because of their business model, which operates for shorter hours than most other service types. However, sessional provision is a key part of the overall early learning and childcare model in Ireland. Funding for sessional services increased on average in 2022/23, but less so than for other service types. This new targeted measure is considered in the best interests of all stakeholders and in supporting sessional provision as an important part of the early learning and childcare delivery model.

Another new targeted measure for Core Funding in year 2 is the introduction of a minimum base rate allocation will be set at €8,150, for all Partner Services except childminders. This is the minimum amount of funding a Partner Service will receive from their Core Funding base rate and the flat top-up payment for sessional services where applicable. All Partner Services delivering centre-based provision, regardless of the size of their service, will receive at least this minimum base rate allocation. All sessional services will receive at least €8,150, from their base rate and flat top up payment combined. This minimum base rate is not affected by the graduate premiums, which are applied on top of it and which will continue to operate as in year 1.

The Minimum Base Rate Allocation continues the successful practice of establishing safeguards to ensure there are no unintended outcomes of Core Funding. Having a minimum allocation will mean that all Partner Services have a minimum financial contribution through Core Funding. Those who are most likely to benefit will be small, part time services and SAC services.

Data from Tusla on service registrations shows that the number of services that closed in 2022 and that have closed so far in 2023 are broadly in line with previous years. There is considerable diversity in the reasons given for closure by providers.

In 2022, there were 141 ELC closures notified to Tusla and 83 new service registrations (i.e. 58 net closures). This compares with 141 closures and 65 new registrations in 2021 (i.e. 76 net closures), 197 closures and 91 registrations in 2020 (106 net closures), and 196 closures and 93 registrations in 2019 (103 net closures).

At end April 2023, there were 20 closures and 12 new registrations of ELC services for 2023. This compares with 32 closures and 13 new registrations in the same period in 2022. Year on year comparisons are not relevant for SAC services due to registration only commencing recently.

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.

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. The Department, with Pobal and CCCs, will continue to engage with the sector and monitor the financial situation of early learning and childcare services, and supports are available where services face sustainability issues.

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.