Evaluation of the Sustainability of ECE Services During the Implementation of Pathways to the Future — Ngā Huarahi Arataki

2 - The Government’s Investments in ECE to Support the Strategic Plan

To support the implementation of the Strategic Plan, the Government has significantly increased its investment in ECE through a range of general and targeted funding streams in the last three Budgets, including the introduction of a new funding system for ECE.

This section provides a summary of the additional spending associated with the Strategic Plan. The following information has been sourced from publicly available Ministry documentation including the 2004 Guide to the New Early Childhood Education Funding System; (Ministry of Education, 2004) Budget 2004, 2005 and 2006 press releases and fact sheets (Beehive, 2007) and Ministry of Education Circulars and fact sheets (Ministry of Education, 2007b).

The New ECE Funding System

The new ECE funding system came into operation from 1 April 2005. It primarily affects the ECE Funding Subsidy for chartered ECE services (“Bulk Funding”) and funding for licence-exempt playgroups.¹

The new funding system provides for increases in funding to reflect cost increases from the Strategic Plan, including additional costs related to teacher qualification and registration requirements as well as future changes to adult:child ratios and meeting regulatory standards. It is also designed to reflect the diversity of ECE services and to respond to changes within particular service types or age groups.

The increased funding is intended to ensure that services do not need to pass on to parents the increased cost of quality improvements under the Strategic Plan (such as more qualified teachers), at least within the 30 hour weekly cap on ECE funding. This is to avoid any adverse impact on participation in quality ECE or in the labour market.

With the implementation of the new funding system came stronger accountability and reporting requirements in order to ensure the integrity of additional funding provided for meeting teacher registration targets and eligibility and attendance criteria for Free ECE.

Cost Driver Approach

The new funding system provides a funding subsidy that is aligned to the cost drivers of ECE services and reflects differences in average costs of service provision for full-day and sessional services, different service types, services with different proportions of registered qualified teachers, and services with different regulated adult:child ratios.

There are two components to most funding rates: a basic component that reflects standard operating costs for all ECE services (e.g. administration, professional services, utilities and educational resources), and a variable component that reflects the cost drivers that differ between ECE service types (e.g. staff and operating costs). Licence-exempt services have only a basic component in their funding rates.

The approach does not take account of all service costs. Property costs can vary widely and are recognised through an average cost for each service type which reflects maintenance but not establishment costs. The funding rates do not vary regionally as the difference in cost within regions is greater than the difference in cost between regions (Ministry of Education, 2006b).

Funding to Meet Teacher Registration Targets

One of the key objectives in the Strategic Plan is increasing the number of registered qualified teachers in teacher-led services, so that the percentage of teachers who are registered and qualified would reach a minimum of 50 percent by December 2007, 80 percent by 2010 and 100 percent by 2012. The rationale for this objective is derived from research-based evidence that one of the best ways of achieving quality outcomes in ECE is through highly qualified teaching staff (Ministry of Education, 2002b, cited in Mitchell and Hodgen, 2008). The funding system is designed to support this requirement through a series of funding bands providing higher rates of funding for teacher-led centre-based services with a higher proportion of registered qualified teachers.

Free ECE

From 1 July 2007, 20 hours of Free ECE will be available to three and four-year-olds who attend teacher-led ECE services. The funding of 20 hours is consistent with international research showing that intensive participation of 15-25 hours each week is beneficial to children. Free ECE is expected to increase participation in ECE.

Free ECE will be funded through higher funding rates intended to cover the full average cost of ECE provision for each service type. Participating services will receive the Free ECE funding rate in place of the standard funding rate for eligible children based on their hours of attendance for the first six hours per day and 20 hours per week. Services must not charge fees for the hours that they provide Free ECE.

Free ECE rates were calculated based on 100 percent of the average cost of ECE provision, as reported by services in the operating cost surveys. The funding therefore may not cover the full cost of service provision for services that have higher than average costs or for services that exceed regulated standards such as adult:child ratios. Services are able to introduce optional charges for aspects of the service that are not required by regulation or which parents could choose to provide for themselves (e.g. food). Participation by services in Free ECE is voluntary, and the Government cannot guarantee access to Free ECE for families.

Sustainable Funding that Reflects Changes in Costs

To ensure funding does not fall permanently behind cost increases from the Strategic Plan, a commitment has been made to regularly review the main costs of ECE provision. The review will also consider whether funding should increase to reflect increases in other costs.

The Ministry collected information from ECE services on changes in the key cost drivers for service provision, through operational cost surveys conducted in 2005 and 2006. The results from these surveys have been used in setting and reviewing ECE Funding Subsidy rates and Free ECE rates. It is anticipated that further operational cost surveys will be conducted in the future as part of the regular review of cost drivers.

Increased funding and a new rates structure for teacher-led services were introduced with the new funding system from 1 April 2005. Rates were increased at 1 July 2005 and 1 July 2006.

Targeted Funding Streams Supporting the Strategic Plan

In addition to the ECE funding subsidy, there are several funding streams aimed at improving participation, quality and/or sustainability for groups of service users or services that would otherwise be disadvantaged. These targeted funding streams are summarised below.

Childcare Subsidy

The Childcare Subsidy, funded through the Ministry of Social Development, provides income-tested assistance to help families pay for ECE. The subsidy is paid directly to ECE providers to reduce the share of costs paid by eligible families. Up to 50 hours per week of subsidy is available for families in work, education or training, or who meet the criteria because of a parent’s or child’s sickness or disability. Up to nine hours per week subsidy is available for all other families who meet the income criteria.

The 2004 Budget provided increased Childcare Subsidy rates and widened eligibility criteria for working families under the Working for Families package. From 1 July 2007, for parents accessing Free ECE, Childcare Subsidy payments will be reduced for each hour of Free ECE received to avoid double-payment for these services.

Equity Funding

Equity funding was introduced for ECE services in the 2001 Budget. It is available to community-based chartered ECE services and is intended to “reduce educational disparities and remove barriers to participation for some children.” Criteria for equity funding include the socio-economic status of the area; numbers of children attending the service who have special education needs or come from non-English speaking backgrounds; the geographic isolation of the service; and services working in languages or cultures other than English (including sign language). The funding pool was $8.5 million in the 2002/2003 year, rising to $11 million in the 2004/2005 year.

An Evaluation of Initial Uses and Impact of Equity Funding was carried out for the Ministry by NZCER in 2006 (Mitchell, Royal Tangaere, Mara and Wylie, 2006a). The evaluation found consistency in the relationships between particular uses of Equity Funding and effects, but could not distinguish between the direct effects of Equity Funding and other external factors such as possible effects related to the Strategic Plan and changes in staff qualification requirements for teacher-led services. The evaluation noted:

“The low socio-economic, isolation, and language and culture other than English components of Equity Funding are generally being used to address some current needs of these services that are not being met through other forms of MOE, Work and Income or other funding, and to raise quality or participation. Since these needs tend to be ongoing, Equity Funding is likely to be required for gains to be sustained and further gains made in the future, unless base funding is improved to levels able to address these needs.”

A future review of Equity Funding will be carried out by the Ministry when sufficient time has elapsed to fully assess its impacts.

Special Education

Special education funding is provided for specialist teaching and support and paraprofessional support for children with high and moderate special education needs. Demand for special education is expected to increase due to increased participation in ECE and advances in diagnosis, assessment and surgery. The 2004 Budget provided additional funding for ECE special education to provide extra support for existing high needs children and additional moderate needs children.

Discretionary Grants

The Discretionary Grants Scheme (DGS) is designed to increase participation in ECE services by providing capital assistance to eligible community-based groups so that they can increase the number of available child places, retain places in services that would otherwise have to close or relocate due to circumstances beyond their control, establish new services in areas of low participation and in areas of high projected population growth. The DGS also enables licence-exempt services to become licensed and chartered. The 2005 Budget expanded the Discretionary Grants Scheme to fund the building of approximately 55-65 additional community-based centres in areas of need, in the lead up to the introduction of Free ECE.

Establishment Funding

Establishment funding provides funding for community-based groups establishing licensed ECE centres and existing services that extend their building and subsequently increasing licensed child places. Funding is available for equipment/resources and to help meet staff costs during the initial start-up phase.

Top-Up for Rural Services

In order to maintain access to quality ECE services for parents in isolated rural communities, small chartered ECE services in these isolated areas are eligible for a top-up of additional funding to ensure that they remain viable despite having few children in their area. The top up is an interim measure to support rural ECE pending a review of government support for rural ECE signalled in the Strategic Plan.

Other Government Actions to Support the Strategic Plan

This evaluation focuses primarily on the financial impacts of the Strategic Plan and in particular of the new funding system. However, it is also important to note that the Government has invested in a number of areas beyond the direct funding of ECE services to support the Strategic Plan, including:

Regulatory Review and Education Amendment Act

A Regulatory Review, comprising a major programme of policy development and sector consultation, was conducted during 2004-2006. As a result of this review, Cabinet has agreed to the introduction of a new regulatory system in 2008, which will set clear minimum standards for all ECE services receiving Government funding, and changes to adult:child ratios to be implemented over 2009 and 2010.

From July 2009, age bands will change from </> 2 to </> 2½. Ratios for under 2½ year olds will be 1:5, and ratios for over 2½ year olds will be 1:10 in all-day centres. From July 2010, ratios for over 2½ year olds will be 1:14 in sessional centres. Decisions have not yet been made about group size.

The passage of the Education Amendment Act 2006 enabled the implementation of the new regulatory regime for the ECE sector (as well as other more minor changes and changes unrelated to the Strategic Plan).

Increasing Numbers of Registered Qualified Teachers

A range of initiatives have been implemented to help increase the number of registered qualified teachers, in addition to the incentives provided through the new funding system. These initiatives include:

• Incentive grants to contribute to the costs ECE services face when assisting staff to gain a qualification leading to registration;
• Recognition of Prior Learning schemes to allow those needing to upgrade their qualifications to receive credit for their skills and knowledge;
• Scholarships to attract people into ECE teacher education;
• Relocation grants to assist registered teachers to move to areas where registered teachers are in low supply;
• Providing mentoring and support to students undertaking ECE teacher education;
• Support grant for provisionally registered teachers working toward full teacher registration;
• Exemption to the goal of 80 percent registered teachers by 2010 and 100 percent by 2012, allowing services to count teachers who are studying for a recognised ECE teacher education qualification for up to 10 percent of the 2010 target and up to 30 percent of the 2012 target;
• Distance learning for student teachers and ECE services in remote areas and where registered teachers are in low supply;
• Te Reo learning provision to support the development of kaupapa Māori/ Māori immersion learning options for student teachers;
• Grants for primary qualified teachers to retrain for ECE; and
• Promoting ECE teaching as a career, especially to groups that are under-represented in the ECE teacher workforce, and in Auckland.

Network Management, Advice and Support

Ministry regional offices provide network management and broker advice and support services to address specific market failures including assisting communities to identify and meet ECE needs through the establishment of new services (e.g. accessing Ministry land or DGS funding), the merging of existing services to improve occupancy and efficiency, and facilitating intervention services to assist services with establishing effective management and governance.

Quality in Parent/Whānau Led Services

Research into quality in parent-led ECE services was published in 2006, (Mitchell, Royal Tangaere, Mara and Wylie, 2006b) as an initial step toward regulations and funding to support quality in ECE services provided by parents/whānau , together with information and support as signalled in the Strategic Plan.

The research analysed factors that contributed to children’s learning, and parent learning and support in playgroups, playcentre, kōhanga reo, puna, and Pasifika services. It showed that a range of factors were associated with service quality, including structural factors (i.e. qualified teachers/kaiako, good quality resources); parent participation in training and PD/wananga; experienced adults working in the education programme; access to and use of a wide range of professional advice and support; parent participation in the education programme; and leadership for adult learning (Mitchell and Hodgen, 2008).

Centres of Innovation

The Centres of Innovation programme aims to research innovative approaches to teaching and learning, and trial different ways of improving learning outcomes for children in a small number of ECE services (six initially, with a further ten in the second round), followed by the development of resources (including a DVD and book) for ECE services to share and promote successful outcomes with other providers.

Self-Review Guidelines

Self-Review Guidelines have been developed to support and strengthen the sector’s capability to achieve quality learning outcomes for children by supporting the development of quality practices in teaching and learning. The guidelines provide ECE services with an approach to self-review that complements external review undertaken by the Education Review Office (ERO). Self-review will be integrated into existing professional development programmes to build ECE services’ capability to implement effective review and to use the self-review process as part of PD programmes.

Assessment for Learning Exemplars

Kei Tua o te Pae/Assessment for Learning: Early Childhood Exemplars is a best practice resource aimed at helping teachers to improve the quality of their teaching. The exemplars consist of a series of books that will help teachers to understand and strengthen children’s learning and show how children, parents and whānau can contribute to this assessment and ongoing learning. The implementation of the resource kit includes a programme of in-depth PD for 3,500 services over five years.

ICT Strategy for ECE

The ICT Strategy for ECE is being developed in consultation with the sector and aims to provide a framework to support sector developments in ECE. This has been supported by additional funding in the 2005 Budget for cluster/PD support, and through a literature review on the use of ICT in ECE in 2006.