Calculation of Free Early Childhood Education Rates
Free ECE funding rates need to fund the full average cost of providing ECE in each type of service. This requires information on the cost of provision, and on how that cost varies between types of ECE service.
Author: Data Management and Analysis Division, Ministry of EducationDate Published: March 2007
Summary
The Ministry of Education developed funding rates for Free Early Childhood Education by calculating the:
- average cost per hour of ECE: using the total costs of provision from the 2006 Operating Cost Survey for each type of ECE service (Sessional Education and Care, All Day Education and Care, Home Based and Te Kōhanga Reo), and dividing costs by the number of hours of ECE provided
- average government funding subsidies: using the subsidy rates paid in 2005/06 (the period that most services’ Operating Cost Survey related to)
- average amounts of cross-subsidisation or cost-smoothing: using information on fees and subsidy rates for different age groups and periods of attendance of ECE, this estimates how services currently use fees and subsidies to offset their costs, in particular the estimated additional contribution being made by the first 20 hours per week for three and four year-olds. This amount was then added to the average cost per hour in step 1.
- costs not met by government funding: adding the results of steps 1 (average cost) and 3 (cross-subsidisation), then subtracting step 2 (funding subsidies), calculated the amount needed in 2005/06 to provide Free ECE
- cost increases since 2005/06: an inflation increase to the results of step 4 (costs not met by government funding).
- total Free ECE funding rates: by adding the results of steps 4 and 5 to ECE funding subsidy rates (from 1 July 2007).
Related Pages on Education Counts
Analysis of Survey of Operational Costs 2006
Related Ministry of Education Web Pages