Executive Summary

20 Hours ECE is an education policy aimed at increasing participation in teacher-led services and eligible kōhanga reo by reducing the cost barrier to families. 20 Hours ECE also gives parents more choice about work and study which supports the Choices for Living, Caring and Working plan, and contributes to the government goal of Families, Young and Old.  Under this policy, government funds up to six hours per day and up to 20 hours of early childhood education per week for three and four year old children (and some five-year olds) who attend teacher-led early childhood services.  Funding is provided for up to 20 hours per week to encourage intensive participation in quality early childhood education.

Early effects study

The focus of this study is on the early effects of 20 Hours ECE on participating services' practices, policies, costs and revenues.  The primary purpose of the study is to provide the Ministry with information on the early implementation of 20 Hours ECE which could lead to fine tuning of the operational policy settings, including the rules by which 20 Hours ECE operates.

Key findings

Implementation

Services participating in the study wanted to offer 20 Hours ECE, but often had some concerns about the implementation of it in their service. These concerns were generally financial in nature. In particular, some services needed (and continue to need) assistance in understanding how to budget and use Optional Charges.

The time and money invested by services to implement 20 Hours ECE varied by service, and were affected by both the number of implementation steps they undertook, and features of the service (such as size and stability of the roll, number and engagement of parents). When implementation was stressful it was often due to uncertainty about the financial impacts of 20 Hours ECE on the service.

Changes to practices & policies

Services most commonly made changes in regards to:

• Financial management and budgeting (e.g. recalculating budgets, forecasting). This was the most significant change for many services, and could generate stress for some services that were uncomfortable with new and uncertain financial impacts.
• Fees and charges (e.g. adjusting fee schedules, introducing optional charges). Adjusting fees and charges was a complex process for most services. Because the nature of the fee structures are complicated (a range of different rates, discounts, etc.) the net effect of changing the structure on families was often ambiguous (costs may have increased for those with one two-year-old attending mornings, but decreased for those with 2 children attending all day). Overall, a few services increased fees, a few decreased fees, and the rest made no changes or made a mix of changes. Nearly half of services we spoke to also introduced an optional charge.
• Administration (including scheduling, invoicing, etc). Most administrative changes occurred during implementation and included issuing and collecting attestation forms and scheduling children. Services estimated significantly higher administrative burden shortly after implementation of 20 Hours ECE than when we followed up in March 2008. By that time, estimated ongoing costs of administering 20 Hours ECE were clustered around two hours per week. By this time, the administrative burden had significantly reduced overall.  Most services reported moderate administrative time, and either no direct financial cost or under $100 per week.
• Operations (hours, staffing or services provided). Fewer services reported changes to their hours of operation or staffing. Those that did more often reported extended opening hours and improved teacher to child ratios.

Enrolment and participation

Overall, nearly half of services said that they believed their enrolment (total hours for all children) had increased since the introduction of 20 Hours ECE. For those whose enrolment stayed the same rather than increasing, this was often because the service was already full.

Some new patterns in enrolment have been observed when looking across what services told us about their individual changes in enrolment. These include: more three and four year old children attending, and longer days or more days per week of attendance.

Revenue and financial position

Revenue streams for services include fees and charges, MOE funding (bulk funding, 20 Hours ECE funding for attested hours, and other funding) and other subsidies such as Childcare Assistance through Work and Income.

Overall, there was a clear tendency for services to believe that parents were attesting all their hours with their service.  This results in a larger concentration of services' revenues coming from MOE. In general, there was also a tendency for fewer families in a service to use the Childcare Subsidy.

By March 2008, half of services said they were somewhat or much better off financially after 20 Hours ECE. About 40% said that there was little or no change to their financial position, and just over 10% said they were somewhat or much worse off financially.