2011 Survey of Income, Expenditure and Fees of Early Childhood Education Providers in New Zealand

Publication Details

This report presents results from the 2011 Survey of Income, Expenditure and Fees of ECE Services. It provides information on average costs of providing ECE services, and the main drivers of these costs. It provides new information on average parental charges, and how much of services costs are met by government and how much are met through private sources. It also looks at the extent of volunteer contribution within the sector.

Author(s): Julia Arnold and David Scott, ECE Analysis, Ministry of Education.

Date Published: September 2012

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Summary

This report presents results from the 2011 Survey of Income, Expenditure and Fees at ECE Services. Following similar surveys in 2005, 2006 and 2008, this survey collected information on the costs of providing early childhood education (ECE) services. In addition to costs, the 2011 survey collected information on income, fees and voluntary work. The survey was run in July 2011, with nearly 1,600 licensed ECE providers participating. The results presented here relate to data for financial years ending between June 2010 and March 2011. The aim of the survey, as with previous ones, was to provide information to assist government in its ongoing role in funding ECE in New Zealand. All figures in this report (including fees) are reported exclusive of GST.

Key findings

What are the average service costs of ECE?

The average cost of providing ECE in 2010 was $8.74 an hour per child. However, costs varied widely even for the same type of ECE. Costs ranged from $4.71 an hour for children aged two years and over at playcentres on the standard funding band to $13.77 an hour for children aged under two at education and care services on the 80%+ funding band. Costs for children under two were, on average, a third higher than costs for children two and over, ranging from 22% higher for playcentres to 58% higher for education and care services.

Table 1: Average expenditure and income per hour by service type
ECE Type Average Cost Per Hour ($) Average Income Per Hour ($)
Mid Point Est. Range Midpoint Est. Range
Education & Care $9.22 $8.19-$8.57 $10.13 $9.99-$10.27
Kindergartens $9.10 $7.96-$8.70 $9.94 $9.89-$9.98
Home-based $8.48 $8.60-$9.19 $9.08 $8.86-$9.30
Playcentre $5.74 $8.65-$9.06 $6.13 $5.90-$6.36
Total (Weighted) $8.74 $8.08-$8.51 $9.55 $9.46-$9.64

How much of ECE is publicly funded?

On average, 75% of income received by ECE services came from government sources, 22% from parents and 3% from other sources, such as fundraising and community grants. The publicly funded proportion was higher for kindergartens (90%) and lower for home-based services (51%). Relative to other service types, playcentres received proportionately less from parents and more from other non-government sources.

Table 2: Source of income by service type
Service Type Government Parents Other Total
Education & Care 75% 22% 2% 100%
Kindergartens 90% 3% 7% 100%
Home-based 51% 47% 2% 100%
Playcentre 76% 7% 18% 100%
Total (Weighted) 75% 22% 3% 100%

To what extent does the government funding subsidy cover costs? Does it meet the full average costs of 20 Hours ECE?

Government subsidy funding for 20 Hours ECE met or exceeded the average costs for all service types and main funding bands except for kindergartens on the sessional funding band. Government funding subsidies covered on average 79% of costs for children under two, and 62% of costs for children two and over (excluding 20 Hours ECE).

What are the main cost drivers in ECE?

Teacher salaries made up around two-thirds of costs for teacher-led services, similar to 2008. Teacher salaries made up a higher proportion for home-based services, and a significantly lower proportion for playcentres, with their highest cost being association levies, at 39% of total costs.

How are fees and other parental charges structured in the ECE sector in New Zealand?

A wide range of charging models are used - per hour, per session, per day, per week, and per term - with many services using a combination of these. The most common type of charging was on a per hour basis (43% of services). Charging on a combination of per day and week basis was also common (23% of services). Most services charged fees, with 79% of playcentres and virtually all kindergartens, home-based networks and education and care services charging some kind of fee.

Average parental charges were $4.86 per hour for children under two and $4.41 an hour for children two and over (who were not in 20 Hours ECE). Charges were highest for education and care and home-based services (between $5.30 and $5.80 an hour), and lowest for playcentres at around $0.40 an hour. Average charges in kindergartens were around $3.13 an hour for children two and over (excluding 20 Hours ECE). Private home-based service charges were on average 14% higher than those of community-based ones, while private education and care charges were around 20% higher than those of their community-based counterparts.

Table 3: Average parental charges per hour
Notes:
  1. Parental changes include compulsory fees for attendance, recommended donations and optional charges for care, but do not include optional charges for discrete items and one-off activities.
  2. Parental charges for  20 Hours ECE only include optional charges for care, but do not for discrete items and one-off activities.
Service Type Under Two Two and Over
(excl 20 Hours ECE)
20 Hours ECE
Midpoint Estimate 95% Confidence Interval Midpoint Estimate Range Midpoint Estimate 95% Confidence Interval
Education & Care $5.55 $5.39-$5.70 $5.26 $5.14-$5.38 $0.34 $0.27-$0.41
Kindergartens - - $3.13 $3.08-$3.19 $0.13 $0.12-$0.14
Home-based $5.83 $5.68-$5.98 $5.81 $5.66-$5.96 $0.18 $0.12-$0.24
Playcentre $0.37 $0.30-$0.44 $0.44 $0.37-$0.51 - -
Total (Weighted) $4.86 $4.67-$5.06 $4.41 $4.31-$4.51 $0.26 $0.23-$0.29


The distribution of fees varied between service types. Playcentres charges were less than $1 an hour at 95% of services, while 72% of home-based services charged between $5 and $6 an hour. Education and care services and kindergartens had wider distributions, with 68% of education and care services charging between $4 and $ 7 and hours, and 76% of kindergartens' charges between $2 and $4 an hour.

For 20 Hours ECE, which is provided free of compulsory fees for parents, 27% of services had optional charges, averaging around $0.86 an hour. Around 10% of services had optional charges outside of 20 Hours ECE.

Nearly 40% of services levied additional charges. There was a wide range of additional charges. The most commonly cited charges were: donations or family/ whanau contributions, late pick-up, absence, enrolment or administration fees, late payment fees, casual charges, holidays, holding or retainer fees, meals, nappies and other consumables, trips, transport and events, portfolios, and membership fees. Many services also offered a variety of discounts, for example, discounts for multiple family members or early payment.

What is the difference across regions?

Wellington had higher fees for education and care for both under two and two and over. Fees for Waikato, Canterbury and North Island regions outside of the main urban centres were lower for education and care services. Canterbury had higher fees for kindergartens. Waikato and Wellington had lower fees for kindergartens.

What is the relationship between fees, and cost, income and government funding?

There was a moderately strong relationship between the extent that government funding met a service's costs, and the average per hourly income it received from parents. On average, when government income fully met costs, average hourly income from parents was nil, and for each 10% drop in the proportion of costs met by government, average hourly income from parents increased by a dollar. 

However, there was a weaker direct relationship between fees and costs. This relationship is influenced by a range of factors including the in mix of 20 Hours ECE, and other types of provision, ownership models and service provision philosophies.

How much unpaid voluntary staffing contribution is there in ECE?

A significant proportion of ECE services used volunteers, both to help reduce costs and as part of a wider philosophy or culture around the benefits of parental and community involvement in ECE Nearly half (or 46%) of services reported use of volunteers. However, this varied significantly, with no home-based services surveyed reporting volunteers, to 32% of education and care services, 88% of kindergartens and 100% of playcentres.

Volunteers, on average, contributed a total of between 1,400 and 1,800 hours per service per year - from 600 to 700 a year at kindergartens and education and care services to nearly 4,000 a year at playcentres. On average, 65% to 70% of voluntary hours were spent on child contact, 25% on administration, and 5 to 10% on maintenance. Education and care services, however, used volunteers for administration and maintenance more than other parts of the sector (55%). While there did not appear to be a strong relationship between costs and the use of volunteers, there did appear to be a relationship between fees and volunteers, with the highest use of volunteers at services with low or no fees.

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