New funding model for childcare operators ‘unsustainable’, providers say

Childcare providers have slammed the Government’s new core funding model as “unsustainable” and an “insult” to operators, who are facing rising costs.

More than 100 people rallied outside the Dáil on Wednesday in protest of the scheme, which is being used to freeze fees to parents.

The €221-million programme, which is taking registrations from Wednesday, requires childcare and early-learning services to sign up to agree to freeze fees at September 2021 levels.

The plan is then to increase subsidies in the budget, with the aim that they will be passed on to parents in the form of reduced fees per child.

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The funding is a new payment largely based on the capacity of a provider rather than the number of children it cares for.

Treasa Keegan, of Dublin-based Bambi’s preschool, said the new scheme rewards large early childcare providers while “actively penalising” small, local operators.

These services “are not going to survive” on the fees offered through the scheme, she said.

Ms Keegan’s mother established the one-room preschool in Clondalkin in 1986. Now, the business is “not viable with inflation on the rampage” and fees fixed by the Government at this level, she said.

“If the electricity bill and the rent are eating up your funding and you are legally prohibited from charging a fee then the owner of the preschool is personally subsidising it. That is what is happening everywhere,” she said.

Ann Quirke, who runs Corbally Montessori in Waterfall, Co Cork, pointed to the difficulties in attracting qualified graduates to the sector because of the rate of pay.

The new scheme is “shocking”, with a level of administration that would leave applicants wanting “an accountant beside you and a solicitor on the other side”, she said.

Ms Quirke said she calculated that the new model would see her preschool’s income reduce by €30,000, the equivalent of a graduate worker’s salary. The tightening purse strings come despite her service being booked out until 2025, she added.

The Department of Children said a record number of childcare services have indicated their intention to expand this year.

In a statement on Wednesday, it said new data showed a “record increase in early-learning and childcare providers signalling their intention to expand their services”.

The department cited a 31 per cent increase in applications from early-learning and care services for a “change-in-circumstances” application, saying this is a signal of their intention to expand services.

It also said the number of closure notices it has received, via Tusla, is down 16 per cent compared with 2019, the most recent pre-Covid year available for comparison. There was a 261 per cent increase in the number of school-age childcare services notifying a change in circumstances to Tusla, which the department also said was “driven by services seeking to expand their service”.

The scheme is due to come on stream from September, with the aim that it is used to improve pay and conditions in the sector for staff. The department has said the vast majority of services will see an increase in funding, with less than one per cent seeing no change. It is setting up a sustainability fund for any service that does encounter financial difficulties.

However, the funding on offer is “unsustainable” and “insulting”, Fiona O’Grady, the owner of Foxrock Montessori in south Dublin, said. She wants to pay her qualified staff properly, but their wages cannot increase if the funding remains as it is, she said.

“Something will have to change so my staff can get on a track where they can get a mortgage ... This is a proper profession and it is simply not recognised,” she said.

Ms O’Grady said she suspects it is partly because the field is populated predominantly by women that the workers are having to fight for pay that reflects the work.

Fiona Kinch, who owns Park Montessori in Leopardstown, said she is not sure her business will survive into next year.

Ms Kinch has been in the sector for nearly three decades, over which time her costs have gone up while her income has decreased, she said.

It will be heartbreaking if she is forced to close, she said, adding: “I have done so much for children in the area and this is what I get. At 52 years of age, I am now in a worse position than ever.”

Minister for Children Roderic O’Gorman pointed to high levels of engagement with prerequisite activities for the core funding programme as evidence of support for it, such as a survey crèches must take before becoming eligible.

He said 90 per cent of services have done this, and 95 per cent of eligible settings have signed up to a transition fund which is bridging the gap between the end of Covid supports and the start of core funding.

Mr O’Gorman said in a statement that “we are on the cusp of transformative change for the early-learning and childcare sector”.

“Delivering high-quality, affordable early learning and childcare is one of my top priorities as Minister. Core funding is central to this and will involve a fundamental shift in the relationship between the state and providers,” he said.

Core funding is contingent on an employment rights order being agreed for workers in the sector, which is currently being negotiated. The department is introducing an interim funding scheme to cover costs if no agreement is reached before the start of September, when it is due to be introduced.