Start Strong fee reduction

The department will monitor fee pass through by comparing a service's reported fees in the August 2016 Preschool Census (baseline) against the data collected in the August 2017 Preschool Census.

Spending rules

The Start Strong spending rules are detailed in the Start Strong program guidelines in section 4. The guidelines stipulate that:

  • services will be required to pass through at least 75 per cent of the increased funding to families by lowering their daily fees.
  • daily fees for children with disability and additional needs and children from low income, and Aboriginal families (equity children) must be lower than non-equity children's daily fees. If a service's daily non-equity fee is lower than its daily equity fee, the service would be expected to redistribute the funds more heavily towards the equity daily fee.

The department will monitor fee pass through by comparing a service's reported fees in the August 2016 Preschool Census (baseline) against the data collected in the August 2017 Preschool Census. The fee pass through amount must be 75% of the increase in annual funding (comparing the period Jan-Dec 2016 and Jan-Dec 2017).

In exceptional circumstances where the preschool cannot reduce fees by at least 75% of the increase, a justification must be provided. This includes preschools where fees are already low and they cannot pass through all 75% of the increase in funding.

A preschool does not have to reduce its fees if it has not received a funding increase under Start Strong.

Funding increase comparable period

To determine the value of the funding increase, funding received by preschools from 1 January 2017 to 31 December 2017 will be compared to the amount they received in 2016 under the Preschool Funding Model (PFM), pro-rata.

The baseline amount to be used to calculate the preschool's funding increase is the 2016 calendar year PFM including any transition and/or Preschools for Sustainable Communities as well any loadings including Language Assistance, Remoteness Loading and/or Higher Order Multiples. It does not include any applications based funding such as capital works, Community Preschools Outreach Grants, Community Preschools 600 Hours Incentive bonus, Preschool Disability Support Program, Intervention Support Program or any other one-off payments received.

The 2016 PFM allocation is the sum of the quarterly payments received by preschools in December 2015, April 2016, July 2016, October 2016 and any adjustments made in December 2016 with reference to the 2016 period.

Timeline of fee reduction

Where possible, preschools are encouraged to reduce fees from Term 1, 2017. The majority of preschools will receive funding increases based on the new Start Strong base rates for the period 1 January 2017 to 30 June 2017.

From 1 January 2017, preschools with only 600 hour enrolments, or which have a large proportion of 600 hour enrolments, will need to ensure that funding increases are used for fee reduction as soon as practicable. In addition, these services should document decisions in preschool committee minutes, or equivalent, to ensure information is available in the event of funding compliance audits.

Calculating fee reduction

For example, a preschool received $100,000 in 2016 under the PFM. This preschool will receive $160,000 in 2017 under Start Strong. This means that the preschool has received a funding increase of $60,000 ($160,000 less $100,000) and it is expected to use 75% (or $45,000) of this funding increase to reduce fees during 2017.

Receiving an additional funding increase

If the preschool receives an additional funding increase after completing the February 2017 opt-in data collection, the preschool should use 75% of this additional funding increase to reduce fees further in the following term or retrospectively.

Fee reduction comparable period

The fee reduction will be assessed by comparing the daily fees reported by the preschool in the August Census 2016 against the reported daily fees in the August Census 2017.

Planned fee increases for 2017

The department understands that some preschools may have planned for a fee increase in 2017. If that is the case, the preschool should consider the amount of funding increase and consider options for passing through 75% of this increase, based on the fees it reported in the August 2016 census.

Whatever decisions the preschool makes, it should document and minute the reasons for the changes including supporting documentation such as preschool committee minutes or equivalent, copies of advice provided to parents regarding intended fee increases and other internal working documents such as budgets.

Eligibility for fee reduction

The fee reduction applies to all eligible children aged 4 and 5 years old as well as 3 year old children with disability and additional needs and children from low income, and Aboriginal families. Preschools are encouraged to reduce equity daily fees for all eligible children as a priority before reducing fees for all other eligible children.

Preschools can use the remaining 25% of their funding increase to improve educational outcomes including hiring additional staff, purchasing educational materials, transportation, excursions and/or reduce fees for all other non-eligible children.

$10 daily fee for equity children

The $10 daily fee for equity children is not mandatory. The department encourages preschools to lower equity daily fees as much as possible so that affordability is not a barrier to early childhood education for the most disadvantaged children in NSW.

Assistance working out the fee reduction

Peak organisations Community Early Learning Australia (CELA) and Community Connections Solutions Australia (CCSA) are providing business support to services during the transition to Start Strong under the Start Strong Sector Support Program.

Each of the peak organisations will be providing telephone and email support, and conducting visits to services as part of the Start Strong Sector Support program.

Service Safety Net funding

A preschool does not have to reduce its fees if it is receiving Service Safety Net funding.

However, a preschool that is eligible for the Service Safety Net but receives funding greater than the Service Safety Net, will be required to pass through 75% of the funding amount that exceeds the Service Safety Net.

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