Investment in early childhood education

Budget 2011 increases in ECE funding rates

The Government will provide two funding increases to the ECE funding rates: 

• A universal cost adjustment to all funding rates 
• A separate increase to the salary component of funding rates for kindergartens.

Universal cost adjustment

Budget 2011 provides $61 million over four years for a universal cost adjustment to all ECE funding rates.

The cost adjustment is being provided to recognise cost pressures in the ECE sector.

The non-salary component of ECE funding rates will be increased by 2.92 per cent.

The universal cost adjustment will benefit all 5,328 ECE services (as at 13 May 2011). ECE services will receive additional funding of between $0.03 and $0.24 per funded child hour.

Kindergarten rates

The Government has provided an increase of 2.75 per cent to the salary component of ECE funding rates for kindergartens.

This funding increase is provided to compensate kindergarten associations for costs incurred from a variation to the Kindergarten Teachers, Head Teachers and Senior Teachers’ Collective Agreement 2009-2011. The outcome includes a 2.75 per cent salary increase and a $300 lump sum payment for kindergarten teachers.

Kindergarten teachers are part of the State sector and the Secretary for Education negotiates collective agreement settlements on behalf of kindergarten associations.

Due to increases resulting from the universal cost adjustment and the Kindergarten Teachers, Head Teachers and Senior Teachers’ Collective Agreement, ECE funding rates for kindergartens will increase by between 0.06c and 0.35c per funded child hour in total.

Universal cost adjustment

Why are there different rate increases?

The universal cost adjustment applies to the non-salary component of ECE funding rates. Different ECE services have different proportions of salary and non-salary costs and so the rates have increased by different amounts.

When does the universal cost adjustment take effect?

The universal cost adjustment will be effective from 1 July 2011.

Why are there so many funding rates?

Funding rates are subsidies to offset the cost of ECE. They are set at different levels to reflect the varying costs of different operating structures and priorities.

What are ECE funding rates made up of?

The ECE funding rates for licensed services are subsidies that reflect salary costs for teaching staff and four components of operating costs (operating, capital, property operating and non-teaching staff costs).

Kindergarten funding rates

Why are kindergartens teachers receiving a salary increase?

As part of the Kindergarten Teachers, Head Teachers and Senior Teachers’ Collective Agreement, any across-the-board payments agreed in the Primary Teachers’ Collective Agreement must be offered to the NZEI Te Riu Roa (NZEI) on behalf of kindergarten teachers.

The Government will provide kindergarten associations with funding to meet the costs of the settlement.

When will kindergartens receive funding at these new funding rates?

New rates are effective from 1 June 2011 and the universal cost adjustment is effective from 1 July 2011. However, due to system limitations and changes, the new rates will be applied in November 2011.

The salary increase is effective from 1 December 2010. Two payments will be made manually because of system limitations. One payment covers the funding period 1 December 2010 to 31 May 2011. The other is a lump sum payment for teachers.

What is a kindergarten?

A kindergarten is an early childhood education and care centre controlled by a free kindergarten association (section 120 of the Education Act 1989).

What are the new rates?

Table 1: ECE funding rates – All ECE service types except kindergartens

Table 2: ECE funding rates – Kindergarten rates

Need more information?

We recommend you:

• check all the ECE fact sheets on Budget 2011
• contact the Resourcing Contact Centre for any specific funding questions – 0800 ECE ECE (323 323).