Funding changes

Budget 2021 announced three potential funding changes for early learning. The changes are summarised below.

1 July 2021: Increase to existing rates, subject to attestation

From 1 July 2021, there will be an increase to existing subsidy rates by which the Ministry pays education and care services. This funding is for the purpose of improving the pay for certificated teachers working in education and care services.

More detailed information on the Pay Parity initiative:

Pay parity for certified teachers in education and care services

The following tables set out the funding rates for education and care services from 1 July 2021. These are available alongside the increased minimum salary attestation requirement for certificated teachers of at least $51,358 per annum, up from $49,862 currently. The annual salaries correspond to a 40-hour week or 2,080 hours per year.

All-day teacher-led centre-based services

$ per funded child hour (incl. GST)
Rates from 1 July 2021
  Under two Two and over 20 Hours ECE
100% certificated teachers $13.62 $7.98 $13.03
80-99% certificated teachers $13.04 $7.21 $12.30
50-79% certificated teachers $11.81 $6.23 $11.21
25-49% certificated teachers $9.53 $4.96 $9.85
0-24% certificated teachers $8.15 $4.12 $8.97

Sessional teacher-led centre-based services

$ per funded child hour (incl. GST)

Rates from 1 July 2021  

  Under two Two and over 20 Hours ECE
100% certificated teachers $12.48 $6.20 $7.51
80-99% certificated teachers $11.60 $5.26 $6.77
50-79% certificated teachers $10.54 $4.70 $6.15
25-49% certificated teachers $8.59 $4.04 $5.43
0-24% certificated teachers $7.49 $3.64 $5.03

1 January 2022: Increase across the board of 1.2% to rates

From 1 January 2022, there will be an across-the-board 1.2% increase to funding rates for all early learning providers, except for home-based services on the standard rate. The increase in Targeted Funding for Disadvantage will take effect from 1st March 2022.

The following tables set out the funding rates for education and care services from 1 January 2022.

All-day teacher-led centre-based services

$ per funded child hour (incl. GST)

Rates from 1 January 2022

  Under two Two and over 20 Hours ECE
100% certificated teachers $13.78 $8.08 $13.19
80-99% certificated teachers $13.20 $7.30 $12.45
50-79% certificated teachers $11.95 $6.30 $11.34
25-49% certificated teachers $9.64 $5.02 $9.97
0-24% certificated teachers $8.25 $4.17 $9.08

Sessional teacher-led centre-based services

$ per funded child hour (incl. GST)

Rates from 1 January 2022

  
  Under two Two and over 20 Hours ECE
100% certificated teachers $12.63 $6.27 $7.60
80-99% certificated teachers $11.74 $5.32 $6.85
50-79% certificated teachers $10.67 $4.76 $6.22
25-49% certificated teachers $8.69 $4.09 $5.50
0-24% certificated teachers $7.58 $3.68 $5.09

More funding tables are detailed in Appendix 1 of the ECE Funding Handbook:

Appendix 1 – ECE Funding Handbook

1 January 2022: Subject to legislation change, a set of higher premium rates to opt into

From 1 January 2022, subject to the passage of the Education and Training (Grants – Budget Measures) Amendment Bill, an additional set of higher premium rates will be made available. Education and care services that agree to pay (at a minimum) their certificated teachers at the first six of the eleven applicable pay steps set out in the Kindergarten Teachers, Head Teachers and Senior Teachers’ Collective Agreement 2019-2022 would be paid the new premium rates.

The following table sets out the funding rates education and care services would be able to opt into. These new rates will be added to the Funding Handbook once confirmed.

All-day teacher-led centre-based services

$ per funded child hour (incl. GST)

Rates from 1 January 2022

  
  Under two Two and over 20 Hours ECE
100% certificated teachers $14.13 $8.29 $13.52
80-99% certificated teachers $13.54 $7.49 $12.77
50-79% certificated teachers $12.25 $6.46 $11.63
25-49% certificated teachers $9.88 $5.15 $10.22
0-24% certificated teachers $8.46 $4.28 $9.31

Sessional teacher-led centre-based services

$ per funded child hour (incl. GST)

Rates from 1 January 2022

  
  Under two Two and over 20 Hours ECE
100% certificated teachers $12.95 $6.43 $7.79
80-99% certificated teachers $12.04 $5.46 $7.02
50-79% certificated teachers $10.94 $4.88 $6.38
25-49% certificated teachers $8.91 $4.19 $5.64
0-24% certificated teachers $7.77 $3.77 $5.22

The pay rates services would need to attest to correspond to the first six steps of the salary scale for trained and certificated teachers in the Kindergarten Teachers, Head Teachers and Senior Teachers’ Collective Agreement 2019-2022 (KTCA).

Kindergarten Teachers, Head Teachers and Senior Teachers' Collective Agreement

These would be as follows:

Pay step

Annual rate

1 $51,358
2 $53,544
3 $55,948
4 $58,133
5 $61,794
6 $65,776

The annual salaries correspond to a 40-hour week or 2,080 hours per year.

Questions and answers about the new funding

How will services receive this increase to funding rates to support increase to teachers’ minimum pay in July 2021?

Existing funding rates will be increased at the same time as raising the minimum rates services must attest to paying.

What rules apply to the minimum attestation rate from 1 July 2021?

The current rules that apply to the minimum attestation process will still apply. That is, if your service chooses not to attest to paying all your certificated teachers at least $51,358 per annum from 1 July 2021, your funding will drop to the 0-24% certificated teachers’ band. This is the same as the current rule.

How was the 1.2% cost adjustment coming into force on 1 Jan 2022 calculated?

The 1.2% cost adjustment was calculated using May 2021 funding rates as a base, not the 1 July 2021 rates. For example, the current 20 Hours ECE rate for services on the 100% certificated teachers funding band is $13.01 per Funded Child Hour (FCH). A 1.2% increase on this rate is $0.16 per FCH, which is added to the 1 July 2021 increase of $0.02 per FCH.

What happens if a service chooses not to opt into the new higher premium rates in January 2022?

If your service does not opt-in to these rates but is still paying all certificated teachers at least $51,358 per annum, your funding will continue according to the proportion of certificated teachers working with children. You would not drop to the 0-24% certificated teachers’ band because you do not opt-in to the new higher premium funding rates.

What obligations would services have if they opt into the new premium rates from 1 January 2022?

Services that opt-in to the new rates would need to attest that they are paying certificated teachers with the requisite experience and qualifications according to the specified salary scale. The specified salary scale is the same as the first six steps in the KTCA. Services that opt into the new rates are not being made a party to the KTCA.

The Government expects those services that do opt in to pass on the increases in funding to their teaching staff, even if they are already being paid above the minimum required.

Why is it being left to services to opt in rather than effectively have no choice but to agree to higher premium rates and higher pay steps?

The opt-in approach signalled for the premium rates intended to come into effect on 1 January 2022 is the preferred approach because the ECE funding system has limited flexibility to adjust funding depending on the level of salary paid at a service level. In particular, the current ECE funding system is a bulk grant that does not differentiate salary costs from other costs, or fund services according to the experience profile of their certificated teachers.

This is why the Minister referred to the need to revise the funding system to achieve the goal of pay parity in his announcement on 12 May. The nature of the work is still to be scoped. We’ll provide more information in the coming weeks.

What if the new rates don’t work for my education and care service?

The new rates from 1 January 2022 may not work for every service for the reason outlined in the previous question. Services therefore have the choice to opt-in or to remain on the existing funding rates.

How was the $170 million funding calculated?

The Ministry used information from the annual ECE Census to estimate the number of certificated teacher FTEs in education and care services. The Ministry then used annualised current rate of pay data and experience levels for certificated teachers from the ECE Remuneration Survey 2020 to cost the gap between what teachers are currently being paid and what it would cost if they were raised to KTCA pay steps, given their experience. This included estimating funding for raising the salaries of the certificated teachers with more than six years of experience but who are currently paid below $65,776 per annum.

How is the intended increase in premium funding rates calculated?

The $170 million total funding required (as described above) is allocated by applying a common 2.57% increase across the various funding rate categories (under two, two and over, 20 hours ECE etc). The increased rates multiplied by the expected number of child hours over the four-year Budget period equals $170 million.

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