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Item 12.5 - Attachment 1 |
Childcare Fees Option Paper -
March 2009 |
CHILD
(OPTIONS PAPER)
MARCH 2009
F2008/03695 – D01156779
TABLE OF CONTENTS
1. EXECUTIVE SUMMARY
2. BACKGROUND
3. CHILDCARE FEE LEVELS – IMPACT ON COUNCIL BUDGET 2009/2010
4. PROPOSED FEE INCREASE IMPACT ON FAMILIES
5. LOOKING AHEAD
1. EXECUTIVE SUMMARY
This discussion paper provides some
background information on the fees currently applying to Council’s child care
services and proposed for the Management Plan and Budget 2009/10. A modest fee increase has been included in
the draft services budget which will result in a deficit result for Council,
similar to 2009/10. Other options are
outlined in this report including details of the potential impact on families
and Council.
2. BACKGROUND
It has been the aim of Council to
achieve cost neutrality with the childcare centres but due to increasing costs
and reduced utilisation this has not occurred in recent years. The utilisation issue started to arise
largely as a result of incentives in the way the Federal Government applied a
fee subsidy which encouraged more families to switch to part time care and so
the centres were faced with numerous odd days to fill, particularly on Mondays
and Fridays.
As a result of this, a significant
review of the childcare centres was carried out prior to the fees being set
last year. Historically, the fees at the
centres have increased by three dollars per day every Financial Year. In 2008/2009, the fees were standardised
across the centres and increased by $1.00 to $6.00 per day, depending on the
centre.
Over this Financial Year the childcare
centres have maintained an average utilisation of 90%. The utilisation reached a high of 96% in
September and a low of 86% in January.
As a result of these figures it is proposed to continue to set the
childcare fees based on 90% utilisation across the board.
Note:
Utilisation rates at each centre vary which is why we aggregate the rate
across all ages for all centres for budgetary purposes. For example, all centres are achieving 100%
utilisation rates for the 0 to 2 year old groups but a varied rate for the 3 to
5 year old age group, ranging from 86% to 90% utilisation
The standardised utilisation method is based
on a more realistic break even fee that anticipates some fluctuation in
childcare operations, takes account of lower utilisation rates and fixed staff
and operating costs.
To achieve full cost neutrality based
on the current environment and utilisation rates the daily fee would need to
increase markedly. The fees within the
2009/2010 draft budget have been set at $65.00 per day which has been based on
the suggested
3. CHILDCARE FEE LEVELS – IMPACT ON COUNCIL BUDGET 2009/2010
The following table provides an
overview of the possible increases per day for the Long Day Care Centres as a
quick snapshot of the increase and difference in fee when compared to current
rates as well as the resulting cost to Council.
|
Proposed Fee/Day |
Daily Increase on current fee |
Total Cost To Council Across 5 LDC Centres |
|
$65.00 |
$3.00 |
$384,994 |
|
$68.00 |
$6.00 |
$227,867 |
|
$70.00 |
$8.00 |
$162,089 |
|
$74.00 |
$12.00 |
$0 |
4. PROPOSED FEE INCREASE IMPACT ON FAMILIES
Families accessing the childcare
centres are entitled to two Federal Government subsidies. Childcare Benefit (CCB) is a subsidy that is
applied weekly at the centres to reduce the fee and is applied as a percentage
through an income test. The second is
the Childcare Tax Rebate (CCTR) which is a 50% rebate for the out of pocket
childcare expenses for families, capped at $7,500, and this can be claimed by
the families quarterly through the Family Assistance Office.
The attached tables illustrate the
impact of the proposed fee increase options on the families after the subsidies
have been applied.
(a) Table one
displays the fee impact after CCB has been calculated and has been calculated
on the percentage rates effective for the 08/09 Financial Year. These are usually
(b) Table two shows
the impact on families after the CCTR has been applied.
(c) Table three
outlines examples of the total difference that families will have to pay for
the varying proposed fee options.
The impact of
fee increases on families will obviously vary depending on their income level
and other personal circumstances. A
breakdown of the income categories for families currently using Council’s
childcare centres is:
i. 25% Families earn
$34,310 or less
ii. 13% Families earn
between $34,310 - $60,000
iii. 31% Families earn
between $60,000 - $130,000
iv. 31% Families earn
above $130,000, are not eligible for CCB or choose to take the Lump Sum CCB
option and claim as part of their annual income tax return.
5. LOOKING AHEAD
Taking into account forward planning,
it must be noted that there are also new Children’s Services Regulations that
are due to be implemented in approximately July 2010, with a change to the
staff to child ratio from 1:5 to 1:4 for children under two years of age. These changes will have a direct impact on
the childcare centres as an extra staff member will need to be recruited per
centre. This will need to be included in
further fee structures.
The changes may also place significant
pressure on Council to maintain or increase the number of under two year old
children that we cater for in the future as there is anticipation that some of
the private centres in the LGA may cease this service as a result.
This information does not relate to the
Occasional Care Centre as it is being dealt with as a separate issue. A review of the service provision model is
currently being undertaken and discussions with the State Government are in the
process to look at approval for the possible improvement that will encourage
viability as well as meet the needs of the Community.