Practicalities of introducing the 30 hours funding

[FSFRebecca]

I've put a brief article up on the home page which links to all the key discussion points. I'd like to assume that we have some agreement on the key points:

• providing additional funded childcare hours for parents is a good thing
• providers are worried that the currently proposed levels of funding fall short of the actual cost of providing the hours
• Currently most providers ‘cross subsidise’ (i.e. they put prices up for hours outside the funded hours) the existing funding shortfall by increasing costs elsewhere in their provision
• With the increase in hours the opportunities for ‘cross subsidising’ funding are limited

I thought it would be useful to hear what providers are doing in preparation for this ... practical ideas, costing calculators, cunning timetabling ...

 

Let's be positive and put our collectively brilliant brains together

 

I look forward to hearing from you!

[AnonyMouse_15]

I have no idea where to start, really

I know it's going to cost us money, but can't work out how much worse off we'll be.

[AnonyMouse_7172]

We're just about to embark on a mammoth costings exercise to work out our 'per child / per hour' cost.

 

It's going to involve about a million division sums. We are going to do it like this:

 

Annual costs (e.g. insurance / ofsted reg fee) / 51 weeks (as we close for a week) / 5 days

Monthly costs (e.g. salary / rates / rent / untitlies) x12 (to give annual) then /51 weeks / 5 days

Weekly costs (e.g. food / nappies) / 5 days - we may have to do this on a room by room basis as the things we provide in different rooms changes

 

Once we have got a daily cost we will divide it by 11 (number of hours we are open)

 

Then we will work out the average income for each room and divide that into an hourly rate

 

My head is muddled just thinking about it - has any one written a fandango spreadsheet that we could use to work this out before I wear out all my pencils?

 

Going for a lie down now PW x

[AnonyMouse_51737]

I may have an old spreadsheet not promising it's still knocking around but you never know I'll have a look (not used it in about 5 years)

[AnonyMouse_7172]

I may have an old spreadsheet not promising it's still knocking around but you never know I'll have a look (not used it in about 5 years)

It would be amazing if you did! I'd love you forever!

[AnonyMouse_7120]

I haven't given any thought to how it will (or most likely won't) work in practice, until there are some cast in stone details around eligible criteria so I know what I might be dealing with I've decided not to stress about it ...

For 'not stress' see bury head in sand

Edited March 18, 2016 by Mouseketeer

[AnonyMouse_9650]

You might find these documents that were published by the PSLA for the 30 hour consultation useful for identifying and calculating costs.

 

Identifying childcare costs v2 PSLA guide.docx

 

calculating childcare costs PSLA guide.docx

 

 

 

 

[AnonyMouse_9650]

• providing additional funded childcare hours for parents is a good thing
• providers are worried that the currently proposed levels of funding fall short of the actual cost of providing the hours
• Currently most providers ‘cross subsidise’ (i.e. they put prices up for hours outside the funded hours) the existing funding shortfall by increasing costs elsewhere in their provision
• With the increase in hours the opportunities for ‘cross subsidising’ funding are limited

 

 

1) Providing additional funded childcare hours a good thing - yes but estimates of how many parents will actually qualify for this vary wildly - one estimate is as low as 8% (please don't ask me where I remember this from there was so much data floating around at the time of the consultation I forget) - however the key question is will there be sufficient qualifying parents to actually make changing our business model's sustainable?

2, 3 and 4) The 15 hour deal is already underfunded so if the 30 hours is not adequately funded then providers just can't afford to offer it - we'll be out of business in a flash

 

New (ish) thoughts

 

If we offer 30 hours without increasing existing capacity then there will be a net reduction of spaces available for all children and with no capital funding in the offing you're back to £s again! In some cases the buildings that we operate in just can't grow any more. For example I run a term time only setting from a church hall - no chance of expanding the premises here and offer a 5 hour session Monday to Friday. At present I usually have approx. 50 children on our total roll with 30 children attending each session - 98% of the children access 15 hours over 3 5 hour sessions per week during term time. If 100% of parents have 25 hours per week then I can only offer a total roll of 30 children therefore there will be a net reduction of 20 spaces at my setting alone.

 

With regard to the actual offer at my setting I could offer a 6 hour session 5 days a week for 38 weeks to meet the 30 hours term time deal however I am wondering whether I would not be better to offer a longer school year and stretch the 30 hours e.g., do away with half term breaks and close for 2 weeks at Xmas, 2 weeks at Easter and 4 weeks for August thereby offering a 44 week year (I know when my children were school age it was the holidays that were the real issue trying to cover). I could stay offering a 5 hour session which would mean I would provide 1100 hours rather than 1140 (30 hours x 38 weeks) or I could extend to a 6 hour session which would mean I would provide 1320 hours thereby allowing me to charge my "going rate" for the 180 hours over the 1140. I would be hard pressed to extend my school year much further as a number of my staff are working mums who want to work term time themselves! There would have to be sufficient demand for these changes though to make it sustainable!

[AnonyMouse_19782]

 

1) Providing additional funded childcare hours a good thing - yes but estimates of how many parents will actually qualify for this vary wildly - one estimate is as low as 8% (please don't ask me where I remember this from there was so much data floating around at the time of the consultation I forget) - however the key question is will there be sufficient qualifying parents to actually make changing our business model's sustainable?

2, 3 and 4) The 15 hour deal is already underfunded so if the 30 hours is not adequately funded then providers just can't afford to offer it - we'll be out of business in a flash

 

New (ish) thoughts

 

If we offer 30 hours without increasing existing capacity then there will be a net reduction of spaces available for all children and with no capital funding in the offing you're back to £s again! In some cases the buildings that we operate in just can't grow any more. For example I run a term time only setting from a church hall - no chance of expanding the premises here and offer a 5 hour session Monday to Friday. At present I usually have approx. 50 children on our total roll with 30 children attending each session - 98% of the children access 15 hours over 3 5 hour sessions per week during term time. If 100% of parents have 25 hours per week then I can only offer a total roll of 30 children therefore there will be a net reduction of 20 spaces at my setting alone.

 

With regard to the actual offer at my setting I could offer a 6 hour session 5 days a week for 38 weeks to meet the 30 hours term time deal however I am wondering whether I would not be better to offer a longer school year and stretch the 30 hours e.g., do away with half term breaks and close for 2 weeks at Xmas, 2 weeks at Easter and 4 weeks for August thereby offering a 44 week year (I know when my children were school age it was the holidays that were the real issue trying to cover). I could stay offering a 5 hour session which would mean I would provide 1100 hours rather than 1140 (30 hours x 38 weeks) or I could extend to a 6 hour session which would mean I would provide 1320 hours thereby allowing me to charge my "going rate" for the 180 hours over the 1140. I would be hard pressed to extend my school year much further as a number of my staff are working mums who want to work term time themselves! There would have to be sufficient demand for these changes though to make it sustainable!

wow - think that deserves a round of applause! Well worked out Sue

[AnonyMouse_30128]

Yes I can see where you're coming from SueJ this is probably a model we could also follow if only staff didn't have school age children themselves!

 

I am not against offering more free hours...for us in fact as we offer two sessions per day plus lunch club then if we up the fees for lunch club we could make a bit of money. (bit of cross subsidisation in action there!)

if 30 hours came in I would withdraw from taking funded two's as I suspect there would be no places for them.

For us provision of 30 for children with additional needs might just kill us...we have no additional funding at the moment this could seriously stretch our resources.

These figures of £4.88 per child include EYPP ...only 2 of mine are EYPP children ..so the basic fund will be lower...then the lea will take their cut...how much will I actually get?????? we get £4.13 at the moment we are in one of the most expensive areas of Britain I suspect when we add up the figures I will be on the same rate as now ...I have done my calculations I need £5.20 per hour per child and need 26 out of 30 places filled to make any money (without fundraising/additionals/cuts etc)

 

 

 

I am also confused by the offer....it is now suggested that both parents have to be working at least 8 hours each they need to be earning less then 16 K to get EYPP ...so each earning less then £8000 per year.......blimey are they both working in early years ! :lol: :lol: :lol:

[AnonyMouse_12805]

Well done Sue! You have very eloquently managed to put my thoughts on the subject in writing!

 

We are open for 26.5 hours a week- cant see us being able to extend that as the only afternoon free is

a Friday and I certainly dont want to pack everything away (we are in a church hall and have to clear it on a Friday) at 4pm on a Friday afternoon (cant see my staff wanting to either)

 

I suppose we could possibly start 30 minutes earlier each morning (but that wouldn't suit those parents who drop to school first) and finish 15 minutes later. However our staff wages would rise then. Like others if we were offering the 30 hours our numbers would drop by around 15/18 children.

 

Our funding is a joke- we get 3.60 per hour (which hasn't changed in the last 5 years) except this last year they have added certain supplements which amount (for us) to around an additional 25p per hour per child. However they also took away a £1300 admin supplement we got in the summer term so the one virtually cancelled out the other. We are a London borough and it is so expensive where we are that I'm really not sure how they can justify giving us what they do.

We have 50 children on our books and 38 of them are paying fees of some sort (mainly for additional hours) and that is what keeps us afloat. Without this money (our fees will be £5 per hour in September) I honestly dont think we could keep going. Our fee paying children heavily subsidize our funded children and have done for a few years now.

 

As I understand it you will have to have both parents working 16 hours now at the EQUIVALENT of the M/W. Which is odd as you could have one person working 15 hours at minimum wage and not qualify, another could be working 8 hours per week at double the minimum wage per hour and yet qualify? I think I must have misunderstood this though. But they have changed from 8 hours to 16 hours working to qualify.

 

I suppose all we can do is wait and see what happens with the pilot schemes. Who knows maybe they will delay until they have worked out a way for it to work.

[FSFRebecca]

This is a great conversation to be having.

 

We are all very well aware of how we feel about this from a financial point of view but I think it has been incredibly helpful to hear the initial thoughts of how people might manage if it all goes ahead. I completely recognise that there are an awful lot of 'ifs and buts' - however if we have shared practical ideas and suggestions 'ahead of the game' then once the details are firmed up we will be much better placed to think about what to do for the best.

 

Once the pilots have started and we hear from some of them how they are managing we will be able to extend our 'list of possible ways to deal with it'

 

keep thinking - keep adding ideas. I will collate them all once I get a sense that we have exhausted the possibilities.

[AnonyMouse_7120]

With head out the sand for a few minutes, and cost aside, it will have an impact on the age of children we take (providing the age I want are not fast tracked into schools by then), I can see it being hugely detrimental to the drive for more 2 year places, I hope it helps those that really could do with it, the always just above getting any help ones.

[AnonyMouse_51823]

A colleague of mine is actually doing research on how the 30 hours funding is going to effect our settings. Any managers/practitioners have five minutes to fill out this survey https://www.surveymonkey.co.uk/r/KNLHL9Zto give your opinion on the topic, and how it will effect your settings personally. It's completely anonymous so don't afraid to be completely honest.

 

Molly

[AnonyMouse_47736]

Just to add to the conversation, the DfE has stated that it does not possess the data or research used in The Review of childcare costs: the analytical report. Call me a sceptic, but this sounds suspiciously like when you're at uni and they tell you not to make up your data because they'll figure it out and will make a request to see it.

http://www.nurseryworld.co.uk/nursery-world/news/1156489/dfe-does-not-possess-the-data-used-in-childcare-costs-report

[AnonyMouse_55063]

With regards to costs to a setting then the easiest way to find out this information would be to check the year end accounts? When i put ours together the outgoings are all plain to see. I appreciate that costs can change over time but it would be much easier to check outgoings this way. If you put your accounts together onto a spreadsheet or similar program it can even be presented monthly with little effort.

 

All you would need to do is work out the amount of hours you opened for the year and use this number to work out the cost per hour required.

[FSFRebecca]

 

All you would need to do is work out the amount of hours you opened for the year and use this number to work out the cost per hour required.

 

 

I think people were wondering about the hourly costs for different age groups - Of course the annual figures will give an average (total expenditure / number of hours / number of children) - but if settings charge different rates for different age groups to reflect ratios that wouldn't be so easily extrapolated from year end data

[AnonyMouse_12805]

Not sure what I'm doing but my total expenditure/number of hours/number of children = £1.82 per hour!!

[AnonyMouse_23964]

Not sure what I'm doing but my total expenditure/number of hours/number of children = £1.82 per hour!!

I think you have just been identified as the next minister for early years and childcare by the government Lynned55!!! Something tells me that they will like your thinking. lol :lol: :rolleyes:

Edited April 18, 2016 by lsp

[AnonyMouse_55063]

Yes i was talking about costs.. ie outgoings and the most accurate and easiest way to see this information, is from your year end accounts.. especially if they end in April like mine - I have just completed 15/16 figures so it is easy for me to see the exact current outgoings, and why i mentioned this method.

 

The problem i have had is then working out the hours we open which i presume would be hours per day x days open, so therefor approx 10 hours per day x 240 days = 2400 hours. Now let's say for argument sake, the costs are £100,000 per year. Mainly wages and rent of course. The problem i now have is when i divide 100,000 by 2400 = 41.66 per hour!

 

I am sure it is fairly obvious that i am doing something wrong.. please tell me what

[FSFRebecca]

Yes i was talking about costs.. ie outgoings and the most accurate and easiest way to see this information, is from your year end accounts.. especially if they end in April like mine - I have just completed 15/16 figures so it is easy for me to see the exact current outgoings, and why i mentioned this method.

 

The problem i have had is then working out the hours we open which i presume would be hours per day x days open, so therefor approx 10 hours per day x 240 days = 2400 hours. Now let's say for argument sake, the costs are £100,000 per year. Mainly wages and rent of course. The problem i now have is when i divide 100,000 by 2400 = 41.66 per hour!

 

I am sure it is fairly obvious that i am doing something wrong.. please tell me what

Divide by number of children?

[AnonyMouse_55063]

Divide by number of children?

 

:wacko: :blink: - oh ye

[AnonyMouse_55063]

Well lets revise this slightly- to get a more realistic outcome! Now i understand how to work it out :unsure: - (makes a man joke, but won't due to sensitive members)

 

SO.. the maximum hours available for funding per day are typically 6-8 hours so i will use 7 hours per day. The number of days open per year for funding is spread over 38 weeks typically, so the new days per year figure is reduced. Each child is allocated 570 hours per year of funding for reference. Available hours settings are open (for funding) = 38 weeks x 5 days = 190 days x 7 hours = 1330 hours per year.

 

For a typical 30 place setting they can usually accommodate 50-60 funded children. So let's use 50 children, for this example.

 

The outgoings for a 30 place setting i estimate would be £170,000 per year, for this example.

 

Now lets work this out: 170,000 / 1330 = 127.82 / 50 = £2.56 per child

 

Can anybody elaborate on this, due to it seeming low?

[FSFRebecca]

That's where I got stuck too - we must be missing something. I shall go back to it!

[AnonyMouse_73]

Just looking at the example and not having to do the calculation myself, but putting my maths head on..

1330 hours but 30 place nursery gives you 1330 x 30 total available hours ie 39900 hours.

so cost per available hour would be 170000/39900= £4.26 per hour.

when you add to that that this assumes you have full capacity at all times.

 

We always talk about 85% capacity, so total hours would come down to 85% of 39900 =33915 hours. Then hourly rate becomes 170000/33915 =£5.01 per hour.

 

If you turn it around and do average 50 children at 570 hours each you get 28500 hours. Which means you are running a lot of unused hours. Add to that the 85% I mentioned earlier and work on children taking 85% of their hours then you get 50 x 485.5 hours = 24225 hours.that's a lot less funding than you are open!

 

Ha if it's not making any sense feel free to ignore!

[AnonyMouse_55063]

Ahh, of course, each child would all actually get the 1330 hours to utilise i didn't factor that right at all. Thank you.

 

So the total hours used for the 30 children would be 39900 as you stated, throughout the year. This now makes more sense.

 

And the results are much better!

[AnonyMouse_19802]

Just looking at the example and not having to do the calculation myself, but putting my maths head on..

1330 hours but 30 place nursery gives you 1330 x 30 total available hours ie 39900 hours.

so cost per available hour would be 170000/39900= £4.26 per hour.

when you add to that that this assumes you have full capacity at all times.

We always talk about 85% capacity, so total hours would come down to 85% of 39900 =33915 hours. Then hourly rate becomes 170000/33915 =£5.01 per hour.

If you turn it around and do average 50 children at 570 hours each you get 28500 hours. Which means you are running a lot of unused hours. Add to that the 85% I mentioned earlier and work on children taking 85% of their hours then you get 50 x 485.5 hours = 24225 hours.that's a lot less funding than you are open!

Ha if it's not making any sense feel free to ignore!

Crikey! - so THATS why they are insisting on EYE's having GCSE Math!!! : )

[AnonyMouse_30128]

 

 

I think people were wondering about the hourly costs for different age groups - Of course the annual figures will give an average (total expenditure / number of hours / number of children) - but if settings charge different rates for different age groups to reflect ratios that wouldn't be so easily extrapolated from year end data

now just to throw a spanner in the works here....this is of course the costs you are managing on but may not be the true cost to the business, It is reasonably easy (!!!) to work out what you are working on at the moment but we need to be working on projected figures to give to the government .which include increases for living wage pensions cost of living increases fuel bill increases and allowing for a 6% net profit too!!

[FSFRebecca]

now just to throw a spanner in the works here....this is of course the costs you are managing on but may not be the true cost to the business, It is reasonably easy (!!!) to work out what you are working on at the moment but we need to be working on projected figures to give to the government .which include increases for living wage pensions cost of living increases fuel bill increases and allowing for a 6% net profit too!!

Absolutely, this is where the conversation started I think - people have their figures from last year - if they can work out hourly cost from them we can then factor in the many increased costs that settings are facing - this makes budgeting decisions easier to see. Some settings are facing some incredibly difficult budgeting decisions.

[AnonyMouse_13453]

Just looking at the example and not having to do the calculation myself, but putting my maths head on..

1330 hours but 30 place nursery gives you 1330 x 30 total available hours ie 39900 hours.

so cost per available hour would be 170000/39900= £4.26 per hour.

when you add to that that this assumes you have full capacity at all times.

We always talk about 85% capacity, so total hours would come down to 85% of 39900 =33915 hours. Then hourly rate becomes 170000/33915 =£5.01 per hour.

If you turn it around and do average 50 children at 570 hours each you get 28500 hours. Which means you are running a lot of unused hours. Add to that the 85% I mentioned earlier and work on children taking 85% of their hours then you get 50 x 485.5 hours = 24225 hours.that's a lot less funding than you are open!

Ha if it's not making any sense feel free to ignore!

Why would you assume that the 30 hours funded child would only take up 85% of their hours? The 85% you referred to earlier was you working at that capacity, meaning you have vacant spaces. This doesn't imply that your currently funded children are not taking their full 15 hour entitlement.