AGENDA ITEM 8
BOROUGH OF POOLE
PEOPLE OVERVIEW AND SCRUTINY COMMITTEE
(CHILDREN AND YOUNG PEOPLE)
31 JANUARY 2017
EARLY YEARS SINGLE FUNDING FORMULA (EYSFF)
PART OF THE PUBLISHED FORWARD PLAN: NO
STATUS: Strategic
1. PURPOSE
1.1 To inform Members of changes required to the Early Years Single Funding Formula (EYSFF) for April 2017 in order to meet government requirements and local need.
2. RECOMMENDATIONS
2.1 Members recommend to Cabinet that Council make the changes outlined in Section 5 of the Report.
3. BACKGROUND
3.1 The EYSFF is part of the Dedicated Schools Grant (DSG). It was established in April 2011 and provides funding for 2, 3 and 4 year old Poole children to access their 15 hours free entitlement with providers including childminders, pre-schools, nurseries and school nurseries.
3.2 The EYSFF has changed over time to reflect changing government policy. Current policy direction is to extend the Free Entitlement for 3 and 4 year olds from 15 to 30 hours a week for some working parents. This will reduce the cost of childcare and break down barriers for families wishing to work, or work more hours than they currently do.
3.3 This new offer is in addition to the current 15 hour entitlement and the entitlement for disadvantaged 2 year olds. In 2016 the Government recognised that in order to achieve this a National Funding Formula was required to ensure a fairer distribution of funding to all Local Authorities.
3.4 The Department for Education (DfE) consulted on the proposed changes and the outcome was published in December. This resulted in a new National Early Years Funding Formula to be implemented from April 2017, centred on a base rate funding for each child and an additional needs factor used to determine the amount of money each Local Authority will receive. In Poole this equates to £4.30 per child, per hour which we need to distribute across a number of budget areas, including to providers. This is an increase from the current rate which is £4.00 per child, per hour.
3.5 To distribute this funding between providers, local authorities are required to implement a new local Early Years Single Funding Formula (EYSFF) by April 2017. Planned changes must reflect a universal base rate for all providers by April 2019. Currently schools and childminders receive a higher base rate than other providers to reflect previously defined differing cost models.
3.6 A mandatory Deprivation Supplement and discretionary supplements, to incentivise market changes needed locally in the sector, may also be included. A maximum 10% of funding can be used in this way.
3.7 As well as meeting the new DfE requirements, Poole’s proposed funding strategy is designed to:
Ø Facilitate the required market changes to support parents
Ø Continue the child focussed support for disadvantaged children
Ø Protect local quality and sufficiency of provision
3.8 We realise these changes will be significant for settings and particularly those currently receiving higher base rate funding than other providers. Proposals have been developed to support a period of transition. We have consulted on the following proposals, Appendix 1. The outcome of the consultation may be found in Appendix 2.
4. The Current EYSFF 2016/17
Table 1 EYSFF 2016/17
4.1 Currently Poole’s EYSFF is made up of 3 different base rates and 2 supplements, both of which have been hugely successful in terms of incentivising the sector.
4.2 The Quality Supplement was introduced, alongside targeted local authority support to help to incentivise providers to improve quality. In Poole, the supplement has supported the drive to increase quality over time. In 2016 100% of group settings inspected in Poole being rated by Ofsted as Good or Outstanding. This compares with only 65% in 2009. This improvement will have benefitted all children.
4.3 The Deprivation Supplement was introduced to help providers to improve educational outcomes for children. The following table shows progress since 2013:
Table 2 – Progress of Children in the Early Years Foundation Stage Profile 2013 to 2016
Child Group / 2013 / 2014 / 2015 / 2016Disadvantaged GLD / 30% / 47% / 52% / 57%
Non Disadvantaged GLD / 51% / 62% / 69% / 75%
LA Gap / 21% / 15% / 17% / 18%
National Non Disadvantaged / 55% / 64% / 69% / 72%
4.4 The supplement was redesigned for 2016/17 with greater targeting towards the children that most need it, being those previously funded as 2 year olds and others eligible for the early years pupil premium as 3 & 4 year olds. As a result the take up of free early education places for 2 year olds has been growing steadily and is currently 83%, which is high compared with January 2016 data for other areas nationally (68%). It is believed that this increase has been hugely supported by the EYSFF Deprivation Supplement payable to providers when these children move on to the universally free 3 & 4 year old provision.
5. Proposed Changes to the Poole EYSFF
5.1 The DfE has provided local authorities with a timeframe of three years to fully implement universal base rates in the local EYSFF and have set the following parameters Local Authorities must:
Ø provide a universal base rate to every type of business within the childcare sector by April 2019
Ø only use a maximum 10% of the budget towards supplements, which are now restricted to a mandatory deprivation supplement and discretionary supplements to support flexibility, sparsity, quality (based on staff qualifications) and EAL
In Poole the proposals include deprivation and flexibility supplements only.
Local Authorities must also:
Ø pass a minimum 93% of the funding they receive to providers by 2017/18 and 95% by 2019. 5% may be retained for central functions
In Poole we plan to retain 1% for central services to include checking eligibility of those in receipt of the funding and the cost of an online funding system.
5.2 The previous success of targeted supplements has been taken into consideration while developing principles to inform the following proposals which have been consulted on with the sector.
Note: These may be subject to change following analysis of the consultation which will be provided to the Committee
1) Supplements to represent 10% of the EYSFF. Given the success of funding supplements in the EYSFF to date, the maximum permitted 10% of the formula is to be allocated for supplements by 2019/20 when a universal base rate is to apply. This is a reduction from the 14% allocated to supplements currently.
2) Deprivation Supplement is to remain unchanged for group settings and for all 3 years. The supplement represents approximately 6% of funding and is at the level of £0.80 per hour per eligible child. No changes to the eligibility criteria are proposed.
3) Deprivation Supplement will become applicable for childminders from 2017/18. The eligibility criteria will be the same as for a group setting but the hourly funding rate will be adjusted to reflect any base rate protection over the period to 2019/20.
4) Flexibility supplement to be introduced for the remaining (approximate) 4% of funding. This is to fulfil our local need to incentivise the sector to provide a more flexible offer (longer working hours and a stretched offer).
5) Transitional protection for providers with reduced funding (childminders and schools) over the period to 2019/20 to support sustainability of providers and the LA sufficiency duty.
The expectation is that funding needed for the flexibility supplement will grow over time as settings adapt to the changing agenda. The transitional protection released over the 3 years can be used to fund increased eligibility for the flexibility supplement without the need to reduce hourly funding rates.
6. EYSFF Funding Rates by Provider for 3 & 4 Year Olds 2017-2020
6.1 The proposed hourly funding rates for each type of provider are shown in Table 3, on the following page, for each of the next 3 years.
Table 3: Provider Funding Rates (with Protections) 2017-2020
7. Impact on Providers
7.1 Table 4, below, demonstrates the impact of proposed changes in 2017/18 by implementing the EYSFF proposals. It shows the worst and best scenarios and demonstrates how providers can earn more money through supplements. There is no scenario where a group provider will see a reduction in funding.
Table 4 - Comparison of Provider Funding
Worst case scenario
Setting not flexibleChild not deprived / Total
Rate
16/17 / Base Rate
17/18 / Flexibility / Deprivation / Total Rate
17/18 / Change from 16/17
Childminder / 4.54 / 4.29 / 0 / 0 / 4.29 / -0.25
Group PVI / 3.71 / 3.77 / 0 / 0 / 3.77 / +0.06
School Nursery Classes / 4.07 / 3.82 / 0 / 0 / 3.82 / -0.25
Best case scenario
Setting is FlexibleChild is deprived / Total
Rate
16/17 / Base Rate
17/18 / Flexibility / Deprivation / Total Rate
17/18 / Change from 16/17
Childminder / 4.54 / 4.29 / 0.25 / 0.28 / 4.82 / +0.28
Group PVI / 4.51 / 3.77 / 0.25 / 0.80 / 4.82 / +0.31
School Nursery Classes / 4.87 / 3.82 / 0.25 / 0.80 / 4.87 / 0
8. Next Steps
8.1 Consultation outcomes will be shared with Poole School’s Forum on 8th February 2017 and, following Cabinet and Council approval, the new EYSFF will be implemented from April 2017.
8.2 The Early Years Sub Group, a group of elected sector representatives and Local Authority Officers, will keep the EYSFF under review and recommend any further changes needed ongoing.
9 FINANCIAL IMPLICATIONS
There is no cost to the Council from these changes as all funding for the EYSFF is provided by the DSG. The financial impact for individual providers has been considered as part of the consultation process and is mitigated through the application of transitional protection.
10 LEGAL IMPLICATIONS
10.1 The Council is responsible for determining the EYSFF after consultation with providers and Poole School’s Forum. The proposed formula meets requirements set out by the DfE.
11 RISK MANAGEMENT IMPLICATIONS
11.1 Full consultation with the sector has taken place and the implication of these changes on individual providers is shown.
12 EQUALITIES IMPLICATIONS
12.1 The maximum Free Early Education entitlement for each eligible child is 570 hours per year; increasing to 1140 hours for the 3 and 4 year olds of some working families from September 2017.
12.2 These proposals will help to incentivise the market to enable an increase in flexible provision to support families to work.
12.3 The proposals will deliver a fairer funding system whereby all providers will receive the same base rate of funding by 2019.
13. CONCLUSIONS
13.1 It is recommended that Members support the recommendation to change the EYSFF as outlined in section 5 of this report in order to meet the government’s direction of a single base rate for all providers, a flexibility supplement and mandatory Deprivation Supplement from April 2017.
Report Author: AMANDA GRIDLEY
0-5 SERVICES MANAGER
CHILDREN, YOUNG PEOPLE & LEARNING
TEL: 01202 261925
Contact Officer: DARREN BUCKLEY
SENIOR SUFFICIENCY AND FUNDING OFFICER
CHILDREN, YOUNG PEOPLE & LEARNING
TEL: 01202 261989
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