Date: 11 July 2012
REPORT TITLE: EARLY YEARS AND CHILDCARE UPDATE
Report by; Early Years Working Group
Contact details;
1. Purpose of report
1.1 To update the Forum regarding the Early Years and Childcare Free Entitlement (FE) Formula and 3 and 4 year old free entitlement funding for 2011/12 and 2012/13.
2. Recommendations
2.1 that the Schools Forum notes:
An increase of £4.271m in the projected cost from £41.151m to £45.422m following a revised forecast
2.2 that the Schools Forum supports:
The addendum to the FE contract in lieu of changes to the National Code of Practice from September 2012
2.3 that the Schools Forum requests from the Early Years Working Group:
further updates termly on these costs and an analysis in the autumn term of the impact of early years provision on children’s attainment at the end of the Early Years Foundation Stage
3. Relevance to Strategic Plans
3.1 The Free Entitlement Funding supports the statutory offer to all 3 and 4 year olds. All Early Years providers of the FE deliver the full Early Years Foundation Stage which benefits children’s social, physical and mental development and helps prepare them for school. The Statutory Guidance from the DfE states ‘Evidence shows that regular, good quality early education has lasting benefits for all children’.
3.2 Along with 2 year old funding (currently funded from the Early Intervention Grant), the Free Entitlement Funding supports the Essex County Council priority of ‘enabling every individual to achieve their ambitions by supporting a world-class education and skills offer in the county’ and the current Children’s Partnership Commissioning Plan.
4. Background
4.1 Until September 2011, when it became statutory for schools to offer a single point of entry to all children in the academic year in which they turned 5, Essex had a large proportion of schools (140) that had two or three staggered points of entry during the academic year, with children usually accessing a reception class place the term preceding their statutory school age. Therefore the vast majority of children would have accessed 5 terms of Free Entitlement funding. This is now most likely to be restricted to autumn born children, with 4 terms for spring born and only 3 terms for summer born children as they may access a full time reception class place at the start of the school year (autumn term) after their fourth birthday. Children who had turned four between 1 April 2007 and 31 August 2007 would be accessing a place a term earlier.
4.2 The implementation of the schools single intake policy in Essex from autumn 2011 had an impact on the uptake of 3 and 4 year old places and the budget allocated in the 2011/12 financial year; specifically the prediction for the spring 2012 term numbers which in fact did not reflect an unexpected significantly higher uptake of places by 3 year olds. Early Years and Childcare had expected to see a depression of uptake concomitant with the single entry starting in September 2011, meaning more children would be in school and not funded from the FE. Indeed this affect was apparent to the tune of £1.9m less than the previous autumn term (2010). On this basis, a lower (than budgeted) estimate for spring term 2012 was prepared by Early Years and Childcare for the February 2012 meeting of the Schools Forum, in line with the lowered take up the previous term. In fact the actual figures for the spring term showed an increased take-up. The environment within which this was happening was exceptional and different to any encountered previously. The actions of parents and settings, who it now appears encouraged high take-up among three year olds, were not predictable. Since this is not a statutory stage, i.e. parents are not obliged to take up the offer in part or in full, it is not possible to model based on child population as with school places. There may still be further unexpected effects to come, for example:
· current take-up among three year olds may have reached a peak - as they become four there is less room for the next tranche of three year olds, and
· with more two year olds coming through having been used to five sessions, there may well be increased pressure on the FE as when these 2 year olds turn 3 they will expect five sessions straight away.
How these two conflicting pressures may play out might take a year or two to bed in and, in the meantime, it may be advisable to set a budget based on all three year olds taking all five sessions, plus sufficient for the run-through as they become four (at 5 terms also). At this point the first full academic year since early entry is nearing completion and into next year the PVI sector will be drawing on this year’s experience and further adjusting their strategies with potential unforeseeable effects. In order to minimise the effects of unexpected events such as this it may be helpful to undertake a survey of the sector or, better still, a conversation with PVI representatives to try to understand their thinking this year and going forward.
4.3 Steps taken to understand the predicted level of uptake and therefore the budget required to meet this statutory offer include:
· Reviewing 2010/11 data e.g. headcount, hours accessed and payments
· Comparing headcount to hours accessed to determine how much of their Free Entitlement (FE) children accessed
· Comparing GP data to headcount to assess how many eligible children accessed their FE
5. Financial Implications
5.1 2011/12 Financial Review
When estimating the financial requirement for 2011/12 the methodology used was to assume all eligible children would access their full entitlement and the budget was set accordingly. This resulted in a combined budget of £50.060, split between £36.029m for the PVI sector, £8.949m for the maintained sector, £1.976m contingency and £3.106m Standards Fund. Based on the actual data for 2011/12, had there been a 100% take up by the children accessing the FE the approximate cost would have been £45.865m. If all children eligible in 2011/12 (68,082) had taken up 100% of their entitlement the cost would have been approx £47.750m. Not all eligible children access their free entitlement and those that do only access 90% of it on average, this level of take up resulted in an actual FE spend of £43.451m in 2011/12. The total under spend from 2011/12 amounted to £6.609m, which included a Standards Fund contribution of £3.106m carried forward from the funding allocated but not utilised in 2010/11.
5.2 2012/13 Original Forecast
The paper the Early Years Schools Forum Working Group took to the Schools Forum on 8 February 2012 set out the proposed budget requirement of £41.567m split between £34.228m for the PVI sector, £6.927m for the maintained sector and £0.412m contingency.
The forecast was based on actual data from summer and autumn term 2011 and estimated figures for spring term 2012 and the assumption that the trend of 97% of eligible children accessing 83% of the FE across the year would continue.
The average take up across all settings in the summer term 2011 was 82% with childminders showing the lowest percentage, 67.6%, and school nursery classes the highest at 91%. In the autumn term 2011 the average across all settings was 84.6%, with childminders again the lowest at 60% but maintained nursery schools had the highest percentage at 99.1%. In the 2012 spring term, the average take up across all settings came out at 84.9% with childminders again the lowest at 65% and maintained nursery schools the highest at 98.7%.
The projections for the summer 2012, autumn 2012 and spring 2013 terms reflected the known trends in variations in the levels of take up during 2011/12 and were based on the best information available at the time. Data for spring and summer 2012 was obtained as soon as it was available and a review of this revealed the original forecast was inaccurate and additional investigation was required to produce more robust predictions. We would recommend that due to the volatility and number of variables involved in producing forecasts there should be more regular reporting to the Schools Forum and that an update be added to the agenda each term. This will enable monitoring of the accuracy of forecasts against actual headcount data and improve the knowledge base on which future requirements are calculated.
The inaccuracies in the original forecast were due in part to an over-reliance on GP birth data prompting the assumption that there would be fewer eligible children taking up the FE. The GP birth data indicated that there were 22,511 children eligible to take up the FE in spring 2012 yet the headcount shows that 23,700 children accessed places across all setting types. This suggests that the assumption that not all eligible children would take up the FE was inaccurate. The data indicates a trend towards all eligible children accessing the FE. In addition, the actual data for the 2012 spring term was not available for the original forecast therefore it was necessary to make projections based on assumptions about how the single intake might affect take up of places. The assumption that fewer places would be accessed due to there being significantly fewer 4 year olds was unfounded as the data suggests that these places were accessed by younger 3 year olds taking up their full entitlement sooner. This suggests a trend towards all children accessing the FE taking their full entitlement. As actual data for a full academic year is available, this gives a much firmer base upon which to model the predictions for future take up. This combined with plans for research into the sector’s strategies and parental expectations of the FE should ensure more accurate forecasting for future periods.
5.3 2012/13 Updated forecast
The revised forecast for the 2012/13 financial year, including a comparison with 2011/12, is set out in Table A in the appendix. The table shows the number of children and the hours accessed in each setting type during the year broken down into terms. The forecast has been produced by studying the trends from the 2011/12 data. The actual headcount data for the summer term 2012 demonstrates that there has been an increase in take up and hours accessed from summer 2011 despite there being approximately 2.5% fewer eligible children during this financial year according to GP data. There was a downward trend in the autumn term in 2011 where in almost all setting types, fewer children accessed fewer hours. This is the case each year as 4 year olds start school. For settings, the conundrum is how many three year olds to take full time from September whilst still retaining enough spaces for them as four year olds later in the year and for new three year olds. Therefore it is very unlikely that settings will begin the academic year at full capacity. We have used this trend and actual data to produce a revised forecast for autumn term 2012 by decreasing the number of children and amount of hours accessed from the summer term by the same percentage as in 2011. The forecast for the spring term has been produced using the same methodology, noting the trend towards an increase in child numbers and hours accessed. However, the autumn 2012 figures are estimated therefore the forecast for spring 2013 may not be as reliable.
5.4 There are a number of specific drivers and recent significant changes affecting demand that have been taken into account when calculating the revised forecast:
· The trend towards all children accessing all their hours over the whole period of their entitlement
· The trend towards all eligible children accessing their entitlement
· The accuracy of GP registration data as at September 2010
· The extended and flexible offer from 12 hours to 15 hours
· The implementation of the schools single intake policy where it is most likely that where some children would have previously accessed 5 terms of funding this will now be restricted to 3.
5.5 When comparing the uptake of hours from 2011/12 to 2012/13, the variance can be analysed as follows:
· The 2012/13 forecast assumes the same level/ratio of children accessing Free Entitlement. However, the total number of funded weeks available in spring 2013 is limited to 11. This is due to a later return to school in January (6th) and an early Easter (term will end on 31 March 2013).
· The total number of 38 weeks delivered remains constant but is adjusted over the financial year. When compared to the school year this may vary by one week.
5.6 The revised forecast using actual headcount data for the summer 2012 and projections for autumn 2012 and spring 2013 terms, including a social deprivation supplement, indicates a full year outturn of £45.422m split between £37.629m for the PVI sector and £7.793m for the maintained sector against £41.563m (including contingency) budget. If this new forecast proves accurate there will be a funding shortfall amounting to £3.859m.
5.7 Risks
There are risks to this forecast - as we have already noted, the GP data indicated fewer eligible children but actual data shows an increase. There are also fluctuations in the number of settings offering the FE in the summer term - there were 813 in summer term 2011 and 839 in summer term 2012. The movement of children in and out of Essex can be subject to unknown future influences. Additionally, there is an active drive to increase uptake among disadvantaged children which will increase this year and accelerate with the increase of 2 year old funding washing through.