Decision - Early Years Single Funding Formula from April 2010

To agree a single local formula for funding the early years free entitlement in the maintained, private, voluntary and independent (PVI) sectors from April 2010.

That, subject to approval by the Early Years Funding Group and the Schools Forum, the Cabinet Member agreed that Brighton and Hove becomes a pathfinder and implements a Single Early Years Funding Formula based on the following factors:

(i)     Three basic hourly rates:  private, voluntary and local authority (PVI) group childcare providers; childminders; maintained and independent school nursery classes and schools (includes a quality supplement).

(ii)             A deprivation supplement for children who live in worst 20% Super Output Areas amounting to 5% of the total budget.

(iii)            Quality supplements based on four levels of quality based on achievement of quality assurance programmes and staff qualifications.  The formula allows PVI providers to be paid at the same rate as maintained nursery classes if they employ an Early Years Professional.

(iv)           Not to include a supplement for flexibility (to be reviewed for 2011/12).

(v)             Additional funding for children with significant special needs in maintained schools – this is already in place for PVI providers.

(vi)           Additional sustainability funding for maintained nursery schools and small group providers with less than 24 places.

(vii)          To base funding on termly counts of participation and adjust funding for children who leave or join after the head count day.

(viii)         Transitional protection – to reduce any losses for PVI providers and nursery schools by 50% after inflation.  Maintained schools with nursery classes will be protected by the Minimum Funding Guarantee.

The recommendations follow the guidance published by the Department of Children Families and Schools on the implementation of the Early Years Single Funding Formula.  More information on the proposals is included in annex 1 to the report.

1.       The advantages and disadvantages of becoming a pathfinder have been considered.   A large amount of work has been done on constructing the formula and consulting with providers so that Brighton and Hove is ready for implementation.  The key advantage of starting the formula in April 2010 is that the four per cent increase in the Dedicated Schools Grant for 2010/11 has been used to minimise the impact on providers who loose under the new system.  It is very likely that future increases will be at a much lower rate.  Providers are expecting the new system and those with good quality provision and/or disadvantaged children will gain funding.  The new formula also introduces increased funding for children with SEN in maintained schools for the first time.  However the new formula is more complicated for parents and providers and does not resolve the gap between funding levels and the charges of the more expensive nurseries.

2.       The rationale for each of the elements of the formula was considered by the Early Years Funding Group.   Highly hourly rates were considered but were not affordable within the existing budget.  Different levels of deprivation funding were considered but rejected because they were not consistent with the approach to funding deprivation.  Ofsted inspection results were considered as a quality factor but were rejected because they only take place every 3-4 years.