Memorandum submitted by Montessori Schools Association
· The proposed EYSFF is likely to have a major and negative impact on provision which is frequently sessional, open for five mornings a week, has highly qualified staff whose salaries are above those of staff qualified at the basic level, and whose parents cannot afford to pay full cost fees. This will adversely affect Montessori provision more than many other preschools.
· The 'level playing field' envisaged by the EYSFF is non-existent. Funding for maintained schools and nursery classes is proposed at higher levels for several reasons including the cost of having a headteacher and quality issues as being centres of excellence. Yet nearly 90% of private Montessori preschools have been recognised as outstanding by Ofsted and will not qualify for similar support. Also funding for maintained provision is proposed to taper over a period of years. This is not available to other provision.
· This paper concludes that if the EYSFF is to work in any way, providers should be allowed to charge top-up fees to bridge the acknowledged gap between the proposed funding and the actual costs of provision. For many Montessori schools, opting out of the EYSFF is not feasible as parents cannot afford to pay full cost fees. However a significant number of settings are considering doing so, thereby creating problems for local authorities who have to have available sufficient places within the EYSFF scheme to meet demand.
are 630 Montessori schools and pre-schools in the
1.2 In general Montessori schools have higher levels of staff qualifications than other private and voluntary preschools. The Montessori Diploma is rated as level 4 by the Children's Workforce Development Council: many staff have Early Years Professional or Foundation degree status, and a significant minority have Bachelors and Masters degrees. This higher level of qualification goes some way to explaining the excellent quality of the provision, but results in higher staff wages costs - besides meeting the government's desire for a better qualified early years workforce. Not every local authority appears to be recognising the salaries which higher qualifications can command; however Harrow has proposed a qualifications supplement of £750 where a leader is level 4 qualified, £4,000 where level 5 is held, and £5,000 where the leader holds a level 6 qualification - this only applies to the leader and no recognition is given where other staff are qualified above level 3.
current range of costs makes establishing a single formula for funding very
1.4 Even the sources of funding appear unclear. Telford and Wrekin's 'Final Consultation on the Early years Single Funding Formula' states that 'the new formula is to replace the 12.5 hours entitlement that is currently funded via the Dedicated Schools Grant' and that it is not intended to replace additional time funded under the Standards Fund or flexibility funding. However Hampshire's consultation on the issue in September states that the funding comes from the dedicated Schools Grant and the Extended Flexible Entitlement Standards Fund.
1.6 The single formula funding proposals are rapidly developing and are frequently changing: many of our members have not yet been made aware of what local authorities are proposing and some authorities are changing their proposals already.
1.5 Fundementally, the private sector is not sustainable at the level of funding being proposed.
2.0 The funding formula issues can be broadly grouped as follows:
2.1 Formula funding will not meet present staffing costs, let alone the full cost per place when on-costs of rent, heating, lighting etc are added in. This is coupled with the embargo on 'top-up' funding within the 15 hours funded.
2.2 Administrative issues centre on the continuing uncertainty in most local authorities as to how they will manage the scheme. These include:
· Whether additional funding will be given to setting judged 'outstanding' by Ofsted;
· Whether Ofsted inspection findings will influence funding;
· What additional funding will be given to settings in areas of deprivation;
· What sums will be 'top sliced' to meet the additional costs for local authorities administration;
· Managing the 15 hours 'entitlement' across different settings - i.e. he 15 hours need not be taken in one setting, incurring additional local authority management costs;
· On-going improvement in staff qualifications, in line with government expectations, without any compensation for additional pay rewards as a result. If settings opt out of the EYSFF, they risk losing access to the training funding, according to some local authorities (others are not sure about this - another source of confusion and uncertainty).
2.3 Staffing costs:
Staffing costs LA funding offer Deficit
per child hour per child hour
funding increased by 3% to -£2.78
Lewisham £8.50 Not yet known
Buckinghamshire £5.75 £3.75 -£2.00
Brent estimated at £7.75 £2.73 -4.73
Warwickshire estimated at £6.75 £3.35 -£3.40
Kensington and Chelsea estimated at £8.50 £3.57 -£4.93
The shortfall is between £1.16 and £4.93 per child hour - and these costs do not include other on-costs such as gas and electricity bills, rent etc.
Montessori schools comment:
(without the top up) 'income will drop - closure is possible or offering fewer days. Losing top-up makes the difference. 7 staff would lose jobs'
'Losing £2,000 per term'
'No way can we run the nursery on the funding alone'
'Could not survive if she did not have under threes (i.e. whose fees compensate for the low rate of EYSFF for 3s and 4s). Make very little profit'
'2-3 year olds sustaining business. Lost £1800 in November and lost approximately £10,000 over the year (on 3-4 year olds). This is the cost of subsidising funding.
'If they go ahead with their proposed funding, I will have to close my new nursery (which opened in September 2009 - 50 children now attend)
'The rent is £1,600 per month and not negotiable... five staff are training for either degrees or Montessori diplomas, they would probably have to stop as they depend on my contribution and some (local authority) funding to continue the courses. 62 children would all lose their places'.
And from someone who has taken part in a 15 hour pilot scheme:
' It has meant we are unable to charge any top ups (we used to charge for lunch) and are now considering longer hours and possibly a Quality Premium (which is only voluntary) to be paid termly'.
The shortfall is such that many Montessori schools face closure.
2.4 Administrative issues
time given to Private and Voluntary Sector (PVI) providers to respond is often
short. Kensington and Chelsea gave 3
2.4.2 Clearly local authorities are working to high pressure deadlines. But the information they need is not easy for private providers to provide accurately at short notice - and many are not fully aware of the issues as yet.
2.4.3 The funding formula states that parents will be entitled to 15 hours a week of provision from September 2010. This can be taken in whatever blocks of time the parents wish. Thus some may want 3 hours a day for 5 mornings. Others may want 6 hours on Monday, 6 on Wednesday and the remaining 3 on, say, Friday. This need not be at one provider. Clearly providers who open for only five sessions (e.g. 5 mornings) a week are at risk of not being able to offer the full 15 hours.
2.4.4 If a parent only wants the 15 hours free entitlement, a provider must allow the child to have any spare place. Providers cannot say that children must attend for more than 15 hours, charging for any time above 15 hours. There is confusion as to whether providers may offer the free sessions for only part of the time when they are open - such as in the afternoons, which are less popular than the mornings. Here, the morning sessions would be charged for.
2.4.5 Local authorities have begun to take on additional staff at extra costs (top-sliced from the early years budget) to devise ways of meeting such projected needs. The cost is estimated to be around £5m to £6m in one shire county, although repeated requests for confirmation of this have not been answered.
2.4.6 A major issue is that the arrangements are not yet clear, even though some authorities have suggested introducing some of the arrangements from January, in advance of the full scheme's funding element starting in April. There has been no clear statement about top up charges (i.e. for more than 15 hours - even more complicated where a child uses more than one provider for the 15 hours): what the top up level might be - some refer to a 'normal' rate rather a rate which would compensate for losses incurred during the 15 hours, and whether food and additional provision such as French or music teaching can be charged as extra.
2.4.7 A further increase in bureaucracy is that local authorities are identifying the need to monitor the take-up of provision. Authorities are seeking to micro-manage the scheme. Thus it is not good enough for a preschool to be open from, say, 0900 to noon, but if the parents only bring their children at 0930, local authorities will monitor that take-up as not providing a full 3 hour session, and so declare that the provider is not delivering the entitlement. Lewisham is proposing to allocate children to settings via the local authority, recognising that the nearest setting to home might not be able to offer a full 15 hours and that the child may have to attend more than one setting to receive their entitlement. Long standing research has clearly shown that attendance at more than one setting is against the child's best interests, and the only way that a local authority can micro-manage such a scheme is to establish a large bureaucracy .
2.4.8 Private providers are at the point of drawing up their business plans for the financial year 2010-2011. Local authorities have not yet fully published their arrangements for the EYSFF, and we are not reassured when one local authority manager wrote on 24 November 'I don't fully understand how the deprivation factor has been identified...'. This demonstrates the widespread confusion existing both within local authorities and between them and the providers.
3.0 The outcome:
formulae being developed by local authorities differ significantly from one to
another. Most are very complex and involve weightings for various aspects of
quality. Hampshire proposes to have
four levels of flexibility, four of quality and five of deprivation.
Hampshire, 16 providers have been
identified by the local authority as being 'at risk' financially under the
present arrangements. Of these, 10 are Montessori settings. This appears to be
a likely scenario elsewhere: in
'playing field' is uneven. In
3.4 For Montessori and other provision with well-qualified staff, the future is bleak. To balance the books, settings will have to
· Cut wages
· Make staff redundant
· Cease staff training as this results in higher staff costs
· Increase the hours open where setting are currently offering only 5 sessions a week, charging for the extra hours (but in Hampshire this would result in settings moving from Fully Flexible banding to Moderately Flexible band which attracts less potential additional money for the 15 hours, since the proportion of the time allocated to EYSFF places is reduced from all the hours open to only some of the overall weekly hours).
· Opt out of the funding.
However the last of these is an uncertain option. It appears likely that access to local authority funding for staff training will be lost. For settings whose staff are mid-way through EYPS (Early Years Professional - level 6) training this is a drastic option which would undermine staff morale. For many, and probably most, opting out is not an feasible as parents cannot afford to pay for the full cost of places.
3.5 Opting out also creates problems for local authorities who would then face a potential shortfall in the number of funded places available. To create new places would be an additional cost to the local authority, on top of the additional administrative costs that are proposed.
4.0 The remaining option is to close. As a consequence places would be lost, particularly at high quality provision.
4.1 Recommendations for action.
· The key issue: the arrangements for the EYSFF are too uncertain and variable to enable the scheme to operate effectively from April 2010. The funding levels are such that many settings will have to close before any steps could be taken to remedy their situation.
Recommendation: that the EYSFF scheme be deferred until the arrangements can be seen to be equable within and between local authorities.
· Issue: The 'level playing field' is clearly not level in many local authorities, where maintained provision is being given a transition period to adjust to the new funding levels. A corresponding transition for the private and voluntary sector is not being proposed.
Recommendation: that a common transition period be adopted.
· Issue: The basic concept of a common funding formula across childminders, private and voluntary providers and maintained and independent schools is flawed. They offer different services with different approaches to care and education to meet parents' and children's varying needs. The single funding formula inevitably reduces the quality of provision by making it too costly to employ well-qualified staff.
Recommendation: that support is based on actual costs.
· Issue: Administrative arrangements are far too cumbersome and the attempt by the government to insert major additional bureaucracy tiers at very high costs is unnecessary, especially in the present national financial situation. This potentially represents a major opportunity to cut local government costs.
Recommendation: that local authorities should not seek to allocate children to places, instead that parents should be able to choose their preferred provision.
· Issue: EYSFF removes from private providers - as small businesses - the capacity to respond to market demands and denies parents the right to choose and to pay for higher quality or different provision if they so wish.
Recommendation: that providers are allowed to seek top-up charges to meet the market costs of providing their services.
5.0 The capacity to top-up charges to market levels is essential to the survival of the private nursery education sector.