ChildForum Office of Pre-Primary Education

ChildForum Office of Pre-Primary EducationLead advisor on early childhood care and education 
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Equity funding use and abuse

Opinion article
By Dr Sarah Alexander

money loss - it is children who can miss out equity funding when not spent for the purpose intended Equity funding paid to early childhood education services is targeted funding meant to be spent on ensuring learning opportunities are available for every child so every child can achieve whatever their characteristics and background.

However the funding is not always reaching its target – children who would benefit for reasons such as special leaning needs, non-English speaking, and low socio-economic home background. 

Here I provide examples of ways that equity funding could be spent to support children for whom the funding is actually intended. I will also identify problems with the handling and reporting of equity funding which need further discussion. But first a cautionary note about the potential for exploitation and shortcomings in the system that seem to allow for this potential.


Potential for exploitation of funding for ECE Services

Not all early childhood services are very good in reporting what they spend the targeted funding on and their reasons. 

There is potential for exploitation of equity funding for ECE services by both individual providers and umbrella organisations, leading to questions being asked about whether equity funding as it is currently administered is an appropriate use of taxpayer money.

 It has been four years since the Education Review Office found that early childhood services were not including in their financial reports the reasons for using the equity funding in the way that they did, and at 39% of services equity funding was just included in the operational budget and was of limited or no effectiveness in terms of reaching the children who needed it.

Services that do not meet the financial reporting requirements are at risk of being put on a list by the Ministry of Education to have their advance funding withheld. 

"Services risk losing funding if their records cannot be audited because they are unclear or ambiguous, or are not available for audit."

Could it be that the Ministry’s own reviewing of financial reporting is not picking up all non-compliance so it’s possible for ECE services if they wish to exploit this? 

Or maybe the problem is more to do with the rather loosely worded guidelines around equity funding use and reporting – allowing too much leeway for ECE providers to use equity funding in any way they wish?  

Why aren’t ECE providers asked to provide actual proof to support claims of spending (e.g. receipts) and provide verification that the money was truly used for equity benefits?  


What can early childhood services spend equity money on?

The acid test of whether or not equity funding is being used for equity is this question “What​ ​would​ ​the children​ ​at the equity funded service ​have​ ​missed​ ​​if​ ​there​ ​was​ ​no​ ​equity​ ​funding?​”

If the money is spent as part of operating expenses for example on providing higher-adult child ratios or resources it is difficult to see how this would benefit a child experiencing disadvantage at an equity funded service compared to a non-equity funded service.   Are the purchased resources to meet a particular need such as being specifically for children with disabilities and not resources which an ECE service could ordinarily be expected to have? Is the extra adult employed part of the usual need to reflect diversity in staffing at an ECE service, or is this someone who adds something more such as being a trained translator or a trained counsellor to support children and families?

Amanda's Home-Based ECE service uses equity funding to provide translators: 

"At present we have Somali, Omoro, Dhuri and some Arabic use in our service as we know it is vital that children speak their first language well, and that we communicate clearly with parents. The cost greatly exceeds the funding because this is being provided in the context of homes and not a single centre/ building setting, but we believe it is necessary”  (Aunt Manders, service provider)

Using the equity funding to pay for the help of translators to communicate better with parents than otherwise would have been possible is an appropriate and good use of it, do you think? Such spending can support children’s learning and build stronger links between children’s families and the ECE service.

But would it be an appropriate use of equity funding to add an extra hour on the day (knowing that it is unlikely to give added benefit to children and that not all families are likely to need the additional childcare) and report that the funding is to be used for fees?  Further is it appropriate to also keep equity funding as fees for children at centres or kindergartens within the group or kindergarten association that are not operating extended hours?  Perhaps not? 

However, if the funding was used toward covering the fees of individual children on a case by case basis, as some early childhood services do, for parents in financial difficulty or stress then this is another matter and could be thought of as appropriate and good.

Some further appropriate uses of equity funding include:

  • To purchase ‘Early Reading TogetherTM’ kits. ‘Early Reading TogetherTM’ is a Ministry of Education and ChildForum endorsed and nationally recognised programme ECE teachers can provide for parents and caregivers to enhance children's language and literacy development)
  • To provide for staff travel and time to home-visit children and get to know children better and their home learning environment.
  • To provide food or clothing such as nappies and nappy washing, sun hats, and transport assistance for children from families who struggle financially.
  • To provide each child with a Christmas present, a birthday cake on their birthday, or some form of marking and making happy memories for children for whatever the events are that are personally and culturally important to them.
  • To change or incorporate within the early childhood service environment things that children may be missing out on due to economic deprivation (this may not be known unless teachers know families well and home-visiting occurs but some possible examples might be: balance and pedal bikes and garden tools to establish a vegetable garden).
  • To pay for a specific modification to the physical environment or new equipment such as a changing facility for older children or apparatus designed for children with motor coordination difficulties.
  • To give children learning experiences that they otherwise would be unlikely to experience such as a magic show, a puppet show, going on a train, going to town, going to an orchard or to a blueberry farm at fruit picking time, museum, beach, farm park, café, or the movie theatre even).
  • To provide physical skill-based developmentally and cultural appropriate programmes, e.g. swimming, Playball, and Kapa Haka.
  • To purchase specific learning or teaching resources to meet a child’s needs or interests that would not ordinarily be purchased.
  • To provide specialist professionals for children and parents/ caregivers when timely specialist help is not available through the public system.


Compliance and reporting requirements for equity funding

The Ministry states that services must report to parents and the community how equity funding is being used. The information required to be in a service’s annual report must include all of the following:

  1. An outline of the amount of equity funding under each component – e.g. language, special needs.
  2. A description of what the funding was used for.
  3. An outline of why the funding was spent the way it was.

Using the above points 1, 2, 3, take a look at the example below of a kindergarten association and make your own assessment in regard to whether there is an adequate description of what equity funding was spent on at each equity funded kindergarten, and how well (if at all) the reasons for spending it the way it was at each kindergarten are sufficiently explained.

AKA equity funding final report


Use of equity funding by umbrella organisations

ECE services that are under the control of an umbrella organisation such a Playcentre Association or a Kindergarten Association are permitted to pool equity funding and share it with other services within their organisation. 

An umbrella organisation can do this according to the ministry’s rules, but only if each of the individual services within the organisation agrees.  Therein lies a problem, individual services may have no choice but to comply with their umbrella organisation and to date it’s not known if the ministry has supported any complaint in this regard.

Going back to the Auckland Kindergarten Association as an example - A newsletter to kindergarten staff stated that the AKA board had approved a change that instead of kindergartens having access to their equity funds and showing in their individual accounts, from the 1 July 2017 all equity funding would be kept by head office.  AKA management is allocating out of this only up to $2,000 per equity funded kindergarten for a singular purpose – trips.  Equity funding has for example been used by some kindergartens to fund the cost of children engaging in the Playball programme. Children will likely miss out on this now since kindergartens won’t be able to fully subsidise the cost for families. As ERO has said when equity funding is absorbed into the operational budget it is of limited or no effectiveness for equity.

Allowing umbrella organisations to pool equity funding, discourage its services from spending by not giving advice on ways it may be spent to benefit children, and using it for purposes outside of the centre or service for which the targeted funding is being paid per hour per child, increases the potential for risk of abuse of equity funding.

There are many aspects about equity funding to consider. 

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