ECE Funding Handbook

Welcome to the Early Childhood Funding Handbook. This Funding Handbook is issued under section 548(5) of the Education and Training Act 2020(external link). The funding paid to licensed services is paid subject to the terms and conditions set out under this Handbook and must be complied with. The terms used in this Handbook are based in the Education (Early Childhood Services) Regulations 2008.

This Handbook is designed to be a ‘one-stop-shop’ for all you need to know about early childhood funding, including:

  • the Early Childhood Education (ECE) Funding Subsidy
  • 20 Hours Early Childhood Education (ECE)
  • Equity Funding
  • the Annual Top-Up for Isolated Services

Note: The information in the Funding Handbook does not apply to certificated playgroups. These services should contact their Ministry regional office for further information.

Downloading the ECE Funding Handbook

If you want a printed copy of this handbook, refer to the list of downloads in the contents section where you will find downloadable PDF versions of each chapter.

ECE Funding Handbook downloads

3-B-4 Home-based ECE services

H symbol.  Compass.  Books

  • Introduction
    • Licensed home-based early childhood education (ECE) services provide education and care for up to four children under the age of six in either a caregiver/educator’s home, the child’s own home or a home nominated by the child’s parent.

      This section explains:

      • funding rates for home-based ECE services
      • the difference between standard and quality funding rates
      • when to change the service’s funding rate.
  • Funding claim exceptions
    • Funding must not be claimed for:

      • an educator’s own children
      • children who are present in the home but not enrolled in the home-based service or
      • children enrolled at school.

      If an enrolled child is absent from a home-based service and the educator, by contractual agreement, is not paid for absent children, the service provider cannot claim funding for that child for that day.

      If, however, the caregiver/educator, by contractual agreement, is paid for absent children, the service provider can claim funding for an absent child and the absence rules will apply.

      See Section 6-4 for more information on the absence rules.

      For funding purposes, an educator’s ‘own’ children includes children living with the educator in the educator’s home.

      ‘Own’ children does not include children who are placed with the educator as part of an Oranga Tamariki care arrangement, where the Chief Executive Officer of Oranga Tamariki is their legal guardian, and where Oranga Tamariki have referred the children and/or educator to a home-based service provider.¹

  • Family members as educators
    • A home-based education and care service can claim funding for a child where the educator is a member of that child’s family and is living with the child in the child’s home only if all of the following requirements are met:

      1. the educator is part of a licensed home-based service, and
      2. the home is available for use by children who are not part of the educator’s family, and
      3. at least one child who is not a member of the educator’s family attends the home.

      A home-based service can only claim funding for the child who is a family member for the hours a child who is not a family member attends the home.

      For example: If a child who is not a family member attends the home for education and care for 15 hours per week, then the home-based service may claim 15 hours per week for each child who is a part of the educator’s family. Other children who are not part of the educator’s family may attend at different times in order to claim up to a maximum of 30 hours per week per child providing that the maximum number of children in home is not exceeded.

      Note: In exceptional circumstances, in isolated communities, (3) may be waived by the Ministry regional office.

  • Definition of family members
    • A family member is any member of the family other than the parent or caregiver of the child. Please refer to the section Funding Claim Exceptions for more information.

  • Home-based education and care declaration
    • Services are required to have a signed declaration for each child to indicate whether the educator who will be providing education and care for the child is a member of that child’s family.

      This declaration is part of the enrolment agreement example and can be found in Appendix 2.

  • Educator absences
    • When an educator is not available (for example, due to illness), funding cannot be claimed if no care is provided. If there is a replacement educator, funding can be claimed only for the educator who provided alternative care. Funding cannot be claimed:

      • for the educator who was not available
      • if the parent/guardian chooses not to place their child in the care of the alternative caregiver/educator.
  • Qualification requirements: all services
    • From January 2021, the qualification requirements for educators on a quality funded licence changed.

      From 1 June 2022 a percentage of educators in every licenced home based education and care service must hold a recognised ‘home-based service qualification’ as set out in  the Education (Early Childhood Services) Amendment Act (No 2) 2021(external link).

      The percentage of educators required to hold a ‘home based service qualification’ differ between quality and standard funded licences. See later in this chapter for more details.

      For educators, a home-based service qualification is:

      (i) an early childhood education qualification that is—

      (A) at level 4 or above on the Qualifications Framework; or

      (B) recognised by the Teaching Council of Aotearoa New Zealand for registration purposes:

      (ii) an early childhood education qualification at level 3 on the Qualifications Framework, completed prior to 1 June 2022:

      (iii) a qualification developed by Te Kōhanga Reo National Trust Board at level 5 or above on the Qualifications Framework:

      (iv) a primary teaching qualification that is—

      (A) listed in the Qualifications Framework; or

      (B) recognised by the Teaching Council of Aotearoa New Zealand for registration purposes: or

      (v) an early childhood education qualification obtained overseas but recognised by NZQA as comparable to a qualification described in subparagraphs (i) and (ii)

      The requirements in force from 1 January 2021-31 May 2022 are set out at the end of this section. The new requirements from 1 June 2022 follow here

       

  • Calculating the percentage qualification requirements
    • From 1 June 2022:

      For standard-funded licences:

      • 10% of educators in a standard funded licence must hold a home-based service qualification.
      • There are no qualification requirements for the remaining educators.

      For quality-funded licences:

      • 50% of educators in a quality funded licence must hold a required qualification.
      • Up to 20% can either be in induction (first 6 months on the quality licence) or enrolled in training (up to a further 2 years, or 4 years if they are working towards an ECE teaching qualification at Level 7 or above).
      • The remaining educators on the licence must hold at least 5 credits towards a required qualification at Level 4 or above. This category enables a transition period for educators who were already working on a quality funded licence prior to these changes coming in.

      The count of educators for the percentage qualification requirement is a headcount of those working in your service. It is done on a licence-by-licence basis. In order to be counted, an educator must have provided home-based education and care for children enrolled in the licence for at least four days in a calendar month.

      Each month, educators can only count towards the percentage qualification requirement in one licence of a service provider. For example, if you’re moving an educator from a standard-funded licence to a quality-funded licence you are unable to count the educator on both licences in the same month.

      Note that this restriction only relates to this particular requirement. You can still claim funding subsidies on both licences for the children attending with those educators, subject to the usual funding rules, even if an educator changes licences or service providers in a month.

      When calculating the number of educators you need to meet the required percentage, if it works out to be a fraction, use normal rounding rules. That means, if the number of educators is 0.5 or above, you round up to the nearest whole number. If the number of educators is below 0.5, you round down.

      Educators who gain a qualification during the month will be considered qualified from the date of the official notification that they have met the course requirements.

      For the purposes of assessing a new probationary licence application with a request to begin at the quality funding rate, all educators who are listed as intending to work for the service will be counted towards the percentage qualification requirements.

  • Discretionary situations for percentage qualification requirements
    • From 1 June 2022:

      Discretionary situations are no longer available in relation to the percentage qualification requirements.

      If you do not meet the requirements in a given month you should use the EC11HB form to apply to move back to standard funding. A service must remain on standard funding for at least one month before applying to return to the quality rate.

  • Percentage qualification requirements: Record keeping for all home-based services
    • From 1 June 2022:

      As percentage qualification requirements are now regulated for all home-based services, the record keeping requirements around educators and their qualifications apply to both standard and quality-funded licences.

      Evidence of educator qualifications:

      Certified copies of qualifications are required. These can be certified by:

      • The service's ECE professional leader, (ie, the coordinator)
      • Ministry of Education staff
      • The authority that originally issued the document
      • A Justice of the Peace
      • A solicitor
      • A notary public
      • A registrar.

      For teaching qualifications where the specialisation is not identified on the certificate itself (that is, it does not state an early childhood or primary specialty), academic transcripts or similar to show the course content must be kept as evidence that the qualification meets the requirements for home-based education.

      Evidence of name change or use of an alternative name must be retained, where qualifications are in an alternative name (eg, maiden name).

      Evidence of meeting percentage qualification requirements:

      All services must keep a Master Staff Record that shows:

      • all educators along with their highest relevant qualification and the date this was achieved
      • entry and exit dates for all educators
  • Percentage qualification requirements: Record keeping for standard funded services
    • From 1 June 2022:

      Standard funded services must keep a monthly record that clearly shows whether the service is meeting the percentage qualification requirements.

      This document should show educators and their categorisation as qualified (holding a home-based service qualification) or unqualified, and the number of days they have worked each month.

      Standard-funded services can choose to categorise educators further, to match the requirements for quality funded licences. See the next section for this detail.

      This more detailed categorisation is not mandatory, but will be useful to determine whether the service might be eligible to apply for quality funding. Note that the limits on the amount of time an educator may be in the ‘unqualified – induction’ and ‘unqualified – in training’ categories are not applicable to standard-funded services until 2025.

      Where there has been a change in categorisation from the previous month, such as an educator achieving a qualification, the reason should be indicated on the monthly record.

      Monthly records must be verified by a representative of the service provider.

      All services must keep educator timesheets (attendance records) that are signed and dated by the educator.

  • Percentage qualification requirements: Additional record keeping for quality funded services
    • From 1 June 2022:

      There are additional records required for quality-funded services.

      During the transition period, transcripts to show completed credits must be kept, if educators on quality-funded licences are being counted as having ‘5 or more credits towards a required qualification’.

      For educators in study, a record of enrolment in a required qualification must be kept by the service provider. This must clearly show the date the programme commenced. This information must be included on the Master Staff Record.

      Quality funded services must keep a Monthly Staff Record that shows the educators in the licence and their categorisation as either:

      Full/Qualified = holds a required qualification

      Partial = holds at least 5 credits of an ECE qualification at Level 4 or above

      Unqualified - in training = has not yet achieved any credits, but is enrolled in a programme of study that will lead to a required qualification

      Unqualified - induction = has worked in the service for less than 6 months and is not enrolled in a programme of study that will lead to a required qualification

      N/A=has left service

      Where there has been a change in categorisation from the previous month, such as an educator achieving a qualification, the reason should be indicated on the monthly record.

      The monthly record should clearly show whether the service is meeting the percentage qualification requirements.

      Monthly records must be verified by a representative of the service provider.

      All services must keep educator timesheets (attendance records) that are signed and dated by the educator.

  • Quality rate requirements: coordinators
    • Coordinators of home-based ECE services receiving quality rate funding:

      • must be locally based (i.e. available, in person, within normal commuter distances and times for that location) and
      • must be on duty for the times specified in the table below, including over the lunch period.

      Coordinators must not provide cover for more than one service at a time.

      Services operating for more than six hours per day must have a coordinator who is...Services operating for six hours or less per day must have a coordinator who is...
      • on duty between 8:30am- 4:30pm Monday to Friday and
      • on-call to supervise home-based care before 8:30am, after 4:30pm and on weekends when education and care is provided by the service during these hours.
      • on duty for the hours that children attend the service.

      For funding purposes, 'on duty' means that coordinators are:

      • mainly focused on, and involved in, supervising quality environments for educators and children in their service
      • able to instantly respond to educators and parents in their service ‘person-to-person’ (i.e. in person or by phone).

      ‘On duty’ does not include times when the coordinator cannot respond instantly to educators and parents in person or by phone.

      ‘On call’ means the coordinator can respond instantly to educators and parents in person or by phone.

  • Relief coordinators
    • When a coordinator of a service funded at the quality rate is unable to be on duty, another coordinator must be on duty during the absence.

      The relief coordinator must also meet the coordinator requirements.

  • Upcoming changes to quality rate requirements: percentage qualification requirements
    • The percentage qualification requirements for the quality funding rate will change each year until 1 January 2025 when there will only be one funding rate for home-based education and care.

      The table below outlines the scheduled changes.

      Date requirement is effective 

      Minimum percentage of educators with a required qualification

      [Full/Qualified]

      Maximum percentage of educators able to be in training or induction^

      [Unqualified]

      Educators with at least 5 credits towards a required qualification at Level 4 or above

      [Partial]

      1 January 2021 30% 20% All remaining educators (0-70%)
      1 June 2022 50% 20% All remaining educators (0-50%)
      1 January 2023 70% 20% All remaining educators (0-30%)
      1 January 2024 80% 20% This category no longer applies

      ^ Educators who do not yet have credits towards a required qualification.

      Educators who join a quality funded licence without a completed qualification can only remain in induction for a maximum of 6 months, or enrolled in training up to a maximum of 2 years, or up to 4 years if they are working towards an ECE teaching qualification at Level 7 or above.

  • Coordinator absences
    • The Ministry will fund up to five discretionary situations at the quality funding rate, per funding period, when a coordinator that meets all of the quality rate coordinator requirements is not available.

      The regulations require home-based services to have a coordinator available to support educators for all hours children are attending. Discretionary situations cannot be used to avoid this obligation.

      Examples where discretionary situations may apply is when a relief coordinator is supervising across more than one network (as long as they are not responsible for more than 50 children at any one time), or is not able to meet the full 8.30-4.30 on duty requirements.

      The standard funding rate will apply from the date of the sixth absence.

      Services may apply to return to quality level funding after one month, using the EC11HB Form.

       

  • Christmas coverage: options for all services
    • There are three service delivery options for home-based ECE services during the Christmas period.

      The options are identified in the table below.

      OptionDescription
      1 Service closes over the Christmas period.
      2 Service continues to operate as normally organised over the Christmas period.
      3 Local services can be ‘reconstituted’ to make up a single service for up to two weeks if:
      • all parents, educators, and coordinators associated with the affected services are given two weeks notice of the change taking place
      • the requirements of the Education (Early Childhood Services) Regulations 2008 are still met by the service
      • the total number of children in the reconstituted service does not exceed the maximum service size of 80
      • trained and named coordinators are on duty for all hours children are receiving education and care
      • all parents and educators that will be associated with the reconstituted service are provided with accurate contact information for the rostered coordinators at least two weeks before the service starts operating
      • clear records are kept that include:
        • the names of rostered coordinators
        • the actual times and dates each coordinator worked
        • names of educators and the children for whom they provided education and care
        • the actual dates and times that each child was cared for over the period that the service was reconstituted.
  • Previous quality rate requirements
    • The following sections outline the quality rate requirements in place from 1 January 2021 until 31 May 2022. They will remain here for information purposes until the next phase of transition on 1 January 2023. Service may still be audited on periods covered by these requirements so should ensure they have complied at all relevant times.

  • Record keeping
    • All home-based ECE services must keep records for audit purposes and in a place where they can be easily accessed by the coordinator.

      The relevant records must be provided at the site of the audit when an audit is taking place.

      Services not able to supply records to the Ministry’s Resourcing Auditors in support of funding at the quality rate will be returned to the standard funding rate.

      For information regarding what records your service needs to keep see Chapter 11 of this Handbook.

  • Previous quality rate requirements: calculating the percentage qualification requirements
    • From 1 January 2021 until 31 May 2022:

      • 30% of educators in a quality funded licence must hold a required qualification.
      • Up to 20% can either be in induction (first 6 months on the quality licence) or enrolled training (up to a further 2 years).
      • The remaining educators on the licence must hold at least 5 credits towards a required qualification at Level 4 or above.

      The percentages are counted on a headcount of active educators in a licence. This means each educator counts once – regardless of the hours or days they work, or the number of children they care for. Educators on holiday, sick, or waiting for children to enrol can be counted up to certain limits (see the definition of ‘Active Educator’ in this chapter).

      Where calculations result in a fraction, then the number of required qualified educators is rounded up and the number of allowed unqualified educators is rounded down.

      For example, if a service has 13 educators then 30% is 3.9 – so they would need 4 qualified educators to meet the requirement; 20% is 2.6, so the service could have no more than 2 unqualified educators. In a service with 87 educators, the 30% is 26.1, so they would need 27 qualified educators; 20% is 17.4, so the service could have no more than 17 unqualified.

      Percentage requirements are viewed weekly – at the end of the 7-day period (Mon-Sun), or part-thereof if the funding period begins or ends mid-week.

      Educators who enter or exit the licence part way through the week will be counted in the same way as educators who have been active for the entire week. An educator who gains a qualification during the week will be considered qualified for that week. A qualification can be counted from the date the educator has received official notification that they have met the course requirements.

      Educators providing backup care to children on a different licence will only be counted on their ‘home’ licence.

  • More record keeping information
    • Use the following table if you would like further information about record keeping and financial reporting requirements:

      If you would like...See Section
      Information on 20 Hours ECE 4
      Record keeping requirements for 20 Hours ECE 4-4
      An overview of the record keeping requirements for all services 11-1
      Information on funding claim audits and record keeping audits 11-2
      Information or instructions for financial reporting 12
  • Previous quality rate requirements: Meaning of ‘active educator’
    • From 1 January 2021 until 31 May 2022:

      The percentage qualification requirements are based on a count of active educators in a licence.

      An educator is considered ‘active’ in a home-based licence if they are providing regular early childhood education and care to children enrolled on that licence.

      An educator may still be considered ‘active’ if they do not provide education and care for a short period of time; for example, if they are sick or on holiday, or due to an emergency event like flooding. In these situations, there must be written evidence of the reason for the break, including the expected return date, on the weekly staff record.

      After a continuous break of 3 weeks, educators can no longer be counted as ‘active’ for the purposes of the percentage qualification requirements.

      Educators on a current licence, who have children leave and are waiting for new children to enrol with them, may also be considered ‘active’ for a period of up to 3 weeks from the date children leave.

      Inactive educators can be reclassified as ‘active’ from the scheduled start date of new children enrolled on the licence to begin receiving education and care from the educator.

      For the purposes of assessing a new probationary licence application with a request to begin at the quality funding rate, all educators who are listed as intending to work for the service will be considered ‘active’. Once the probationary licence is granted, educators who do not yet have children enrolled with them must be moved to ‘inactive’ status after 3 weeks.

  • Previous quality rate requirements: Discretionary situations for percentage qualification requirements
    • From 1 January 2021 until 31 May 2022:

      During this first stage of the transition period, a quality-funded service can access, without requesting Ministry approval, 5 ‘discretionary situations’ (ie, 5 weeks) in a funding period where percentage qualification requirements have not been met. These must be clearly identified on the weekly records.

      After this, the service must apply to move back to the standard funding rate (including in situations where the 5 weeks are not continuous) and must remain there for at least one month before they can re-apply to move back to quality.

  • Previous quality rate requirements: Additional record keeping for quality funded services
    • From January 2021 until 31 May 2022:

      Services must keep the following records and make them available to the Ministry on request. These are in addition to the record keeping requirements for standard funded services, and the record keeping relating to the quality rate coordinator requirements in Chapter 11.

      Evidence of educator qualifications:

      Certified copies of qualifications are required. These can be certified by:

      • The service's ECE professional leader, (ie, the coordinator)
      • Ministry of Education staff
      • The authority that originally issued the document
      • A Justice of the Peace
      • A solicitor
      • A notary public
      • A registrar.

      For teaching qualifications where the specialisation is not identified on the certificate itself (that is, it does not state an early childhood or primary specialty), academic transcripts or similar to show the course content must be kept as evidence that the qualification meets the requirements for home-based education.

      During the transition period, transcripts to show completed credits must be kept, if educators on quality-funded licences are being counted as having ‘5 or more credits towards a required qualification’.

      For educators in study, a record of enrolment in a required qualification must be kept by the service provider. This must clearly show the date the programme commenced.

      Evidence of name change or use of an alternative name must be retained, where qualifications are in an alternative name (eg, maiden name).

      Evidence of meeting percentage qualification requirements:

       

      Services must keep a Master Staff Record that shows:

      • all educators along with their highest relevant qualification and the date this was achieved
      • entry and exit dates for all educators
      • enrolment date for educators still in study

      Services must keep a Weekly Staff Record that shows the educators in the licence and their categorisation as either:

      Full = holds a required qualification

      Partial = holds at least 5 credits of an ECE qualification at Level 4 or above

      Unqualified - in training = has not yet achieved any credits, but is enrolled in a programme of study that will lead to a required qualification

      Unqualified - induction = has worked in the service for less than 6 months and is not enrolled in a programme of study that will lead to a required qualification

      N/A=has left service

      Where there has been a change in categorisation from the previous week, such as an educator achieving a qualification, the reason should be indicated on the weekly record. If an educator has been unavailable for an entire week, the reason for this should be noted on the record.

      The weekly record should clearly show whether the service is meeting the percentage qualification requirements, or (for quality funded services) claiming the week as a discretionary situation.

      Weekly records must be verified by a representative of the service provider.

      Services must keep educator timesheets (attendance records) that are signed and dated by the educator.

  • When to change funding rates
    • Use the following table to find out when and how to change a home-based ECE service’s funding rate:

      If the service provider...  and .. then... using ...
      is funded at the standard rate the service can meet the requirements of the quality rate  you may apply to change to the quality funding rate the EC11HB Form.
      is funded at the quality rate the service can no longer meet the quality rate requirements you must apply to return to the standard funding rate the EC11HB Form
      is funded at the quality rate the service has used 5 discretionary situations in a funding period to cover coordinator requirements and has a 6th breach you must apply to return to the standard funding rate the EC11HB Form
      is funded at the quality rate there has been a change in coordinator, but the service continues to meet one of the quality rate options you must inform the Ministry of Education regional office of the change the EC11/A Form

      Note: Funding rate changes are effective from the date the EC11HB Form, with evidence of the educators' qualifications attached, is received by the Ministry.