2-7 Recovery of Early Childhood funding

Introduction

Section 311 of the Education Act 1989 provides for the payment of funding to eligible early childhood services¹ subject to conditions so that they may provide early childhood education. Services which fail to meet these conditions may no longer be eligible for funding and either all or part of this funding may be recovered by the Ministry of Education.

This section sets out the circumstances where the Ministry may recover funding from services or service provider(s).

The following funding conditions apply to the recovery of funding from 1 October 2009.

Recovery of funding

If the results of a funding claim audit and/or reporting on RS7 Funding Claim and/or RS3 Initial Application for Funding for an Early Childhood Service forms indicate that the amount of funding provided is greater than it should have been, the amount of the over funding will be:

• repayable by the service to the Ministry of Education on request and
• treated as a debt which the Ministry can offset against all or any funding sums payable by the Ministry to the service provider.

When a service has received less funding than it is eligible for, the amount of any underpayments will be credited to the bank account nominated by the service provider as soon as is reasonably possible. However, the Ministry may choose to verify whether services are eligible for any underpayments of funding before these are made, for example by way of a funding claim audit.

Offsetting funding recoveries

The Ministry may offset against all or any funding or other sums of money payable by the Ministry to the service provider, any debt or other sum payable to the Ministry by that service provider.

In these cases, the debt or liability will have been outstanding to the Ministry for a period of 30 days or more.

Funding may be withheld in part or in full

The Ministry may, subject to any conditions and for any period, determine that no funding is payable either in full or in part for any service(s) where:

1. the service has temporarily closed and for the period of that closure; or
2. the service’s licence has been suspended and for the period of that suspension; or
3. the service’s licence has been cancelled or revoked; or
4. the service provider has not met any of the conditions set out in the Early Childhood Education Funding Handbook or in any other documentation which was the basis for receiving funding. This includes the failure by the service(s) to maintain accurate records to the standard required by the Ministry;
5. the service has not met the financial reporting requirements for early childhood education services that are outlined in Chapter 12 of the Early Childhood Education Funding Handbook ; or
6. the service has not returned its completed RS61 Annual Statistics Form to the Ministry by the due date. This form gives the Ministry of Education a 'snapshot' of the number of enrolled children, as well as the number of staff for ECE services and is used in the development of policy, monitoring and funding; or
7. the service provider is in debt to the Ministry which the service provider is unable or unwilling to repay the Ministry either immediately or within the timeframe prescribed by the Ministry; or
8. the Ministry is satisfied on reasonable grounds that the service provider’s financial viability is at risk (for example if there is a substantial debt owed to the Ministry, Inland Revenue, or some other person or agency) or there has been a change in some other circumstances that may affect its ongoing ability to provide the services required; or
9. the service or the service provider is the subject of an investigation for fraud or financial mismanagement, the funding may be withheld for the period of that investigation pending its outcome. If the investigation finds there is fraud or financial mismanagement, the funding arrangement for that service(s) will be reviewed to determine, at the sole discretion of the Ministry, the service or service providers continuing eligibility to funding; or
10. the service or the service provider is in receivership or liquidation.

For the avoidance of doubt, nothing in the paragraphs above prevent the Ministry from decreasing the amount of the grant paid in advance to a service where the Ministry has reasonable grounds to believe that the matters set out in paragraphs d), g), h), i) or j) above may apply.

¹ Eligible services are services that are either deemed to hold a licence under section 319K or section 319L of the Education Act 1989 and to which section 319M of the Act applies or services that hold a licence under the Education (Early Childhood Services) Regulations 2008.