614. Deputy Fionntán Ó Súilleabháin asked the Minister for Children, Disability and Equality in light of reports that more than 50 childcare providers have exited the core funding scheme in the past two years, to outline the analysis her Department has undertaken into the reasons for these withdrawals; whether rising operating costs are being fully met under current funding arrangements; the immediate measures that are being considered to prevent further providers from leaving the scheme; and if she will make a statement on the matter. [47320/26]

I am aware that a small number of services are regrettably considering withdrawing from or no longer participating in the Core Funding scheme.

The Department, through the local Childcare Committees (CCC), engages directly with any such service to highlight the benefits of staying in Core Funding, not only for their service but also for the families who avail of them. I am hopeful that the providers may reconsider their decision.

As Core Funding is an optional scheme, services have the autonomy and business freedom to not participate in or withdraw from Core Funding.

As of 3 November 2025, there were 5,035 services listed as being open on the Early Years Platform, of which 177 (4%) had left Core Funding at one point over the lifetime of the scheme to this date and continue to operate outside of this scheme. A further 415 services (8%) had left Core Funding at one point over the lifetime of the scheme to this date but later rejoined and were signed up to fourth year of the scheme on this date.

The overwhelming majority of services, 4,157 or 83%, have continued to participate in Core Funding from the date on which they first signed up for the scheme.

It should be noted that of the 592 services that have left the scheme at one point, some 415 services were contracted to Core Funding as of 3 November 2025 – meaning over 70% of services who left the scheme at one point have now returned to Core Funding.

If a Partner Services wishes to withdraw from the Core Funding Programme, they must provide 3 months’ notice to the Scheme Administrator. This must be done by submitting a Service Request on the Early Years Early Years Hive outlining the withdrawal date and the reason for the withdrawal.

However, if an existing Partner Service decides not to enter a contract for the new programme year starting on 1 September, they, as private businesses, would no longer be subject to the provisions of the Core Funding Agreement and, by extension, the required minimum notice period to parents. They are also not required to provide a reason for choosing not to reapply for Core Funding to the Scheme Administrator.

In relation to withdrawals specifically, services may choose to leave the scheme mid-year for a multitude of reasons including being denied a fee increase, temporary closures, financial difficulties, administrative requirements and personal reasons such as retirement. Many services have left and later re-joined the scheme.

While the State cannot mandate providers to participate in the scheme, Core Funding has been designed with maximum participation of providers in mind as reflected in the year-on-year growth of investment in the Scheme (rising from €259 million in year 1 to over €390 million in year 4). This represents an increase of over 50% in Core Funding in three years.

I was delighted to announce the details of further investment in the next programme year of Core Funding in recent weeks. The additional funding being made available will see the allocation for Core Funding increase to over €480 million from September 2026. That is an additional €90 million on the current full year allocation, or a 23% increase.

This increased investment will allow for further increases in capacity across the sector, with €21.4 million specifically set aside to support Partner Services in adhering to Core Funding fee management conditions, including reductions in the maximum fee caps, from September 2026. This will guarantee that Core Funding’s monetary protections will continue to be passed on to families while ensuring sustainability and stability for the sector. The increased allocation also includes €45 million to facilitate improved pay for early years educators and school-age childcare practitioners through enhancement of the Employment Regulation Orders in Year 5 of the scheme.

The majority of Core Funding is distributed to services via the Base Rate, which is calculated on the basis of a service’s staffed capacity – the opening hours, operating weeks, the age group for whom services are provided, and the number of places available. The Base Rate calculation also accounts for the increases to the cost of delivering services encountered by providers. The Base Rate for Year 5 was also adjusted upwards to take into account the €21.42 million in additional fee management funding secured in Budget 2026.

Core Funding allocations are based on staffed places, not on child registrations and attendance levels. Places do not have to be filled in order to be allocated Core Funding, but for capacity to be funded, there must be enough staff in place to satisfy the minimum staff to child ratios as set in the Regulations made under the Child Care Act 1991. This provides services a guaranteed minimum income, supporting stability where attendance may be fluctuating.

The base rates in Core Funding have been developed using the various components associated with the cost of delivery of service provision such as: staff pay and conditions (including contact and non-contact time, holiday pay, sick pay and other employer costs such as pension contributions); administrative staff/time, and non-staff overhead costs. These components have been factored into the calculation of the budget for Core Funding since the scheme began in 2022.

Although the cost of delivery components such as improvements to staff pay have been used to derive the base rates, the eligible areas of expenditure of the Core Funding grant are much broader.

In addition to this increased allocation, being in Core Funding unlocks additional supports for services to access, including:

• access to wider financial supports where a service is experiencing financial difficulty or has concerns about their viability;

• access to enhanced support for services caring for concentrated numbers of children facing disadvantage through Equal Start; and

• opportunities to apply for capital grants through the Department.

In addition to the year-on-year increases, the Department has made changes to improve the sustainability of providers through, for example, targeted measures for small and sessional services and a fee increase assessment and approval process for services with fees frozen at unsustainably low rates.

There are also wider financial supports available where a service is experiencing financial difficulty or has concerns about their viability. These supports can be accessed through the Department’s case management process, which can be accessed while remaining in Core Funding.

All services have been encouraged to avail of these supports as an alternative to withdrawing from Core Funding and removing the benefit of Core Funding to children and their families.

Moreover, the annual changes to the allocation model and in the conditions attached to the funding has ensured the Scheme remains responsive, balancing the needs of providers while seeking also to meet a range of other objectives. Among these objectives is ensuring taxpayers’ money is being used in a way that sustains services while not excessively increasing their private profit.

The Department will explore further changes based on the operation of year 5 of the Scheme as well as stakeholder input and income and cost data from providers. The Department will continue to engage with the sector and continue to develop the scheme so that it can continue to see the high uptake levels it has seen this year, and indeed since it was launched in 2022.

It should be noted that uptake of Core Funding remains strong. As of 15 June, 93% of all eligible providers have signed up to the fourth year of Core Funding, which equates to 4,647 services. These are the highest numbers of Partner Services in Core Funding at any point since the scheme was launched in 2022.

Participation in Core Funding is optional, but it remains open to all Tulsa registered providers, subject to their agreement to the terms and conditions of the Core Funding Agreement. It is a matter for providers to decide whether they wish to sign up to Core Funding and benefit from the significant financial supports it offers to providers and the certainty it gives to parents through the associated fee management measures.

I am confident in the adequacy of Core Funding for this sector. However, there is a safety net in place for the small number of services who may for any number of reasons require additional supports, to ensure that they can continue to provide this vital service for the public good without needing to withdraw the benefits that Core Funding achieves for parents such as fee freezes and caps.