Neg Funding

[Guest]

I am the deputy in a montessori day nursery in (southend on sea)Essex. I am trying to get to grips with the funding system and just need to talk through with others about my understanding of how it works. This is not an area I am involved with but from January it will make a huge difference in the way we run.

We have always sent the parents an invoice detailing the terms fees minus the appropriate funding e.g. 3/5 for 3 sessions over the relevant weeks. The parents pay the 'top up' which includes the weeks not covered and the difference of each session.

We have been told that we need to offer 2 1/2 hour sessions completely free and only charge top ups if we are offering something 'special' on top of this time. At the moment we have a 'timetable' which involves everyone taking part in music, dancing, cooking, french, etc (many of these use visiting professionals). The only way we feel we can offer these activities and keep the nursery running is by asking the parents if they wish their child to stay after the 2 1/2 hours they need to pay a higher hourly premium, infact it would be for 3/4 hour. We are fortunate that most of our parents are able to afford this and will probably agree, but what about the ones that can not.

I feel it is making a two tier nursery experience the have and have nots.

We have qualified Montessori staff and beautiful equipment throughout the nursery, Our overheads are high. Our ratios are 1:5 and our ofsted report was very good. Our reputation within the area is excellent and the parents have understood why the billing is like this and appreciate what we do.

I can not understand why we must make this change. Do we???

We accommodate so much change with the FS BTTM now the EYFS etc etc. Why is it becoming so hard. My Manager is at the end, it is affecting her health and family. She is talking about giving it all up after 10 years! It would be such a shame.

 

Sorry its a 'waffle' but I feel better already.

[Guest]

The way we have to work it out in Kent is this:

 

an example.

 

Preschool is open for 6 hrs per day. In the case of a child attending all day, and using 2.5 hrs as a funded session:

 

The funded time is not charged to parents, this is paid in Kent @ £8.22 per 2.5 hrs.

 

The remainding 3.5 hrs is charged to parents. ie: non funded time, irrelevant to what 'extra's you offer, the price of this is up to individual groups., to cover costs.

 

If your fees are £10 an hour you are not allowed to charge "top-up" on the 2.5 funded time.

 

ie: normal fees @ £10 ph for 2.5 hrs = £25 you get £8.22 grant , you are not allowed to charge parents the difference of £16.78

 

Their fees for the day would be 3.5 x £10 = £35

 

My Invoices show

A) Total number of sessions the child will attend in the term.

( our sessions in a day are 3 hrs morning, hour for lunch, then 3 hrs afternoon)

Total number of funded sessions

( these are free)

 

C) A minus B = Total number of sessions charged to parents

 

D) Total number of half hours ( funding for 2.5 of a 3 hr session)

 

E) Total number of lunches

 

Invoice total is C + D + E

 

I have attached an example of my excel invoice calculations.

 

Are you aware of the Kent Association who are fighting for a revue of the no top-up rule? It has been discussed recently, just do a search for 'grant' to find other recent discussions. Nursery World has also featured this issue.

 

Peggy

INVOICE_EXAMPLE.xls

[Sue R]

In our DN, unless a child is only doing the specific 2.5 hour sessions, the fees are calculated normally, the parent usually paying monthly receiving a cheque for reimbursement of the NEG amount when we receive our cheque, towards the end of term. Sometimes the NEG is subtracted from fees during term time, but this is a real bind for staff who have to keep recalculating and requesting changes of Standing Orders from parents.

 

Funded-only children's parents never have to put their hands in their pockets, provided they sign the forms or request extra time before or after.

 

Sue

[Guest]

In our DN, unless a child is only doing the specific 2.5 hour sessions, the fees are calculated normally, the parent usually paying monthly receiving a cheque for reimbursement of the NEG amount when we receive our cheque, towards the end of term. Sometimes the NEG is subtracted from fees during term time, but this is a real bind for staff who have to keep recalculating and requesting changes of Standing Orders from parents.

 

Funded-only children's parents never have to put their hands in their pockets, provided they sign the forms or request extra time before or after.

 

Sue

 

 

Sue, are your fees for non funded times at the same level as the NEG?

 

When you say the fees are calculated normally do you count the NEG time and additional hours all together then charge the total amount then re-imberse the NEG amount? If your fees are higher than NEG limit this would be seen as parents topping-up the NEG time.

 

but if the non funded time fees are lower than the NEG then this would be seen as the grant being used to subsidise non funded time.

 

EXAMPLE;

If fees are higher than NEG level

grant is £4 per hour.

DN fees are £5 per hour

 

looking at your description for a days fees, supposing it is an eight hour day.

 

8 x £5 = £40 fees charged to parents. actual cost to parents should be 8hrs - 2.5 hrs = 5.5 hrs = £27.50

 

if you use the re-imbursment method:

 

parents charged £40, give back £ 10 ( £4 grant x 2.5) = £30

 

The parents are being overcharged £2.50- this is called a top-up charge.

 

EXAMPLE

If your fees are lower than the NEG level

grant is £4 per hour.

DN fees are £3 per hour

 

8 X £3 = £ 24 charged to parents, actual cost to parents should be(8 hrs - 2.5) = 5.5 hrs x £3 = £16.50

 

If you use the re-imbursement method:

Parents charged £24, give back £10 = £14

 

You are using £2.50 of the grant money to subsidise non grant time.

 

Both these examples show that re-imbursement method does not work in terms of the code of practice.

 

You need to work out how much you charge per hour and times this by the non funded hours (and part hours of the day) This is the true cost to parents and the 2.5 hrs remains seperately funded by LEA. The funding is not about pounds and pence as far as parents are concerned it is about "free" time.

Auditors will want to see that parents haven't been charged top-up or that funding money has been used for any other period of time other than the 2.5 hrs. My preschool is like the second example my fees are just lower than the grant.

 

I know it is all confusing, but I hope my examples make some sense.

 

Peggy

[Sue R]

Peggy,

 

Can't answer your question accurately as I don't have all the figures on hand and don't actually 'do' the fees, speaking from how we explain it to parents. We have, however had the whole sysytem audited by local council financial people who found no irregularities in terms of administration of NEG. More examples of different standards??

 

I will investigate further and get back. Please remind me, I'm soooo BAD at remembering things

[Guest]

Peggy,

 

Can't answer your question accurately as I don't have all the figures on hand and don't actually 'do' the fees, speaking from how we explain it to parents. We have, however had the whole sysytem audited by local council financial people who found no irregularities in terms of administration of NEG. More examples of different standards??

 

I will investigate further and get back. Please remind me, I'm soooo BAD at remembering things

 

 

If your LEA are fine with it I wouldn't worry, and yes, maybe an example of different standards????

 

Hopefully the media coverage will ensure a total revue of NEG administration etc and we will all ( by all I mean nationaly) be using the same interpretation and systems. ...and pigs might fly...

 

Peggy

[Guest]

Peggy

does this mean you are running at a loss of £16.78 each child per day (should they stay all day). How can this work?

Also, do you have children leaving after the 2.5 hours 'free' time?

thank you for the example of the invoice. We have heard about the Kent issues.

[Guest]

Peggy

does this mean you are running at a loss of £16.78 each child per day (should they stay all day). How can this work?

Also, do you have children leaving after the 2.5 hours 'free' time?

thank you for the example of the invoice. We have heard about the Kent issues.

 

 

ie: normal fees @ £10 ph for 2.5 hrs = £25 you get £8.22 grant , you are not allowed to charge parents the difference of £16.78

 

In answer to your question, Yes. you run at a loss for those 2.5 hours of grant funded time.

THIS IS NOT JUST A KENT REQUIREMENT, THIS IS A NATIONAL REQUIREMENT NOT TO CHARGE TOP-UP FEES. It is just that Kent have bought this issue to the attention of the media. Beverly Hughes, Childrens Minister categorically quotes that the DFES code of practice states that the 2.5 hours must be totally free for parents, no charge is allowed, (whatever setting you work from in England.)

I think many settings will increase non-funded time fees to cover the loss of the funded time. How this will be interpretated as regards to younger children subsidising the funded children is yet to be seen.

I used to give my parents the option to just send their child for the 2.5 hrs of our 3 hr session, because I thought it was a requirement of out code of practice. 2 out 30 parents chose to do this. The other 28 parents were happy to pay for the additional half hour. However, the disputed Kent code of practice changed this rule and said that if a setting offered 3 hr sessions then they could make it that parents would have to pay this as a part of the sessions admissions policy. If parents didn't want to then if they contacted the early years unit they would be offered a place elsewhere which only opened for 2.5 hrs. ( ie: we would lose this customer)

 

It is all just a horrible, horrible nightmare and I hope I wake out of it very soon before I go completely MAD.

 

Peggy

[Jackie H]

I spoke to our local county council today about charging parents for the extra 4 1/2 hours that our children are in nursery. She told me that it was quite in order to charge the session rate less the £8.oo funding money. Is this what you are all doing ? I have attached part of the letter.

What a nightmare this funding is turning into

[Guest]

Hi Jackie

we have taken the funding off the session cost and have been told (and the guidance states this) that we can not do this. The preschool learning alliances lastest publication details what is expected and that is; to offer 2 1/2 hours totally free and only charge our normal hourly rate for the remaining time and that is only for the parents that wish for their child to stay. We will be receiving nearly 1/2 of our sessional cost. How do private nurseries manage? As I have said before we have a very good reputation in the area and parents are willing to pay these 'top ups' which we feel allows us to offer a very good service. When we make the changes we will have to cut staff and reduce the activities on offer or even pack up completely - we are 10 years old this year!

I just wonder why the parents aren't allowed to choose what to do, if they do not wish to pay 'top ups' they can go somewhere else.

I am beginning to lose sleep over this, I have just been promoted to manager and feel bewildered.

 

julie

[SueT]

a deputy

 

I totally agree with you - it really is a nightmare, as Peggy says. If you go to www.saveournurseries.org you will see what the campaigners in Kent are doing to try to change this bizarre situation. Good luck.

Sue

[Guest]

Hi Julie We are in exactly the same position as you and yes I am losing sleep over it too. County Advisors, PLA and everyone else I go to agrees this is just terrible but the whole ridiculous mess seems to be rolling on until nurseries start to close and then what......

[Guest]

What constitutes 'something special' anyways?

 

Surely this needs to be backed up by a list of what can be charged for

 

This regional variation causes practitioners (who talk things over with each other lol) many headaches.

 

As far as we are aware (Northamptonshire) we offer 2.5 hours completely foc and are then allowed to charge a top up for any additional hours taken.

[Guest]

What constitutes 'something special' anyways?

 

Surely this needs to be backed up by a list of what can be charged for

 

This regional variation causes practitioners (who talk things over with each other lol) many headaches.

 

As far as we are aware (Northamptonshire) we offer 2.5 hours completely foc and are then allowed to charge a top up for any additional hours taken.

 

 

Maybe people are getting confused with the 'jargon'.

Charging for time over the 2.5 hours is not a top up charge, this is a fee for a service.

 

However, if settings charge anything for the 2.5 hrs then this is a top up.

The confusion is in the way fees are calculated, if the funding figure ie £8.22 is deducted from the days total fees, this is not a proper calculation, and actually means you are charging a top-up.

 

The 2.5 hrs have to be deducted from the total daily hours, then the fees charged for the remaining time you are open over and above the 2.5 hrs

 

ie: open 8 hrs, deduct 2.5 hours you can only charge fees for the remaining 5.5 hrs service ( at whatever rate you want) .

 

Peggy

[Guest]

I think we tend to refer to it as a top up because we used to offer the extra hour for free! Therefore funded children did not pay anything for the 3.5 hour session. And to be honest, this is what a lot of parents expect, until you explain it to them.

 

But I completely understand and agree with what you say. We should stop referring to the charge as a top up, as it is not.

[Guest]

I just open for 2 1/2 hours and don't charge the parents anything. This works well as we are in an area of deprivation with many parents on low incomes.

 

Makes it easy for us we only collect fees for 2 1/2 year olds and we charge them less than the grant funding. We only have a few 2 1/2 year olds in.

 

Deb

[hali]

we are exactly the same

[HappyMaz]

We offer a three hour session from 9.10 - 12.10. My invoice states

 

"This invoice is for sessions not covered by Nursery Education Funding:-

 

11.40 - 12.10 - difference between cost of a three hour session and the NEF grant

plus any lunch clubs or afternoon sessions at our usual hourly rate

 

Hopefully it makes it clear to parents (or rather the Local Authority) that we are only charging from the end of the funded session until the child leaves.

 

Of course parents pay for the extra half hour proportionately at more than our hourly rate for the rest of the time, because the hourly rate of the NEF doesn't match the hourly rate we charge.

 

What worries me most is what will happen when the funding is increased to 15 hours. That's when I'll begin to make a loss (assuming Gordon Brown doesn't take it into his head to increase the NEF to a more reasonable level).

 

Maz

[Guest]

Until this term it has been relatively straight forward. However this term the funding offering is for 12 1/2 hours per week and no longer has to be in 2 1/2 hour blocks. Where children attend more than one setting the funding can be claimed though either for any length of time up to 12 1/2 hours as long as the total is spread over at least 3 days. Does that make sense? I'm sure it will when we get our heads round it but the system will no doubt change again next term.

 

I think what we will do is convert our sessional fee for 2 3/4 hours into an hourly fee and charge that rate for anthing over the funded time.

 

Al

[Guest]

Until this term it has been relatively straight forward. However this term the funding offering is for 12 1/2 hours per week and no longer has to be in 2 1/2 hour blocks. Where children attend more than one setting the funding can be claimed though either for any length of time up to 12 1/2 hours as long as the total is spread over at least 3 days. Does that make sense? I'm sure it will when we get our heads round it but the system will no doubt change again next term.

 

I think what we will do is convert our sessional fee for 2 3/4 hours into an hourly fee and charge that rate for anthing over the funded time.

 

Al

 

 

Determining what your hourly rate is, I think, is the only way to be able to do the calculations, so hopefully you've got it sussed out whitetree.

 

Peggy

[Guest]

I manage a Steiner Waldorf Kindergarten and at first it took me some time to get my head around the NEF. The way I do it is state our fees for the session, which runs from 9am to 1pm. When I invoice the parents I invoice for the session and deduct the NEF from that. There is never any mention of the 2.5 hours and we wouldn't take a child for the 2.5 hours only as it would not work with our session structure at all. We did have an audit recently which went well but they did mention that in future we may have to start invoicing per hour. This will just make slightly more work initially but shouldn't be a problem.

 

What tends to happen is once a child is no longer eligible for the NEF parents have to decide wether to make the commitment to continuing, as we have children from 3 years to 7 years. This can be difficult for some but most manage it. Our "top up" is actauly just less than the NEF hourly rate anyway. We run on a tight budget and are a charity but we somehow manage to break even.

Edited July 7, 2007 by Guest