Family Day Care (FDC) is a government recognised child care option which provides care to children in a carer’s home. Council has operated the Monash Family Day Care service since 1995. The scheme has a strong reputation for its quality service provision, good management and stable utilisation figures. This is reinforced by its solid accreditation assessment record.
However, the FDC environment has significantly changed over recent years with a range of alternate providers now operating in Monash or with an expressed interest and capacity to operate within the municipality. Monash Council has also been operating the service at a significant loss for several years. The net operating cost to Council for in the 2013/14 financial year was $253,639. Following the Australian Government announcing that its operational subsidy for FDC will not continue beyond July 2015, Council directed officers to commence a review of the program and to evaluate options for the future.
At its meeting on 30 September 2014, Council considered a report that outlined options for Council’s consideration regarding the future operation of the FDC program. Council officers recommended that Council cease providing the service as at 27 March 2015.
An alternative recommendation which I proposed was unanimously passed by Council expressing Council’s strong preference to continue the service and resolving to conduct a survey of Family Day Care families and educators to seek their feedback on a higher fee structure to allow the service to continue without the need for an ongoing ratepayer subsidy.
My reasons for proposing the alternative recommendation was because parents and carers had demonstrated a very clear preference for remaining a Council administered service. I wanted Council to explore further options to reduce the ratepayer subsidy for the service so that the service might be able to continue on a cost neutral basis. Cost neutrality was an important goal in my view given other FDC services compete with the Monash service and do not have the benefit of such a subsidy and given the other options for FDC in the local community, it is not fair to Monash ratepayers to be providing such a significant subsidy.
Following the September Council meeting, officers distributed a survey to Monash FDC parents and educators seeking their views on fee increases in order to retain the service on a cost neutral basis.
Whilst some parents and educators indicated concern regarding proposed cost increases, there was also a clear indication that parents and educators trust the quality and reputation of the service and want it to continue as a Council operated service.
In this context, Cr Pontikis and I proposed to the October 2014 meeting that Council should continue to operate the program with a range of operational changes aimed at achieving cost neutrality. These included:
- reducing the number of positions in the Coordination Unit by 1.09 EFT with current supervision and home visits would be maintained at the current level;
- reducing expenditure associated with:
- facilitated playgroup provision: playgroups would be reduced from two playgroups to one playgroup per week;
- allocated FDC vehicles reducing from three vehicles to two vehicles;
- discontinue expenditure associated with:
- coordination unit facility rental including associated cleaning and utility costs at Kemp Lodge. Coordination unit staff would return to the Monash Civic Centre;
- FDC functions and celebrations for children and educators and families;
- transporting equipment and toys to educators; and
- provision of relief care whilst educators attend private appointments; and
- passing on the impact of the loss of the Australian Government’s Community Support Subsidy and ensuring a break even budget position through:
- increasing parent fees by $1.15 per hour; and
- replacing the educator levy (which is paid by educators) from a flat fee of $1.30 per week to $0.15 fee per hour.
It is important to note that the proposed fee increase of $1.15 per hour for parents is substantially less that the proposed fee of $1.75 which was the figure used in in consultation with parents and educators. Therefore, at $1.15 this fee increase is less than two-thirds the fee increase which the survey questions were based upon.
Given the preparedness of most parents to pay an increased fee of $1.75 in order to retain the service as a Council run service, it is expected that with the now substantially reduced fee of $1.15, an even greater proportion of parents will be willing to pay this fee. It is also important to note that all other family day care services are expected to increase their fees as they too deal with the loss of operational subsidy from the Australian Government from 1 July 2015. To our knowledge, most other services have not indicated yet what their fee increases will be.
However, given these expected significant increases, we believe that Monash FDC will continue to be priced very reasonably and cost effectively in comparison to other family day services.
Moreover, the strong track record and high quality of the Monash service will be preserved which our parents and educators have overwhelming told us is the reason why they want Council to continue to provide this service.
The proposed operational changes should be fully implemented by 1 February 2015 with all fee increases delayed until 1 July 2015.
Monash Family Day Care enjoys an enviable reputation for delivering high quality, flexible and affordable care. A future program, with reduced operational expenditure and increased fees should be given every opportunity to succeed. The operational changes detailed above are essential to ensure cost neutrality, and represent the fairest outcome for all stakeholders.
This solution represents the best outcome by balancing the desirability for Council to continue to provide a highly regarded service in a competitive local environment, while eliminating the unfair cost to ratepayers of doing so.
UPDATE (October 2016): The changes introduced by Council in October 2014 have been effective in maintaining the operation of the service at no net cost to ratepayers.
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