When Core Funding was introduced in 2022, services previously in receipt of ECCE standard capitation (of €69 per week per child) received an additional €9.75 per child per week through Core Funding – an increase of 9.5%. For the current programme year, ECCE capitation and Core Funding combined will be €80.40.
Core Funding operates alongside the National Childcare Scheme (NCS), the Early Childhood Care and Education (ECCE) programme and Equal Start and constitutes additional income for providers on top of funding for these schemes, as well as income from parental fees. Core Funding incorporates funding for administration and to support the employment of graduate staff, replacing the Programme Support Payments and ECCE Higher Capitation, respectively.
No service is less well-off under Core Funding. Core Funding is distributed in a fair and reasonable manner that is related to services’ costs of delivery. Core Funding addresses some of the existing disparities in funding levels across ECCE and non-ECCE provision, providing funding proportionate to the age ratio of children being cared for and supporting the employment of graduate Lead Educators across ELC provision. While Core Funding operates in addition to and alongside ECCE (standard capitation), AIM, CCSP, NCS and Equal Start, it replaces ECCE higher capitation and incorporates funding previously allocated to the discretionary Programme Support Payments (PSP) from September 2022.
The Core Funding Partner Service Funding Agreement for 2022/23 programme year (Year 1) included a funding guarantee to ensure that providers received the same level of funding from Core Funding as they did from Higher Capitation and PSP, assuming their circumstances including the numbers of graduate staff and the type of service offered remained the same in the 2022/23 programme year as in 2021/22. All other services saw increases in funding.
In year 2, a funding guarantee applied for services whose annual allocation was lower than the combined annual allocation of the 2022/23 Core Funding and Interim Funding, provided they offered the same amount of graduate-led provision and the same number of hours and weeks of service. However, the increased State investment from year 2 onward, which allowed for the introduction of new targeted measures, meant that the funding guarantee was no longer required from year 3.
The introduction of Core Funding in 2022 brought a significant increase in investment for the sector, with €259 million of funding paid directly to services in year 1 of the scheme, of which €210.8 million was entirely new funding to the sector.
Core Funding has seen consistent increased State investment to the sector year on year. Core Funding increased by 11% to reach €287 million for the second year of the scheme (September 2023 to August 2024), and again by another 15% to €331 million for the third year of the scheme (September 2024 to August 2025), and rising by a further 20% to over €390 million in the current fourth year of the scheme (September 2025 – August 2026).
I was delighted to announce further investment in Core Funding in Budget 2026. The additional funding being made available in 2026 will see the allocation for Core Funding in the next programme year which begins in September 2026 increase to over €480 million. That is an additional €87.6 million on the current full year allocation, or a 22% increase.
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.
The graduate premiums provide additional funding on the basis of graduate leadership in a service. The Graduate Lead Educator Premium is paid out at a rate of €4.44 per graduate-led hour in rooms with ELC capacity, while the Graduate Manager Premium is paid out a rate of €4.44 per graduate-led hour in ELC or combined ELC/SAC settings.
The targeted measures consist of a flat rate top-up for sessional-only services, a minimum base rate allocation and a maximum base rate allocation. The flat rate top-up for sessional-only services is paid out at an annual rate of €5,000 per service or a weekly rate of €96.15 to services who are registered with Tusla to offer only sessional provision.
The minimum base rate allocation is currently set at €14,400. Any centre-based service whose base rate allocation (and flat rate allocation where applicable) falls below this level will see their grant automatically topped up to the minimum allocation.
The maximum base rate allocation is currently set at €450,000. No service will receive more than this amount in respect of their capacity. The Graduate Premiums and Staff Funding Additional Contribution are applied separately and can bring a services allocation above the minimum or maximum value.
The Staff Funding Additional Contribution is a newly introduced element of the grant designed to distribute the ring-fenced funding for improving staff pay and conditions, contingent on the establishment of updated Employment Regulation Orders. This funding is ring-fenced for staff pay and conditions and can only be used for this purpose, and €45 million is available for this purpose.
The calculation of the Staff Funding Additional Contribution per service is linked to the staffing requirements set out by regulations and reflects that the funding that has been available for graduate-led provision for the previous three years can and should be facilitating higher rates of pay for graduates.
The release of the funding is contingent on the establishment of updated Employment Regulation Orders by the independent Joint Labour Committee.
It is important to note that although there are various elements used to derive the grants for individual services, the eligible areas of expenditure of the Core Funding grant are much broader. Services can choose how to spend their Core Funding grant in accordance with the approved areas of expenditure outlined in the Funding Agreement. The Staff Funding Additional Contribution is the only element of the grant which has a prescribed use.
The year 4 allocation reflects increases secured in Budget 2025 to facilitate 3.5% capacity growth and to ensure that providers have increased income to continue to be able to meet rising costs whilst maintaining an effective fee freeze.
Unlike other funding streams within the Department, a place does not need to be filled for a service to receive funding, but the service does need to have the necessary staffing in place to meet the regulatory adult to child ratios.
The Department is confident in the adequacy of the new funding model 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.