NSW sets out COVID-19 free preschool funding rules
The Sector > COVID-19 > NSW sets out COVID-19 free preschool funding rules

NSW sets out COVID-19 free preschool funding rules

by Freya Lucas

April 23, 2020

Following an announcement earlier in April, the New South Wales Government has released detailed information about the objectives, process, funding conditions and spending rules for the COVID-19 Free Preschool Funding program for community and mobile preschools. 


Readers should be aware that the NSW Department of Education is working with sector representatives to finalise program implementation, which includes funding guidelines. As such, the advice given below, while correct at the time of publication, is subject to change. 


Readers are encouraged to cross reference this information with that provided by the Department, the most recent version of which (if applicable) will be found on the Department’s website, here



Recognising that preschools operating in NSW have been affected by the COVID-19 pandemic, with some experiencing a significant reduction in enrolments, the NSW Government have announced that time-limited payments will be made to community preschools and mobile preschools. 


These payments are top up payments which are designed to replace a portion of the fee income being lost as a result of fewer enrolments due to COVID-19. 


The top up payments will consider Start Strong Funding and mobile preschool funding already provided or allocated by the NSW Government, as well as support provided under the Federal Government JobKeeper program before any additional funding is provided. 


It is hoped by the NSW Government that the payments will support the community sector to remain viable, support the retention of the workforce, and provide relief in cost of living pressures for NSW by making community and mobile preschool free for children in NSW for up to six months, covering the periods of Terms Two and Three of the 2020 academic year. 


Who is eligible, and what funding is available? 

Services who receive Start Strong funding as community preschools, and mobile preschools on contracts are eligible to opt in to receive funding under the program. 


If a service decides to opt in, Start Strong funding or mobile preschool contract funding will be based on August 2019 enrolment levels, paid at 2020 funding rates. In addition to this, the COVID-19 Free Community Preschool Funding program is designed to replace a reasonable level of fee income so that free preschool can be offered.


The maximum additional funding a service will be eligible for will be 100 per cent of half year fee income, based on the data provided in the August 2019 census, with a 2 per cent indexation rate applied. 


The minimum funding a service will be eligible for will be 80 per cent of half year fee income, based on the data provided in the August 2019 census, with a 2 per cent indexation rate applied. 


Funding will be paid to each service, up to a $34 daily fee cap for each of the following cohorts: 

  • equity children aged three years and above
  • non-equity children aged four years and above
  • non-equity children aged three years.


Services who are not eligible for JobKeeper

When a service is not eligible for JobKeeper payments, they will receive something in the window of 80 to 100 per cent of fee income for Terms Two and Three, with that amount to be calculated based on data provided by the service in the 2019 August census, to which 2 per cent indexation will be applied. 


For example, if the fee income for a mobile preschool service, for both terms, based on 2019 census data, including indexation, is $100,000, that service will receive the full $100,000 across the two terms (if the average daily fee for all eligible cohorts is $34 or less).


If the same service was charging an average daily fee, across all eligible cohorts, of more than $34, then the service would receive at least $80,000, with the exact amount to be determined based on other funding sources as mentioned above.


Services who are eligible for JobKeeper

For those services who are eligible for support under the Federal JobKeeper program, the Department emphasised that, in the first instance, services should enrol in the JobKeeper scheme, saying “it is important that (services) work through the program information” to determine their eligibility. 


If a service is eligible, JobKeeper payments may apply for the period from 30 March to 27 September, and provide up to a total of $19,500 per eligible employee over a six month period. 


The enrolment process for JobKeeper is now available on the ATO website


Funding under the COVID-19 Free Preschool funding program may be provided as a top up to the Australian Government’s JobKeeper program where the funding received through JobKeeper is less than the amount the service is eligible to receive under the COVID-19 Free Preschool Funding program.


For eligible services, funding support may be provided from multiple sources, such as a combination of JobKeeper and/or the COVID-19 Free Preschool Funding program. 


In the event that a service qualifies for JobKeeper payments, and the JobKeeper payments are more than the amount for which the service is eligible under the COVID-19 Free Preschool Funding program, the service will no longer be eligible for COVID-19 Free Preschool Funding. A table which outlines the distinction is available here


Applying for funding 

Eligible services who wish to participate in the NSW Funding scheme are invited to apply through the SmartyGrants platform, where the process will be made available shortly. 


To be eligible for funding, a service must comply with the following criteria:

  • Enrol in the JobKeeper program in the first instance (if eligible).
  • Remain open and available (unless on public health advice).
  • Provide at least 15 hours of free preschool to families.
  • Retain staff where possible.
  • Prioritise access for children of essential workers, vulnerable and disadvantaged children and existing enrolments.
  • Provide suitable outreach (or distance education) to children who are enrolled but not physically attending.


Preschools can provide more than 15 hours of delivery for free should they choose to do so, and fundraising activities and donations are still able to be accepted under the funding guidelines. 


The Department will email services when the system is online, and services are encouraged to enrol as soon as possible to take advantage of the opportunity. 


Payment information and spending rules 

Payments for eligible services will be made from May and July, for community preschool and mobile preschool services respectively.


Where the circumstances of a service change – for example, where enrolment levels move significantly, or when adjustments to JobKeeper payments are made – adjustments to funding may occur. 


All funding received must be spent by 31 December 2020, with activities under the program required to commence during the 2019/20 financial year.


The funds must be spent on the operational costs of the preschool, and must prioritise: 

  • free preschool and fee relief for families
  • staff wages to enable retention of the workforce

Services must have accepted the Early Childhood Education Funding Terms and Conditions for 2019/2020 to receive payment, with acquittal of funds required following the completion of the 2020 calendar year. 


Further information and support 

The information provided above has been sourced from the NSW Department of Education, with the original information found here


For further support, or to speak to someone about the funding program, the Department may be reached by phone on 1300 755 426, or by email at [email protected]

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