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As kinder funding ramps up, so does its complexity – do you have the right systems in place to meet your obligations?
Marketplace Editor
Mar 07, 2023
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2023 has seen a broadening and deepening of State and Territory commitments to the funding of kindergarten and preschool programs across Australia.
One such program, Start Strong 2023 in New South Wales has expanded its funding pool materially with long day care (LDC) providers that deliver kindergarten programs now included in the funding arrangements.
Over the course of the last three weeks, services that have registered with the NSW Department of Education will have received substantial credits to their bank accounts with the specific aim of supporting the delivery of affordable quality preschool education to children aged four years and above, as well as a new trial payment for three year old kinder.
For many LDC providers participation in the program and the amounts of money provided will be a first, and accordingly it is essential that they are across their accountability obligations from the start.
“As kindergarten and preschool funding moves up the political agenda there will certainly be an increased focus on ensuring that recipients are spending what is essentially tax payers money properly,” Ben Marcos, a certified practicing accountant and founding member of specialist ELC bookkeeper Early Learning Bookkeeping, said.
“We have certainly seen a significant increase in our user community seeking advice as to how to properly spend, track and account for the different types of funding streams.”
“It's very important that providers get this piece right. We do not expect the NSW Government to adopt a ‘give and not check’ stance anymore. 2023 marks a step change in funding, and with that will mark a step change in accountability.”
“As specialist early learning bookkeepers we are very well placed to guide providers through the life cycle of the funding from receipt all the way to demonstrating their financial accountability to their respective state or territory Government.”
Spending, tracking and reporting - The three steps providers must get right
With funding balances, in particular in NSW, now disbursed there will be a strong temptation for providers to spend now, and ask questions later. With a step change in Government oversight ensuring compliance going forward Early Learning Bookkeepers does not advocate this approach.
“Getting the foundations right from the get go is very important to protecting providers from recourse to the Government at the end of the year,” Mr Marcos said. “We have developed a simple three step process that creates a system that automatically lends itself to easily demonstrating financial accountability when the time comes.”
Spending: Making sure you are spending correctly
Understanding spending rules for kindergarten and preschool funding may seem straightforward but perhaps unsurprisingly, given the increase and complexity of funding streams, it is not.
For example, did you know that the four year olds funding can be used to pay salaries for educators AND early childhood teachers, but the three year olds trial funding stream can only be used to pay for salary and wages for early childhood teachers? And that the four year olds stream allows for wellbeing support payments but the three year olds stream doesn't?
When it comes to the fee relief funding there are nuances as well. For example, if you are unable to disburse it across the year, residual funds can be used to increase affordability for non eligible children and also, importantly, can be spent on kinder program requirements too.
“Knowing precisely what the funding can be spent on is very important,” Mr Marcos said.
“We work with our clients to help them identify what best suits their services' particular spending needs and in turn obtain maximum benefit from the fund provided.”
Tracking - Keeping tabs on expenditure effectively
Once decisions are made on how funding will be spent, the next step is to ensure that suitable tracking processes are in place to protect services from overspending and also provide visibility to address any underspends.
“At Early Learning Bookkeepers we have created what we believe is a very simple tracking tool which provides service leaders, or those responsible for tracking funding, with the means to ensure they know precisely what they have spent on, when and how much,” Mr Marcos said.
Mr Marcos also highlighted that just giving a spreadsheet to a team leader to update is not enough to ensure good outcomes in this area.
“It is essential that service leaders responsible for funding are across the intent of the funding, the reasons for the tracking and why going forward their ownership of this part of the funding cycle can protect the organisation from unnecessary regulatory scrutiny and ensure that children, educators and families make the most of the funding itself,” he added.
“This creates a sense of share responsibility which is very powerful as a motivator.”
Reporting - Adopting the correct accounting practices
The final piece to get right when it comes to funding management is the process that is perhaps most distant from service leaders' day to day responsibilities but can make or break a service's ability to demonstrate their financial accountability to the Department of Education.
“As specialist bookkeepers our expertise is making sure that any kindy funding related expenses are accounted for in the right place in an efficient and streamlined manner,” Mr Marcos said.
“No longer do business owners or leaders have to stay back after work to submit individual invoices to their bookkeepers. Our systems are very efficient and are at a level of sophistication that lend themselves to effortlessly identifying what spend category an invoice might fall into.”
From a kindergarten funding perspective this is essential, as eligible expenditure on resources, professional learning, well being or whatever the category of spend needs to be correctly identified at the point of entry into the bookkeeping system so as to enable matching of funds received with funds spent.
“From our perspective, this is the area where we are adding most value to our clients seeking kindergarten funding support,” Mr Marcos added.
“Given our deep understanding of how the funding works, how service leaders work and what the Department expects we have crafted an intuitive, almost fail safe system, to ensure that not only are funds correctly spent, they are correctly allocated and correctly submitted so that all stakeholders are satisfied.”
“That's the benefit of working with an organisation like Early Learning Bookkeepers. We are more than just bookkeepers. We provide an end to end service across the early learning sector that is aligned, through our own experience, with getting the best outcomes possible."
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