Preschool funding changes face scrutiny as not-for-profits warn of cutsents take shape

Member for Cootamundra Steph Cooke has asked the NSW Government to explain how preschool funding changes will affect regional and rural community preschools. She lodged a question on notice in the Legislative Assembly on 10 November, seeking financial modelling, consultation details and safeguards for services facing reductions.

River Region Early Education (RREE) has separately estimated combined funding reductions of approximately $277,000 in 2027 and $551,000 annually from 2028 across three services affected by preschool and long day care funding changes.

“Our communities rely on these services. If rural preschools become financially unviable, families cannot simply enrol their children somewhere else,” general manager Felicity Michael said in a report published by Shepparton News.

Which services could receive less funding?

Ms Cooke asked how the Government had assessed the financial impact on regional and rural community preschools. She also sought the number of services in the Cootamundra electorate projected to receive less funding and whether modelling of individual services’ reductions would be released publicly.

The question raised asks how lower enrolments, workforce shortages, transport barriers and higher delivery costs were considered. It also seeks measures to prevent funding reductions leading to fewer services, staff cuts or restricted enrolments.

Other parts address consultation and whether the Government would consider transitional funding or a no-worse-off guarantee. These questions seek information for preschool leaders needed when planning staffing, enrolments and budgets for next year.

Not-for-profit providers warn of pressure on family fees

Six not-for-profit early learning providers released a joint media statement announcing a campaign against what they describe as a $150 million reduction in funding for preschool programs in long day care from 1 January 2027.

The providers warned that not-for-profit services may need to increase fees to remain viable. Their concerns relate to preschool programs delivered within long day care, being a  separate funding arrangement from the Universal Preschool Funding model for community preschools.

The NSW Government has announced a $255 million Fee Relief for Long Day Care program, providing eligible families with up to $2,625 per child in 2027. The providers argue that fee assistance does not resolve the loss of funding supporting preschool program delivery.

Community preschool transition funding applies to 2027 only

The 2027 Universal Preschool Funding guidelines includes a one-off Transition Arrangement payment to eligible community preschools who have less funding calculated than they received under the 2026 Start Strong funding. This payment is a proportion of the funding gap and takes into account changes to service delivery. It will be a one-off payment for 2027 funding only.

Location loadings and an Operational Adjustment are also available for services who meet the relevant criteria.

Government responses are required by 15 December 2026. These questions require information about funding at the service level and what support is provided. This will allow providers to understand how it will affect staffing, enrolments and budgets for 2027. The Member for Cootamundra has asked questions in parliament, you can view the questions here.