Tēnā koutou katoa
As stated in my last update, I have receiving a lot of questions from Centres regarding funding. In order to communicate with you more regularly and in light of your queries, I will be putting out a fortnightly Update.
Here are some answers to your most recent questions and observations – for instance I noticed that many people were quite surprised about my comment that 80 per cent of our sessions have a paid supervisor.
We recently completed a census of all our sessions and how many had a paid supervisor – and how many had two. In the week selected, 1,518 sessions were run, of which 1,214 had at least one paid supervisor, or 80 percent. Please note however, that these figures are somewhat increased by the programmes sessions (Space, BCP, Cycle) that run with paid facilitators only. If we look at general sessions the percentage drops to about 75.
Prior to receiving the new Government funding last week, I have seen in media reports that 101 Centres are facing closure. Which Centres and who decides?
As you may also have seen in the media, the $3.7 million funding announced last week has given us some breathing space, the means to offset our deficit and will help Centres to survive, at least in the short term.
But I want to assure you there is not a “hit list”. In so far as we have a list, it is an assessment done at a particular point in time (in this instance, it was in about July 2019) of Centres that were expected to become vulnerable to closure for a number of different reasons in the next three years. In that list, which we presented to the Ministry of Education prior to the Budget, we identified 101 such Centres. By the end of March 2020, that list was reduced due to some of the Centres closing their doors in the previous nine months. We have not done a reassessment but, sadly, I suspect the list would have grown if we did.
What was considered in the assessment?
The simplest measure was financial; which centres were operating at a loss and how long until they ran through their reserves. This was the largest category and for many Centres it is only distributions from their previous associations that are keeping them afloat. Unfortunately, when you are using savings for day-to-day operating and wages, then eventually tough decisions have to be made.
Not surprisingly we also identified many Centres that have been able to operate viably through use of volunteers to meet their licensing. However, they will no longer be able to do that with the change in the education programme without paid employees – a change of circumstance often moving a Centre, which is breaking even, into an unprofitable one. That then leads to a cycle of closing sessions, further reducing income and then eventually a financial situation where they will ultimately run out of money.
Not all buildings are equal and some of our Playcentres are in very poor condition. We also have many Centres built in the age of poor insulation and asbestos, which can result in some very expensive repair work. With quotes for repairs starting to come thick and fast in the many hundreds of thousands of dollars for single projects, our 6 percent of levies budget isn’t going to stretch very far. See my previous post for more on this.
Loss of building
As I said earlier, there is no Playcentre Aotearoa “hit list” of Centres. Unfortunately, some Centres are getting letters from their landlords or the landowners wanting to use the land or building for another purpose. With the cost to relocate one Centre now up to almost our entire annual budget for all property work, the ability to support new Centres without some significant external funding puts them at high risk of closure.
Lack of tamariki
Without community support, Playcentre doesn’t make sense. Centres that we have identified as having only one to two families attending won’t be able to cover costs. Low numbers also a sign that the Centre is not being supported by its community. Chances are these Centres will struggle financially and getting external support to keep the Centre open for a few families is going to be quite tough.
Wasn’t it a feature of the amalgamation that no Centre would be left behind?
The amalgamation predated my time at Playcentre Aotearoa but having studied the Action Research Team (Art Report) from 2013, the truth is that until we amalgamated the accounts the true financial position and property condition were simply a “best guess”.
However, hI can see that either the collated information was not correct, or our numbers have dropped considerably over the following six years resulting in far higher numbers of vulnerable centres than estimated at the time, resulting in less money, which has to be stretched much further.
If the estimates of the ART report were applied today, the 50 per cent Playcentre levies would sit at $7.7m per annum at today’s funding rates, however next year we are budgeting levy revenue of only $5.8m $1.9m less!
We also know that there were no property assessments at this time, and no one predicted the decay, which is systemic in certain parts of the country, and the enormous cost in getting these Centres back to operating standard.
If we were to take this action and prop all the Centres up using levies, those levies would have to rise, and not by a small amount, but, on our current numbers, by more than 100 per cent! In other words, even if all Ministry of Education bulk funding was used, it wouldn’t be enough, especially to correct some of the long-term property issues.
Does last week’s $4.2m funding announcement change this situation?
Yes, it does, but only for the short term, this funding is split into two parts, one part is $500k to carry out an assessment of the condition and needs of our property portfolio. Hopefully this will then give us a clear indication of exactly what we need to bring our properties up to standard and can apply for further funding to support this project.
The second item was an unconditional $3.7m to support Playcentre Aotearoa over the next 12 months. This will cover the budget deficit of $2.7m next year and allow an additional $1m to invest into our struggling centres to keep them licensed, our education program to support more parents and cover our immediate property needs.
However, we have only had this income once, and we will need to go back in to negotiate our long-term funding with the Ministry of Education and the post-election Ministers.
For now, we are out of the woods and the extra money has not just set a precedent but also bought us time to look internally at how we can grow our own numbers and better support our Centres and members.