ECE Funding Handbook

Welcome to the Early Childhood Funding Handbook. This Funding Handbook is issued under section 548(5) of the Education and Training Act 2020. The funding paid to licensed services is paid subject to the terms and conditions set out under this Handbook and must be complied with. The terms used in this Handbook are based in the Education (Early Childhood Services) Regulations 2008.

This Handbook is designed to be a ‘one-stop-shop’ for all you need to know about early childhood funding, including:

  • the Early Childhood Education (ECE) Funding Subsidy
  • 20 Hours Early Childhood Education (ECE)
  • Equity Funding
  • the Annual Top-Up for Isolated Services

Note: The information in the Funding Handbook does not apply to certificated playgroups. These services should contact their Ministry regional office for further information.

Downloading the ECE Funding Handbook

If you want a printed copy of this handbook, refer to the list of downloads in the contents section where you will find downloadable PDF versions of each chapter.

ECE Funding Handbook downloads

Licensing Criteria Cover

4-3 Fees, donations and optional charges

H symbol.  E symbol.  K symbol.  R symbol.  Books.

  • Introduction
    • This section explains the financial payments services may and may not request from parents for the period children are enrolled for 20 Hours ECE.

      There are three types of payments. They are fees, donations, and optional charges.

  • Definition of a fee
    • A fee is a payment that is required as a condition of enrolment and can be enforced. It includes any compulsory payment regardless of the type: wages, salary or any other payments made by the parents /caregiver to either the educator or the service provider

      Enforcement is when a service withholds or withdraws enrolment, or withholds or withdraws parts of their service (for example children not permitted to take part in certain activities), or attempts debt recovery.

  • Parents must not pay fees for 20 Hours ECE
    • Parents must not be charged fees for hours claimed as 20 Hours ECE.

      The service provider must ensure parents do not pay a compulsory fee for hours covered by 20 Hours ECE, either to the service provider or to the educator. Where parents pay home-based educators directly, the service provider is responsible for fully reimbursing parents for compulsory fees paid for the hours covered by 20 Hours ECE.

      Parents may be charged fees for hours outside the 20 Hours ECE maximum of six hours per day and 20 hours per week per child.

  • Definition of a donation
    • A donation is a voluntary payment. There is no obligation to pay and there is no enforcement of payment.

  • Services may request donations
    • When requesting donations, services must ensure that donations are not described as fees, or by any other term that implies that they are compulsory.

  • Definition of optional charges
    • Optional charges are a request for a payment that parents may choose whether or not to make for a specific purpose, which can be one-off or ongoing, that:

      • is for the education and care of the child; and
      • is above what is required to meet the regulated standards; and
      • can be separated out and measured.

      Optional charges should reflect the real and actual costs of the additional item or activity.

      Parents must have a choice about whether they want to pay for the additional item or activity covered by the optional charge. They must be informed in writing that agreeing to an optional charge is not compulsory, and they must not be penalised for choosing not to pay an optional charge.

  • Non-compulsory
    • Parents must be informed in writing that agreeing to an optional charge is not compulsory and services must not make agreement to pay optional charges a condition of initial or continued enrolment.

  • Agreement to optional charges
    • When a parent agrees to pay an optional charge, the specific items covered by the charge, and the agreement to pay the charge must be part of the enrolment process and recorded on the enrolment agreement.

      An agreement to pay ongoing optional charges must include information about how long the agreement will last and/or what the rules are about making changes to the agreement.

      Once an agreement to pay has been reached then services may enforce payment.

  • Acceptable optional charges
    • Optional charges can only be requested for:

      • aspects of provision that are not required by regulation
      • additional staff beyond the minimum regulated adult/child ratios
      • items that parents may either provide for their own children, or pay for the service to provide.

      Services must ensure that the activity or item offered exceeds/is over and above what is required by regulation.

      For example:

      • specific teaching resources such as a dance or music teacher
      • excursions and entrance fees
      • transport
      • sunscreen lotion
      • clothing items such as sun hats
      • food.

      Optional charges cannot be requested for the administration of 20 Hours ECE, wage administration for Home-based educators, home management or ‘payment top-ups’. Further information on this can be found at the website.

  • Requesting optional charges for excursions and transport
    • An optional charge should only be requested for excursions if:

      i. There is a direct cost associated with the excursion (e.g. an entry fee); and/or
      ii. Travel is required to get to the destination, specifically any distance greater than what could be considered reasonable to reach by walking

      Any optional charge for an excursion must be for the education and care of the child, and be able to be separated out and measured.

      Costs must be itemised so parents can see how the optional charge is to be spent. Requesting a nominal hourly rate for unspecified excursions and transport does not meet the intent of an optional charge.

      Optional charges can be requested at any time after enrolment. Therefore, if requested at the time of planning the excursion, the charge can reflect real and actual costs.

  • Unacceptable optional charges
    • Optional charges can not be a condition of initial or continued enrolment, or requested for:

      • aspects of provision that are required by legislation
      • general contributions towards the cost of high quality education and
      • care provided by the service or due to the service being well regarded
      • home management (in the case of ECE provided in the child’s own home)
      • wage administration
      • wage top-ups
      • administration of 20 Hours ECE
      • excursions that do not meet the criteria for excursions and transport.

      Following the reintroduction of the 100% funding band on 1 January 2021 services will no longer be able to request additional payments from parents to help contribute the cost of having more than 80% certificated teachers. 

      For more information can be found at the website.


  • Enforcement of payment
    • Once a parent has agreed to pay an optional charge, the service may enforce the payment as they would enforce a fee.

  • Parents who choose not to pay optional charges
    • If a parent chooses not to pay an optional charge, the only action a service can take is to withhold the additional feature(s) covered by the optional charge. By choosing not to pay an optional charge, parents are agreeing to not have access to that additional activity or item.

      Parents who choose not to pay an optional charge must receive at least the standard of service required by the regulations. It is the responsibility of the service providing 20 Hours ECE to ensure parents do not pay a fee for hours covered by 20 Hours ECE, either to the service provider or the educator (in the case of a Home-based service).

  • Changing optional charge agreements
    • Services must allow reasonable opportunities for parents to review their decisions regarding optional charges. Either party may initiate a change to the agreement, but both parties must agree on the changes.

      Any change to agreements on optional charges is a change to the enrolment agreement.