Section 548 of the Education and Training Act 2020 provides for the payment of funding to eligible early childhood services subject to conditions so that they may provide early childhood education. Services which fail to meet these conditions may no longer be eligible for funding and either all or part of this funding may be recovered by the Ministry of Education.

Education and Training Act 2020 – New Zealand Legislation

• ¹ Eligible services are services that hold a licence under the Education (Early Childhood Services) Regulations 2008.

Education (Early Childhood Services) Regulations 2008 – New Zealand Legislation

Recovery of funding

If the results of a funding claim audit and/or reporting on an RS7 Return and/or RS3 Initial Application for Funding for an Early Childhood Service forms indicate that the amount of funding provided is greater than it should have been, the amount of the over funding will be:

• repayable by the service to the Ministry of Education on request and
• treated as a debt which the Ministry can offset against all or any funding sums payable by the Ministry to the service provider.

When a service has received less funding than it is eligible for, the amount of any underpayments will be credited to the bank account nominated by the service provider as soon as is reasonably possible. However, the Ministry may choose to verify whether services are eligible for any underpayments of funding before these are made, for example by way of a funding claim audit.

Offsetting funding recoveries

The Ministry may offset against all or any funding or other sums of money payable by the Ministry to the service provider, any debt or other sum payable to the Ministry by that Service Provider.

In these cases, the debt or liability will have been outstanding to the Ministry for a period of 30 days or more.

Funding may be withheld in part or in full

The Ministry may, subject to any conditions and for any period, determine that no funding is payable either in full or in part for any service(s) where:

1. the service has temporarily closed and for the period of that closure, or
2. the service’s licence has been suspended and for the period of that suspension, or
3. the service’s licence has been cancelled or revoked, or
4. the service provider has not met any of the conditions set out in the Early Childhood Education Funding Handbook or in any other documentation which was the basis for receiving funding. This includes the failure by the service(s) to maintain accurate records to the standard required by the Ministry,
5. the service has not met the financial reporting requirements for early childhood education (ECE) services that are outlined in Chapter 12 of the Early Childhood Education Funding Handbook, or
6. If the service has not responded, by the due date, to requests made by the Ministry for services to provide complete and accurate information as required by conditions of funding and/or section 619 of the Education and Training Act 2020 through the Early Learning Information System (ELI) or any alternative authorised method, to enable the Secretary for Education or the Minister of Education to exercise their powers or carry out their responsibilities under the Education and Training Act 2020, and as permitted under Privacy Principles 10 and 11.
7. the service provider is in debt to the Ministry and is unable or unwilling to repay the Ministry either immediately or within the timeframe prescribed by the Ministry, or
8. the Ministry is satisfied on reasonable grounds that the service provider’s financial viability is at risk (for example if there is a substantial debt owed to the Ministry, Inland Revenue, or some other person or agency) or there has been a change in some other circumstances that may affect its ongoing ability to provide the services required, or
9. the service or the service provider is the subject of an investigation for fraud or financial mismanagement, the funding may be withheld for the period of that investigation pending its outcome. If the investigation finds there is fraud or financial mismanagement, the funding arrangement for that service will be reviewed to determine, at the sole discretion of the Ministry, the service or service provider’s continuing eligibility to funding, or
10. the service or the service provider is in receivership or liquidation.

For the avoidance of doubt, nothing in the paragraphs above prevent the Ministry from decreasing the amount of the grant paid in advance to a service where the Ministry has reasonable grounds to believe that the matters set out in paragraphs d), g), h), i) or j) above may apply.