For discussion FCR(95-96)131
on 8 March 1996

ITEM FOR FINANCE COMMITTEE

HEAD 170 - SOCIAL WELFARE DEPARTMENT
Subhead 175 Child care centre fee assistance

Members are invited to approve supplementary provision of $11.18 million under Subhead 175 Child care centre fee assistance.

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PROBLEM
PROPOSAL
JUSTIFICATION
FINANCIAL IMPLICATIONS
BACKGROUND INFORMATION

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PROBLEM

The revised provision for child care centre fee assistance is inadequate to meet increased expenditure in 1995-96.

PROPOSAL

2. The Director of Social Welfare (DSW) proposes supplementary provision of $11.18 million under Subhead 175 Child care centre fee assistance.

JUSTIFICATION

3. The original provision for child care centre fee assistance in the 1995-96 Estimates was $154.49 million. On 27 October 1995, Members considered FCR(95-96)58 and approved supplementary provision of $14.09 million (comprising $14.11 million for day nurseries, offset by a saving of $0.02 million from day crèches) to meet increased expenditure arising from an improvement to the salary scales for child care workers from September 1995, an increase in the weighted average fee level for day nurseries to take account of inflation, and an increase in applications for fee assistance. DSW estimated the amount of supplementary provision required then on the basis of the actual expenditure for the five months from 1 April 1995 to 31 August 1995.

4. DSW has updated the estimated requirement on the basis of actual expenditure from April 1995 to January 1996. He now estimates that expenditure for 1995-96 under Subhead 175 Child care centre fee assistance will exceed the revised provision of $168.58 million by $11.18 million, calculated as follows -

5. As regards day nurseries, the supplementary provision of $11.82 million now sought is mainly due to a greater than anticipated increase in the number of fee assistance recipients. In October 1995, DSW estimated the revised provision of $143.78 million on the basis that the average number of recipients per month would increase by 7% from 9 120 to 9 800. However, up to January 1996, the number of recipients per month has already increased by 22% to 11 100. Having regard to this trend, DSW anticipates that the number of applicants per month will increase further to 11 300 by March 1996.

6. As regards day crèches, DSW estimated the revised provision of $24.8 million on the basis that the average number of fee assistance recipients per month would be 840. However, up to January 1996, the number of recipients per month has decreased by 4% to 805. Therefore, he expects a decrease in the provision from his earlier estimate by $640,000 in this financial year.

FINANCIAL IMPLICATIONS

7. If Members approve the proposal, we shall offset the supplementary provision required by deleting an equivalent amount under Head 106 Miscellaneous Services Subhead 251 Additional commitments.

BACKGROUND INFORMATION

8. Provision under Head 170 Subhead 175 is for the payment of fee assistance, on a means-tested basis, to low-income parents who have a social need to place their children in full day care. Fee assistance was initially provided to children attending day nurseries but has been extended to day crèches since September 1994.

9. Under the Child Care Centres Ordinance, DSW approves the fees for all child care centres. Based on the approved fees for the aided child care centres, the Social Welfare Department derives the general maximum fee assistance level (GMFAL) on a per child per month basis in respect of day nurseries and day crèches. The GMFAL then operates as the maximum limit for granting fee assistance to individual applicants who have satisfied the means tests. The amount of fee assistance granted in each case is the difference between the relevant maximum fee assistance level or the actual fee charged, whichever is the less, and the amount of contribution payable by the parents under the Fee Assistance Scheme depending on their family income.

Health and Welfare Branch
February 1996

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