For discussion FCR(95-96)58
on 27 October 1995

ITEM FOR FINANCE COMMITTEE

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

Members are invited to approve supplementary provision of $14.09 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 approved provision for child care centre fee assistance is inadequate to meet increased expenditure in 1995-96.

PROPOSAL

2. We propose supplementary provision of $14.09 million under Subhead 175 Child care centre fee assistance.

JUSTIFICATION

3. Provision under 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.

4. Under the Child Care Centres Ordinance, the Director of Social Welfare (DSW) approves the fees for all child care centres. Based on the approved fees for the aided child care centres, the Social Welfare Department (SWD) will derive 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.

5. In view of the increase of the GMFAL for day nurseries and day crèches for the school year 1995-96, DSW estimates that expenditure for the financial year 1995-96 under the child care centre fee assistance will exceed the approved provision by $14.09 million, calculated as follows -

6. As regards day nurseries, the increase in expenditure is mainly due to a 17% increase in the GMFAL for the school year 1995-96 as a result of -

1. an improvement, with effect from 1 September 1995, in salary scales for child care workers in day nurseries, arising from implementation of harmonised pay scales for kindergarten teachers and child care workers;
2. an increase in the weighted average fee level for day nurseries to take account of inflation; and
3. an increase in the number of applications for fee assistance.

7. Regarding day crèches, the additional financial implications arising from improvement of salary scales of child care workers in day crèches and general inflation are more or less offset by savings resulting from rationalisation of manning levels and better utilisation of staff resources. Consequently, we expect a modest net saving of $20,000.

FINANCIAL IMPLICATIONS

8. If Members approve the proposal, we shall provide supplementary provision of $14.09 million by deleting an equivalent amount under Head 106 Miscellaneous Services Subhead 251 Additional commitments.

BACKGROUND INFORMATION

9. In the context of introducing a kindergarten subsidy scheme, the Executive Council endorsed on 9 May 1995, among other things, harmonised salary scales for kindergarten teachers and child care workers in day nurseries effective from September 1995. The harmonised salary scales represent a rationalisation of the then disparate pay scales of the kindergarten and day nursery sectors which are serving similar clients and discharge broadly comparable duties and responsibilities. On 16 June 1995, the Finance Committee approved funds for the introduction of the kindergarten subsidy scheme from September 1995.

10. Subsequent to the endorsement of the aforesaid harmonised salary scales, SWD conducted a separate review on child care workers in day crèches. The review recommended that the salary scales for child care workers in day crèches should be the same as those adopted for child care workers in day nurseries. It also recommended that a new child care aide grade be introduced to day crèches to enable a better utilisation of trained staff resources. This recommendation results in a manning ratio of one child care worker for eight children which fulfils the minimum statutory requirement. With the support of additional child care aide staff, the overall manning ratio remains unchanged at 1:6. The recommendations were endorsed by the Social Welfare Advisory Committee on 4 July 1995. The improved salary scales for day nursery and day crèche staff came into effect from 1 September 1995.

Health and Welfare Branch
October 1995

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