Moray Council is facing a potential £3.3 million black hole in its early years and childcare budget in the next financial year.
A combination of higher than predicted demand for free nursery places and an expected reduction in Scottish Government funding are the cause of the shortfall.
Members of the education, children’s and leisure services committee will discuss the issue at a meeting tomorrow.
Costs relating to the increase in uptake of statutory provision of 1,140 hours a year of free child care for three and four-year-olds, as well as eligible two-year-olds, has seen staffing costs rise, more lunches required and an increase in providing for children with additional support needs.
A rise in the hourly rate paid by the council to other childcare providers takes the estimated total to £1.9 million.
Moray Council to bear the brunt of £3.3m shortfall
The Scottish Government has changed the way it calculates funding, and while Cosla and local authority leaders are lobbying for that to be looked at again, if the decision stands it will see a drop of £1.4 million in the council’s grant.
In her report, early years service manager Hazel Sly warned while there was still uncertainty over the final figures, the council is expected to bear the £3.3 million shortfall, at least on a temporary basis.
She said: “Urgent action is being taken to contain costs where possible and an investigation will be undertaken led by internal audit to inform a further report to the committee to identify changes to be applied, the service implications of this and to consider options to address the total shortfall in budget once further clarity is available.”
Options to ease the budget pressures include continuing to lobby the Scottish Government over the funding formula, freezing the hourly rate for outside providers, bringing all early years provision in-house or even closing some council run nurseries could be considered.
However, none of them will cover the shortfall in its entirety, could lay the council open to legal challenge through breach of contract, cause overcrowding at some nurseries or leave the local authority in a position of not being able to meet its statutory obligations.
