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Many early childhood centres are considering leaving the "20 hours free" scheme because of cash cuts announced in the Budget.

A survey of 526 centres shows more than a quarter are looking at leaving the scheme - which allows children aged 3 to 5 20 hours of free care each week - or have decided to do so.

If they do, parents will have to cover the cost of the 20 hours.

Those unable to pay will have to withdraw their children and keep them at home or find another centre still providing the 20 hours free.

Quitting the scheme is just one of the changes centres are considering, says the Early Childhood Council survey, which this month questioned centres most likely to be affected by the Budget funding cuts.

The centres surveyed care for 25,000 children throughout New Zealand.

Early childhood centres now receive funding at different rates, with the most going to those where all staff are fully qualified.

But from next year, the top two funding brackets are to be removed, cutting money for centres where more than 80 per cent of staff are qualified.

Most of the centres surveyed were in this bracket, and they expected to lose between $20,000 and $80,000 a year.

Eight per cent said the figure would be more than $100,000.

While many cost-cutting plans are being considered, most centres are planning to raise fees by up $40 a week.

Eight per cent of the centres surveyed planned to increase them by even more.

Other options being considered include reducing service levels, staff-to-student ratios and professional development for staff.

Some centres were considering spending less on food or cutting meals altogether, reducing the number of outings for children, shortening opening hours and reducing spending on building maintenance.

More than a quarter were considering the future of the 20 hours scheme.

Early Childhood Council chief executive Peter Reynolds said it was possible "the negative picture" might improve once centres had a chance to find ways of adjusting to the sudden funding change, and another survey would be done near the end of the year.

Education Minister Anne Tolley said she didn't accept that most parents would have to pay more as a result of changes announced in the Budget.

Less than half of all services were affected and those that were had been given more than eight months to adapt.

"Any centres which have taken a knee-jerk reaction to think about raising fees should consider their customers," the minister said.

Ms Tolley said alternatives to increased fees included reducing the number of qualified staff, making changes to the services offered or changing hours of operation.

New Zealand has 4300 early childhood centres. About 2000, providing care for 92,800 children, will be affected by the Budget changes.

MANAGING ON LESS
* Most centres with more than 80 per cent qualified staff expect to lose between $20,000 and $80,000 a year.
* Majority of centres are raising fees by up to $40 a week.
* Nearly half of centres looking at reducing staff-to-child ratios.
* More than a quarter plan on leaving 20-hours-free scheme.
* Low-income families expected to be big losers from cuts.