Municipal Day-Care Facilities

Nicole Lieb, Ludwig Maximilian University of Munich

Relevance of the Practice

Since 1 August 2013 all children from the age of 1 to the age of 3 are entitled to early childhood support in a day-care facility.[1] In practice, many local governments – especially in conurbations – are unable to meet the demand for day-care places because they lack financial resources to provide facilities or to expand or modernize existing day-care facilities, as well as to recruit sufficient personnel. According to an analysis by the Institute of the German Economy 273,000 childcare places for children under the age of three are currently lacking throughout Germany. More than every tenth child at this age cannot be cared for and the parents therefore are incapable to resume employment which also impacts the economy. This means that one of the local government’s core responsibilities, the safeguarding of services of general interest, is increasingly endangered. Ways must be sought of how local governments can fulfil their legal obligation to offer day-care places and the necessary expansion of the corresponding capacities without overburdening the local budget situation and their own personnel resources. Urban local governments (ULGs) in particular are struggling to find suitable properties and personnel.

Description of the Practice

The expansion, further development and improvement of the quality of day-care facilities has a high priority on the political agenda. Such intended objectives are established by the federal legislature, but their (costly) implementation in practice is incumbent on the Länder under the Basic Law (Article 83ff of the Basic Law [BL]). As a result of the prohibition on the assignment of responsibilities (Aufgabenübertragungsverbot) under Article 84(1)(7) BL, the problem has shifted to financial compensation between the Länder and the municipalities in accordance with the principle of connectivity of the respective Länder constitution.[2]

According to Social Security Code VIII (SGB VIII), the financing of day care facilities for children is regulated by the respective Länder law. Accordingly, the structures, responsibilities and level of financing for day-care in Germany vary greatly. There are different cost pillars within a day-care facility, for which there are different financing regulations (depending on the Länder). Each Land also uses a different personnel key for childcare (= for how many children one educator is responsible). In all East German Länder this key is traditionally much higher (i.e. less educators for the same amount of children) than in the west Länder. There is the need to cover operating costs (personnel and material costs) and investment costs, but also the possibility to receive further funding or demand parental contributions. In most cases, the financing consists of state subsidies (by Federal and Länder level), participation fees or charges, subsidies from the local public youth welfare institution, subsidies from the municipalities and personal contributions from the institution itself. That means municipalities, counties and Länder as well as sponsors, parents and the federal government share the financing which results in a network that is difficult to describe in every detail. Since this is not only regulated in the Länder day-care facility laws, but also in additional regulations and guidelines, an overview of the Länder is hardly possible. It becomes even more difficult when one considers that the regulations only give a coherent picture against the background of the general financial resources of the Länder, counties and municipalities as well as the municipal financial equalization (Finanzausgleich). Due to different financing structures the cost share remaining with the municipalities is not comparable across regions. The cost of a day-care facility to be borne by the parents also depends strongly on the place of residence, the institution, the age of the child, the care offered (i.e. personnel key) and the care periods and sometimes it is also influenced by social aspects such as income and the number of children in the family. The coalition agreement of 2018 presents as one of its objectives with regard to the topic ‘focus on families and children’ the expansion of the day care facilities and a reduction in parents’ fees up to and including exemption from fees.[3] The federal government is supporting the Länder with the ‘Gute KiTa’ Law with a total of EUR 5.5 billion until 2022 in measures to further develop the quality of childcare and to reduce fees for parents.[4]

However, two overall forms of financing have emerged. If the facility is subsidized irrespective of the actual occupancy of the places, the project-executing agency has planning security. This financing of the offer is also referred to as ‘object financing’ (Objektfinanzierung). If in contrast to financing via the ‘object’, only the number of actually occupied places – i.e. the children cared for – plays a role in the institution, this is referred to as ‘subject financing’ (Subjektfinanzierung). Each Land has to decide what is the best approach for its municipalities. This depends primarily on financial capacity, which is why structurally weak and therefore financially weak RLGs have to fight harder than flourishing ULGs. But the ULGs have to face problems like real estate and staff shortage.[5] It must therefore be ensured at the federal government and Länder level that the financial resources actually reach where they are needed (linkage to report section 5 on intergovernmental relations). RLGs naturally also have to struggle with declining financial resources due to population decline, while ULGs have to meet a greatly increased demand for day care places in a short period of time due to an increased influx. Both the birth rate seems to be rising again and migrants with their families prefer to settle in urban areas as they hope for better job and integration opportunities there.

Assessment of the Practice

Over the past decade, many support packages have been passed in Germany to promote day-care facilities. However, these packages are always only temporary financial aid, which does not give the facilities much planning security. Just as little planning security is provided by subject financing. The institutions are dependent on the support of the federal government and the Länder. Despite the introduction of a legal right to a place in a day-care facility, the practice continues to lag behind. This applies equally to urban and to rural areas. The promises made at federal level often lead to excessive financial demands on the individual municipality. Support packages by the federal government set fixed subsidy sums instead of sharing the actual costs incurred. A long-term solution to cost sharing must therefore continue to be worked on and above all the federal government and the Länder must make financial resources available on a long-term basis. In the best case, this happens without making the system more complicated than it already is. The individual municipalities are not in a position to run their own day-care facilities without sufficient financial support from the government levels. On the other hand, the danger of an increasing political influence on the self-governing structure of local governments through the increasing provision of financial resources at federal and state level should be taken into consideration.

References to Scientific and Non-Scientific Publications

—— ‘Financing’ (Bayerisches Staatsministerium für Familie, Arbeit und Soziales) <>

Korioth S and Müller M, ‘Gestaltungsmöglichkeiten bei der Finanzierung der Kindertagesförderung‘ (2019) 38 NVwZ 1065

Heitzer S and Wolff D, ‘Ein Krippenplatz für jedes Kind? § 24 Abs. 2 SGB VIII zwischen Förderung von Familien und Überforderung der Kommunen‘ (2018) 51 Die Verwaltung 523

Schoch F, ‘Aufgabenkreation des Bundes, Mehrbelastung der Kommunen, Ausgleichspflicht der Länder‘ in Hans-Günter Henneke (ed), Vergewisserungen über Grundfragen kommunaler Selbstverwaltung (Boorberg 2018)

[1] The responsibility therefore lays (in most of the Länder) within the counties or county-free cities, see para 69(I) SGB VIII in accordance with the respective Länder law.

[2] See for more details on the principle of connectivity Martin Burgi, Kommunalrecht (6th edn, CH Beck 2019) para 18 marginal no 6.

[3] ‘Coalition Agreement between CDU, SCU and SPD’ (2018)      <> see marginal no 735ff.

[4] See for more information and the measures already taken <>.

[5] The average salary of educators – and generally in social professions – is too low to afford the mostly expensive life in conurbations.