"This is the first decision we've made as a result of the funding cuts to early childhood education," association manager Angela Jacobson said yesterday.
In June, the Government announced changes to the way early-childhood education was funded.
Its funding was based on the number of qualified teachers employed in centres.
From February 1, 2011, early-childhood services will receive funding for 80% of qualified staff.
Kindergartens were staffed 100% by qualified teachers and at present received funding at that level, so the new rates would mean a 20% decrease, or $234,000, in the association's operating budget, Mrs Jacobson said.
The salary component of the association's expenditure could not be reduced.
The Central Otago association is responsible for six kindergartens - two in Alexandra, one at Hawea Flat and two in the Queenstown area.
It will withdraw from offering a home-based service as from September 17 this year.
The service caters for 19 children, with six educators, but was struggling to be viable, she said.
"With the cuts to the budget, we can no longer sustain this service."
Barnardos KidStart would take over the service and would continue to offer the families that used the service the Government 20-hour early childhood subsidy for three and four-year-olds.
The association met Central Otago kindergarten teachers last week to discuss the funding cuts but there was no suggestion savings would be made by reducing staff numbers or making teachers redundant, Mrs Jacobson said.
"What we're looking at is ways of basically trying to recoup half of the loss, $117,000, by increasing our income in some way and cutting costs somehow.
We're still working through that process, but should have some more information available about that next week on our cost-cutting measures."
The association believed it was vital to retain 100% qualified teachers in kindergartens to continue to offer a top service, she said.
