Protecting Refunds to Parents and Employee Salaries when Student Care Centres Cease Operations

Name and Constituency of Member of Parliament

Mr Jackson Lam, Nee Soon GRC

Question

To ask the Minister for Education (a) whether security deposits required of new Student Care Centre and Kindergarten Care operators will be sufficient to cover refunds owed to parents and outstanding employee salaries in the event of an operator's sudden failure; and (b) whether similar safeguards will eventually apply to existing operators.

Name and Constituency of Member of Parliament

Mr Ng Shi Xuan, Sembawang GRC

Question

To ask the Minister for Education whether the Ministry has assessed (i) the cumulative impact of the new security deposit guarantee on student care operators managing multiple centres, including its effect on banking facilities and working capital (ii) whether financial institutions may require smaller operators to provide cash collateral and (iii) the cliff effect arising from the tiered multipliers when enrolment crosses each 50-student threshold.

Combined Response

1. Mr Speaker, my response will address oral question No XX on today’s Order Paper and the related oral question scheduled for the 7 Oct sitting, on the security deposit requirements for Student Care Centre (SCC) operators in our schools.
2. For new SCC contracts commencing December 2026, operators will be required to provide a new security deposit. This includes existing operators who are awarded new contracts. The security deposit is intended to mitigate financial losses incurred by MOE in the event of an operator's default or failure to meet its contractual obligations. MOE will support affected students as appropriate. The operators are responsible for outstanding employee salaries.
3. 3. MOE has sized the security deposit at about one month of the SCC’s total fees to guard against potential losses, while avoiding excessive burden on operators. The security deposit is tiered by enrolment so that operators with lower revenue from a smaller enrolment provide a smaller deposit. The quantum is also pegged to the lower bound of each enrolment tier to ensure operators of centres with enrolment just above a threshold are not unduly burdened.
4. To ensure operators have sufficient time to make the necessary arrangements, the estimated enrolment and security deposit computation for each SCC are stated upfront in the tender documents. Operators are required to fulfil this requirement through a letter of guarantee from a financial institution six months from the commencement of the contract. The requirements imposed by financial institutions, including whether collateral is required, will depend on commercial factors such as the operator's creditworthiness, financial standing, and existing relationship with the financial institution.
5. MOE will monitor and review the implementation of this requirement.