North East councils that operate childcare centres are lobbying the Victorian and federal governments to remediate funding so jobs are protected and care for families continues.
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Free childcare and a new funding model came into effect across the sector on April 6, with the federal government paying 50 per cent of a centre's fee revenue.
While centres run privately could make up for lost income with the Job Keeper payment, local councils are not eligible for it, leaving a shortfall.
Wangaratta Council, which has 60 educators across its Handley Street facility and family day care, has joined with Regional Cities Victoria to find a solution.
"Our childcare centres are still open and running as per normal, though they certainly don't have the numbers did have," mayor Dean Rees said.
"We don't get any relief as a council from Job Keeper - we have to foot the bill ourselves.
"We are lobbying ... and we would hope to have something within the next couple weeks.
"They (the federal government) can't be funding privately-owned childcare centres and not subsidise councils in the same situation.
"We need to have this as an equal playing field.
"If we can get past this situation, then we won't have to stand down staff - we have no plans to do that."
The Victorian government is being pressured to provide relief similar to what the NSW government announced, but the federal government has also been lobbied to change its model.
Indi MP Helen Haines has been contacted by the Wangaratta, Alpine, Indigo and Murrindindi councils about the issue.
Dr Haines said the fact that NSW had allocated funding to council-run childcare showed there was a problem with the federal government's policy.
"I thought Victoria would follow suit, but they haven't," she said.
"There were good intentions here, but the unintended consequences for local government-run childcare centres, or childcare centres that have been operating for less than 12 months, is really problematic."
Education Minister Dan Tehan opened "exceptional circumstances" funding under the new package on April 10, directing providers to make an online application.
Dr Haines had hoped this avenue would help council providers.
"People in Wodonga and Wangaratta haven't been able to access the fund; there's problems with the guidelines and broken links with applications," she said.
"The exceptional circumstances fund needs transparency and clarity, it needs to be operational and right now it isn't.
"If that doesn't remedy the problem, we need this reviewed very quickly."
As reported by The Border Mail, the "flaw" in the funding had put Greater Hume Children's Services at risk.
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Greater Hume corporate and community services director David Smith updated his council on Wednesday, explaining for family day care educators with their own ABN, council would pass on their 50 per cent allowance of what was the childcare subsidy and help them to apply for the Job Keeper.
"In the short-term my advice is that next week the federal government will be giving us a double payment of the 50 per cent allowance we are going to receive, and that will allow us to pay the family day care educators a full normal pay next fortnight," he said.
"Then a fortnight after that, when their next pay is due, by that date we're into early May and our advice is by then the Job Keeper situation should have kicked in.
"With those payments, it should mean they're not financially disadvantaged."
Mr Smith is still awaiting details on the NSW government funding.
"With the centres, we have a commitment form the NSW government but no detail yet, so I can't put my hand on my heart and say the funding situation for the centres has been resolved," he said.
