A nursery owner claims she was advised to put out donation buckets to make up for her “funding shortfall”.
Working parents of three and four-year-olds are eligible for 30 hours of free childcare.
Nicola Cannon, who runs a nursery near Woodbridge, says the rates paid by Suffolk County Council leave nurseries out of pocket.
Council leader Colin Noble says they are lobbying the government to increase the amount paid to Suffolk.
Nicola Cannon, who owns Melton Day Nursery, claims the shortfall is £1-per-child-per-hour and it would cost her £42,000 a year.
Government guidelines say charges can be made for meals and additional services.
“If parents don’t agree to make a voluntary contribution, it means I’ll either close or the quality of what I offer would have to change,” said Mrs Cannon.
Mrs Cannon said a county council officer advised her to take in ironing, provide takeaway meals for parents and have a donation bucket for contributions.
“It’s absurd – I’d have to have a significant-sized bucket to fit £42,000,” she said.
Colin Noble, Conservative leader of the council, said local authorities can retain 7% of the money given by the government for childcare provision, but the council has decided to retain 6.3%, and 5% next year.
“We spend that money providing services to nurseries, to make sure the quality of what they provide is as we would all want them to be,” he said.
He said he was not aware his officers had suggested Mrs Cannon put out a donation bucket and will investigate where that advice came from.
In a statement, the Department of Education said that “helping families access affordable childcare is at the heart of this government’s agenda” and that the government’s average hourly funding rate for three and four-year-olds, had increased from £4.56 to £4.94 in April 2017.
Source: BBC Suffolk