OSCARs is a Hartlepool Borough Council-run childcare service operating all year round during term time and school holidays.
The service – which operates from two sites – is open to children across town between the ages of four and 16.
But counc
il bosses say the service is not sustainable with the current fee structure.
Independent councillor Cath Hill, portfolio holder for children's services, is set to discuss a proposed change to charges next week.
OSCARs operates a flexible fee policy based on the number of children using the service and whether their parents work.
Last year it cost just over £200,000 to run the scheme but officers say there is a funding deficit of £80,000.
Currently, the most parents pay is £6.15 for the afterschool club and £11.30 for the holiday club sessions.
Coun Hill is asked to approve one of two options; to either break even by removing the sibling discount and the unwaged subsidy.
That would see the after school cost rise to £7.20, a rise of 17 per cent, and the holiday club full day session to £16.75, a rise of 48 per cent.
Or option two, a staged approach to break even, which would see the afterschool session cost £6.60, a 10 per cent rise and the holiday club session rise to £13, a rise of 15 per cent.
But the council would need to subsidise the child care with this option.
A report to the meeting by Danielle Swainston said: "OSCARs budget continues to overspend even when costs have been reduced to the bare minimum.
"If more income is not generated the service cannot be sustained. This means that OSCARs will either have to close or other services for children and families will have to close to subsidise this service.
"There is a risk that if fees are increased that parents will choose to remove their children from the childcare due to affordability.
"This will initially reduce income. Research carried out to ascertain where parents live who access OSCARs show that the majority come from more affluent areas therefore implying that a rise in fees will not have substantial impact.
"Parents on low incomes can claim working tax credits for childcare and therefore will not feel the impact of the increases."
The report added that in comparison to out of school childcare in other parts of the region, OSCARs current pricing is below average.
OSCARs operates from two sites in town, the Miers Avenue Sure Start centre and the Owton Manor Community centre, in Wynyard Road.
The afterschool club service operates from 3.15pm-6pm and the holiday club operates between 8.30am-5.45pm.
The portfolio meeting is due to take place on Tuesday, August 3, at 10am, in the Civic Centre, in Victoria Road.
