Province's child care changes will put 6,000 subsidized daycare spaces into question, city official says

City officials raise concerns over daycare funding According to city staff, a funding shortfall could result in the loss of 6166 child care subsidies.

Changes by the Ontario government regarding funding for child care are expected to cost the City of Toronto $84.8 million in 2019, while putting more than 6,000 subsidized daycare spaces for low-income households into question, according to city calculations.

A memo, obtained by CP24, was emailed by city manager Chris Murray to Mayor John Tory and Toronto’s 25 city councillors on Thursday. In the memo, Murray informed city officials of the results after crunching numbers pertaining to recent changes to provincial funding for child care and the new provincial child-care tax credit.

“These changes, combined with the discontinuation of the fee stabilization support program used to mitigate increases to child care fees, will have a negative impact on families paying child-care fees,” Murray wrote.

Murray explained that the cumulative impact of the changes at $84.8 million for this year alone breaks down to $28.6 million for reduction in allocation and $56.2 million for cost-sharing changes. He expressed that the 2019 Ontario budget did not provide enough detail to determine the city’s funding allocation for subsidized child care in 2019.

Murray estimated these losses based on the provincial government’s new child-care tax credit, dubbed Ontario Childcare Access and Relief from Expenses (CARE), and an annual update from Children’s Services that stated funding allocations.

“This represents a direct pressure on the 2019 Children’s Services operating budget, which city council has already approved and for which the municipal levy bylaw has been passed,” he wrote.

“This year’s memo did not provide sufficient detail to determine the exact funding allocation that the city can expect for 2019. However, staff has noted that there will be financial impacts due to a reduction in the city’s allocation, as well as potential impacts arising from policy changes by the ministry.”

CARE, which was introduced in the 2019 Ontario budget, provides families, on a sliding scale, with incomes of up to $150,000 up to 75 per cent of their eligible child care expenses.

Lower income households could receive up to 75 per cent of their eligible child care expenses incurred as of the beginning of 2019, with up to $6,000 for children between the ages of zero and six, $3,750 for children between the ages of seven and 16 and up to $8,250 for children with severe disability.

“The province has reported that the average annual tax credit benefit per family will be $1,250,” Murray wrote. “Staff have no information from the province at this time on how this tax credit may impact fee subsidies in the future.”

“In general, the CARE tax credit is of less benefit to families when compared to a child care fee subsidy, and middle and lower-income families are most affected by the change in different approaches.”

On Wednesday, it was announced that some daycare fees were already on the rise due to the discontinuation of a $50 million fund that helped child care centres cover increasing labour costs without passing them on to parents.

The province said the so-called fee stabilization support was introduced last year under the then-Liberal government as minimum wage increased from $11.60 per hour to $14 per hour and was not to be continued in 2019.

A statement from Minister of Education Lisa Thompson’s office said the Progressive Conservative government “is committed to easing the financial burden on hard-working Ontario families.”

“We’ve invested up to $2 billion to support child care this year alone, while increasing funding for child care workers through the wage enhancement grant and creating up to 30,000 new child care spaces,” the statement read.

“In an attempt to protect child care funding for future generations, our government is looking at ways to better deliver services and reduce administrative costs.”

The statement said these reductions are “primarily at the administrative level,” while asking the city to look at ways to “make their operations more efficient instead of passing on these costs to parents.”

“We are challenging municipalities to reduce their administrative spending on child care delivery by five per cent and refocus that funding on things like subsidies for low-income families,” the office said.

“There is no need for a single child care space to be lost as a result of a five per cent administrative change.”

The Minister of Education’s office said they have already taken steps to assist the City of Toronto in the process of removing “a number of red tape requirements and administrative burdens.”

“Instead of funding administrative costs, our government is focused on putting money back in parents’ pockets so they can make the best child-care decisions for their families.”

Councillor Michael Thompson is expected to hold a news conference on Friday to discuss the Murray’s memo.