Ontario child-care operators warn of closures if province doesn't soon revise funding

Child-care centres are at risk of closing across Ontario if the province doesn't soon update how it compensates them under the national $10-a-day program, the largest operator is warning.

The plea from the YMCA and other providers comes as the province seeks to significantly boost the amount of child-care spaces. When Ontario signed on to the program in 2022 it committed to creating 86,000 spots, though the province's budget watchdog estimates demand will outstrip that supply by more than 220,000 spaces.

YMCA child-care programs represent one-fifth of all licensed spots in the province, and while the non profit is a big supporter of the $10-a-day program, it says the way it is currently being funded is not sustainable.

"Unfortunately, while cost savings are being offered to families, the cost burden on operators like the YMCA has grown," the charity is telling the government in a pre-budget submission.

"This is because the current approach to revenue replacement funding is insufficient, leaving many non-profit operators with deficits and uncertain outlooks as we negotiate with each municipality for pressure funding."

Revenue replacement not enough, operators say

The fees parents pay for child care have been cut in half, with the provincial government replacing that revenue to centres using its share of federal funding that Ottawa doled out to provinces and territories when they signed on to the program.

But that calculation is not cutting it, some operators say.

Traditionally, child-care centres have raised parent fees when they faced rising expenses such as staffing costs, catering, rent, heating and supplies. However, any operator that wanted to sign on to the plan had to freeze their fees in March 2022, and many voluntarily froze them in 2020, not wanting to raise rates during the COVID-19 pandemic.

That means the government's revenue replacement model is based on rates that don't reflect the true current cost of providing child care, operators say, and the 2.1 per cent increase Ontario has factored in for 2024 to account for inflation is not nearly enough. That number for 2023 was 2.75 per cent.

"We are hearing more and more operators who are ready to close their centres and leave this profession behind," said Sharon Siriboe, director of the Ontario Association of Independent Childcare Centres, who also runs a child-care centre in Peel Region.

"Although we have had revenue replacement, it has not been enough for many operators as they continue to struggle to stay afloat during very challenging economic times."

What the YMCA and others want to see is what they're calling a "full cost recovery" model.

'They haven't figured it out'

Carolyn Ferns, policy co-ordinator for the Ontario Coalition for Better Child Care, said operators should be able to submit budgets and if costs are reasonable, they should be covered.

"(Revenue replacement) was the only way they could have done it initially," she said. "That was 2022. We're in 2024 now and they haven't changed the model. They haven't figured it out."

Jamison Steeve, chief strategy officer for the YMCA of Greater Toronto, said the YMCA had hoped to see a new funding formula in the fall of 2023, but that did not materialize. It needs to come sooner rather than later, Steeve said, because right now the charity is essentially subsidizing the cost of care.

"(For) an infant in our care, if it's under the current funding model, we would be running at a loss of between $10,000 to $13,000 a year ... if the funding formula isn't corrected going forward," he said.

"It's difficult for any provider in the not-for-profit or for-profit sector to have that level of uncertainty on a year-to-year basis of what the funding model is going to look like."

A spokesperson for Ontario Education Minister Stephen Lecce said the province is pushing for more federal money.

"While Ontario will continue to increase funding annually to operators, starting this month, we will commence a review of the federal deal and vigorously advocate for a long-term increase in funding to better support operators and families," Isha Chaudhuri wrote in a statement.

A spokesperson for Jenna Sudds, the federal minister of families, children and social development, said the agreements when provinces and territories signed on to the program were designed to provide them flexibility to respond to inflation, and the funding increases each year.

"The Government of Canada continues to engage with (provincial and territorial) governments to understand better their needs and challenges and support the successful implementation of a Canada-wide (early learning and child-care) system," Soraya Lemur wrote in a statement.

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Child-care centres across the country are so short-staffed that they have serious doubts that the national $10/day child-care program's expansion plans will be viable.

Operators are also waiting for funding from the province to boost the wages of early childhood educators, as Lecce announced late last year. In the meantime, a workforce crisis persists, with many centres including the YMCA unable to recruit and retain enough staff to operate at full capacity.

That money should come soon, as well as funding to increase the wages of non-ECE child-care staff, who represent about 40 per cent of the workers in licensed child care, say advocates and operators.

"You had staff work as front-line workers during COVID-19, and a lot of them feel undervalued in this profession," said Siriboe, of the Ontario Association of Independent Childcare Centres.

"The way operators can at a minimum incentivize staff to stay on is by creating a workplace culture of appreciation and higher wages."