March 12, 1998

To: Community and Neighbourhood Services Committee

From: Commissioner of Community and Neighbourhood Services

Subject: Child Care Demand Related to the Ontario Works Program

The purpose of this report is to provide additional information concerning the current levels of child care service in support of social assistance recipients and to identify the future child care service demand related to the Ontario Works program.

Funding Sources, Financial Implications and Impact Statement:

The 1998 budget request from Children=s Services includes $ 9,570.0 thousand dedicated to the Ontario Works child care program. These funds are sufficient to support up to 2,050 subsidized spaces.

It is recommended that this report be received for information.

Council Reference/Background/History:

During the March 2, 1998 briefing and March 9, 1998 presentation to the Budget Committee, the Department was asked to identify the current level of subsidized child care services being provided to social assistance recipients and to identify the future service pressures on child care which will be exerted by the Ontario Works program.

Comments and/or Discussion and/or Justification:

Potential Demand for Child Care Subsidies

Mandatory participation requirement in Ontario Works applies to all clients who are not excused by the virtue of permanent ill health or old age, or whose youngest child does not attend school. The municipal staff understands that the mandatory requirement includes those parents whose youngest child is enrolled in either junior or senior kindergarten; in such cases the mandatory requirement may be limited to the time periods during which the child attends school. In order to assess the potential impacts of Ontario Works on the existing child care system, an analysis of December, 1997 General Welfare Assistance (GWA) and Family Benefits Allowance (FBA) caseload, together with current Children's Services data, was undertaken.

According to the latest service statistics there are 18,525 families with 24,739 children who have mandatory Ontario Works participation requirements. Of this total, 15,943 children are from families on GWA and 8,796 children are from families on FBA.

An examination of the service statistics within Children=s Services shows that as of March 9, 1998, there were 9,387 children of social assistance clients in receipt of subsidized care. Only 3,186 of these children were from families who would meet the mandatory Ontario Works participation requirements; the parents of the remaining 6,201 children are involved in full time work, study or have documented special needs. Even without a legislated requirement, it is gratifying how many parents with young children are voluntarily pursuing educational or employment opportunities with the support of a child care fee subsidy.

If all children whose parents have mandatory participation requirement require child care, an additional 21,553 subsidy spaces may have to be provided. Although the actual participation requirement may be limited to the school attendance periods, a successful attachment to full time employment or education will most likely require ongoing, full time subsidized child care.

The gross cost of providing the additional 21,553 subsidies is approximately $133.0 million ($26.6 million net); however, this is significantly less than the continuing cost of maintaining these families on social assistance because of lack of affordable child care. For example, for 5,326 of these children who are from single-child families, the annual savings of providing subsidized child care as opposed to welfare would be $15.2 million (net).

The child care system could not accommodate any large scale infusion of subsidized children without a corresponding expansion in the licensed capacity; currently there are less than 2,000 licensed vacancies.

Existing Ontario Works Funding

The original child care strategy for Ontario Works approved as part of the Business Plan in 1997 assumed that the majority of children served would be of school age. The 1997 and 1998 operating budgets projected an expenditure of $9.6 million for 2,050 spaces of which at least 1,000 licensed spaces and all 500 informal care spaces would be used by school age children. Experience has shown that there is already significant utilization of subsidized child care by younger children (infants, toddlers and preschoolers) of Ontario Works participants; instead of 73 per cent, only 21 percent of Ontario Works funded child care spaces are filled by school age children. Parents of children not in school are classified as voluntary Ontario Works participants. This higher than anticipated level of voluntary participation and the higher costs of caring for their younger aged children have severely strained the financial resources specifically dedicated to the child care component of Ontario Works. Without additional dedicated resources, the Department will face difficult priority admission decisions to manage within the current child care allocation to Ontario Works. It runs counter to the basic intent underlying the overall Ontario Works program to discourage or impede the transition of any client from welfare to sustainable employment.

Impact on Regular Subsidy Clients

Without the financial resources to meet the growing service pressure generated by the roll-out of the Ontario Works initiative, the regular child care subsidy system will also be affected. Although the former Metro Council directed that service to Ontario Works clients should not impede access to child care subsidies for other low income families, without substantial expansion a re-examination of the "first-come first-served" policy currently in place will be necessary.

Furthermore, if Ontario Works clients displace or replace low-income working subsidized clients, there will be a corresponding loss of user revenue. (Ontario Works clients contribute $2.33 less through user fees that the regular subsidized user.) This loss of user revenue which currently helps fund the 20 per cent local share under the 80:20 cost sharing formula of child care services would have to be made up by an increase in the net city contribution to this program; for every 1,000 children displaced by Ontario Works clients, the resulting loss of revenue is approximately $0.6 million.

Conclusions:

This information report was prepared at the request of the Budget Committee to help inform consideration of the Children=s Services budget request.

Contact Name:

Petr Varmuza

Asst. General Manager

Children=s Services Division

Telephone: 392-8297

E-Mail: varmuza@csis.csis.csd.metrotor.on.ca

General Manager of Children=s Services

Commissioner of

Community and Neighbourhood Services