October 22, 1998

To:Community and Neighbourhood Services Committee

From:Commissioner of Community and Neighbourhood Services

Subject:A Proposed Reinvestment Strategy for Municipal Savings Resulting

from the Implementation of the National Child Benefit

Purpose:

This report proposes a reinvestment strategy for the City's savings in social assistance payments resulting from the implementation of the National Child Benefit and describes the rationale underlying the proposal. Details concerning the performance measures that will be used to monitor and evaluate the impact of the proposed strategy are not available at this time and will depend on reporting guidelines soon to be released by the Province.

Funding Sources, Financial Implications and Impact Statement:

Fiscally, the projected net savings from the Social Assistance program as a result of the implementation of the National Child Benefit are expected to be $1,972.3 by calendar year-end. The savings are accruing at a rate of approximately $575.0 per month. After inclusion of savings from FBA clients, the net annualized impact for the City has been previously estimated to be approximately $7,000.0 . It is also important to recognize that the level of savings available will change with fluctuations in the Social Assistance caseload.

Recommendations:

It is recommended that:

(1)the City's savings from the implementation of the National Child Benefit be reinvested to develop and provide a broader range of care alternatives and service supports for children of low income families including those families making the transition from Ontario Works into sustainable employment;

(2) pending provincial confirmation of the actual City savings and acceptance of the City's reinvestment priorities, the savings accrued be retained and designated in the Social Services Reserve for future spending in accordance with the approved reinvestment plan;

(3)the Department report further on how the success of the reinvestment strategy will be monitored and evaluated once provincial accountability and reporting requirements are known; and

(4)the appropriate City Officials take the necessary action to give effect thereto.

Council Reference/Background/History:

At their July 1998 meeting, Toronto City Council approved a report entitled "National Child Benefit Supplement" which outlined the origins and implications of the National Child Benefit program for families on social assistance and which directed the Department of Community and Neighbourhood Services to report further on a strategy for reinvesting the expected fiscal and annualized municipal savings from this program. In subsequent correspondence from senior officials in the Ministry of Community and Social Services guidelines governing how these savings must be reinvested were shared. Based on the program's objectives savings must be spent to either prevent and reduce the depth of child poverty or to promote workforce attachment. As one specific option, the Ministry has been actively encouraging the city to consider increased spending on additional child care support for families on social assistance to facilitate their transition from welfare to work. Ministry officials have also advised the City that it must declare its reinvestment priorities by November, 1998.

Comments and/or Discussion and/or Justification:

How the National Child Benefit Works

Federal, provincial and territorial governments have agreed on a joint approach to the National Child Benefit that involves three simultaneous steps. On July 1, 1998, the Federal Government increased its benefits for low-income families with children, thereby assuming more financial responsibility for the provision of basic income support for children. Corresponding with the increased federal benefit, provinces and territories decreased social assistance payments for families with children while still ensuring that these families receive the same level of overall income support from government. Provinces and territories then have the obligation to reinvest these newly-available funds in complementary programs which improve work incentives, benefits and services for low income families with children. In Ontario, because of the cost sharing partnership with municipalities, local government shares this obligation to reinvest its portion of the savings on social assistance in accordance with the policy objectives of the national Child Benefit program.

A Proposed Reinvestment Strategy for the City's Savings

It is proposed that the City's savings resulting from the implementation of the National Child Benefit program be reinvested to support the development and provision of a broader range of care arrangements for children of low income families including those making the transition from Ontario Works into sustainable employment. More specifically, the City's savings could be used creatively in a variety of ways to achieve this overall service objective. These include:

(a) supporting the start-up and development costs of strategically located non-licensed community programs that meet the recreational needs and interests of school aged children requiring out of school care while their low income families are earning, learning or engaged in community participation activities;

(b) purchasing service on behalf of school aged children of low income families who require assistance with their care arrangements during out of school times including after school, professional development days, seasonal and summer breaks. Service options would focus on non-licensed but accountable community programs such as recreation services, family resource centres, boys and girls clubs, etc.;

(c)purchasing increased service from summer day camps to provide another summer service option for low income families who might otherwise continue to utilize a regular child care fee subsidy over the summer school break period;

(d) providing increased access to non-licensed care options for children of families graduating from Ontario Works but not yet eligible for or desirous of a regular child care fee subsidy arrangement; and

(e) providing a top-up payment (in lieu of wage subsidies) to the base provider rate paid to providers under subsidy contract with licensed home child care agencies. This would facilitate expansion of home capacity within the licensed home child care sector. Expansion of this flexible child care service option for low income families has been difficult in the absence of the additional wage subsidy dollars needed to pay at established provider rate scale.

Reinvesting social assistance savings in developing and providing a broader range of child care options makes sense for a number of reasons. This strategy is consistent with the objectives of the National Child Benefit and will therefore meet provincial requirements. It allows the City to prudently explore a broader range of flexible service options for children requiring care while their parents earn or learn than would normally be possible through the regular fee subsidy system which requires cost shared dollars to be spent on licensed care only in accordance with the Day Nurseries Act. This strategy is also consistent with recent provincial suggestions that the child care service strategy for the Ontario Works program be revised to include more part-time and informal care alternatives. The strategy is also in line with Council's direction to explore a broader range of service options to address the unmet service needs of the children of Ontario Works clients and the many families eligible for child care subsidy but still on the waiting list.

The reinvestment in non-licensed service options does not negatively impact the City's continued commitment to the subsidized child care system. Spending these savings in this way helps to avoid the redeployment of existing fee subsidy dollars away from the licensed child care system to which they are already committed. Spending these reinvestment dollars on a broader range of programs which can meet some of the care needs of low income families also helps Children's Services to develop relationships with new service partners and to encourage more cross sectoral co-operation in planning a range of service options for children. This strategy will also be timely in encouraging the inclusion of recreational and other non-licensed programs for children within the local planning process currently underway to update the City's existing Child Care Service Plan. And finally, investing the savings from the National Child Benefit initiative in a broader range of child care service options for low income families avoids one significant concern raised by neighbouring municipalities who are part of the pooled payment system. Since the types of services included in the proposed reinvestment strategy for the City are not subject to pooling, any concern about an inflationary impact within the pooled social services funding envelope is unfounded.

For all of the reasons discussed above, reinvesting the National Child Benefit savings in a broader range of care options for the children of low income families is a prudent strategy for the City to adopt.

Details concerning specific financial allocations and service level expectations can not be provided until the level of savings has been confirmed by the Province. If the proposed reinvestment strategy is approved in principle the department will provide additional allocation details as part of the 1999 Children's Services budget request.

Conclusions:

The Department recommends that the proposed reinvestment strategy be approved and that a further report on the allocation details and the way in which the initiative will be monitored and evaluated be provided once the level of savings accruing to the municipality has been confirmed and the Province has clarified its reporting requirements with respect to this program.

Contact Name:

Marna Ramsden

General Manager

Children's Services Division

Tel.: 392-8128

General Manager of Children's Services

Commissioner of Community and Neighbourhood Services