November 18, 1998
To:Community and Neighbourhood Services Committee
From:Commissioner, Community and Neighbourhood Services
Subject:National Child Benefit Supplement Reinvestment Plan
Purpose:
This report responds to the Community and Neighbourhood's Services Committee (C.N.S.) request to explore alternative
options for the reinvestment of municipal social assistance savings resulting from the implementation of the National
Child Benefit Supplement (N.C.B.S.) in Toronto.
Financial Implications:
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 $1.97 million by calendar year-end. After inclusion of savings from FBA clients, the
estimated net annualized impact for the City has been previously estimated to be approximately $7.0 million. 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)City Council endorse the Region of York's resolution requesting that "the Minister of Social and Community Services
rescind the decision to consider the National Child Benefit Supplement as income thereby deducting the supplements
from social assistance", and communicate this position to the Minister;
(2)should recommendation (1) not be approved by the Province, and within the current Federal-Provincial framework
agreement for the National Child Benefit, the City's savings from the implementation of the National Child Benefit be
reinvested to develop a combined strategy consisting of:
(i)provision of child care alternatives and service supports for children of low income families including those families
making the transition from Ontario Works into sustainable employment;
(ii)a shelter fund to address the high shelter costs of families with children;
(3)the Commissioner report back to Community and Neighbourhood Services Committee on an implementation plan to
carry out the proposed reinvestment strategy;
(4)pending provincial confirmation of the actual City savings and review of the City's reinvestment priorities, the
N.C.B.S. savings accrued be retained and designated in a reserve for future spending in accordance with the approved
reinvestment plan;
(5)City Council strongly encourage the Province to address shelter issues facing Ontario Works clients through the
creation of a shelter supplement program; and
(6)the appropriate City officials be authorized and directed to take the necessary action to give effect thereto."
Council Reference/Background:
At its November 5 meeting, the Community and Neighbourhood Services Committee considered the Community and
Neighbourhood's Services October 22 report proposing a reinvestment strategy for the City's savings in the social
assistance program resulting from the implementation of the N.C.B.S. At that time, Committee requested that the
Commissioner of C.N.S. report back in December on the following issues:
(a)the establishment of a Toronto Child Income Program and how such a program would be administered, including the
cost and the reaction for the 905 municipalities;
(b)any other options that could be considered, such as the provision of hot lunch programs; and
(c)the implications of any suggested options on the Ontario Works program.
This report examines these issues. Initially, the reinvestment plan discussed in the October 22 report to Committee is
reviewed.
Discussion:
I.Ontario's Approach to the N.C.B.S.
At its 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. Based on the
framework established by the Province governing the use of municipal social assistance savings achieved through the
implementation of the N.C.B.S., Council directed the Department to report further on a strategy for reinvesting these
savings.
Subsequently, senior officials in the Ministry of Community and Social Services (M.C.S.S.)shared guidelines governing
how these savings must be reinvested. Based on the program's objectives, savings must be used in two ways:
1.to help prevent and reduce child poverty; and
2.to promote attachment to the workforce by ensuring that families will always be better off as a result of finding work.
As discussed in the Department's October 22 report to Committee, the federal, provincial and territorial governments have
agreed on a joint approach to the National Child Benefit. On July 1, 1998, the Federal Government increased its benefits
for low-income families with children. Provinces and territories were to subsequently decrease 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 must then reinvest these newly-available funds in complementary programs which improve work
incentives, benefits and services for low income families with children. There is some variation in how provincial
governments have proceeded with the implementation of the N.C.B.S.
Ontario's approach is to deduct 100 percent of the income families on social assistance with children receive from the
N.C.B.S. The intention is that a family's overall social assistance entitlement before receipt of the N.C.B.S. will remain
unchanged. To implement the program in Ontario, M.C.S.S. included a specific regulation under the Ontario Works Act
which mandates that municipalities deduct the benefit. Because of the cost sharing partnership with municipalities, local
government shares the Province's obligation to reinvest its portion of the savings on social assistance in accordance with
the policy objectives of the National Child Benefit program. However, municipalities have not had a role in developing
the guidelines for using savings. Further, all municipal reinvestment plans will be reviewed by the Province.
In a recent communication from the M.C.S.S. Toronto Area office, dated November 12, 1998, the Ministry has identified
its priorities for municipalities. The first priority encouraged by the Ministry is "increased spending on additional child
care support for low income families to assist them in joining or participating in employment or to maintain their
employment." According to the Ministry, "Municipalities may wish to consider using N.C.B. reinvestment to offset their
20 percent contribution" to recently announced provincial programs, such as the new Learning, Earning and Parenting
Program (L.E.A.P.), which provide more flexible child care supports to families on O.W. who are involved in training or
upgrading activities, or who are working. At the same time, the Ministry clearly stated that municipal savings cannot be
reinvested to replace current program spending or leverage Provincial cost-sharing to create licensed child care spaces.
The Province is reinvesting its savings to create the new Ontario Child Supplement for Working Families. This new
program is designed to provide assistance to low and middle income families, with eligible families receiving up to a
maximum of $85 for each child under age seven. Parents who incur child care expenses to attend school or training
courses will be eligible, as will working families where one parent stays at home to care for their children.
Ontario's treatment of N.C.B.S. savings, involving deduction of the N.C.B.S. from a family's social assistance
entitlement, is shared by Manitoba, Nova Scotia and Prince Edward Island. Each of these provinces is also implementing
a range of programs aimed at reducing child poverty and increasing workforce attachment using the program savings
obtained by introducing the N.C.B.S.
British Columbia and Saskatchewan have developed programs which remove the support for children from the social
assistance system. In both cases, N.C.B.S. payments will be subtracted from all families' social assistance entitlement, but
benefits provided under the respective new child income programs will ensure that families are no worse off. However, in
both cases, families must file a tax return to receive the new basic allowances for children. Quebec is taking a very similar
approach. Alberta has effected a reduction in base benefits for all families with children. Families, in turn, must apply for
the N.C.B.S. to compensate for this loss of income. A supplementary benefit will be provided to recipients who do no
receive the full entitlement only if hardship is shown.
Only New Brunswick and Newfoundland obtained federal agreement to allow families in receipt of social assistance to
retain the new benefit in 1998-99 to compensate for social assistance rates which are the lowest in the country.
In each case, these reinvestment initiatives have been developed on the basis of Federal-Provincial agreements. There has
been no municipal involvement in the formulation of these agreements, or in the decision making processes.
II.A Combined Reinvestment Strategy for City of Toronto Savings
The Department is proposing a two-pronged reinvestment strategy, consisting of:
(a)provision of child care alternatives and service supports for children of low income families, including those families
making the transition from Ontario Works into sustainable employment; and
(b)creation of a shelter fund to address the high shelter costs of families with children.
As will be discussed below, the Department believes the two elements of the proposed strategy work together to provide
families with the types of critical supports they need to become independent of social assistance. They also reflect the
unique issues that parents on social assistance in Toronto face in trying to maintain stable housing, and obtain reliable
child care supports. It should be noted that the Department anticipates that the proposed strategy is consistent with the
objectives of the National Child Benefit and will therefore meet provincial requirements.
In its October 22 report to Committee, the Department discussed the advantages of reinvesting City savings from the
implementation of the N.C.B.S. to support the development and provision of flexible child care arrangements for children
of low income families, notably families seeking obtain sustainable employment and move off of Ontario Works.
This thrust is based on the recognition that families with children now comprise more than 50 percent of the total social
assistance caseload, and that the length of stay on assistance for families has been steadily increasing to its current level of
25 months. There is well documented evidence that such families often need access to a wide range of supports, as early
as possible, to prepare to re-enter the workforce, or to participate in value-added educational or community placements.
Any efforts the City can make to reduce the length of time families must remain on assistance, and increase their chances
of obtaining sustainable employment, will potentially benefit both the families involved, and the City.
The child care option presented by the Department (see Appendix 1) allow the City to prudently provide 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. An additional advantage is that the reinvestment of savings 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 also helps to avoid the redeployment of existing fee subsidy dollars away from the licensed child care system
to which they are already committed. Since the types of services included in the proposed reinvestment strategy for the
City are not subject to pooling, there will be no incremental within the pooled social services funding envelope.
Finally, this direction is consistent with both the Province's and City Council's emphasis on providing families with a
wider range of service options to address the unmet needs of the children of Ontario Works clients, and of the many
families eligible for child care but still on the waiting list. As discussed above, the Ministry has recently elaborated its
reinvestment priorities for municipalities, stressing the provision of child care supports to families to assist them in joining
or participating in activities leading to employment.
At the same time, the Department recognizes that housing stability is a basic need for all families on social assistance. It is
also an essential foundation for families' efforts to move into the workforce, or to participate in O.W. activities.
Currently, nearly 80 percent of all social assistance recipients live in private rental accommodations. The Department's
own analysis indicates nearly two thirds of all families with children in receipt of O.W. pay more than the maximum
shelter allowance for rent in Toronto. More than half of all single parents receiving O.W. pay more than 50 percent of
their total income toward shelter. The result is that often families have to substantial amounts of their basic allowances to
cover their rent. Fewer resources are available for other basic necessities, for providing for the health and welfare of
children, or for any expenses related to seeking employment.
Given the extremely low vacancy rates in the City, and the impacts of the new Provincial Tenant Protection Act, it is
particularly difficult for families with children to find affordable rental accommodation. This situation has persisted since
the Provincial rate cuts in 1995, and has been extensively documented in previous Departmental reports to the former
Metro Council.
A shelter fund delivered by the Department could provide direct financial support to families with children who
demonstrate needs for assistance in a number of areas: money for first and last month's rent, one-time assistance with
utility bills or other housing related costs, or assistance to relocate to less costly or more adequate accommodation.
However, the Department recognizes that a Toronto shelter fund is only a partial answer to the much larger challenge of
promoting housing stabilization among O.W. recipients. The Department noted in a previous report to Metro Council
dated August 15, 1995 ( "Shelter Supplement to Address Social Assistance Benefit Reductions") that "The stresses placed
on families...by sharply reduced shelter allowances will be detrimental to their efforts to achieve economic independence."
At that time, Metro Council strongly endorsed the creation of a shelter supplement for social assistance recipients
experiencing high shelter shortfalls.
Given the statistics reported above regarding the number of clients who still experience shelter shortfalls, the extreme
housing affordability issues which exist in Toronto, and the critical role housing stability plays in facilitating workforce
attachment, the Department reiterates its support for Provincial action to address the shelter issues facing O.W. clients
through the creation of a shelter supplement program.
Finally, it is incumbent that the City ensure that it takes every step possible to achieve program service targets, which it is
required to meet under Ontario Works. Failure to meet designated targets in any of the three O.W. program streams
(Employment Supports, Community Participation, Employment Placement) can result in the Provincial government
clawing back funds from the municipality. The Department believes that by directly supporting O.W. program activities,
including Community Participation, the provision of flexible child care arrangements will assist the City meet its service
targets. Similarly, helping O.W. families with children obtain or maintain suitable accommodation can positively affect
their participation in O.W. activities and potentially increase workforce attachment, in both cases supporting the
achievement of the City's O.W. targets.
III.Alternative Uses For City of Toronto Savings
There are a wide range of possible ways to use such savings. Support for the Public Health programs serving children,
such as the "Healthy Baby Healthy Children" program, or for hot lunch programs in the community are two potential
options that would meet the Provincial criteria for reinvestment of savings. However, in response to Committee's request,
the focus of this section is on issues related to the development and administration of a City of Toronto child income
program.
City of Toronto Child Income Program
In accordance with Provincial Ontario Works regulations, N.C.B.S. benefits must be deducted from all families on social
assistance who receive them. Therefore, it is not possible for the City to simply pass the benefit through to the client.
However, the City's net savings equal only 20 percent of the income deducted from the 26,500 clients who currently
receive N.C.B.S. funds, as the remainder flows to the Province. To re-imburse families, it will be necessary to identify the
total amount of the N.C.B.S. deduction for each case, and calculate 20 percent for subsequent disbursement. It is estimated
that the average amount returned per family would equal about $12.00 per month. Appendix 2 provides a breakdown of
the average monthly benefit for different family sizes.
It should be noted that all families will not receive the N.C.B.S. Currently, there are approximately 38,000 families with
children in receipt of O.W., of which 26,500 are eligible for N.C.B.S. Returning funds to eligible families will in effect
establish a two tier benefit structure, and introduce clear inequities into the current system.
Re-issuing benefits to families is potentially technically feasible, although a cumbersome technological system will be
required to make the necessary budget adjustments. The City must use the Provincial computer system (MAIN) to
re-instate benefits to clients, for which Ministry approval will be required. However, significant administrative resources
will be required. Caseworkers will have to manually enter the appropriate amount for each case with N.C.B.S. income
deducted. Given the potential for error in manual processes, supervisory staff will be required to review the process to
ensure entitlements are distributed accurately.
Key Issues and Concerns
Whether a Toronto child income program is technically or administratively feasible, there are a number of crucial issues
and concerns that must be considered with regard to pursuing such an option. These are as follows:
(a)In a preliminary consultation with legal counsel barriers to the creation of a separate Toronto program have been
identified. Under current regulations, "income" is calculated by taking " the total amount of all payments of any nature
paid to or on behalf of or for the benefit of every member of the benefit unit". Given the broad nature of this definition, the
payment of a municipal child benefit may be considered "income" for the purpose of determining the amount of a benefit
unit's entitlement. If the City's child benefit is considered "income", it would have to be deducted from the benefit unit's
entitlement and there would be no net increase in the amount paid to the benefit unit. A legal opinion on this issue will be
required if the City decides to pursue development of its own child income program.
(b)Provincial approval will also be required to use the current computer system (MAIN) to re-issue the deducted N.C.B.S.
income to clients. However, the Province has indicated it will phase out the computer system now used by the City in 6
months because it is not Year 2000 compliant. In mid-1999, the City must convert to the system (CIMS) currently used by
the Province and the majority of municipalities in Ontario. At this time, the Province is unwilling to consider any changes
to CIMS which are not required as part of Year 2000 preparations.
(c)While it may be possible to back out the program benefit costs of a Toronto child income program from pooling
calculations if the MAIN computer system is used, there will be no easy way to accurately establish administrative costs.
It is unlikely that 905 municipalities will consent to share any such costs associated with the creation of a separate
Toronto income support program which re-imburses N.C.B.S. savings to clients.
Summary:
There are a number of substantial resource, administrative and legal obstacles to the creation and implementation of a
separate Toronto child income program. Given these factors, the Department believes it is not advisable to proceed with
the development of a such a program at this time.
However, as a necessary precursor to making such an approach possible, the Department supports efforts, such as the
resolution recently passed by York Region Council, which requests that "the Minister of Social and Community Services
rescind the decision to consider the National Child Benefit Supplement as income thereby deducting the supplements
from social assistance"(see Appendix 3). Therefore, the Department recommends that Toronto Council endorse the
Region of York's resolution, and communicate its position to the Minister.
The Department is also concerned that a Toronto child income program will not provide critical supports to Ontario
Works recipients who are seeking to upgrade their skills, participate in community placements or take new jobs. Nor will
it assist the Department to achieve its Ontario Works program targets, with the attendant financial risks to the City.
Conclusions:
Based on the issues considered in this report, the Department is proposing a strategy for reinvesting N.C.B.S. savings
which consists of two elements:
(a)provision of child care alternatives and service supports for children of low income families, including those families
making the transition from Ontario Works into sustainable employment; and
(b)creation of a shelter fund to address the high shelter costs of families with children.
From the perspective of obtaining Provincial approval, of assisting O.W. clients to capitalize on opportunities to obtain
employment, and of meeting the City's program targets under O.W., these options represent the most effective way to
reinvest N.C.B.S. savings in Toronto.
Therefore, the Department recommends that the proposed reinvestment strategy be approved and that a further report on
the implementation of the strategy, 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 Names:
Heather MacVicar, General ManagerMarna Ramsden, General Manager
Social Services DivisionChildren's Services Division
392-8952392-8128
General Manager, Social Services DivisionGeneral Manager, Children's Services Division
Commissioner, Community and Neighbourhood Services
Appendix 1: 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. 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.
Appendix 2: National Child Benefit Supplement (N.C.B.S.) Monthly Entitlement
The Canada Child Tax Benefit (C.C.T.B.), of which the N.C.B.S. is the newest component, is calculated based on last
year's income and current eligibility (children in care). The maximum amounts apply to all families with net family
income of $20,921 or less.
For example, a single parent with one child would receive a maximum N.C.B.S. entitlement of $50.41 monthly which
must be deducted, per Provincial regulation, from their social assistance entitlement. 20 percent of this amount, or
approximately $10.00 per month, accrues to the City. This is the amount that would be available to return to this family on
a monthly basis.
In cases where the family has higher employment earnings, the entitlement would be scaled back as earnings increase. In
this case, the monthly N.C.B.S. entitlement would be progressively reduced from the maximum until it is eliminated.
