November 18, 1998

To:Community and Neighbourhood Services Committee

From:Commissioner of Community and Neighbourhood Services

Subject:Payment of Former City of Toronto Daycare Grants

Purpose:

This report recommends payment of the former City of Toronto Daycare Grants to child care programs which meet the original grant criteria. The implications of adhering to the original grant criteria are identified in the report and the development of a strategy for the future disposition of the grant funds is recommended.

Funding Sources, Financial Implications and Impact Statement:

As part of amalgamation, the former City of Toronto Daycare Grant Program was transferred to the Children's Services Division of the Community and Neighbourhood Services Department. The recommendations contained in this report can be financed from funds approved for this purpose in the 1998 Children's Services budget.

Recommendations:

It is recommended that:

(1)a total payment of $543,564.00 from the former City of Toronto Daycare Grant funds be made immediately to eighty-four of the ninety-nine child care centres considered for funding in the amounts identified in Appendix I of this report;

(2) the Daycare Grant Program be reviewed in 1999 with the intent of streamlining and harmonizing how child care centres are funded and the Department recommend funding strategy changes to Council early in 1999; and

(3) the appropriate City Officials be authorized to take the necessary action to give effect thereto.

Council Reference/Background/History:

Funding for licensed child care centres comes from a variety of sources both public and private. Over the past fifteen years a very complicated mix of provincial grants (wage subsidy program), cost shared fee subsidies, and parent fees has evolved. Through purchase of service agreements, this municipality provides funding to child care programs on behalf of families eligible for subsidized child care. These fee subsidy costs are shared with the Province of Ontario on an 80:20 basis. The City calculates the per diem rates it will pay to child are operators by reviewing their operating costs net of any grants they receive directly. Many child care centres currently receive direct grants from the Ministry of Community and Social Services who introduced its wage subsidy program in 1987. Provincial wage subsidies may fund up to one third of the salaries of child care centre employees. However, the funding of the provincial wage subsidy program is capped and has not kept pace with ensuing growth in the child care system. This has resulted in an uneven distribution of these direct provincial grants. Where programs have received these direct grants, their per diem rates for subsidy purposes have been adjusted to prevent double funding.

The former City of Toronto introduced its Daycare Grant Program in 1983 to provide stability to the non-profit child care sector, to address the low salaries of child care staff and to address the affordability issues faced by families. Under the criteria established by the former City of Toronto Council, grants were payable to non-profit centres whose maximum average non-supervisory salary was $32,500.00 This level was established through comparison with salaries paid to staff in the child care programs directly operated by the former Municipality of Metropolitan Toronto.

Toronto Council, at its meeting of February 4, 5 and 6, 1998, in consideration of the administration of municipal grants, approved using the same criteria for determining eligibility in 1998 as were used in 1997. Therefore, applications were sent to all of the programs that had received funding in 1997 under the Daycare Grant Program and the submissions received were reviewed against the original grant criteria.

Comments and/or Discussion and/or Justification:

A total of 99 applications for the Daycare Grant were received and reviewed. As shown in Appendix I to this report, 60 centres remained eligible for the same level of grant as in 1997, 24 centres were found eligible but for a reduced level of grant and 15 centres were found to be no longer eligible. Based on the existing grant criteria, the Department has determined that payments totally $543,564.00 should be made. In general, the change in eligibility may be accounted for by the impact of pay equity adjustments since the last full assessment. Centres were last assessed by the former City of Toronto against 1996 data. It was on this basis that both the 1996 and 1997 grants were awarded. Since then, many centres have implemented pay equity adjustments which take them above the average salary ceiling.

While there are sufficient grant dollars in the Daycare Grant program to pay all 99 centres last year's level of grant, this would not be consistent with Council's direction to make payment based on the existing grant criteria. The Department recognizes that centres found to be ineligible will be given very little notice that their grant status is changing. Therefore, strategies to maintain centre revenue by converting grant dollars to fee subsidy payments were tried without success. The strategy did not work for centres without a purchase of service contract or for centres whose fees to the public were too low. The only remaining remedy for these ineligible centres would be a reversal of the original Council direction to make payment based on the existing grant criteria. This would likely occasion an adverse reaction from child care centres across the new City not eligible for Daycare Grant consideration at all. The staff in many of these centres have salaries well below the $32,500.00 benchmark used to guide the daycare grant decisions.

The Department recognizes the need to review and revise the Daycare Grant Program to ensure a more equitable, effective and efficient use of the funds available and recommends that such a review be undertaken early in 1999 with a view to streamlining and harmonizing the funding available to child care centres across the new City. Following this review, which will include an analysis of the financial impact on programs currently in receipt of this Daycare Grant, the Department will make recommendations to Council on future revisions needed.

Conclusions:

In keeping with Council's direction to make payment of the Daycare Grant to non-profit child care centres in the former City of Toronto who qualify under the original grant criteria, the Department recommends Daycare Grant payments totally $543,564.00 to the 84 centres found eligible be made in the amounts specified in Appendix I of this report. The Department also suggests that a review of the future use of these grant funds be undertaken early in 1999 and recommended changes be reported to Council.

Contact Name:

Brenda Patterson

Director, Contract & Quality Compliance

Children's Services Division

Tel.: 392-3319

General Manager of Children's Services

Commissioner of Community & Neighbourhood Services