October 20, 1999
To: Community Services Committee
From: Commissioner, Community and Neighbourhood Services
Subject: Options for Addressing the Projected 2000 Budget Increase for Hostel Services
Purpose:
The purpose of the report is to advise Council of the $27.0 million budget increase projected for Hostel Services in the year
2000. The report outlines options that Council could pursue in order to manage and/or reduce this projected increase.
Financial Implications and Impact Statement:
Current budget projections for the year 2000 show a very substantial increase in cost for Hostel Services. The following
high level summary clearly shows how costs are increasing and how Provincial subsidies are falling behind.
(000's) 1999 Budget 2000 Estimate Change
Gross Costs $68,600.0 $95,600.0 $27,000.0 (39%)
Toronto share $19,000.0 $33,000.0 $14,000.0 (73%)
Provincial Share $49,600.0 $62,600.0 $13,000.0 (26%)
The increase in gross cost is driven by three factors. First, staff project an 18 per cent growth in the shelter caseload.
Second, the unit cost in the shelter system is growing because of the disproportionate expansion of full standard shelters
and a greater reliance on special needs programs and City-operated programs. Last, there has been a substantial increase in
services that assist in people in obtaining or maintaining appropriate housing in the community.
The entire situation is exacerbated by the fact that the Provincial subsidy is not keeping up with these increased costs.
Since 1992 the Provincial subsidy has remained fixed at $27.60 per person per day. In theory, the Provincial subsidy is
intended to cover 80 percent of the cost of operating shelters. In reality, the Provincial share has shrunk to approximately
70 percent in 1999 and is projected to fall even further next year.
The combined impact of the growing cost of homeless shelters and the increasingly inadequate provincial subsidy on the
City of Toronto is quite severe. Clearly, a year over year increase in the City's costs of $14.0 million or 73 percent is
unacceptable. The Mayor has recently written to senior levels of government expressing the City's concern regarding this
issue and seeking their assistance in addressing the issue.
Recommendations:
It is recommended that:
(1) the Mayor be requested to meet with the Premier, and the Chair of the Community Services Committee be requested to
meet with the Honourable John Baird, Provincial Minister of Community and Social Services and the Honourable
Elizabeth Witmer, Provincial Minister of Health to discuss the issues contained in this report;
(2) the Provincial Government be requested to provide 80/20 cost-sharing on the actual per-diem costs of providing
emergency shelter service in the City of Toronto;
(3) the Provincial Government be requested to provide 100 percent funding on all emergency shelter services provided to
assaulted women and their children;
(4) the Provincial Government be requested to provide 100 percent funding on all emergency shelter services provided to
individuals with serious mental illness;
(5) the Mayor be requested to meet with the Prime Minister, and the Chair of the Community Services Committee be
requested to meet with the Honourable Elinor Caplan, Federal Minister of Citizenship and Immigration and the
Honourable Jane Stewart, Federal Minister of Indian Affairs and Northern Development to discuss the issues contained in
this report;
(6) the Federal Government be requested to provide 100 percent funding on all emergency shelter services provided to
refugee claimants;
(7) the Federal Government be requested to provide 100 percent funding on all emergency shelter services provided to
Aboriginal persons;
(8) the Provincial and Federal Governments be informed that should discussions regarding cost-sharing, as noted in the
previous recommendations not be resolved within the first six months of 2000, the City of Toronto will bill the respective
governments for the services provided and will review whether the City can continue to expand the emergency shelter
system beyond the service level set in the year 2000;
(9) the report be forwarded to the Policy and Finance Committee, and the Budget Committee, for consideration as part of
the year 2000 budget process; and
(10) the appropriate City Officials be authorized and directed to take the necessary action to give effect thereto.
Background:
On April 13, 1999 Council adopted a recommendation that directed staff to pursue the opening of further facilities should
the occupancy rates for the single adult and youth shelters rise above 90%. Further, on June 9, Council directed that staff
take all necessary steps to locate sites to provide the 300 - 400 emergency shelter beds that were required to meet
increasing need. These motions are directly linked to the increase in beds that is, in large part leading to the budget
increase.
Comments:
Historical Reasons for the Growth of the Emergency Shelter System
The City of Toronto has always taken the position that an emergency shelter system is needed to provide an immediate
response to people who find themselves without a home. Eligibility for the system is determined solely by the fact that one
is homeless. The City of Toronto never placed a ceiling on the number of emergency shelter beds that could be provided
and so as the need grew, so did the system.
Over the years the face of the homeless population also changed, and the system developed specialized supports to meet
the needs of the "new homeless". A system that initially provided supports to older itinerant men expanded over the years
to provide services to assaulted women, families, youth, aboriginal people, individuals with addictions, psychiatric
consumer/survivors, newcomers and many others. The system evolved to respond to emerging social issues and to address
the increasing diversity of the population in Toronto and the increasing diversity of the homeless population.
Senior government policies also contributed to the growth of the emergency shelter system. Reductions in social assistance
rates, cancellation of affordable housing programs, de-institutionalization from psychiatric hospitals, early release from
correctional facilities, changes to immigration and changes to landlord-tenant legislation have all led to greater numbers of
people seeking emergency shelter.
Emergency shelter service is essentially the provision of welfare in-kind. The Ontario Works Act defines emergency hostel
service as:
"The provision of board, lodging and personal needs to homeless persons on a short term, infrequent basis, but does not
include the provision of services to residents of interval or transition homes for abused women"
It is up to the discretion of individual municipalities whether they will or will not fund/provide shelter services. Unlike
providing welfare, municipal councils are not compelled to provide emergency shelter service. Nevertheless, successive
Councils in Toronto have remained committed to providing emergency shelter services to meet the diverse and growing
needs in the community.
Options for Managing the Budget Increase
The decision to have a responsive, flexible emergency shelter system that operates a sufficient number of beds does have a
financial price. As the system has grown so have the expenditures. As described in the financial implications section of this
report the level of subsidy from the Province has not kept pace with this growth. Not only is the City fully responsible for
the provision of the service, they are paying a greater and greater proportion of the financial costs associated with the
program.
There are two major options that could be considered should Council wish to reduce the budget increase projected for
2000. First, the choice could be made to somehow reduce the volume or level of service that is being provided. Second, the
City could seek more appropriate cost-sharing from senior levels of government thus improving the funding to the
emergency shelter program.
This Council has clearly demonstrated its belief in the importance of the emergency shelter system. It has also, however,
been clear that it does not see the indefinite expansion of the emergency shelter system as an appropriate response to the
problem of homelessness. Council has endorsed the concept that an adequate affordable housing stock is the first step in
slowing the growth of homelessness. Over the last year the City has taken a number of steps to put in place tools that will,
in the long term, increase the affordable housing stock in Toronto. In that same time, neither the Federal nor the Provincial
governments have announced any programs or funding that would add substantially to the rental housing market in Toronto
and provide real options for the homeless.
Council has further taken the position, in supporting the report of the Mayor's Homelessness Action Task Force, that more
housing must be put in place before the City can realistically look at a reduction in the size of the shelter system. Even the
steps taken by the City of Toronto to stimulate the growth of the affordable housing stock are unlikely to see results before
2002. Any discussions regarding reduction of service in the emergency shelter system must therefore be considered within
the larger contest of the current affordable housing crisis in Toronto and the time frames required to begin to address that
crisis.
Service Reductions
The first and most obvious way to reduce the budget is to reduce the service being provided. Service could be reduced in a
number of ways.
a) Reducing volume of service: The simplest way to reduce the volume of service provided is to restrict the supply of beds
available. The decision could be made to freeze the number of shelter beds following the expansion of 675 beds for single
adults and youth that is anticipated during this fall and winter. This would not result in significant savings in 2000 as the
cost of these beds is already annualized into the 2000 projected budget. A freeze in further expansion would in fact have a
greater impact on the 2001 budget.
Volume of service could also be reduced through categorical restrictions on admissions based on reason for homelessness.
That is, a decision could be made to refuse admission to certain individuals or families based on jurisdictional boundaries.
The decision could further be made to refuse to admit anyone being discharged from another institution i.e.: a general
hospital, group home, psychiatric hospital or correctional facility. The expectation would be that these institutions would
find their clients appropriate housing in the community.
The implications of these options are obvious. On a practical level, they would have an immense human impact. Adults
and children would be left in inadequate or dangerous housing conditions. Women, children and youth could be forced to
remain with someone who assaults them physically, verbally or sexually. Other individuals would be left with no housing
at all and would be force to resort to living on the street. Visible homelessness would increase. These types of service
restrictions would also place a huge burden on service operators who would have to police admissions and would be forced
to reject people who desperately need shelter, simply because they do not fall into the appropriate client group.
b) Reducing level of service provided: Another option for service reduction involves reducing the level of on-site service
provided. This could include closing facilities during day-time hours, restricting lengths of stay, removing counselling
services and children's programming, closing facilities during the summer months, cancelling recreation programs, etc. The
impact of daytime and seasonal closure is, again, an increase in visible homelessness. The already over-burdened and
underfunded drop-in sector would not be able to absorb the additional people. Cancelling specific counselling, supports
and recreation services would result in high levels of stress for adults, children and staff. In fact, when these types of
supports are taken away other supports need to be put in place. Instead of providing counselling, security services will need
to be provided. Staff experience is that it is often just as expensive to run a bad shelter as it is to run a good shelter.
c) Cancelling programs: A final option for reducing service is to cancel any programs that are not directly related to
providing people with emergency beds and meals. This would include programs such as Project Going Home, that assists
homeless individuals and families to return to their home communities and Housing Contacts, that assists families in
finding housing outside of Toronto. These are innovative and creative programs that have been developed to address the
ongoing housing shortage in Toronto. Cancellation would significantly restrict housing options for many people in the
shelter system and would mean longer stays in the system.
Improved Cost-sharing
A second way to mitigate the impact of the budget increase is to seek improved cost-sharing on the delivery of hostel
services. This would mean that the system could continue to respond appropriately but that the financial impact of the
response would be reduced. There are a number of possible areas where improved cost sharing could be negotiated.
a) Provincial Government: As decribed previously the cap on provincial cost sharing is having a significant impact on the
City's net expenditures. On the staff level, there have been discussions regarding this over the last number of years,
however, to date the Province has not been willing to change existing policies regarding the per-diems. Possible
approaches to the Province could include a request that the Province remove the cap on the per-diem and allow the cost
sharing to return to its original 80/20 level. If cost sharing were returned to the 80/20 level, revenues from the Province
would be increased by $14.0 million in the 2000 budget year.
The City should also consider approaching the Province for full cost sharing for the clients with mental health or addictions
issues who are using the emergency shelter system. These issues are clearly the responsibility of the Provincial Ministry of
Health and in many ways the shelter system has ended up providing cheap detox or psychiatric beds. Staff estimate that up
to 860 beds in the single adult and youth system are occupied by individuals with mental health issues. The cost of
providing service to the individuals, based on 1999 budget estimates, is $12.6 million. Using the estimated 1999
cost-sharing ratios of 70/30 Provincial/Municipal (as opposed to the legislated 80/20 cost sharing ratio) the City's portion
of this figure is $3.8 million. It is not currently possible to calculate the cost of providing service to individuals with
alcohol and drug addictions.
Finally, the City should request funding from the Province for the high number of assaulted women and children who are
being served in the emergency shelter system. Responsibility for assaulted women's shelters was uploaded to the Provincial
level on January 1, 1998. However, there are large numbers of assaulted women who cannot access the specialized services
of an assaulted women's shelter and must rely on other emergency family shelters for support. Staff estimate that on any
given night 380 beds in emergency shelters for families are occupied by women and children fleeing family violence.
Based on per-diem estimates in the 1999 budget, the annual cost to Hostel Services of providing service to these families is
an estimated at $5.6 million. Again using 1999 cost-sharing ratios, the City is paying 30 percent or $1.7 million. In addition
to requesting full Provincial cost-sharing on these cases, the City should advocate with the Provincial government for the
expansion of the assaulted women's shelter system in Toronto as no new beds or facilities have been added since 1992.
b) Federal Government: The Federal Government has jurisdiction for two groups that are currently served by the
emergency shelter system in Toronto. The City should approach the Federal Ministry of Indian Affairs and Northern
Development to provide cost sharing for services provided to all aboriginal persons. Through current agreements some
cost-sharing is provided for individuals who have lived on reserves within the last year. This is not sufficient given the
documented needs of the homeless aboriginal population in Toronto and the disproportionate number of aboriginal people
who are homeless. The actual cost of hostel services to aboriginal persons is difficult to calculate as shelter operators do
not collect ethno-racial data at the time of admission.
The Federal Government should further provide full funding for any refugee claimants using the emergency shelter system
in Toronto. It is the responsibility of Canada Immigration to manage entry of individuals into the country. The City does
not question the desire of people to come to Canada to improve their lives; however, the Federal Government is
responsible for supporting these individuals and families until such time as Canada Immigration provides them with the
documentation they require to access social services or employment. Previous reports to Council have estimated that
approximately 450 refugee claimants are accommodated in the emergency shelter system on any given night. Again, using
current per-diem costs and cost sharing, the annual cost of providing this service is approximately $6.6 million of which
the City pays $1.98 million.
Potential City Savings in 2000 from Improved Cost Sharing
There would be significant savings to the City in the year 2000 if negotiations with senior levels of government were
successful.
First, if the City was successful in negotiating with the Province regarding the general subsidy issue and was able to have
cost sharing returned to 80/20 Provincial/Municipal then $14.0 million in funding would be restored. Once the 80/20
cost-sharing was in place, if the City was successful in negotiating full funding for assaulted women and individuals with
serious mental health issues, estimated expenditures of $3.9 million would be recovered. Thus there is a potential estimated
funding increase of $17.9 million from the Province.
Again, assuming that 80/20 cost-sharing had been restored, if the City was successful in negotiating with the Federal
Government regarding full funding for refugee claimants, an estimated $1.4 million would be received.
The total possible increased funding to the City from these sources for the 2000 budget year is estimated at $19.3 million
which would eliminate the net budget increase estimated for 2000.
Conclusions:
Flexibility and responsiveness have been the strengths of the emergency shelter system. The system has been able to grow
as needs have increased and has been able to develop specialized programs to meet emerging needs in the homeless
population. Unfortunately the system's capacity to meet so many different needs has allowed other levels of government to
abrogate responsibility for the impacts of their own policy decisions. By default, the shelter system has become heavily
involved in many issues, such as family violence, mental health and immigration that now lie within the jurisdiction of
senior government. The emergence of these issues in the emergency shelter system over the last ten years has largely been
the result of poor policy or program decisions by other levels of government.
It is clear that over time the mandate of the emergency shelter system has changed. The Community and Neighbourhood
Services Department is embarking on a service planning process that will include examining and defining the current
emergency shelter system. The intent will be to return the system to providing emergency short-term once other housing,
treatment and supports are in place. In the mean time, it is important that the City examine the short and long-term budget
implications of continuing to fund the system as it now operates.
At the present time it is not proposed that there be a reduction in volume or level of service to homeless persons because of
the high human cost that can result from the denial of service. The City's first strategy should be seek appropriate cost
sharing from other levels of government in order to offset the growing financial impact on the City of Toronto.
Negotiations should begin with the Provincial government for a return to the 80/20 cost sharing that has traditionally been
in place. The City should also negotiate with the Province for full reimbursement for emergency shelter services provided
to assaulted women, individuals with mental health issues and individuals discharged from psychiatric hospitals. The City
should also discuss with the Province the high level of emergency shelter service being provided to individuals with drug
and alcohol addictions.
The City should further meet and negotiate with the Federal government for full reimbursement for shelter service
provided to refugee claimants and aboriginal persons.
Should these negotiations with the Province and the Federal Governments be unsuccessful within the first 6 months of
2000, it is recommended that the City bill the respective governments for the services provided and review whether the
emergency shelter system in Toronto should expand beyond the service level set in 2000.
Contact:
Joanne Campbell
General Manager, Shelter Housing and Support
Phone - 392-7885
Fax - 392-0548
Commissioner, Community and Neighbourhood Services
