Provincial Update to the Child Care Fee Subsidy Guidelines

The Community Services Committee recommends:

(i) the adoption of the report dated June2,1999, from the Commissioner of Community and Neighbourhood Services;

(ii)the City of Toronto notify the Province of Ontario of the adverse impact of recent changes to the provincial Child Care Fee Subsidy Guidelines pertaining to the Registered Retirement Savings Plan asset policy on clients, and formally request that the prior exemption be continued;

(iii)Councillor Joan King be requested to raise this issue as a priority item at the annual conference of the Association of Municipalities of Ontario in August, 1999;

(iv)while advocating this position to the Province, no client should lose their child care subsidy, having regard that staff have identified a grace period of up to six months during which time the subsidy will continue; and

(v)the Commissioner of Community and Neighbourhood Services be authorized to negotiate with the Province an annual RRSP cap for each family who receives subsidized child care.

The Community Services Committee reports, for the information of Council having requested the Commissioner of Community and Neighbourhood Services to:

(i)report to the Community Services Committee on the options available to advise subsidized families on how best to adjust to the provincial decision to include RRSPs as part of the asset ceiling used to determine eligibility for child care subsidy with as minimum financial impact as possible; and

(ii)review the Saskatchewan Housewife Pension legislation and report thereon to the Community Services Committee; and

The Community Services Committee submits the following report (June 2, 1999) from the Commissioner of Community and Neighbourhood Services:

Purpose:

The purpose of this report is to provide information concerning updated provincial guidelines for determining child care fee subsidy eligibility and to describe the anticipated impact on clients currently in receipt of or wait listed for child care subsidy in Toronto.

Funding Sources, Financial Implications and Impact Statement:

The revisions to the provincial guidelines for determining child care fee subsidy can be implemented within the 1999 approved budget for Children's Services. However, the annualized impact will be an increase in the net municipal contribution of $1.8 million. Adherence to these provincial guidelines is a condition of continued cost-sharing eligibility.

Recommendations:

It is recommended that:

(1)this report be received for information; and

(2)City officials track and continue to discuss with Provincial Officials the financial and service impacts for both subsidized families and the City that the changes in the provincial fee subsidy guidelines will have.

Council Reference/Background/History:

The City's Children's Services Division has historically managed the subsidized child care system and is in the process of assuming system management responsibility for a broader range of child care services from the Province effective July 1, 1999. In preparation for the transfer of child care service system management responsibilities to municipalities, the Ministry of Community and Social Services reviewed existing policies and directives and developed a consistent set of Child Care Management Guidelines to which municipalities must adhere as a condition of their service contract with the Province and as a condition of their continued cost-sharing of child care services. Part of this document includes an update of existing guidelines for determining child care fee subsidy which have been in effect since 1988.

As part of their review and revision process last winter, the Ministry assembled and consulted with a small group of municipal staff, including a City representative concerning the proposed changes. Municipal staff alerted the Ministry staff to the hardship that the planned changes respecting Registered Retirement Savings Plans (RRSPs) would have on some clients. In addition to this caution, the City's representative also outlined the annualized impact that the planned changes would have on the net municipal contribution to the cost of subsidized child care. Despite the concerns identified, the Ministry recently released the Child Management Guidelines for implementation.

There are two main changes which will have an impact on some of the City's clients currently in receipt of child care subsidy. The two main changes relate to an increase in the basic needs rate and a clarification of the asset policy as it concerns the treatment of Registered Retirement Savings Plans (RRSPs).

Comments and/or Discussion and/or Justification:

(1)Basic Needs Rate:

The basic needs rates will be increased effective July 1, 1999. Table 1 compares the pre and post basic needs rate schedules. The impact of this change will be a slight decrease in fees for almost half of the 16,100 families in receipt of child care subsidy. On average, client fees will decrease by 89cents per family per day. This is because the income test formula used by the City to calculate the level of user fee contribution by families receiving subsidized child care is based in part on the provincial basic needs rate. As the provincial basic needs rate increases, the level of user fee contribution the client must pay decreases. The lower level of user fee contribution in turn affects the net City contribution towards the cost of subsidized care.

Subsidized child care is a cost-shared program. The local 20 percent contribution includes both the user fee contribution and the net City contribution from the property tax base. As the user fee portion of the 20 percent local share decreases, the net City contribution must increase proportionately to secure the full 80 percent provincial subsidy available.

While the Department is confident that fiscally the program can be managed within its approved 1999 budget since user revenue figures are currently running above the amount forecast in the budget, the annualized impact of the provincial change in the basic needs rate will be a $1.8 million increase in the net City contribution required to maintain current service levels.

Letters have been sent to families and service providers advising them of the change. Adjustments will be automatically made in payments made to operators on behalf of subsidized clients in the July billing cycle.

Table 1

Basic Needs Allowance

(2)Treatment of RRSPs Within the Asset Policy:

In order to qualify for subsidy, clients may not have assets over the allowable ceiling. For one adult and one child, the asset ceiling is $5,000.00. An additional $500.00 may be added to this ceiling for each additional family member. Liquid assets, as defined in the regulations under the Day Nurseries Act include: "cash, bonds, stocks, debentures, interest in real property, the beneficial interest in assets held in trust and available to be used for maintenance, and any other asset that can readily be converted into cash". In 1984 Children's Services was granted approval by the Ministry to exempt from inclusion in the asset ceiling an RRSP if the client did not have a company pension plan.

Under the updated guidelines, an RRSP is to be included as part of the asset ceiling used to determine eligibility for child care subsidy even if the client has no company pension plan. RRSPs that are locked in and cannot be accessed under any circumstances until retirement continue to be exempt. This change will be implemented effective June 1, 1999 but the Division has negotiated the following implementation plan with the Ministry under their updated Guidelines.

All clients in subsidized care and on the waiting list and all operators providing service to subsidized clients will be advised in writing of the updated provincial requirements with respect to the treatment of RRSPs under the asset policy. For all new clients an RRSP will be included as an asset. For clients with RRSPs who are currently receiving subsidy, subsidy will continue as usual until their next regularly scheduled case review. If, at the time of that review the client's assets, including their RRSP exceed the allowable asset ceiling, they will be deemed ineligible for subsidy but given a "grace period" of up to six months during which time subsidy will continue. At the end of the "grace period" if the assets are still above the allowable ceiling, then subsidy will be terminated and the client will become responsible for the full cost of child care. Under the terms of the Provincial Guidelines, extensions beyond the original grace period may be considered in extenuating circumstances provided that the new requirements are completely implemented by May 31, 2000.

While only a case by case review will identify the actual magnitude of this change in provincial requirement on the families currently in receipt of subsidy, the Division estimates that between 1,000 to 2,000 families may be affected. Every effort has been made to provide early notification and the maximum amount of time under the guidelines for families to make any required adjustments to maintain their eligibility. Staff will work with families on an individual case by case basis to minimize service disruption to children.

(3)Other Changes:

Other less significant changes outlined in the updated Provincial Guidelines include an updated shelter allowance. The new schedule for shelter allowance is shown in Table 2. The minimum monthly amount to be included from boarder revenue has been increased from $40.00 to $100.00 per month and the 25 percent exemption on earnings is no longer allowed on Employment Insurance, even if this is a training allowance. All federal income maintenance payments are to be considered on gross not net amounts even if income tax has been deducted. The updated Guidelines also clarify that any interest generated from assets that have been exempt as a result of awards for pain and suffering are to be included as income and any payment for foster care service is to be excluded from the income calculation.

Table 2

Maximum Shelter Allowance

Family Size	Family Composition	Maximum Monthly Rent Levels Allowable
		New	Previous
2 3 4 5 6 or more 3 4 5 6 or more	One parent plus 1 child 2 children 3 children 4 children 5 or more children or Two parent plus 1 child 2 children 3 children 4 or more children	$1,350 $1,450 $1,550 $1,650 $1,750 $1,450 $1,550 $1,650 $1,750	$1,250 $1,360 $1,480 $1,590 $1,650 $1,360 $1,480 $1,590 $1,650

The abovementioned changes are not expected to significantly alter eligibility calculations.

Conclusions:

Under the terms of the City's Service Contract with the Ministry of Community and Social Services, the Children's Services Division must comply with the Provincial Guidelines governing Child Care Service Management. Changes in current eligibility determination requirements for child care subsidy will impact some of the clients currently in receipt of subsidized care. Children's Services is assuring the immediate implementation of those changes that positively impact clients and has negotiated an implementation approach for those changes that will negatively impact some clients that includes a generous advance notice and compliance period to help avoid service disruption for children. This report has been prepared for the information of Council.

Contact Name:

Kathy McGuire

Client Services Coordinator

Children's Services Division

Tel.: 397-1262

mcguire@csis.csis.csd.metrotor.on.ca

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The following persons appeared before the Community Services Committee in connection with the foregoing matter:

-Ms. Jennifer Snowsill, Parent, Montrose Child Care Centre, and submitted a brief in regard thereto; and

-Ms. Cheryl MacDonald, Toronto Coalition for Better Child Care, and submitted a brief in regard thereto.