National Child Benefit Supplement Reinvestment Plan

The Strategic Policies and Priorities Committee recommends the adoption of the recommendations of the Budget Committee contained in the following communication (December10,1998) from the City Clerk:

Recommendation:

The Budget Committee on December 8, 1998 recommended to the Strategic Policies and Priorities Committee and Council the adoption of the recommendation of the Community and Neighbourhood Services Committee subject to Recommendations No. (2)(ii) relating to child care alternatives and No. (2)(iii) relating to other enhanced reinvestment strategies being deferred until such time as the requested legal opinion has been received.

Background:

The Budget Committee had before it a transmittal letter (December 3, 1998) from the City Clerk forwarding the recommendations of the Community and Neighbourhood Services Committee with respect to the subject matter.

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(Transmittal letter dated December 3, 1998, addressed to the

Budget Committee from the City Clerk)

Recommendations:

The Community and Neighbourhood Services Committee on December 3, 1998, recommended to the Budget Committee:

(a)the adoption of the attached report dated November 18, 1998, of the Commissioner of Community and Neighbourhood Services, subject to amending Recommendation No. (2) to read as follows:

"(2)if the Province disallows the City of Toronto's strategy and the requested legal opinion prevents the City from granting money directly back to families on social assistance, the City develop a combined strategy whereby:

(I)the reinvestment of Municipal social assistance savings resulting from the implementation of the National Child Benefit Supplement would go directly to all families on social assistance through a shelter fund that requires the least intrusive administrative measures;

(ii)child care alternatives and service supports for children of low income families, including those families making the transition from Ontario Works into sustainable employment, be provided; and

(iii)any other enhanced reinvestment strategies, such as school nutrition programs, continue to be considered; and

(b)that City Council request the Association of Municipalities of Ontario to seek endorsement from its entire membership of the Region of York's resolution; and to pressure the Provincial Government to change its policy with regard to the National Child Benefit Supplement.

The Community and Neighbourhood Services Committee reports, for the information of the Budget Committee, having requested the City Solicitor to provide a legal opinion on the City's proposed strategy with respect to the National Child Benefit Supplement, in order to determine whether the City is able to develop its own child income program.

Background:

The Community and Neighbourhood Services Committee had before it the following report and communications:

-(November 18, 1998) from the Commissioner of Community and Neighbourhood Services responding to the request of the Community and Neighbourhood Services Committee 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; and recommending that;

(1)City Council endorse the Region of York's resolution requesting that "the Minister of Community and Social 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 No. (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 the 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;

-(November 4, 1998) from the City Clerk advising that the Children and Youth Action Committee on October 26, 1998, considered the report dated October 22, 1998, of the Commissioner of Community and Neighbourhood Services regarding the proposed reinvestment strategy for Municipal Savings resulting from the implementation of the National Child Benefit, and recommended to the Community and Neighbourhood Services Committee that City Council remind the Federal Government of the commitment to end child poverty in the year 2000;

-(December 2, 1998) from the City Clerk advising that the Children and Youth Action Committee on November 23, 1998, recommended that the Community and Neighbourhood Services Committee find a way of keeping the National Child Benefit Savings in the pockets of social assistance recipients with children and further requested that this money not be clawed back from the families;

-(December 2, 1998) from Ms. Anne Dubas, President, Canadian Union of Public Employees, Local 79, urging the Community and Neighbourhood Services Committee to endorse the Region of York's resolution and to work with other municipalities in efforts to convince the Province to reverse its clawback of the National Benefit; and

-(December 2, 1998) from Ms. Maria de Wit, Chair, Child Care Advisory Committee of Toronto, outlining the position adopted by the Advisory Committee at its meeting on December 2, 1998.

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

-Ms. Sue Cox, Daily Bread Food Bank; and submitted a paper, entitled "Hunger Hardship and Children in Toronto";

-Ms. Debbie Bridge, L.A.M.P., and Mr. Gavin MacLeod;

-Mr. Colin Hughes, Metro Campaign 2000; and submitted a brief in regard thereto;

-Ms. Sue Collis, Ontario Coalition Against Poverty;

-Mr. Mike Howard;

-Ms. Vicki McPhee, Riverdale for Kids;

-Ms. Cheryl MacDonald, Toronto Coalition for Better Child Care; and

-Ms. Michelle Adams; and submitted a brief in regard thereto.

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(Report dated November 18, 1998, addressed to the

Community and Neighbourhood Services Committee from the

Commissioner of Community and Neighbourhood Services)

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 No. (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, 1998, meeting, the Community and Neighbourhood Services Committee considered the Community and Neighbourhood's Services October 22, 1998, 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 Community and Neighbourhood Services 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 from 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, 1998, 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, 1998, report to Committee, the federal, provincial and territorial governments have agreed on a joint approach to the National Child Benefit. On July1,1998, 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 which 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 Ontario Works (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 $85.00 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 to obtain sustainable employment and move off 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 pay 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 Metropolitan 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 Metropolitan 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, Metropolitan 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 to 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 the Community and Neighbourhood Services 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 reimburse 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.

Reissuing 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 reinstate 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 six 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 reimburses 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 Manager, Social Services Division, Tel: 392-8952.

Marna Ramsden, General Manager, Children's Services Division, Tel: 392-8128.

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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 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.

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Appendix 2: National Child Benefit Supplement (N.C.B.S.) Monthly Entitlement

(1)Maximum monthly entitlement available. In some cases, families will receive less, depending on their level of income.

(2)Maximum monthly social assistance entitlement that a single parent paying maximum shelter would receive. Two parent families will receive a slightly higher entitlement.

Case example:

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 a net family income of $20,921.00 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. Twenty 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.

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(A copy of the Appendix 3 referred to in the foregoing report of Commissioner of Community and Neighbourhood Services was forwarded to all Members of Council with the agenda of the Community and Neighbourhood Services Committee for its meeting on December 3, 1998, and a copy thereof is on file in the office of the City Clerk.)