1.         CHILD CARE FEE SUBSIDY STABILIZATION PLAN - PHASE 1 AND NEW FEE SUBSIDY MANAGEMENT POLICY

 

PLAN DE STABILISATION DES SUBVENTIONS POUR FRAIS DE GARDE – PHASE 1 ET NOUVELLE POLITIQUE DE GESTION DES SUBVENTIONS

 

 

 

Committee RecommendationS AS AMENDED

 

That Council:

 

1.         Approve the adoption of a new policy framework to manage the fee subsidy purchase of service budget in the child care program and implement the new policy through an annual fee subsidy stabilization plan subject to annual budget approval and beginning in 2009 including the following elements:

a)         2009 Implement One-time Base Budget Adjustments of centre-based child care agencies that have at least 20% of their program enrolled with full fee parents to close the gap between subsidized per diem rates and full fee per diem rates by allocating $1 Million.

b)         2009 Allocate up to $900,000 to fund an adjustment of up to 2.25% to all centre-based child care purchase of service.

c)         2010 Implement annual indexed rate increases to fee subsidy rates determined in the fall of 2009 within the existing 2010 global fee subsidy budget (i.e., no additional 100% municipal funding) in accordance with the following:

i.          Any new provincial funding will be first used to fund the annual indexed rate increase

ii.         If provincial funding is not sufficient to fully fund the annual rate increase then unused monies recovered as part of the annual retrieval process will be used

iii.        Once the indexed rate is achieved, any surplus funds will be reinvested into the fee subsidy system 

iv.        If the annual rate is still under funded, then a budget pressure be identified for the appropriate City budget in order to ensure no net reduction in the number of subsidized child care spaces in the City of Ottawa and that the 2008-2009 Child Care Service Plan update document be revised accordingly

d)         2010 Implement a 4% increase to licensed home child care provider rates to complete the base budget adjustment.

 

2.                  Receive for information the 2008-09 Child Care Service Plan update document attached as Document 1


 

RECOMMANDATIONS MODIFIÉES DU COMITÉ

 

Que le Conseil :

 

1.                  Approuve l’adoption d’un nouveau cadre stratégique afin de gérer le budget d’achat de services de subventions pour frais de garde dans le programme de garde d’enfants, et mette en œuvre la nouvelle politique par le biais d’un plan annuel de stabilisation des subventions pour frais de garde sous réserve de l’approbation annuelle du budget,  démarrant en 2009 et comportant les éléments suivants :

a)                  2009 : mise en œuvre de rajustements uniques au budget de base des centres de garde d’enfants qui comptent parmi leurs inscrits au moins 20 % de places à tarif régulier, afin de combler l’écart entre les tarifs journaliers subventionnés et les tarifs journaliers réguliers, et ce grâce à une allocation de fonds de 1 million $;

b)                  2009 : allocation d’une somme pouvant atteindre 900 000 $ afin de financer un rajustement (pouvant atteindre 2,25 %) apporté aux tarifs des contrats d’achat de services de tous les centres de garde d’enfants;

c)                  2010 : mise en œuvre d’augmentations annuelles indexées des tarifs de subventions pour frais de garde établis à l’automne 2009, dans le cadre du budget global 2010 existant des subventions pour frais de garde (c.-à-d., sans financement municipal intégral supplémentaire) en conformité avec les conditions suivantes :

i.          toute nouvelle contribution provinciale sera d’abord affectée à l’augmentation annuelle indexée des tarifs;

ii.         si le financement provincial ne suffit pas à couvrir l’entier de la hausse annuelle des tarifs, on fera appel aux sommes inutilisées obtenues par le biais du processus annuel de récupération;

iii.        une fois atteint le tarif indexé, tous les fonds excédentaires seront réinvestis dans le système de subventions pour frais de garde;

iv.        si la hausse annuelle est toujours insuffisamment financée, qu’une pression budgétaire soit définie dans le budget municipal pertinent afin de veiller à ce qu’aucune réduction nette du nombre de places subventionnées dans la Ville d’Ottawa et que le document de mise à jour du Plan de services de garde d’enfants 2008-2009 soit révisé en conséquence;

d)         2010 : mise en œuvre d’une augmentation de 4 % des tarifs de prestataires agréés de services de garde en milieu familial, pour compléter le rajustement de leur budget de base;

 

2.         Reçoive pour sa gouverne la mise à jour du Plan de services de garde d’enfants 2008-2009 (pièce jointe : Annexe 1).

 

 

 

 

Documentation

 

1.      Deputy City Manager's report, City Operations dated 17 March 2009
(ACS2009-COS-SOC-0003).

 

2.      Extract of Minutes, 2 April 2009, follows the French version of the report.


Report to/Rapport au:

 

Community and Protective Services Committee

Comité des services communautaires et de protection

 

and Council / et au Conseil

 

17 March 2009/le 17 mars 2009

 

Submitted by/Soumis par:

 

Steve Kanellakos, Deputy City Manager/Directeur municipal adjoint,

City Operations/Opérations municipales 

 

Contact Person/Personne ressource :

Francine Riopelle, Division Manager, Children's Services Social Services/

Gestionnaire de division, Services à l’enfance Services sociaux

(613) 580-2424 x24373, francine.riopelle@ottawa.ca

 

City Wide/à l'échelle de la Ville

Ref N°: ACS2009-CPS-SOC-0003

 

 

SUBJECT:

 

CHILD care FEE SUBSIDY STABILIZATION PLAN - PHASE 1 and new Fee Subsidy Management Policy

OBJET :

 

PLAN DE STABILISATION DES SUBVENTIONS POUR FRAIS DE GARDE – PHASE 1 ET NOUVELLE POLITIQUE DE GESTION DES SUBVENTIONS

 

REPORT RECOMMENDATIONS

 

That the Community and Protective Services Committee recommend that Council:

 

1.      Approve the adoption of a new policy framework to manage the fee subsidy purchase of service budget in the child care program and implement the new policy through an annual fee subsidy stabilization plan subject to annual budget approval and beginning in 2009 including the following elements:

a)      2009 Implement One-time Base Budget Adjustments of centre-based child care agencies that have at least 20% of their program enrolled with full fee parents to close the gap between subsidized per diem rates and full fee per diem rates by allocating $1 Million.

b)      2009 Allocate up to $900,000 to fund an adjustment of up to 2.25% to all centre-based child care purchase of service.


 

c)      2010 Implement annual indexed rate increases to fee subsidy rates determined in the fall of 2009 within the existing 2010 global fee subsidy budget (i.e., no additional 100% municipal funding) in accordance with the following:

                                i.            Any new provincial funding will be first used to fund the annual indexed rate increase

                              ii.            If provincial funding is not sufficient to fully fund the annual rate increase then unused monies recovered as part of the annual retrieval process will be used

                            iii.            Once the indexed rate is achieved, any surplus funds will be reinvested into the fee subsidy system 

                            iv.            If the annual rate is still under funded, then service reductions would be implemented through attrition (i.e., subsidized spaces would be retired and converted to full fee spaces so that the overall number of licensed spaces is maintained)

d)      2010 Implement a 4% increase to licensed home child care provider rates to complete the base budget adjustment.

 

2.      Receive for information the 2008-09 Child Care Service Plan update document attached as Document 1

 

RECOMMANDATIONS DU RAPPORT

 

Que le Comité des services communautaires et de protection recommande que le Conseil :

 

2.      approuve l’adoption d’un nouveau cadre stratégique afin de gérer le budget d’achat de services de subventions pour frais de garde dans le programme de garde d’enfants, et mette en œuvre la nouvelle politique par le biais d’un plan annuel de stabilisation des subventions pour frais de garde sous réserve de l’approbation annuelle du budget,  démarrant en 2009 et comportant les éléments suivants :

a)      2009 : mise en œuvre de rajustements uniques au budget de base des centres de garde d’enfants qui comptent parmi leurs inscrits au moins 20 % de places à tarif régulier, afin de combler l’écart entre les tarifs journaliers subventionnés et les tarifs journaliers réguliers, et ce grâce à une allocation de fonds de 1 million $;

b)      2009 : allocation d’une somme pouvant atteindre 900 000 $ afin de financer un rajustement (pouvant atteindre 2,25 %) apporté aux tarifs des contrats d’achat de services de tous les centres de garde d’enfants;

c)      2010 : mise en œuvre d’augmentations annuelles indexées des tarifs de subventions pour frais de garde établis à l’automne 2009, dans le cadre du budget global 2010 existant des subventions pour frais de garde (c.-à-d., sans financement municipal intégral supplémentaire) en conformité avec les conditions suivantes :

                                i.            toute nouvelle contribution provinciale sera d’abord affectée à l’augmentation annuelle indexée des tarifs;

                              ii.            si le financement provincial ne suffit pas à couvrir l’entier de la hausse annuelle des tarifs, on fera appel aux sommes inutilisées obtenues par le biais du processus annuel de récupération;

                            iii.            une fois atteint le tarif indexé, tous les fonds excédentaires seront réinvestis dans le système de subventions pour frais de garde;

                            iv.            si cela ne suffit pas à couvrir la hausse annuelle, on effectuera des réductions de service par un processus de départs naturels (c.-à-d., des places subventionnées seraient supprimées pour être converties en places à plein tarif, de manière à maintenir le nombre global de places autorisées);

d)      2010 : mise en œuvre d’une augmentation de 4 % des tarifs de prestataires agréés de services de garde en milieu familial, pour compléter le rajustement de leur budget de base;

 

2.   reçoive pour sa gouverne la mise à jour du Plan de services de garde d’enfants 2008-2009 (pièce jointe : Annexe 1).

 

EXECUTIVE SUMMARY

 

At its meeting of February 27, 2008 Council approved that staff, in consultation with the child care community, develop a local fee subsidy stabilization plan as part of the 2008/2009 Child Care Services Plan.

 

The City of Ottawa, as the Consolidated Municipal Service Manager, (CMSM) is responsible for the management of the local child care system according to specific service level agreements with the Province.  This responsibility includes the allocation of funds within the fee subsidy budget such as setting purchase of service rates with agencies and determining how fee subsidy spaces will be allocated in the community.

 

There are approximately 19,975 licensed child care spaces available in the City of Ottawa, of which 7,208 (36%) are fee subsidy spaces.  All children may access licensed child care spaces if their families can afford to purchase a space and a space is available.  For families who cannot afford to pay the full fee rate and are eligible according to Provincial criteria, the City provides a fee subsidy to pay for all or part of the cost of care on behalf of the family. There are presently approximately 6,400 families registered on the centralized waiting list requiring licensed child care spaces in the next six months, of which 2,000 require subsidized services. 

 

In Ottawa, the total cost-shared budget for child care services in 2008 was $91.5 million.  The fee subsidy budget represents the largest portion of the total budget in 2008 at $61 million.  The program establishes contracts with community agencies to provide licensed child care services to families that receive either a full or partial fee subsidy.  The portion of the child care fee paid for through this program is sent directly to the service agencies.  

 

Over the past decade the gap between the rate the City pays agencies for a subsidized space and what a parent pays an agency for a full fee space has been widening.  The City has struggled to maintain service levels for fee subsidy system over many years while experiencing provincial funding freezes and even reductions, with concurrent rising costs of care and higher utilization rates in the system. The City has tried to address the provincial funding shortfalls with 100% municipal funding infusions to support the fee subsidy system. 

Notwithstanding a City investment of $5.1 Million above the cost sharing formula, the gap between full fee rates and subsidy rates is too great now and puts significant financial pressure on many licensed child care agencies and affects the quality of care that agencies can offer. 

 

Accordingly, per Council’s direction, this report recommends approval of a fee subsidy stabilization plan and new fee subsidy management policy that will provide annual indexed increases to the fee subsidy rates paid to community agencies within the global fee subsidy budget (i.e., without any additional 100% municipal funding).

 

The plan calls for a phased approach.  In 2009, the fee subsidy stabilization plan provides for a one-time base budget adjustment to address past under funding.  In 2010 and beyond the new policy framework will provide for on-going annual adjustments to properly maintain the system within the existing budget. 

 

The annual child care service price index that determines the cost changes that affect the provision of child care services will be developed during 2009.  This index will be used to determine appropriate annual increases for fee subsidy rates. An annual indexed rate increase will allow community child care agencies to do budget planning in a predictable environment knowing that the City will provide annual indexed rate increases at the beginning of the year.  In the past rate increase were uncertain, were not fully indexed and in some years were not finalized until November of the current budget year. 

 

The cost of the implementation plan in 2009 would be $1.9 million.  This would be funded from $1.2 million in funding approved as part of the 2009 municipal budget process and the additional $700,000 from unspent funds previously allocated for purchase of service contracts.  These unspent funds are always retrieved annually to ensure funds are efficiently allocated and in the past have been reallocated through other purchase of service agencies to maintain service levels. 

 

Licensed home child care agencies have already received an 11% increase to their 2009 provider rates as part of the 2009 budget process, which helps to address past underfunding. This was funded from an additional $1.2 million received from the Province for the 2008-2009 budget year for which Ottawa received permission to address base budget instead of creating new spaces. In 2010 a final 4% base budget adjustment would be made to licensed home child care provider rates.

 

There may be an impact on service levels for subsidized care each year as the indexed increase is provided to agencies and higher purchase of service rates are paid out of the same global budget. Service level impacts will depend upon whether the provincial government provides an annual adjustment to the fee subsidy base budget or if any other funding becomes available in the fee subsidy budget.

 

Beginning in 2010 retrieved unspent funds would first be reallocated within the fee subsidy system to provide indexed fee subsidy rate increases.  If additional unspent funds were available from the annual retrieval process they would be reallocated to agencies to provide further fee subsidy services. 


If the retrieval process does not deliver sufficient funds to provide indexed fee subsidy rate increases then service will be further reduced by withdrawing utilized spaces through attrition until sufficient funds are available to provide the indexed rate increase.  This will ensure that the global fee subsidy budget remains balanced and that no additional municipal resources are required. The process for any required removal of spaces from the fee subsidy system will be developed during phase two of the fee subsidy stabilization plan. 

 

All other large municipalities in Ontario contacted during development of this policy fund annual fee subsidy rate increases from their existing global budget. This model does not affect the total number of licensed spaces in the community but it does affect service levels for fee subsidy spaces.  Any provincial funding increases for the global fee subsidy budget may offset potential service reductions in some years. 

 

The Ministry of Children and Youth Services did not require CMSM’s to prepare new child care service plans for the 2008-09 fiscal year.  Instead, templates were provided to the CMSM’s that were to be used to provide the Province with an update on activities outlined in the previous service plan.  The administrative update document is appended to this report as Annex A for Council’s information.

 

BACKGROUND

 

The Province is responsible for approving licensed child care agencies and monitoring standards as legislated in the Day Nurseries Act of Ontario.  The City, as the local designated Consolidated Municipal Service Manager (CMSM), manages the child care system according to a set of core operating principles, developed with broad community consensus.

 

The City of Ottawa has always been a leader for its commitment to providing access to quality licensed child care services for both subsidized and full fee care.  Two of the practises that the City has historically used to manage its fee subsidy budget were intended to preserve child care service levels and support growth.  In the past the City accepted all potential new provincial funds in the fee subsidy program to create new spaces.  This has provided more service but has not left adequate resources to provide subsidy rate increases to community agencies using 80/20 funding.  Secondly, instead of paying full cost of living adjustments and reallocating the 80/20 global budget, which would have decreased service levels, the City added some additional 100% municipal funding to the fee subsidy budget annually to provide modest rate increases.  These rate increases using 100% municipal funds have not been adequate to fully address inflationary pressures that agencies have experienced.  Over the years the gap has widened between the higher full fee rates and lower fee subsidy rates that the City provides to community agencies.

 

These management practises were to provide short term support for the system in anticipation that future provincial governments, that had child care as a priority, would make up the shortfall in funding for the global budget.  Although subsequent provincial governments have provided additional resources for child care, these funds have been prescriptive and could not be applied to match municipal dollars that were unilaterally added to the global subsidy budget.  The fee subsidy budget has been expanded using 100% municipal funding beyond approved provincial funding levels.

These practises did preserve service levels for subsidized care for many years while other municipalities reduced service to remain within their 80/20 global fee subsidy budget.  The legacy of this approach is that the current system is too large for the current level of provincial funding and the City can not provide appropriate fee subsidy rates to agencies. The Province has been very clear that Ottawa must manage within its global fee subsidy budget and that no additional provincial funding will be forthcoming to address the gap created by the infusion of 100% municipal funds.

 

The Province of Ontario has recently embarked on a child care funding review.  The scope of the review and its implications are not known yet.  There are also concerns regarding whether Best Start funding will continue after 2010.  It is also anticipated that the Province will announce in 2009 their plans for Full Day Early Learning in Ontario, which could place further pressure on the child care system.  The new stabilization plan and fee subsidy management policy will allow the City of Ottawa to manage the fee subsidy budget within available resources and respond quickly to changes in funding levels.

 

The City of Ottawa also established a system of allocating fee subsidy spaces that is unique in the Province of Ontario.  In Ottawa, fee subsidy funding has been allocated directly to community child care agencies.  Parents who qualify for a fee subsidy space then access subsidized child care through an agency that has available funding and a space in their program.  The City originally was very prescriptive with how many subsidized spaces an agency had and how many were available for each age group.  Over time these very prescriptive requirements have been relaxed so that agencies could use funds to respond to the need by applying funds to whatever age group was on the waiting list.  Agency budgets now have a funding level established with no prescribed number of subsidized spaces.  This allows agencies to have the most flexibility to utilize the funds to serve fee subsidy families.  This creates more flexibility in the system and allows agencies to respond more easily to the specific service demand in their community.

 

This system of attaching fee subsidy funding to the agency has made providing rate increases from the global budget more challenging.  The system for allocating fee subsidy funds in Ottawa provides more certainty for licensed child care programs regarding their revenue, but has actually been a barrier to providing rate increases.  To provide rate increases from the global budget to agencies where set spaces and funding levels are established means decreasing spaces set out in contracts to fund increased rates.  The new fee subsidy stabilization plan would increase agency rates as they receive their annual indexation and financial limits in their service contacts would be adjusted.  Agencies will have the ability to allocate the funding through their program as demand for spaces warrants.  All spaces in any agency programs not utilized by families with a fee subsidy may be filled with a family paying the full fee rate.  How many children are actually served through the fee subsidy funding to an agency depends upon the ages of the children, since generally the younger the child the more expensive the care.

 

In all other jurisdictions in Ontario the CMSM establishes contracts with licensed child care agencies to provide service through the fee subsidy program, but the agency is just eligible to provide service. The difference is that there is no set service level established through the contract.

When a family is approved for a fee subsidy they choose any licensed child care program that has a fee subsidy contract with the CMSM and has an available space.  This is referred to as floating spaces since the funding or space floats through the system with the family/child and is not attached to a child care agency.  A child care agency with a fee subsidy service contract may serve two families one month and sixteen families the next month.  There is much more fluctuation in the system for agencies to manage and no pre-established service level and funding that the agency can budget upon.  This system does provide the most flexibility to parents and allows them more choice where to access child care services. 

 

The floating space method of distributing fee subsidy spaces allows the CMSM the most flexibility to manage the global budget.  The CMSM approves new rates annually, and provides rate increases from the existing global budget.  The total system cost depends upon how many families are receiving care, the children’s ages and the agency rates that are providing that care.  As financial projections show that the budget is fully utilized intake for the fee subsidy system is put on hold until families no longer require their fee subsidy and drop out of the system and financial projections show additional families can be added to the system.  Child care agencies are never guaranteed a set service level in their contracts.  The global budget management does not impact agencies who serve both full fee and fee subsidy families. When subsidy intake is closed those agencies then recruit only full fee families as spaces become available in their program.  The agencies that are the most impacted are programs that predominantly serve families receiving subsidies.  As these programs have shrinking enrolment their enrolment can not be replaced because subsidy intake is closed.  With intake for fee subsidies closed no new clients are enrolled and the agencies must in extreme circumstances close rooms and layoff staff to maintain balanced budgets.   

 

In Ottawa the City has worked to provide high quality services to families, but also to try and support agencies.  The floating fee subsidy system provides the greatest flexibility and service choice to parents, and is the easiest system for the CMSM to manage the global budget within.  It provides less certainty for agencies and does impact on programs that predominantly serve families with subsidies.  For this reason staff in consultation with the child care community and after examining the benefits and drawbacks of each system is recommending to implement a fee subsidy stabilization plan using the current system of fee subsidy distribution in Ottawa.  A yearly service budget would be established with child care agencies and the annual recovery program of underutilized funding from agencies would continue.  City staff is recommending that a pilot project for some floating spaces be developed as part of phase two of the fee subsidy stabilization plan to create some additional flexibility and responsiveness in the system.

 

DISCUSSION

 

The need for system stabilization through additional provincial funding was first highlighted in the 2001 Child Care Service Plan.  The recommendations contained in this report deal only with stabilizing the fee subsidy system and the corresponding budget for those services.  The fee subsidy budget includes both cost-shared and 100% municipal funds, as well as 100% provincial funds for Best Start spaces. 

The allocation of these funds is the responsibility of the CMSM.  Other programs in child care services such as the wage subsidy program have separate budgets and require the leadership of the Province including additional provincial funding to address stabilization in those other areas. 

 

Each licensed child care agency that has a purchase of service contract to provide fee subsidy services is paid a specific rate based on allowed costs and an annual audited financial statement submitted to the City. Over many years a gap has developed between what the City pays for a child care space and the higher rate that full fee parents pay for the same spaces.  This gap between the subsidy rate and the full fee rate is not uniform across all child care agencies for a number of reasons.  These may include the neighbourhood they operate in and its capacity to absorb additional full fee rates, an agency’s business plan, whether an agency had any full fee users, and the specific categories that an agency experienced cost increases in during particular years and whether those were eligible categories for funding increases that year. 

Fee subsidy rates negotiated through purchase of service contracts with agencies no longer cover operating costs for many licensed centres.  Rate increases over the last few years have only covered minimal salary increases and some uncontrollable costs such as heat, utilities, and rent, while other increasing program costs have not been funded.  This funding shortage impacts on quality early learning experiences for children.  Program costs, where no increased costs have been recognized for years, include such items as educational materials, toys, craft supplies and food. The lack of recognition of program cost increases affects the provision of quality care because there are fewer supplies available to enrich programs.

 

The child care community has identified the need to provide ongoing increases to purchase of service rates and to respond to years of chronic under funding of program costs. The one-time adjustments and then annual indexed rate increases will respond to this need.  For years the child care system has maintained the number of subsidy spaces available to families in Ottawa while only receiving very minimal budget increases for their programs. The per diem rate that child care agencies receive in many cases does not reflect the rising costs of providing a quality program.  In the past to compensate for the under funding of subsidized spaces programs have increased the rates for full fee spaces to cover costs, where they were able to.  To control costs, licensed child care operators have also made program adjustments, less supplies for example, to decrease expenditures.  Licensed programs do not have any flexibility left in their programs to address costs.  Licensed child care programs cannot cut their program costs any further and still offer quality programs and they cannot increase full fee rates to parents and continue to make their programs affordable. Child care programs no longer have the ability to absorb and manage these funding shortfalls on an individual basis.  The funding shortfalls in the child care system in Ottawa must be addressed through a change in policy regarding how the City manages the global fee subsidy budget and establishes purchase of service rates with community agencies and accommodates yearly indexed increases. In other municipalities agencies have been receiving a more realistic annual increase through the budget process.  The City of Ottawa needs to develop a policy that is more consistent with municipal practises across the Province while still preserving many practises that exist in Ottawa.

 

As part of the development of the fee subsidy stabilization plan the current practices and guidelines for how rates are established have been reviewed both at the City and across the Province.  City staff is not recommending any changes to these administrative practices. 

The current practices provide financial accountability while giving staff the flexibility to respond to the many unique circumstances agencies face across the City.

 

Annual Retrieval Process of Underutilized Funding

 

The retrieval process is an annual management practice, used for many years in Ottawa, to ensure that all funds in the fee subsidy budget are utilized as close to 100% as possible.  This ensures that funds are used efficiently, the most families possible benefit from the funds in the system and that non utilized funds do not have to be returned to the Province.  Each year City staff review the fee subsidy contract for each of the 93 community agencies that provide fee subsidy services and retrieve any unspent portion of the subsidy budget allocated to an agency.  The following year the agency budgets are decreased by the under spent amount, or a portion of that amount.  This ensures funds are maximized in the system and that the most families possible benefit from the funds in the system.

 

The annual retrieval process is an important tool for the management of the fee subsidy system in Ottawa and is required as long as funding is attached to agencies.  Although the annual retrieval process is not new and is essential to manage the fee subsidy system it will also be a key tool that will support the implementation of the fee subsidy stabilization policy.

 

Recently many agencies have been experiencing more challenges in spending 100% of their approved fee subsidy budgets because of income testing and changing parental contributions as well as possible demographic shifts.    As part of phase two of the fee subsidy stabilization plan this issue will be examined and tools and approaches will be developed to help agencies and the City continue to manage this process effectively.

 

            Research On Existing Fee Subsidy Rates

 

Extensive research was undertaken to develop this new policy and implementation plan.  City staff conducted a review of the practices of seven large municipalities in Ontario, including Toronto.  Staff also undertook extensive line by line analysis of child care purchase of service budgets that are filed annually.  As part of that process it was highlighted by both the Advisory Committee and through the community consultation session in June that many agency budgets do not accurately reflect current staff salaries since those salaries have not been fully recognized in the setting of subsidy rates.  City staff therefore conducted a survey of 40% of purchase of services agencies regarding salaries, wages and benefits.  The purchase of service agencies sampled represent over 50% of funding in the system.  This information was used to identify the costs that agencies are currently paying to provide licensed child care services.

 

The outcome of the budget analysis was that agencies are incurring costs that are not being reimbursed through their fee subsidy rates.  In examining the system fee subsidy rates could be adjusted to equal the rates paid by full fee parents for most agencies and the rate increases would be supported through the audited financial statements.  One of the principles established across the Province in the setting of fee subsidy rates is that fee subsidy rates may never be higher than full fee rates paid by parents.  This ensures that the City is paying a true market rate for child care services.

All other CMSM’s contacted through this review provide an annual increase from within existing resources to purchase of service agencies to ensure that that fee subsidy rates are competitive with full fee rates.  The City of Ottawa has historically not been doing this to preserve service levels and because the system configuration in Ottawa makes it more difficult to achieve.  Ottawa needs to adopt the approach of all other municipalities to provide fee subsidy increases within the existing global budget.  Child care agencies in Ottawa can no longer afford to continue to receive insufficient fee subsidy rates and be expected to provide quality care.

 

New Fee Subsidy Stabilization Policy Framework

 

The new policy framework assumes that no additional 100% municipal funds will be used to provide annual fee subsidy rate increases.  The intent of this policy is not to remove any funds that are currently in the global fee subsidy budget. City staff will manage the child care fee subsidy program within the existing global budget approved annually by Council. The policy provides flexibility and will allow for subsidy rates and service levels to be adjusted to whatever funding is available annually in the system.

 

The previous method for managing the budget has been to provide increases to fee subsidy rates using mostly additional 100% municipal funds.  The new policy recommends a step by step process for establishing purchase of service rates and budget levels with agencies that only utilizes existing resources.  This new policy is consistent with the approach other large municipalities use in Ontario. The contract levels would be adjusted yearly to ensure that the city only purchases services up to what the global budget will accommodate and not beyond.  No additional 100% municipal funds would be added to the global budget to maintain services. 

 

Each year City staff would use the child care service price index formula to identify the appropriate indexation rate for child care operators in Ottawa that reflects true cost increases.  The total global budget for the fee subsidy program would also be confirmed between the City and the Province.  Any new provincial funds that are eligible to be added to the fee subsidy base budget would be included and first used to offset the implementation costs to provide indexed rate increases.   Child care agencies would be notified of the intended indexed rate increase and asked to submit budgets for the upcoming year.  Agency rates would be adjusted up to the indexed rate increase as long as their budgets justify the increase.  City staff would then use the new rates to calculate the contract levels that could be established with community child care agencies through purchase of service contracts.  City staff would determine if the global budget and any available new provincial funds support the new indexed rates for purchase of service agencies. 

 

If there are not sufficient funds to provide the indexed rate increase, then funds identified through the retrieval process would be used to finance the indexed rates.  If the rate increase is funded from retrieved funds and additional unspent funds are available from the annual retrieval process they would be reallocated to agencies to provide further fee subsidy services.  If the retrieval process does not deliver sufficient funds to provide indexed fee subsidy rate increases then service will be further reduced by withdrawing utilized spaces through attrition until sufficient funds are available to provide the indexed rate increase. 

This will ensure that the global fee subsidy budget remains balanced and that no additional municipal resources are required.  If in any given year retrieved funds are used or utilized spaces are withdrawn through attrition then there would be an impact on service levels that year.   In other municipalities this process is achieved by closing intake, because they use floating spaces.

 

            New policy process

 

 

This is a significant policy change for the management of the fee subsidy purchase of service system.  The impacts will be especially different if the implementation of the total indexed rate increase on a system wide basis in any given year is higher than any new funding from the Province.  If that happens then agencies’ purchase of service contracts will be affected and service levels will also be affected.  Agencies would be paid a higher rate per space but there would be less subsidized service in the whole system.  This would impact on service levels for subsidized child care services.  An agency could serve the same number of children, but the mix between full fee and subsidy would change.    The agencies would receive a higher fee for each space a subsidized child was using and then the remaining spaces would be filled with full fee users.  If an agency is operating at close to 100% capacity then their total budget will be higher to address costs and fund quality programs. 

 

      Operationalizing The New Fee Subsidy Stabilization Policy Framework

 

Before implementing the new policy for managing the global fee subsidy budget and purchase of service contracts a one time base budget adjustment to some agency rates is required.  The first year of implementation during 2009, would be a transition year funded from within the existing approved global budget. It is recommended that a one time adjustment to fee subsidy rates be implemented to address the gap in rates that some agencies currently are experiencing.   This would be done in 2009 by matching 2008 full fee and subsidy rates for centre-based licensed child care agencies.  In 2009 an adjustment of up to 2.25% would also be provided to centre based purchase of service agencies as warranted through the agency budget submissions to a maximum global budget impact of $900,000.  All of the current policies in setting rates would apply to this process to ensure that agencies are only reimbursed for existing costs of care. 

 

Agencies would be required to have at least 20% of their program enrolled with full fee parents to qualify for the adjustment to their base subsidy rate.  It is important to have a market rate in the setting of fee subsidy rates.  Agencies that are fully or almost fully subsidized programs in general have higher fee subsidy rates.  Historically these agencies did not have full fee parents to pay higher rates and help fund the agency budgets. 

More fee subsidy funds have been directed to these programs over many years with fee subsidy rates that are now higher than the average to support these agencies and programs.

 

To maintain the one-time base adjustment to fee subsidy rates there would be an annual indexed rate increase to fee subsidy rates beginning in 2010.    An annual child care service price index will be developed that determines the cost changes that affect the provision of child care services.  The child care service price index formula would be used to establish the indexed rate annually for fee subsidy rates. An annual indexed rate increase will allow community child care agencies to do budget planning in a predictable environment knowing that the City will provide annual indexed rate increases at the beginning of the year.  In the past rate increase were uncertain, were not fully indexed and in some years were not finalized until November of the existing budget year.  The indexed rate increase would be provided to all agencies that have a purchase of service contract to provide fee subsidy services based on audited financial statements.  The indexed rate increase would be funded from within the existing global fee subsidy budget beginning in 2010, as is done by other municipalities across Ontario.

 

The implementation of the provision of an annual indexed rate increase inherently creates the potential for service reductions each year.  In some years provincial funding increases may offset the implementation cost of the indexed rate increase, but this cannot be anticipated or expected.

 

Licensed home child care provides a critical component of licensed child care services and subsidized care.  Through the regular administrative process of establishing licenses home child care provider rates an 11% increase has been established for 2009. This will provide a portion of the required base budget adjustment to the licensed home child care sector.   In 2010 an additional 4% increase in provider rates is planned to complete the base budget adjustment.  The indexed rate increase for 2010 will also be provided to the administrative portion of the budget.  Beginning in 2011 the indexed rate increase would be applied annually to the provider rate and administrative budget.

 

Annual process to identify resources to reallocate

 

Any eligible additional provincial funding for the fee subsidy budget will first be used to fund the annual indexed rate increase before creating new spaces.  If sufficient additional provincial funding is not available to fully fund the annual rate increase then the resources identified through the annual retrieval process of underutilized funding in the fee subsidy budget will be used.  Once the indexed rate increase is implemented then any additional funds from the retrieval process will be reinvested into the fee subsidy system to increase some service contract levels as has been done in the past.

 

If further funding is required to implement the indexed rate increases beyond the level of retrieved funds then additional service reductions would be implemented annually to provide agency rate increases.  Service reductions would always be implemented through attrition.  Each year the impact on service levels and agency contract levels will be different depending upon utilization rates, inflation rates and how much new provincial funding has been provided for the fee subsidy budget.  

Procedures for how funds are retrieved and reinvested will be developed during phase two of the fee subsidy stabilization plan to ensure that resources are strategically allocated in the community.

 

Impact of 2009 Implementation

 

The 2009 implementation of the fee subsidy stabilization plan along with provider rate increases for licensed home child care will together provide rate increases for 3,533 licensed spaces in both home and centre based care, representing 49% of all subsidized spaces and would address base budget issues for fee subsidy rates.

 

Centre-based child care

 

 

 

The City of Ottawa approved an additional $1.2 million in new funding for the fee subsidy budget as part of the 2009 budget process.   These funds will be applied to the implementation costs of the fee subsidy stabilization plan in 2009.  The annual retrieval process of funds not spent by agencies in 2008 will provide the additional $700,000 required to fund up to a 2.25% increase towards the cost of care.  Together these resources will provide all the required funds to implement the stabilization plan in 2009.

 

            Licensed Home child care

 

There are no additional financial impacts in 2009 for the licensed home child care sector.

 

 

It is important to stabilize the current child care system before more changes and potential service pressures are added to the system. Through the implementation of a fee subsidy stabilization plan the child care system in Ottawa will be in a better position to respond to future demands.  The existing system is too under funded to support more growth until a funding realignment is implemented.  If action is not taken overall program quality will suffer.

 

Next Steps

 

City staff, based on Council direction will implement phase one of the Fee Subsidy Stabilization Plan beginning in 2009 with base adjustments to fee subsidy rates for those agencies that qualify.  City staff has begun work that will be used for the development of phase two of the fee subsidy stabilization plan.  This phase will provide an audit of where current fee subsidies are located in the community and compare that to demand for fee subsidy services and the location of children in the City of Ottawa.  The goal of this phase is to provide information and strategic direction on where to place and adjust services as required.  The Community Advisory Committee for phase one of the development of the plan has agreed to continue for the development of phase two of the plan.  There will be broad community consultation with the child care community to develop phase two of the fee subsidy stabilization plan.

 

Phase Two will:

 

 

Phase two of the fee subsidy stabilization plan will be included in the Child Care Service Plan for City Council review in the fall of 2009.

 

RURAL IMPLICATIONS

 

The child care system serves children and families across the City of Ottawa, including in the rural areas.  There is a shortage of licensed child care services in the rural areas of Ottawa. The Province has responsibility for licensing and therefore has more control regarding where new programs are located.  The City tries to ensure there is a geographic balance in accessibility to child care services in all parts of Ottawa.  

 

Phase one of the fee subsidy stabilization plan will have no impact on accessibility of service in the rural areas.  The development of Phase two of the plan will identify areas of the City that are underserved with fee subsidy contracts and develop strategies to address service levels.   This may assist families in rural areas over time to access licensed child care through a fee subsidy.  


 

CONSULTATON

 

The City has worked very closely with the child care community in the development of Phase 1 of the Fee Subsidy Stabilization Plan.  A letter was sent in May 2008 to all child care agencies with a fee subsidy contract asking for Expressions of Interest to sit on a Community Advisory Committee.  The City received twenty expressions of interest and seven community members were chosen based on ensuring a range of experience was present at the table.  The Advisory Committee met monthly beginning in May 2008 to assist City staff with the development of the plan.

 

Two community consultation sessions were also held in June and October of last year.  The first consultation session outlined the research that had taken place for the development of the plan including the review of agency budgets and the identification of unrecognized costs, not currently paid by the City.  The October consultation session included a presentation on the fee subsidy stabilization plan that staff would be recommending for City Council consideration.  At the consultation session feedback forms were also provided to give the community a further method of providing input.

 

City staff also held an update session for the child care community on February 19, 2009 to provide information on the new policy and stabilization plan and answer any further questions in the community. 

 

Generally the child care community would like increased funds provided for the child care system to address the lack of service, and shortage of funds especially to support staff salaries.  Child care agencies that require fee subsidy rate increases recognize that given the current funding limits there are few alternatives to adjust rates. 

It is generally agreed by the child care community that fee subsidy rates need to be adjusted annually for licensed agencies to continue to provide quality care.

 

FINANCIAL IMPLICATIONS

 

There are no financial implications associated with this report.  The fee subsidy stabilization plan will have no net impact on the City of Ottawa budget, but would redistribute funding differently in the community. The fee subsidy stabilization plan has been developed to be implemented with current resources in the global fee subsidy budget. 

 

The fee subsidy stabilization plan will provide City staff with the policy framework and tools to manage the fee subsidy system with the available resources in any given year and to adjust service levels accordingly.  

 

The $1.9M is comprised of $1.2 Million in municipal funds approved as part of the 2009 City budget as well as $700,000 from the annual retrieval process of funds not spent by agencies in 2008. 

 

CITY STRATEGIC DIRECTIONS

 

City Strategic Direction – Priority E. Sustainable Healthy and Active City

 

SUPPORTING DOCUMENTATION

 

Document 1 – 2008–2009 City of Ottawa Child Care Service Plan Update

 

DISPOSITION

 

The Social Services Department will implement any direction received as part of consideration of this report.


Document 1

2008- 09 Child Care Service Plan Update

June 20, 2008

 

Introduction

 

As the CMSM, it is the responsibility of the City of Ottawa to plan, establish priorities and manage the child care system. The provision of child care is a provincially mandated service.  The purpose of the 2008-09 Child Care Service Plan is to provide an update of last year’s service plan for the Ministry of Children and Youth Services (MCYS).  This year’s plan provides an update on the key issues, priorities and planned actions outlined in last year’s plan.  This plan provides a progress report on 2007-08 activities and highlights key areas the City of Ottawa will be focusing on in 2008-09 in the delivery of child care services.

 

 

Operating Principles and Priorities

 

A set of operating principles, that have community support, are used locally to manage the child care system and help to ensure quality service. The City of Ottawa continues to manage a child care system in a manner that is:

 

§         Accountable:  by setting standards and measures that enhance the integrity of the system through cost-effectiveness, efficiency and quality.

§         Responsive:  by proactively and sensitively addressing ever changing political, social, economic, linguistic and cultural needs.

§         Collaborative: by working with individuals, staff and the community, encouraging consultation at all levels of decision making.

§         Inclusive: by working with the early learning and child care community as well as other levels of government to provide services that are culturally sensitive and include children with special needs.

 

Key Objectives and Commitments

 

The City of Ottawa’s Child Care program goal is to foster a high quality child care system which promotes the well being of children and responds to the needs of parents, caregivers and the broader community.  The licensed child care system, including subsidized spaces, is designed to help children reach their full potential and achieve success in school.

 

The City of Ottawa will support future growth in the child care system in the non-profit community child care sector.  The City will maintain purchase of services from the for-profit child care sector at no more than the current level.

Child Care Service Objectives and Priorities

 

The following child care service objectives were outlined in last years service plan and continue to be valid in the operation of a high quality child care system. The City of Ottawa will, in partnership with the Ottawa Network for Children (ONC), the Regional French Language Best Start Network, the Child Care Council of Ottawa-Carleton and Le Regroupement des services éducatifs à l’enfance d’Ottawa:

 

·        Work with the community to enhance the quality of child care programs and services through a local accreditation process that will eventually be linked to purchase of service contracts;

·        Participate in any new provincial initiatives to enhance quality early learning and child care programs and services;

·        Address in partnership with the Province the provision of adequate funding to prevent further deterioration of the existing child care system and ensure its long term health and stability;

·        Increase accessibility of child care services to all citizens throughout the City of Ottawa by creating new spaces and fee subsidies as new provincial funding is available;

·        Promote increased access in the child care system to evening and weekend care, including more part-time care to meet the changing needs of families with a particular focus on increasing these services for Francophone families;

·        Increase accessibility of child care services for Francophone families by implementing the second and third years of the Francophone Catch-up Plan;

·        Provide child care services that meet the unique needs of immigrants and newcomers;

·        Identify with the ONC the child care service needs of the Aboriginal and Inuit communities and develop an action plan; 

·        Develop opportunities with the Ottawa Network for Children and Best Start planning for increased program integration between the child care system and other services for children and families;

·        Ensure a continuum of services exists to meet the needs of all children including children at risk and children who have special needs, within an integrated child care system; and

·        Work with the Province and the College of Early Childhood Educators to address adequate salaries for qualified staff in the child care system.

 

Key Challenges and Priorities for 2008-09

 

During 2008 the City of Ottawa has a number of challenges and service priorities that it is endeavouring to address as it plans for the provision of quality child care for families and children. 

These issues have been addressed in more detail in the 2006-07 and 2007-08 Child Care Service Plans.  This section is meant to provide a short review and then an update on activities that have taken place since the last plan was filed with the Province and to identify any new activities that are currently underway or planned for 2008-09.

 

Francophone Child Care Services

 

In 2005 it was identified that there was a significant shortfall in the availability of subsidized child care spaces for the Francophone population, especially in licensed home child care services. During 2006 the Francophone Catch-up Plan was adopted by City Council to create parity in access to subsidized spaces for Anglophones and Francophones. The plan outlines principles for the development of further subsidized Francophone child care spaces as well as the types of programs that will be given priority.  The total cost to implement the Francophone catch up plan is $2.3 million. 

 

Council adopted a three year implementation plan, to begin in 2007, which requires the addition of approximately $765,000 to the child care base budget each year for 3 years.  Following the approval of the budget requirements for the first year of implementation, the Province announced just under $1.6 million in additional funding to the City child care budget to address funding pressures.  The City has committed to apply 25% of any new provincial funds allocated for the fee subsidy budget to support parity in accessibility to subsidized spaces for the Francophone community. As such, in 2007 an additional $400,000 was applied to the implementation of new subsidized spaces for the Francophone community.

 

Using the original 100% municipal funds approved by Council and the additional provincial funding the City exceeded the target number of new spaces to create by 21 spaces.  According to the priorities identified by Council 104 new subsidized spaces were created to serve the Francophone community instead of the original target of 83 spaces. 

 

The table below shows the current distribution of child care funding for subsidized spaces as well as wage subsidy and pay equity for Francophone and Anglophone programs from January 2007 to the end of 2007 with the investment of the first year of municipal funding and the distribution of additional provincial funding received in 2007.  The funding gap is being closed and we anticipate further progress during 2008. 

 


Francophone Child Care Programs - Current Distribution of Funding for Anglophone and Francophone Child Care Programs

  

Child Care Programs

January 2007

March 2007

December 2007

Total budget Anglophone *

61.2 M

61.2M

62.1M

% of Total Budget

87.46%

86.51%

86.48%

Total Budget Francophone*

8.8M

9.5M

9.7M

% of Total Budget

12.54 %

13.49%

13.52%

Total Budget Combined

70M

70.7M

71.8M

 

* Includes available funding for subsidized spaces, pay equity and wage subsidy.

 

City Council approved, as part of the 2008 budget the full second year installment of $770,000 to implement year two of the catch-up plan.  City staff has begun to implement the additional funding approved for 2008.

 

The municipal budget requirement for 2009 will depend upon a number of factors.  The new 2006 Census data is now available to the City of Ottawa.  Using the new data the current equity target of 14.9% will be reviewed and discussed with the Francophone community.  The equity objective for access to subsidized Francophone child care spaces will be reviewed and may need to be adjusted.  This will ensure that the equity objective is an accurate reflection of the community so that parity is created in accessibility to child care spaces.  If the equity objective is revised this may require minor revisions to the budget requirements for full implementation of the catch-up plan. The implementation of a fee subsidy stabilization plan, described below may also impact on what service level parity is reached within the system.  These factors will all be considered in the development of the 2009 implementation goals.  City staff will include in the City of Ottawa 2009 budget for Council consideration the additional funding required to fully implement the Francophone Catch–up Plan.

 

The Ministry of Children and Youth Services and the Ministry of Education issued in June 2008, A Proposal to Increase the Number of School–based French Language Child Care Spaces Across Ontario for Pre-school Children.  The announcement is for the creation of 266 new spaces across the Province and includes a call for proposals to CMSM’s.  The City of Ottawa has submitted a proposal to the province that includes two potential budgets; one budget for 16 spaces and one budget for 32 spaces.  The City of Ottawa will wait for an announcement by the Province regarding these spaces.

Child Care Services for the Aboriginal and Inuit Communities

 

The Aboriginal and Inuit communities are a priority group for the provision of Best Start services including child care.  It is a new responsibility for the City to plan for the delivery of services to this community. The City of Ottawa will continue to work with the ONC planning table that is identifying service needs and gaps in service for the Aboriginal and Inuit communities in Ottawa. The City has a purchase of service contract with Sweetgrass Home Child Care Agency for the provision of licensed home child care targeted to the Aboriginal community. 

 

The City of Ottawa was one of 14 communities identified in the Provincial Expression of Interest as a priority to receive child care spaces to serve the Aboriginal and Inuit community. The Ottawa community sent 3 proposals forward to the Province for consideration, one of which the Province recommended for funding.  The proposal by the Ottawa Inuit Children’s Centre was approved for the development of a culturally appropriate off-reserve child care program with 26 new child care spaces.  The proposal has been approved for up to $987,049 in capital funding and $7,500 per space to support operational costs of the new spaces developed.  The program is planned to open in July 2008.

 

Services for Children with Special Needs

 

The 2006-2007 Child Care Service Plan utilized a one-time provincial grant that was available to support the integration of children with special needs.  Since these funds were a one-time grant they were not included in the base budget.  These funds were used for the provision of program assistants to aide the integration of children with special needs in licensed child care programs.

 

The City of Ottawa received just under $1.6 million in additional funding in 2007-08 to address child care system pressures. The City has allocated $100,000 of these funds to the base budget to support children with special needs.  The City in partnership with CISS has used a portion of these funds to create a pilot project to extend services for children with special needs to transition successfully out of licensed child care once they reach the age of 12. The City and CISS will evaluate this pilot during 2008-09.

 

The remainder of the funds will be used by CISS to provide program assistants in licensed child care, which supports quality inclusion of children with special needs to attend these programs.  One time funding had been used to expand the program in 2006.  The allocation of these new funds will allow for a portion of the service to continue to be provided during 2007-08 and to be annualized in the child care budget.

 

In consideration of the prevalence rates of children with special needs, the demand for supports to integrate children into licensed child care programs continues to be an issue in the community.  Additional funding is required for integration advisors, program assistants, and on site speech, occupational and physiotherapy services to reduce the waiting time for children with special needs to enter licensed child care programs. As the child care system expands there is also an increased need for additional Integration Advisors who play an integral role in training Early Childhood Educators in licensed child care programs to facilitate the inclusion of special needs children into the daily program.  CISS trains approximately 1700 child care staff annually which has a significant impact on the quality of services provided to children with special needs on a day to day basis. Additional provincial funding is required to support the expansion of service to this priority service group.

 

Child Care System Stabilization

 

The stabilization of the child care system has been a long standing issue across the Province and been discussed in detail in previous Child Care Service Plans. The City of Ottawa encouraged the Province in last year’s service plan to provide action in the key areas listed below to support overall system stabilization.  The items listed below for provincial action are still urgently required.

 

1.      The return to an 80/20 cost shared funding relationship between the Province and the City for the provision of DNA and ELCC spaces and corresponding services, and 100% funding that reflects real costs for Best Start spaces, together which totals $5.1 million, and

2.      The provision of $3.2 million by the Province to implement the full wage subsidy program in Ottawa for child care providers.

 

The City of Ottawa Council approved as part of its deliberations on the 2007-08 Child Care Service Plan that if significant additional funding for the fee subsidy budget is not forthcoming in 2007 from the Province to address item 1 outlined above then the City should develop during 2008 a fee subsidy stabilization plan. A fee subsidy stabilization plan would reallocate funds within the fee subsidy budget to reflect the true operating cost of service provision in purchase of service contracts.

 

The municipality does not have the ability to address the full implementation of the wage subsidy program which is 100% provincially funded. The City of Ottawa encourages the Province to fully fund this program as implementation will support   system stabilization and the provision of high quality child care.

 

 

 

Fee Subsidy Stabilization Plan

 

The City estimates a requirement for an additional $ 5.1 million from the Province to fully fund the fee subsidy system and recognize operational costs of child care programs in 2007-08. The City of Ottawa has not received a response from the Province regarding its request for this increased funding to support the fee subsidy budget.  According to City Council direction, City staff has now begun the development of a fee subsidy stabilization plan for City Council approval. The goal of the fee subsidy stabilization plan is to modify the purchase of service contracts between the City and each child care operator to reflect the true cost of care.

 

The shortage of provincial funding to respond to the budget pressures faced by community agencies is a situation that has been compounding over many years. The provincial funding formula used to calculate CMSM’s budgets has not been modified for years and has resulted in little or no increases in cost per space funding for the fee subsidy budget.  This has resulted in little flexibility on behalf of municipalities to respond to local cost increases and continue to serve the same number of children. For many years the Ottawa community has chosen to continue to serve the same number of children and manage the funding shortages using other methods. Licensed child care agencies can no longer afford to do this and provide quality programs that meet the requirements of the Day Nurseries Act.

 

The child care community has identified the need to increase purchase of service rates to respond to years of chronic under funding of program costs. In the past to compensate for the under funding of subsidized spaces programs have increased the rates for full fee spaces to cover costs.  Licensed programs do not have any flexibility left in their programs to address costs.  Licensed child care programs cannot cut their program costs any further and still offer quality programs and they cannot increase full fee rates to parents and continue to make their programs affordable. Child care programs no longer have the ability to absorb and manage these funding shortfalls on an individual basis. 

 

In Ottawa purchase of service contracts are used between the City and agencies where upset financial limits are established regarding the amount of care that will be contracted for the year.  This establishes contractual levels of service and establishes a fixed number of spaces within a program that will be set aside as subsidy spaces.  This system has created stability for child care operators but makes it more challenging to adjust per diem rates.  In Ottawa, to increase per diem rates contact levels for service provision must be adjusted downwards to provide available budget funds to finance the rate increases.  In other municipalities in Ontario where floating spaces are used, municipalities manage intake levels to fund per diem rate increases. 

Agencies have no established contractual service levels and therefore see no impact except that per diem rates have been increased.   In both systems the outcome is the same; per diem rate increases are provided by decreasing the number of children receiving subsidized child care services.  

 

The development of a fee subsidy stabilization plan began in Ottawa in May 2008.  The plan will be developed in two phases.  A Community Advisory Committee has been created to assist City staff in the development of the plan.  Broad community consultations will take place in June and September 2008 before a report is presented to City Council in the fall of 2008 on Phase 1 of the plan.  Phase 1 will focus on the identification of the true cost of child care in Ottawa and will try to determine the gap between current costs and per diem rates.  This phase will also focus on service and user patterns.

 

Phase 2 of the Fee Subsidy Stabilization Plan will develop principles for the redistribution of subsidized spaces in the community and develop an implementation plan for any necessary redistribution.  Implementation would not take place before 2009.

 

It is expected that if the fee subsidy stabilization plan is approved and implemented that there would be adjustments made to the number of fee subsidy spaces in the system.  The City would withdraw some subsidized spaces and reallocate the funds so that the rates that agencies are paid for their subsidized spaces reflect the true cost of service provision.   Child care spaces would not be closed, but some spaces that are currently fee subsidy spaces would be transferred to full fee spaces.  The current level of funding would remain in the system, but it would be distributed differently over a smaller number of total fee subsidy spaces. This will allow the City to provide a level of funding that recognizes the true costs to deliver a quality child care program. Special attention will be given to small agencies as well as agencies with a high percentage of subsidized spaces that have the potential to be more greatly impacted by the implementation of a stabilization program.

 

The implementation of a fee subsidy stabilization plan would allow the City and the child care community to reallocate subsidized spaces across the City to better match the neighbourhoods where the greatest demand for subsidized spaces currently exists. In the development of the fee subsidy stabilization plan, the City will work very closely with child care operators to try to ensure that no programs are placed in jeopardy by loosing fee subsidy spaces.  There is a considerable waiting list for full fee licensed child care spaces, and some agencies are in a better position to convert spaces from subsidized to full fee.  As part of the development of a fee subsidy stabilization plan a set of implementation principles will be developed.  The City will develop those principles in consultation with the child care community. 

Issues to consider will include the impact on small agencies, geographic sensitivity, impact on neighbourhood accessibility, the size of program waiting lists and how subsidized spaces would be withdrawn from the system.

The City would not evict children from a subsidized space but implement the withdrawal of spaces through attrition as spaces are vacated.

 

The City has no intention of removing any funding that is currently in the child care system as part of the fee subsidy stabilization plan.  In the short term the implementation of a fee subsidy stabilization plan may result in fewer subsidized spaces available in the community.  The Province is committed to the implementation of a full day early learning program for kindergarten aged children.  It is important to stabilize the current child care system before more changes and potential service pressures are added to the system. Through the implementation of a fee subsidy stabilization plan the child care system in Ottawa will be healthy and properly funded and therefore in a solid position to respond to future demands.  The existing subsidy system is too under funded to support more growth until a funding realignment is implemented.

 

Wage subsidy

 

The City has an approved allocation plan for how additional provincial funding for wage subsidies will be applied to child care programs until all programs reach 100% of their eligible grant.  The City of Ottawa was notified in the summer of 2007 that an additional $1.3 million would be provided for wage improvement funds for eligible child care practitioners. The allocation plan was completed and agencies that received an increase in their wage subsidy grant were notified in November 2007.  The City will continue to apply this funding according to its allocation plan to community agencies to support wages in the child care sector. These new funds announced by the Province are welcome and will move the implementation of the allocation plan forward.  Through the implementation of these new funds agencies that were at 36% of their eligible wage subsidy grant were increased to 50%. 

 

The City will continue to implement its allocation plan for wage subsidy grants until all agencies reach 100% of their eligible grant. How quickly this goal is reached will depend on provincial funding levels.   In 2007, all agencies were receiving at least 50% of their eligible grant.  The implementation of 100% of wage subsidy grants to all eligible programs is a key requirement to stabilize the system, retain trained staff and provide quality child care.


 

Home Child Care Provider Rates

 

Home child care provider rates are so low that it is difficult to attract new providers to the licensed home child care system.  Home child care services provide the most flexible option for families working non-traditional hours.  It is also the choice of many parents requiring regular hours of child care.  To encourage development and expansion of regulated home child care services, ongoing increases in provider rates are necessary. 

The 2005/06 Child Care Service Plan projected a 7% increase in rates in 2005, and a 5% increase in the subsequent 2 years of Best Start funding.  The 7% increase provided in 2005 has been maintained and further increases will be dependant on increased provincial funding.

 

Impacts of Income Testing

 

The impacts of using income testing to determine eligibility for fee subsidies are being closely monitored.  Impacts are being noticed regarding eligibility and parental contribution levels.  This will impact the overall fee subsidy budget since parental contributions are re-invested back in the subsidy system to operate the overall program.  City staff is closely monitoring the final impacts on the municipal budget. 

 

For some parents the use of income testing to determine eligibility for a fee subsidy has resulted in a very low level of subsidy.  As parental contributions for the total cost of licensed care increase it becomes cheaper for parents to purchase care through the unlicensed system.  The fee subsidy these parents receive is not enough of a financial incentive to enter or remain in the licensed system, which is more expensive. There is concern that the trend that is beginning to appear is that parents are withdrawing children from the regulated licensed system and instead choosing unregulated care because of this new financial reality. This is especially true for school age care that has lower per diem rates to reflect fewer hours of care each day.  For middle and high income earners in the subsidy system wanting school age care, they qualify for either a very low level of subsidy or not at all.  Unregulated care becomes a financially desirable alternative to licensed group care.  This situation is beginning to shift user patterns especially in relation to decisions around the type of care (licensed or unlicensed) for school aged children.  The user pattern shift would also have a significant impact on agencies that provide school age programs.  These changes in user patterns also have the potential to affect child care programs in schools that are a priority for Best Start. The City is monitoring the situation with child care agencies.  New models of care may need to be developed for school aged children given the impacts of income testing.

 

Families with children with special needs are also experiencing impacts from the use of income testing to determine eligibility for a fee subsidy.  These families often incur significant additional costs to support their children with special needs, but income testing does not allow for these costs to be adequately reflected in the eligibility determination.  This situation is affecting subsidy levels.  Adjustments should be made to the assessment criteria to recognize these additional costs.

 

Full Day Learning for Four and Five Year Olds

 

The integration of early learning programs is a key service priority for the Province through the Best Start Initiative.  This provincial commitment has resulted in the appointment of Dr. Charles Pascal as the Early Learning Advisor to the Premier who will explore all of the elements required for effective implementation of full day early learning and will present a report to the Premier in early 2009.  The Premier has announced his commitment to implement full day early learning for four and five year olds by 2010.

 

To prepare locally for the implementation of this provincial initiative The Ottawa Network for Children (ONC) has created the Full Day Learning for Four and Five Year Olds Working Group. The working group’s mandate is to increase awareness of full day learning programs for four and five year olds and to propose recommendations to governments and other groups regarding the implementation of this initiative.  Previous child care service plans and Best Start plans have identified many challenges to implementation where provincial action is required to assist local efforts.  The work group is researching and preparing background information for discussion at the ONC, obtaining input from stakeholders regarding full day learning strategies and working with stakeholders to make recommendations to government and other relevant groups regarding full day early learning.

 

In Ottawa, kindergarten and child care programs that are already co-located and communicating regularly will be encouraged to identify ways to cooperate in planning a curriculum for children attending both programs.  It will be important to monitor the impacts of income testing on school aged programs and how this is affecting licensed child care programs operating in schools, where before and after school care is an important component of their services.  It will be essential not to destabilize these licensed programs if the integration of early learning is to be a success.

 

The City of Ottawa supports the concept of the integration of early learning programs.  The City is actively working with other CMSMs through the Ontario Municipal Social Services Association (OMSSA) on system wide issues related to the implementation of this initiative.

 

Quality Care and Accreditation

 

The City of Ottawa has developed in partnership with the Child Care Council of Ottawa-Carleton and Le Regroupement des services éducatifs à l’enfance d’Ottawa, a pilot project to help support the provision of quality child care in the community.  A new accreditation tool has been developed by the City of Ottawa that will help to guide child care agencies in enhancing quality care and programming.  The tool is now available in both French and English. 

The new accreditation tool is a self-assessment done by child care agencies to assess their programs.  This tool provides a guide for programs to understand what the City of Ottawa would like agencies to include in their programming and services to children and families.

 

The City will work with the child care community on the further development and use of this tool.  The tool is currently being used in some centre-based child care programs.  The licensed home child care network has undertaken to look at the applicability of using the tool in licensed home child care settings.   The City of Ottawa would eventually like to link this accreditation process with the purchase of service agreements between agencies and the City for the provision of fee subsidies.  The City would like to receive financial support from the Province of Ontario to support the application of this tool, which will assist in ensuring quality child care programs are provided in the community. The City plans to implement this tool more widely in 2009.

 

The City is discussing with the Province and other municipalities about expanding the use of the tool to additional municipalities in Eastern Ontario.  The City would also be very interested in working with the Province on any other initiatives in this area that support the provision of quality child care programs.

 

            Community Child Care Capital Projects

 

The City currently has in the 2008 budget $2 million in municipal funds to support capital improvements for community child care agencies of which, there is $600,000 allocated for minor capital requests and $1.4 million allocated to support a lifecycle renewal program.  The lifecycle renewal program is aimed to reduce overall operational costs for agencies and result in long term investments in infrastructure.  The program will fund projects such as new roofs, replacement windows, heating systems etc. This is the first year that the City will offer a program to support lifecycle renewal projects for community child care agencies.  City staff has no way to predict how many grant proposals will be submitted. 


The Branch will be issuing a call for proposals for the lifecycle renewal program in the third quarter of 2008.  Once the City reviews the grant applications it will be in a better position to determine the total community requirement, how far the $1.4 million allocated will go in addressing the needs in the community, and what the future priorities should be for funding.  City staff will bring forward an information report regarding this process and the projects that will be funded during 2008.

 

The Province provided the City of Ottawa with $100,000 to support health and safety related projects for community child care programs.  These funds have been distributed to community agencies.

 

Consultation

 

The Ottawa Network for Children, responsible for Best Start planning, considered the key elements of the 2008/09 Child Care Service Plan at its meeting of June 12, 2008 at which representatives from the Regional French Language Best Start Network were present.  Input from the meeting has been incorporated into The Child Care Service Plan before its final submission to the Province by June 30, 2008.

 

The City of Ottawa has an ongoing well-established dialogue with stakeholders and service partners in the child care system.  The City of Ottawa distributed a draft copy of this Service Plan to Le Regroupement des services éducatifs à l’enfance d’Ottawa for discussion at its meeting of June 19th.  Le Regroupement des services éducatifs à l’enfance d’Ottawa has been involved in the planning of child care services for Francophone families and this plan reflects their recommendations. The City also distributed a draft copy of this Service Plan to the Child Care Council of Ottawa-Carleton at its meeting on June 10, 2008.  Feedback was sought and has been incorporated into this Service Plan.

 

The fee subsidy stabilization plan is being developed with extensive community consultation.  A Community Advisory Committee has been established through an expression of interest for membership in the committee sent to all purchase of service agencies in Ottawa.  Twenty expressions of interest were received by the City and seven representatives were chosen to ensure diversity in programs is represented.  Two broad community consultation sessions will also be held in June and September on this plan, which is a major priority for the City of Ottawa in 2008.


 

Conclusion

 

The additional $1.6 million from the Province in 2007 has helped the City of Ottawa to respond to service pressures.  To truly address the stabilization issues in the child care system more funding is required for wage subsidy grants and the fee subsidy system.  Failure to secure appropriate levels of funding for the future operation of the system will necessitate the closure of spaces to ensure the vitality of the system. The City of Ottawa is now developing a new fee subsidy stabilization plan to provide purchase of service agencies with per diem rates that better reflect the true cost of quality care.  This will unfortunately necessitate the decrease in accessibility of subsidized spaces. The Province also needs to provide leadership to address the shortage in trained staff and to expand service levels through licensed home child care programs.