The Ontario government is capping daycare fees for young children to $22 a day starting next year for operators enrolled in the government-funded program, as it announced a new funding model for child-care centres that is intended to provide more stability and predictability to help reduce lengthy wait-lists.
The province announced Thursday that fees for children under six in centres enrolled in the countrywide Early Learning and Child Care system, the federal Liberal initiative known as the $10-a-day program, will be capped at $22 a day beginning in January, 2025.
On average, parents who have spots in the program will pay $19 a day, according to the government, with the goal of reducing fees to $10 a day by 2026. Once the fee cap is implemented, Ontario said it will have reduced fees by almost 60 per cent compared to 2020 levels.
The government also introduced a new cost-based funding for operators – one that it says is simpler and easier to use than the previous system and reflects the “true cost” of operating child-care centres. Many operators have said they’ve struggled with higher costs since fees were frozen in 2022 and some centres kept fees low to support families during the COVID-19 pandemic, making it difficult to expand or increase the number of available spots.
The new system moves from a revenue replacement model to a cost-based funding approach, where all operators receive benchmark funding based on core metrics, such as the number of children and location, with a top-up for certain areas that are more expensive. There is also a growth top-up for centres looking to expand in certain communities.
The formula will set an average 8-per-cent profit for for-profit operators and an average 8-per-cent surplus for non-profit operators.
Minister of Education Todd Smith said the government is determined to make life more affordable for families.
“When kids are in child care, they’re able to learn and grow, and their parents are able to enter the work force with peace of mind,” he said in a statement.
Lesley Davidson, president and chief executive officer of the YMCA of Greater Toronto and president of YMCA Ontario, the largest not-for-profit provider of child care in Ontario, said in a statement the government “heard our charity’s concerns and is working to ensure the full cost of delivering high-quality child care is funded.”
“This program supports thousands of families across Ontario, and is vital to creating healthy, equitable communities,” she said.
Donna Spreitzer, executive director of advocacy group Toronto Community for Better Child Care, said she too welcomed the new funding formula, including additional money for certain regions, but expressed concerns that it treats for-profit and non-profit operators in the same way. She said any surpluses generated by the not-for-profit providers go directly back to the centres and staffing – but not necessarily in for-profit centres.
“We do worry a bit about the accountability and how the funds will be used differentially by the two different systems we have,” she said.
Ms. Spreitzer also said she was concerned that the new funding model doesn’t include wage increases or a new wage grid for child-care workers.
The province has so far created less than a third of the 86,000, $10-a-day spaces it committed to by 2026. Meanwhile, wait-lists have ballooned since the introduction of the program. The government has so far created 51,000 spaces for children from the ages of 0 to 5, but only 25,500 of those are part of the $10-a-day program.
Ontario NDP Leader Marit Stiles criticized the province for delaying the release of its funding formula. She also said early child-care childhood educators and child-care workers need to make more money or the system will keep losing workers.
“You shouldn’t have to break the bank, or wait months and months, to get child care for your kid. Parents deserve a government that doesn’t view child care as an afterthought,” Ms. Stiles said in a statement.
Ontario has also been embroiled in a battle with the federal government over for-profit child-care centres, with the province asking Ottawa to lift the cap on for-profit spaces in order to increase availability.
Ontario says that municipalities have had to turn down thousands of child-care spaces in the $10-a-day system, even as families struggle to secure a spot, because they are in for-profit centres. Ontario’s child-care deal with the federal government commits to maintaining of 70-per-cent non-profit spaces and 30-per-cent for-profit spaces. Ottawa says that non-profit operators provide a higher quality of child care, and that money is reinvested in the child-care centres and work force.
The two levels of government are set to meet in the next two weeks to discuss the issue.
Jenna Sudds, federal Minister of Families, Children and Social Development, said Thursday her government welcomes the new funding formula and that it will make the child-care system more sustainable as well as reduce wait-lists by providing operators with more certainty. She also said the fee reduction is a step toward reaching $10-a-day child-care fees by 2026.
“That said, the job’s not over. Ontario needs to keep its foot on the gas in order to meet the targets that it agreed to. That includes good pay and working conditions for child-care workers, and creating thousands of new child-care spots,” Ms. Sudds said in a statement.