Report To: Program Planning Committee
From: Lori Clark, Director of Integrated Human Services
Amy Winnington-Ingram, Integrated Human Services Manager
Date: September 18, 2024
Re: New Child Care Funding Approach
Purpose
To provide the Board with an update on the new cost-based funding model for the Canada-Wide Early Learning and Child Care (CWELCC) system, which will take effect on January 1, 2025.
Background
The Ministry of Education recently shared a memo detailing significant updates regarding the transition to a cost-based approach for CWELCC funding, which will be implemented in 2025. These changes are critical for our planning as we strive to continue offering affordable, high-quality child care to families. The new funding framework will be essential in shaping the 2025 budget.
In May 2023, the Board approved an issue report regarding the Ministry’s release of a high-level discussion paper, which proposed the conceptual framework for the 2025 CWELCC funding formula. It was also noted that funding through this new formula is intended to support CWELCC eligible children aged 0-5, while existing funding for children aged 6-12 and EarlyON programs will remain outside of this framework.
The newly introduced cost-based funding guidelines will govern how child care services are funded across Ontario, ensuring the funding is transparent, representative, simple, and accountable. This report summarizes the key points from the Ministry's communication, including funding allocations and new guidelines.
Funding Approach
Cost-Based Funding
Cost-based funding supports CWELCC-participating licensees in delivering child care services to children aged 0-5, based on eligible costs incurred during the year. Funding is calculated using a ministry developed formula.
The program cost allocation includes two components: a benchmark allocation covering operating costs like staffing, supervisors, accommodation, and general operating, and a top-up allocation, such as legacy, growth, and, after 2025, rolling top-ups to support transitional or expansion needs.
Service System Managers are responsible for distributing cost-based funding in regular installments and must reconcile these allocations throughout the year against actual program costs.
Local Priorities Funding
Beginning in 2025, this allocation will support child care programs for children aged 0-12, including general operating grants (6-12), wage enhancements, fee subsidies, and special needs resourcing. While the guidelines for local priorities funding have not been released, the Ministry has indicated that no significant changes are expected for these programs in 2025.
Start-Up Funding
To enhance access to inclusive licensed child care services for children aged 0-5, the Ministry has provided start-up funding for the 2025 calendar year. This funding is aimed at supporting the creation of child care spaces in line with the Manitoulin-Sudbury DSB's Direct Growth Plan and notation space creation targets.
Preliminary 2025 Child Care Funding Allocations
The Ministry has released preliminary funding allocations for 2025. The new funding model represents a significant increase compared to the current allocation. In 2025, the total funding will be $15, 086, 284, compared to the current total of $10,552,118. This results in an increase of $4,534,166. Staff are currently assessing provider eligibility for the funding, a tool will be developed by the ministry for providers to submit eligible costs, the funding allocation is an estimate, and an adjustment will occur based on eligible costs.
| Funding Category | Amount |
| Cost-Based Funding | $11,016,119 |
| Start-Up Grant | $97,200 |
| Local Priorities Funding | $3,621,872 |
| Administration Funding | $351,093 |
| Total | $15,086,284 |
To support the transition to the new cost-based funding model, the Ministry has allocated $156, 258 in administrative funding for 2024. This funding will assist with the necessary updates to policies, procedures, IT systems, and training to implement the new framework.
The 2025 child care funding formula and framework requires Service System Managers to maintain municipal cost share requirements at historic levels. The Ministry assumes that municipal cost share contributions remain consistent with 2024 transfer payment agreements. Additional details on updated transfer payment agreements will be provided later in 2024.
Next Parent Fee Reduction
As part of the transition to an average of $10 per day child care fees by the end of 2025-26, the Ministry plans to cap base fees at $22 per day starting January 1, 2025. This change is subject to regulatory amendments and sector consultation. The impact on our service area will be minimal, as only the Home-Based Child Care overnight care rate will require adjustment, all other rates are below the $22 per day cap.
Home Child Care Agencies Operating in Multiple Jurisdictions
Beginning in 2025, Service System Managers overseeing home child care agencies with active homes in multiple jurisdictions will receive allocations to cover all the agency’s active homes, excluding new homes established in secondary jurisdictions after December 31, 2022.
An overseeing agency is a home child care agency that operates in different geographic areas. A secondary jurisdiction refers to areas outside the agency's primary region. For example, West Nipissing Child Care Corporation’s main region is Nipissing District, but homes in Sudbury East are considered part of a secondary jurisdiction.
Next Steps
Staff will implement the new CWELCC Cost-Based Funding Guideline and preliminary 2025 funding allocations in the 2025 budget and implement parent fee reductions. The new funding approach will require updates to some policies, procedures, and IT systems, and staff will recommend changes as needed. Additionally, it will be important to monitor local priorities funding to ensure compliance with the new guidelines and to address any potential impacts on our service delivery.
Conclusion
The upcoming changes in the CWELCC funding model represent a significant shift in how child care services are funded and managed. While these changes bring new challenges, they also provide opportunities to enhance the quality and affordability of child care for families across the province.
Staff will continue to collaborate closely with the Ministry and our partners to navigate these changes and ensure a smooth transition.