Why some daycares are thinking about opting out of province's grant agreement

For Scott Quan and his family, the Alberta child care affordability grant has been a game-changer.

The government program has meant both he and his wife can work while their three children are looked after in daycare programs.

"We can afford to do both and still manage finances appropriately," Quan said in an interview.

But then this week he received notice that his Lethbridge, Alta. daycare was considering opting out of the program, saying it's a financial burden. If that were to happen, Quan says it could cost nearly three times more to stay in while looking at years-long waitlists elsewhere.

"There are 60 kids at this childcare facility. And I'm sure all of these parents are now struggling with this news."

The Association of Alberta Childcare Entrepreneurs, which represents for-profit child care centres across the province, encouraged its membership to outline concerns to parents after seeing the latest agreement from the province set to come into effect in the new year.

"[Members are] feeling very stressed right now, very frustrated," Krystal Churcher, the association's chair, said Tuesday. 

"A lot of operators are feeling that they're just not going to make it financially."

Alberta child-care affordability grant

The federal-provincial arrangement — touted as $10-a-day daycare, although that target isn't set to be reached until 2026 — uses federal funding to limit child-care fees through grants to operators, who are reimbursed for costs per child based on a fixed rate set out in the provincial implementation plan.

The initial phase of the agreement was first offered in January 2022 and covered roughly 50 per cent of costs. Churcher said the next version of the agreement will cover more like 70 or 80.

She said one major issue is the scheduling of that payment. Parents pay fees — now targeted at $15 a day per child — at the beginning of the month. At the end of the month, operators submit claims to the government and then are supposed to receive the grant funding within 5 to 10 business days.

Churcher, who also owns a child-care centre in Fort McMurray, Alta. and runs another out of a school in Calgary, said that creates cash flow issues as operators must front costs like rent, insurance and wages before the grants are paid out.

"We're still being used as unpaid fiscal agents for the government programming."

She said it comes as operators struggle financially with the costs of inflation on food, utilities, and more. The agreement means operators cannot raise child-care fees but it does offer Cost Increase Replacement Funding  — six per cent for operators who previously received the increase funding or three per cent for those who did not.

"Everything is costing more, and operators have really only seen a very small increase since we signed this," Churcher said. Furthermore, she said, many operators — most of which are for-profit in Alberta — had set their fees low after pandemic measures were removed and when the program was implemented.

She said to remain competitive and viable, operators are "stuck" opting into the program.

"Either sign in now and then slowly go bankrupt, or you opt out and go bankrupt tomorrow."

Churcher said concerns that have been brought to the government are not reflected in the latest agreement, which has a sign-on deadline of Jan. 31.

"It's been nothing but a fight with government for two years."

An emailed statement from Ashli Barrett, press secretary for the minister of children and family services, highlights the three-per-cent increase in program fees for operators, in addition to funding for wage top-ups, infant care incentives, and subsidies for eligible families.

"Children and Family Services monitors child care programs and takes action as appropriate to ensure the well-being of all children attending programs. We expect all operators to continue providing quality child care services, as per the Early Learning and Child Care Act.

"Alberta families expect access to safe, high-quality, affordable child care and we continue to work with our partners to develop an Early Learning and Child Care funding formula that ensures this."

The response did not address questions about the percentage of operators taking part in the program or whether more operators were opting out, though it did note that child care operators have until the end of January 2024 to sign their affordability grant agreements.

In a follow-up email, Barrett said the government won't know what percentage of operators are taking part until that time.

Time of transition

Christopher Smith is the associate executive director of the Muttart Foundation, a private foundation based in Edmonton that supports charity work in early education and child care, and a member of the national advisory council for the federal minister on implementing the Canada-wide system-building agreements.

He said in other jurisdictions, governments tried to take into account the actual cost of delivering child-care services rather than have flat range grants that applied to everybody.

"Alberta needs to look at how it reduces fees in a much more responsive and much more sort of interactive way. "

He said when work on the child-care affordability system began, it came with the expectation there could be disruptions.

"I think we're in kind of a transition period," Smith said.

"We need to work through these with the long-term goal of providing all families with equitable access to high-quality early learning and childcare."