Manitoba OKs $530M settlement after judge found province improperly kept money from children in care

Katrena Jack remembers choosing her new glasses from the cheap section, like other kids in Child and Family Services care, and then not being able to get new ones when they broke.

"There's a couple times where … I just kind of had to fix my glasses as best as I could," she said Monday. "I used electrical tape and super glue a lot."

Now the province of Manitoba has agreed to pay out more than $500 million after a judge found the government improperly withheld federal money intended for children in care like Jack.

The "historic settlement is a significant step forward in rectifying the discrimination endured by vulnerable children in care," a joint news release from the government and plaintiffs said Monday.

"This is a strong message for all governments across Canada in regard to the rights of children," said Trudy Lavallee, one of the named plaintiffs in the case.

"Quit discriminating against the most vulnerable kids," said Elsie Flette, another of the plaintiffs.

Similar lawsuits are underway in Saskatchewan and Alberta.

The province has agreed in principle to pay $530 million after three class-action lawsuits were filed by Child and Family Services agencies. The deal is subject to court approval.

In 2022, a Manitoba Court of Queen's Bench judge ruled Manitoba's decision to order CFS agencies to give the money from the federal children's special allowance (CSA) to the province, which occurred from 2005 to 2019, was unconstitutional and discriminatory against Indigenous and disabled children.  

'Terrible loss of opportunity'

It's estimated the province, which had argued it was entitled to the funds because it was paying for the children's care,  improperly took more than $334 million — including $251 million from Indigenous CFS agencies — in benefits.

Flette was executive director of the southern Manitoba children's welfare authority when the former NDP government started clawing back the federal children's allowance. It was meant to ensure children in care get the same federal funding that other children get through the Canada child benefit and child disability benefit.

The funds could have helped pay for activities such as sports or travel to visit family or participate in ceremonial activities, Flette and her lawyer said Monday.

Jack, now 23, says the money would have helped her pay for things like glasses or sports she couldn't afford.

"Growing up, I loved to dance and I loved sports, and it was choose one or the other, so I I chose to go with dance.
It's just you couldn't do all the activities you wanted to do," she said.

"It makes me quite happy hearing that we all finally get paid out on the opportunities that we missed out on while we were growing up in care."

"This settlement represents a significant victory, unequivocally holding the province accountable for its unjust targeting of vulnerable children," Grand Chief Cathy Merrick of the Assembly of Manitoba Chiefs said in a statement.

Manitoba Keewatinowi Okimakanak called the agreement long overdue.

"Finally, First Nations children in the care of the CFS system who were denied a benefit by the government will be compensated not just for the loss of benefits they were rightfully entitled to but for the terrible loss of opportunity the CSA was intended to provide," Grand Chief Garrison Settee said in a statement.

Resolution fund

The settlement will compensate every child affected by the province's actions, including interest and additional money for other damages and costs, through the creation of a resolution fund, the news release says. The funds will also cover legal fees.

The province previously argued it deserved the money since it was paying the cost of looking after the children.

The clawback started in 2005 under the NDP government. The Progressive Conservatives, elected in 2016, ended the practice after three years, and in 2020 tried to ban any legal challenge against Manitoba. A judge struck down that section of the law.

The former PC government decided last year not to appeal the ruling that it had improperly withheld the money.

Nahanni Fontaine, the current NDP government's families minister, acknowledged the province is righting the mistake of previous NDP and PC administrations. 

"What was done previously in respect of the CSA dollars that were supposed to go directly to children in care was not a good thing," she said, after an unrelated news conference.

"Our government upon coming in that was my No.1 priority, was to make sure that we entered into negotiations in a good way."

David Chartrand, president of the Manitoba Métis Federation, called the settlement a victory for the children.

"The MMF will do what it takes to ensure that every child who is eligible for this settlement receives every penny they are owed," he said in a news release.

Jack isn't fully set on what she will use the money she receives for, but she has some ideas.

"The ideas I have with money from settlements is making sure that I'm taking care of myself. I want to ensure I have a stable home," she said. "I'd like to buy a house. I'd like to buy a truck."

"I'd like to eventually go back to school and take the support worker programs and work with youth who have also been in the CFS system."