Toronto daycare operator reduces wages, cites lack of funding

A major Toronto daycare operator that's part of the national $10-a-day child-care program is reducing wages for hundreds of employees, saying it has no choice due to an out-of-date funding model that's forced it into debt.

The Learning Enrichment Foundation (LEF), which operates 25 child-care centres in Toronto that care for approximately 1,800 kids, told parents in a letter last week it made the "incredibly difficult decisions" to implement wage reductions and change some staff roles in order to keep operating.

In its letter, the foundation says the current design of the Canada-wide Early Learning and Child Care (CWELCC) program is putting the sector at risk.

"Simply put, the [program's] funding formula does not fully cover the wages and expenses required to operate quality child care," LEF's letter reads. 

"Many operators, including LEF, have been forced into deficit."

The change highlights the financial pressure many child-care centres across Ontario face after cutting their fees in half — a key requirement of the program. While the federal government is providing billions of dollars in annual funding to cover the costs of reducing fees, improving care and boosting access to spaces, it's up to individual provinces to determine how that money is distributed.

Ontario committed to replacing revenue lost by participating day cares who halved their fees. The province based the amount each would receive on the fees they charged in March 2022, with annual increases of 2.75 per cent last year and 2.1 per cent this year.

But the rapid rise in the cost of living since then and the need to improve the pay of child-care staff to cope with a severe shortage of workers in the sector have outstripped those increases.

Wage increases had 'remarkable' effect, operator says

LEF executive director Peter Frampton says around 200 staff members will see their hourly wages cut by $2.32 to around $30 per hour in September. The wage cuts come after the foundation increased pay last year to help retain more staff and boost the quality of care the provided, a move Frampton said "had a remarkable and good effect."

"The pressure on frontline workers is unconscionable and and there has to be some changes," Frampton said. "People need to be able to have confidence that they can feed their own family as they're caring for others."

Operators in Ontario have been warning about the risk of closures if the province's funding formula isn't updated to cover the actual cost of providing care, rather than just replacing lost revenue.

Toronto parent Alicia Lam, whose three-year-old son attends one of the foundation's daycares, said she's devastated to hear staff wages will be going down. 

She said a staff members twice gave her son life-saving medication when he experienced medical emergencies at the daycare.

"They have a right to live in a dignified, financially comfortable way. The job itself is demanding, physically, emotionally," Lam said.

"I am afraid that it'll impact not only the quality of care that they want to provide, but maybe the people that can be retained, the training that they're able to provide, the resources that are available to them as employees."

Frampton said he hopes the wage rollback for his staff will prove temporary, as the provincial government plans to implement a new funding model in 2025 that is cost-based.

But for now, he says, there's no choice but to proceed with the cut.

"We have been waiting over two years for a modernized funding formula that went beyond just reductions in fees for parents ... but also spoke to quality, which means consistent staff and really enabling staff to have a living wage within the city of Toronto," Frampton said.

"We're still waiting for that. It has not been forthcoming."

Morna Ballantyne, executive director of the advocacy group Child Care Now, said the CWELCC program has been mostly successful at reducing fees at licensed child-care centres across the country, but in Ontario the replacement funding hasn't been sufficient.

"Replacing the foregone parent revenue with public funds is not enough because the costs of operations have gone up significantly," Ballantyne said. 

"The provincial government has just simply not taken that into account in the amount of money that it's been transferring to municipal service managers, who in turn pass it on to the operators."

Province, feds trade blame 

Ottawa and Ontario are pointing the finger at each other for challenges with the program.

The two levels of government jointly invested more than $4.1 billion in the child care and early years system in 2024, an increase of more than $200 million from the previous year.

"National child care is the federal government's signature program. Ontario has already reduced child care fees by 50 per cent on average, but the federal government needs to step up with funding and provide more flexibility to operators if they want their program to succeed," Ontario Education Minister Todd Smith's press secretary Isha Chaudhuri said in an email statement. 

"To support our hard working [early childhood educators], our government has introduced a comprehensive child care workforce strategy to provide wage increases and support the recruitment and retention of ECEs across Ontario."

Meanwhile, a spokesperson for Jenna Sudds, the federal minister of families, children and social development, said provinces are responsible for the "design and delivery" of the program and that Ontario will receive more than $2 billion from the federal government this year for the national program. 

Press secretary Geneviève Lemaire said in an email the province has received a 17 per cent increase in annual funding, but only passed on two per cent of that increase to the operators.

"They have all the necessary funding they need to prevent devastating closures from happening and make this program a success," Lemaire said.

"We will continue to strongly advocate for Ontario to update its new funding model as quickly as possible to provide operators with the certainty they need and deserve."