Daycare says Ontario's funding model threatens it with closure

A Toronto daycare that signed on to the national childcare program is now in such financial difficulty that its board is considering closure, a plight that advocates say reveals flaws in how Ontario funds the system.    

Sunnyside Garden Daycare, a non-profit that serves nearly 150 children in Toronto's west end, is appealing to the province and city for emergency funding to stave off a shutdown by the end of the year. 

"We are facing an urgent financial crisis that threatens the existence of our not-for-profit daycare," the centre's director Barbara Wannan wrote in a letter sent Thursday to Premier Doug Ford and Education Minister Stephen Lecce.

Ontario's funding model — in place since the province agreed to join the national program in 2022 — has had "devastating consequences" for the daycare centre, says Wannan in the letter, a copy of which was provided to CBC News.

She says without an infusion of cash, its board will have to choose between dropping out of the program or shutting down. 

Carolyn Ferns, policy co-ordinator of the advocacy group Ontario Coalition for Better Child Care, says Sunnyside Garden's situation is not unique.  

"All over the province, I hear from child-care centres that are struggling," Ferns said in a interview. "Things are really precarious for childcare programs right now financially." 

At issue, according to Ferns and the operators of multiple daycares around Ontario, is the province's formula for centres that have opted into the Canada-Wide Early Learning and Child Care program, the federal initiative designed to bring fees down to $10 per day by 2026.

Annual increases below inflation 

Daycares that signed on in Ontario immediately had to cut the fees they charge parents in half, with the province committing to replace that lost revenue. 

Ontario based its replacement funding on the fees each daycare charged in March 2022, with annual increases of 2.75 per cent last year and 2.1 per cent this year. 

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, said Ferns.   

"It's not enough to make up for the inflationary pressures that child-care centres are facing," she said. 

The province has repeatedly promised to revise the funding model, but announced earlier this month that its new formula won't be in place until 2025 and has yet to tell daycares what the new model will be.

The YMCA, the largest child-care provider in the province, has also warned of the risk of closures unless Ontario updates its funding formula to cover the actual cost of providing care.

"We need to make sure [the funding] is stable and we need to make sure it's sufficient so that child-care centres aren't feeling squeezed all the time," said Ferns.

Province and feds trade blame

Lecce's spokesperson Isha Chaudhuri said it's up to the Trudeau government to deliver the funding necessary to operate the national child-care program.

"While we have cut child-care fees by 50 per cent, we know the federal program is creating difficulty for families and operators alike, which is why we will continue to advocate to the federal government for action," Chaudhuri said in an email to CBC News.

"We will keep cutting fees for parents, but the federal government needs to step up with funding or this program will fail across the country," she said. 

The federal minister responsible for the child care program recently blamed Ontario for the financial difficulties of participating daycares. The province hasn't stepped up "with a sustainable and long-term funding formula for providers," said Families Minister Jenna Sudds on May 13.

The province has allocated $98 million for what it calls "emerging issues funding" to help daycares cover cost increases deemed non-discretionary.

While centres with unionized staff are eligible for that funding to cover pay hikes in collective agreements, daycares like Sunnyside Garden where staff are not unionized cannot use it to cover wage increases. 

Sunnyside Garden is using $40,000 to $50,000 of reserve funds each month to cover its costs, says Niiti Simmonds, who serves on the board of directors and has two children enrolled in the daycare.

"We are about to be completely out of money and insolvent by the end of the year," Simmonds said in an interview.

'Shocking and unfortunate outcome'

"We have two options and neither of them are good," she said. "We are facing a situation where we'll either have to close our operations at the end of this year or withdraw from the Canada-wide program." 

Simmonds says it would be "a shocking and unfortunate outcome" if implementing a universal childcare program in Canada resulted in a loss of badly needed daycare spots. 

Although the national program is a federal initiative backstopped with billions of dollars from Ottawa, responsibility for running it rests with each province. Ontario's version is administered through what are called "service system managers" — cities, regions, counties or districts.

When the board of Sunnyside Garden took their concerns about funding to Ontario's Ministry of Education, a provincial official told them to talk to their service system manager, the City of Toronto. 

The city "told us we needed to work on our staffing levels and cut our budget," Simmonds said. "We have reduced spending in all areas and we have cut staff and cut wages. We've done pretty much everything we can to keep operating within the limited funds that we get." 

City officials told the daycare that it will not receive any additional funds this year. The daycare's director wrote Thursday to Mayor Olivia Chow to appeal.  

"Our office will work with the local councillor to better understand the issue this child-care centre is facing and see what support the City may be able to provide," said Chow's director of communications Shirven Rezvany in an email to CBC News.

Provinces across Canada are reporting lengthy waitlists and staffing shortages for the national child-care program. That has led to warnings that the Trudeau government's plan to create 250,000 new spaces by 2026 costing an average of $10 a day may not be feasible.