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TORONTO — Ontario has told child-care centres that it will implement a new way of funding the national $10-a-day program — something operators have urgently called for — starting in 2025.

Child-care centres, including the YMCA, the largest operator in the province, have been warning about the risk of closures if the funding formula isn't soon updated to cover the actual cost of providing care, rather than just replacing the revenue they've lost from the now-discounted fees. 

After several delays, the province told them in a memo last week that the new structure will be in place for next year.

"The priority for us is to provide certainty to the operators," Education Minister Stephen Lecce said in a recent interview.

"We've given lots of time now, half a year of certainty to prepare for that transition because the priority is to make sure we keep operators in the system so that we can provide affordable child care to hundreds of thousands of families."

Traditionally, child-care centres have raised parent fees when they faced rising expenses such as staffing costs, catering, rent, heating and supplies. However, any operator that wanted to sign on to the national plan had to freeze their fees in March 2022, and many had voluntarily frozen them since 2020, not wanting to raise rates during the COVID-19 pandemic.

That means the government's revenue replacement model is based on rates that don't reflect the true current cost of providing child care, and the amount Ontario has factored in for inflation — 2.1 per cent for 2024 and 2.75 for 2023 — is not cutting it, some operators say.

The province has put more than $98 million this year toward "emerging issues" for when operators aren't able to cover non-discretionary costs such as rent increases.

YMCA of Greater Toronto Chief Operating Officer Janie Romoff said the increases will address what's needed in the short term, but hopes the new funding formula will truly cover operators' costs so the program is sustainable into the future.

"This is a critical step to ensure that providers — including our charity — can continue to deliver high-quality child care under the new $10-a-day system," Romoff wrote in a statement. 

"We appreciate the complexity of this type of change and, while disappointed with the delay, recognize the need to get it right."

The province has been looking to move to a cost-based funding formula since 2022, initially hoping to have the new system in place for 2023. Then the ministry put out a discussion paper in 2023 aimed at a new formula for 2024. 

The ministry has now told operators that a new, cost-based funding approach will be in effect starting in January 2025, and that the details of that new formula will be announced soon.

Cathy Stevenson, the business co-ordinator of Campus Community Co-Operative Day Care at the University of Toronto, said she hopes the new funding formula will cover all the legitimate costs of running a child-care centre and recognize additional costs such as providing care for a large number of children with special needs or care in remote or rural areas of the province. 

"It should provide incentives for the provision of higher quality childcare services," she wrote in an email. "The funding formula also needs to be stable and reliable from year to year to allow operators to plan their programs and budgets."

Carolyn Ferns, policy co-ordinator for the Ontario Coalition for Better Child Care, said certainty and predictability will allow child-care operators not only to keep their doors open but also to plan for the future and create more spaces.

"It has certainly been a long time in coming, which, again, I hope means that they've taken the time to get it right, because I think that's what's really important at this point, that we have a solid funding scheme for child-care programs so that we do see some stability in the sector," she said. 

This report by The Canadian Press was first published May 16, 2024.

Allison Jones, The Canadian Press