Ontario seeks municipal daycare audits, raising cost-cutting concerns

A new report from Statistics Canada says child care was more affordable across the country in 2023, but more parents are having difficulty finding it. Children play at a daycare in Coquitlam, B.C., on Wednesday March 28, 2018. THE CANADIAN PRESS/Darryl Dyck

TORONTO -- Ontario has ordered municipalities that directly operate child-care centres to do a value-for-money audit of their programs to determine if they could instead be operated by a "third party," raising concerns about privatization.

The move also has some advocates concerned the provincial government is looking to find savings on the backs of early childhood educators, as higher staff pay in municipal centres is often the reason they can cost more to run.

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Ministry of Education funding guidelines sent to licensed child-care operators late last year say municipal child-care administrators should have the independent audits completed by the end of 2024.

"The purpose of the value for money audit is to determine whether provincial funding is being used efficiently and effectively by directly operated centres, and whether the child care services could be offered by a third party provider instead," the ministry wrote.

Funding from the federal $10-a-day program or regular provincial administration funding can be used to pay for the audits, the ministry wrote.

The ministry has also told municipalities that it is cutting administration funding. Ontario is the only province with a mandated role for municipalities in delivering child care and funding for that administration has until now come entirely from the province.

The government announced in 2019 that it was asking municipalities to contribute 20 per cent of the cost of creating spaces, where the province had previously contributed all of it. The province also said administration funding would be split 50-50 going forward, but has since provided $220 million in transitional funding that is now expiring.

The Ontario Coalition for Better Child Care says that will amount to a cut of $85.5 million.

NDP child-care critic Teresa Armstrong said the system is in desperate need of more funding, not less.

"Many families are already having to drain their bank accounts to pay for child care, and providers such as the YMCA are warning of imminent closures if crisis funding isn't received," she wrote in a statement. "These Conservative cuts will only make life even more unaffordable."

The ministry wrote in a memo to municipalities that the transitional funding was in place due to impacts of the COVID-19 pandemic and to support the service managers while they "found efficiencies and adjusted their administrative cost structures."

When it comes to the audits, a spokesperson for Education Minister Stephen Lecce said Ontario is committed to "optimizing the municipal child-care system to better serve families."

"The independent third-party review will drive greater transparency on taxpayer dollars and maximize the number of families supported in the areas that need it most," Isha Chaudhuri wrote in a statement. "In short, it's about delivering better value for Ontario parents."

But others are not so sure.

Zeenat Janmohamed, the executive director and senior policy analyst at the Atkinson Centre for Society and Child Development at the Ontario Institute for Studies in Education, said it sounds like privatization is a possibility.

"Those municipally operated child-care programs...function as model programs, where the staff remain pretty consistent, they get paid good wages and good benefits, and we're not seeing high turnover in those types of programs, as we are in the community sector," she said.

"In early childhood we also have an obligation to serve families that might be in need and the municipal programs do that at not much greater cost, but do that in a way where they also have a way to connect to other municipal programming and support families in a broader sense."

• Stagnant funding for $10-a-day daycare has Ontario operators worried

Mandy Koroniak, the director of children's early years in the County of Wellington, said that like the province, the municipality is always interested in ensuring appropriate budgets are maintained.

"In addition to costs, we also consider fair wages, and the fact that in some communities if the county was unable to provide care other options may not be available to families," she wrote in a statement. "This is a concern in rural and high needs communities."

The City of Toronto commissioned a review of its services a few years ago and the report published in 2021 found that city-run centres serve a much higher proportion of vulnerable families than other centres.

The city-run centres are costlier to operate than comparable non-profit or commercial centres, the report said, largely due to paying early childhood educators higher wages.

"(City-run) centre wage costs are higher than comparator centres but they operate efficiently with lower than average administrative and related costs in part due to centralized administration and the benefits from economies of scale in other expenditures," the report said.

Alana Powell, the executive director of the Association of Early Childhood Educators of Ontario, said it sounds like the province is trying to save money by reducing ECE wages.

"The fact that they're more expensive is because they're making an investment back into the program by appropriately compensating early childhood educators and by hiring more qualified staff than regulations require," she said.

"So it's because these programs sort of have these best practices that they cost more, not because they're being inefficient with their funding. I think it comes down to: how do you describe the value of early learning and child care?"

Municipally run programs that have been through previous value-for-money audits often end up closed, Powell said. The Region of Waterloo announced in 2020 that it was closing its five licensed child-care centres after a KPMG audit concluded it would save $7.1 million a year in operating costs.

"The federal government has made it an express priority for expansion in public and non-profit child care," Powell said.

"The intentions of the province in doing the audits only for the public operated child cares (are) a little concerning. It seems to deviate from those stated values of the federal program."

This report by The Canadian Press was first published Jan. 31, 2024.