City of Ottawa getting $443M through Ontario's new daycare funding model: memo

Ottawa’s Little Heroes Daycare Centre on Friday, Feb. 23, 2024 (Katelyn Wilson/CTV News).

The City of Ottawa will be getting approximately $443 million in funding next year to go toward the implementation of the national $10-a-day child-care program.

Ontario Education Minister Todd Smith announced a new funding formula Thursday, saying it will give operators certainty and stability. The new funding structure comes into effect Jan. 1, 2025. Smith also announced the province will cap child-care fees at $22 per day starting in January.

Daycare operators have been struggling to operate under the program's former compensation model. They were required to freeze fees at 2022 levels and the "revenue replacement" approach the province used in 2022, 2023 and 2024, where the government covers the amount of money parents are saving through reduced fees, proved unsustainable as costs rose. 

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In a memo to Ottawa city council, Director of Children's Services Jason Sabourin called Smith's announcement an important next step in the phased provincial approach to providing a national system of high-quality, affordable and inclusive early learning and child-care services for families.

"The new funding formula is designed to be transparent and representative of how child care is delivered across the province, with more simplified administrative processes and heightened accountabilities to ensure equitable distribution of public funding," Sabourin wrote. "The Province has developed benchmarks to be better representative of costs typically incurred for the delivery of licensed child care, including legacy top-up funding to fully cover historic costs above the benchmark allocations and a growth top-up for new providers. In addition to covering eligible costs, the funding formula provides an amount in lieu of profit / surplus to recognize service provider’s opportunity costs and the risk of running a business or to reinvest in child care."

The preliminary allocation of $443 million the City of Ottawa is expected to get in 2025 includes $375 million for the Canada-wide Early Learning and Child Care (CWELCC) cost-based allocation, $4.6 million for start-up grants to support the City’s directed growth plan, $6 million for service system managers administration allocation and $57 million for local priorities which includes supports to school-age programs, fee subsidies, workforce strategies and special needs resourcing, Sabourin said.

He added that the provincial government is also providing $1.9 million in incremental administrative funding in 2024 to support set-up costs associated with implementing the new cost-based approach.

"Staff are currently assessing the allocation and awaiting further contractual information from the Province. Any service adjustment or financial implication would be identified through the City’s budget process," Sabourin wrote.

Ottawa's total allocation in 2024 was $308 million, according to a Feb. 8 memo. 

Sabourin said the City of Ottawa will be busy over the next few months to get everything in place in time for the changes to come into effect in the new year.

"In the coming months, staff will work quickly to review and interpret the Provincial guidelines and will prioritize the development and implementation of the new Provincial funding formula to meet local needs by January 1, 2025. The summer and fall months are a busy time for service providers as they navigate operational pressures, prioritizing daily service, staffing and integrating new children into care," he said. "Staff recognize this is a significant transformation, within short timelines and competing demands. Supports will be provided to all sector partners to assist with the successful implementation of the cost-based funding allocation, including leveraging our local System Planning Advisory Group (SPAG) to help support implementation."

--With files from The Canadian Press