The Funding Formula Isn’t Adding Up
b2c2
We need a funding formula that will provide funding to enable current programs to continue to operate effectively and to prepare and pay for rapid growth in the not-for-profit and public sectors. It doesn’t appear that “the ministry has considered all the appropriate parameters and which ones may be missing”.
Inputs vs Outputs
The funding formulas that work the best are based on outputs rather than on its inputs like the schools funding formula and the Early Learning and Child Care system in Quebec. These systems base their funding models on per diems/per unit of service but the proposed 2024 Child Care funding formula is based on inputs, accommodation costs, and operating costs.
A funding formula based on a per diem/per unit of service cost requires that wage rates and other compensation are similar across all operators. Operators would be paying staff according to a wage grid to ensure consistency in costs, so compensation rates will need to be significantly higher than now.
Averages vs Ranges
The wage rates being collected now for 2022 collect a “wage range”, but that doesn’t reflect what the average wage rate is – the average for any operator could be at the very top of that range. The average wage should be calculated as a weighted average wage for RECE staff with the weights being the different number of hours worked by different staff.
Simplifying the system doesn’t mean there will be no accountability. As in Quebec, there are robust reporting requirements at audit time in order to ensure that taxpayers’ money is being spent well.
Competition with other jurisdictions with wage grids
As we have indicated above, there are clearly very significant retention and recruitment issues at prevailing wage and benefit rates. The funding formula should be based on a target wage grid at much higher wages.
Time worked should be time funded
The staffing grant is not based on the expected number of hours worked but on the expected number of hours and days that the centre will be open.
No annual increase in wage costs
An annual wage cost increase has been alluded to as part of the formula but has not been specified.
Staffing at different levels
The program staffing grant formula is based on the percentage of program staff who are RECEs and the percent that are not RECEs, not on the hours worked by those staff. In the case where staff are given director’s approvals to work as an RECE does the Ministry have any knowledge as to whether these staff members are earning at the rate of an RECE, the rate of a non-qualified staff, or somewhere in between? There are also issues with the wage rates of those given director’s approvals, the number of supervisors allowed, their wages, and the wages of pedagogues.
Training, Prep time, Professional Development
The program staffing grant does not include any allowance for training and professional development, or planning time.
Accommodation grant issues
The accommodation grant formula doesn’t yet take into consideration the cost of playground space, capital renewal and maintenance costs, the age of the facility, or the costs of the additional administration requirements of the program itself.
Funding accommodation costs for for-profits and non-profits should be treated differently. For-profits should not be permitted to use the accommodation costs to enhance their own personal wealth either through direct ownership or non-arm’s length ownership. This accumulation of private wealth, funded by the government, is not available to not-for-profits. The Funding Formula should definitely take this into account.
Child care subsidies
The funding formula is silent on what will happen to future funding for children whose families receive child care subsidies with no explicit commitment about child care subsidies directed at low-income families and families otherwise in need. It does not accommodate for extra staff time and the higher costs of subsidized children.
The role of CMSMs and DSSABs
The proposed funding formula makes CMSMs and DSSABs into flow-through agencies for the distribution of funds, rather than service system managers. The new funding formula should restore local funding discretion.
Principles Upon Which the Funding Formula Should Be Based
- cover all the legitimate operating costs of a centre providing quality licensed child care services at or above regulatory minimums for children 0-5 across Ontario;
- cover compensation costs for staff at wage and benefit rates that are competitive with other similar occupations so that Ontario’s sector is not characterized by staff shortages;
- reward ongoing professional development and increased educational qualifications;
- provide for extra compensation for early childhood educators with special qualifications;
- give operators discretion in decisions about the expenditure of allocated funds, but also require operators to report in detail at year-end;
- adopt a desired wage grid and a timeline over which to achieve it.
- recognize sources of additional legitimate costs;
- recognize higher costs per child in a rural or remote area;
- distinguish between legitimate and illegitimate reasons for having higher than normal occupancy costs;
- encourage expansion, especially within existing facilities;
- introduce a “reconciliation” process to adjust funding at year end or in the following year.