Ontario Reduces Funding for Daycare Centres Not Participating in $10-a-Day Program

Ontario child-care centres that aren’t part of the national $10-a-day program will soon lose provincial funding, cutting fee subsidies for lower-income families and leading to a potential $2 per hour wage reduction for staff.

In a memo sent to licensed daycare operators, an assistant deputy minister of education outlined changes to the province’s funding structure. Starting in 2025, centres not enrolled in the $10-a-day program will no longer receive general operating funds, fee subsidies, or wage enhancement grants.

Families currently receiving fee subsidies will continue to benefit until their child ages out or leaves their care provider. However, new families won’t be eligible for subsidies for children under five if they attend centres outside the $10-a-day program. The memo explained that these funds will be redirected to support the $10-a-day system and ensure its long-term viability.

Last month, the Ministry of Education introduced a new funding formula for centres in the $10-a-day program, as many operators had expressed concern about financial sustainability with the reduced parent fees. The new approach is designed to cover actual operating costs and provide some flexibility, which may help stabilize the sector in the short term, though long-term growth remains uncertain.

The funding cuts to non-participating centres will make it more challenging for them to stay in business, said Andrea Hannen, Executive Director of the Association of Day Care Operators of Ontario.

“When these centres lose access to provincial funding, including wage enhancements and fee subsidies, they’ll either be forced to close or raise fees significantly,” Hannen said. “This reduces affordable child-care options for families with modest incomes.”

Centres in the $10-a-day program offer lower fees, but non-participating centres can set fees based on their operational needs, said a spokesperson for Education Minister Jill Dunlop. Ontario has committed to creating 86,000 new child-care spaces as part of its deal with the federal government to join the $10-a-day program. To date, 51,000 new spaces have been added, but only 25,500 of them are in the $10-a-day system.

The province claims a federal cap on for-profit spaces is hindering growth, as many applications are from for-profit operators, which municipalities must reject. Dunlop’s office has urged the federal government to lift this cap to allow more operators to join the program and expand affordable care options.

Federal Minister Jenna Sudds has indicated a willingness to discuss lifting the cap, but she requested further information on Ontario’s efforts to create non-profit spaces, as the program aims to prioritize public and non-profit care.

Alana Powell, Executive Director of the Association of Early Childhood Educators of Ontario, emphasized that the $2-an-hour wage enhancement, set to be cut from non-participating centres, will significantly impact staff.

“While we support the development of a publicly funded system, losing wage enhancements will be devastating for educators, especially given the current economic climate,” Powell said.

The wage enhancement for early childhood educators and licensed child-care workers, introduced in 2016, is crucial for recruitment and retention. Despite Ontario raising the minimum wage for ECEs to $23.86 per hour this year, advocates argue it remains too low to attract enough staff for the promised 86,000 new spaces.