Sufficient public cost-based funding of ELCC operational budgets
Funding for child care programs must be determined by funding formulas based on the program’s full operating costs. These cost-based funding formulas will be designed by each province/territory.
The patchwork approach falls short
Historically, early learning and child care (ELCC) funding was a patchwork of parent fee revenue, grants, and payments that fell far short of the costs of operating high quality, affordable child care. Child care services relied primarily on parent fees to cover operational costs, including staff compensation. This resulted in out-of-reach parent fees and low staff compensation, contributing to high staff turnover and lower quality programs.
Since 2021, the new federal funding has largely replaced parent fees through a fee revenue replacement model. But the old patchwork funding model remains, with government funding split into parent fee replacement and separate grants and payments, such as wage enhancement and other funds. Affordability for low income families continues to be addressed in part through outdated, stigmatizing parent fee subsidies, which often fail to ensure access.
Toward an operational funding model with sufficient funds
Public funding must be allocated in a way that recognizes child care as a system. Transforming child care into a stable, high quality, universal system requires a cost-based funding model that accounts for the full cost of operating a child care program.
Cost-based funding formulas must include all operational costs including fair staff compensation and facility, food, administration, and other program costs.
Cost-based funding will also be based on the ages and number of children (licensed capacity and occupancy rate), days and hours of operation, facility costs, and location.
These public operational funds may be supplemented by affordable geared-to-income parent fees (from $0 to a $10/day maximum fee).
What direction now? Ontario’s Funding and Management Guidelines for 2023 and beyond
Childcare Resource and Research Unit, BRIEFing notes, Oct 2022. Ontario
Policy brief 2: Ontario child care funding formula
Association of Early Childhood Educators Ontario (AECEO), report, May 2024. Ontario
Hallelujah! Ontario finally has a new funding formula
Childcarepolicy.net, blog, Sep 2024. Ontario
Giving parents money doesn’t solve child care problems
The Prosperity Project, report, Sep 2024. Canada
Financing early learning and child care in Canada
Canadian Council on Social Development, report, Nov 2004. Canada
Could the Conservatives’ tax credit help create more child-care spaces?
CTV News, news article, Sep 2021. Canada
Early education and childcare in the UK and beyond: Key challenges and lessons
Women’s Budget Group, report, Sep 2023. International
