The OECD noted Canada’s market-determined fee structure for child care results in high parent fees and an inefficient subsidy system with widely varying and complex eligibility criteria. It encouraged Canadian jurisdictions to “devise an efficient means of funding a universal early childhood service”.2 There is a general consensus across the OECD countries that substantial government investment is necessary to support a sustainable system of high quality, affordable services (OECD, 2006). Without strong government investment and involvement, it is difficult to achieve broad system aims, such as child health and well-being, equitable access, social inclusion and quality learning goals.Funding levels are important, but how services are funded also makes a difference. A universal approach appears to be more effective at including children from low-income families. Mixed enrolment in ECE is also associated with better-quality outcomes than programs targeted to children from low-income families. Direct funding to programs appears to have a positive impact on staff wages and program stability, whereas funding through fee subsidies or tax transfers has less positive effects. Since fee subsidies to parents seldom reflect the actual cost of child care, they tend to hold down staff wages and leave a gap between what parents receive and the fees programs must charge. This can exclude low-income families from using ECE centres.Three benchmarks look at funding levels and how funds are directed:
Percentage allocations to program operations, special needs integration and parent fee subsidies are determined through public reporting and are based on the last year a funding breakdown was available. Provinces may have announced global increases for child care in their most recent budgets, but unless specified, it was assumed that new funding would follow the established breakdown. Unless otherwise specified, funding for children with special needs is included as part of operations, since most jurisdictions deliver this funding to child care programs rather than through parent fee subsides. The two-thirds benchmark for program funding was chosen because it is associated with greater system stability (Figure M1).
Figure M1 Licensed Child Care Program Funding versus Fee Subsidy Spending
This benchmark reflects provincial policies establishing a maximum parent fee scale and a minimum wage scale for educators. Such policies contain the market nature of child care funding and delivery.
Percentages were calculated using total 2016/2017 operational spending estimates to March 31, 2017 as stated in government budget documents. ECE spending includes total 2016/2017 estimates for the operation of licensed child care and child care support programs for infants to school aged children, kindergarten, pre-kindergarten and other early education services, including school-based parent/caregiver/child programs. Major capital funding is not included.
In Ontario, 47 service managers (Consolidated Municipal Service Managers [CMSMs] and District Social Services Administration Boards [DSSABs]) are designated under the Child Care and Early Years Act to manage and contribute financially to child care services. The CSMSs/DSSABs portion of Ontario early years funding was calculated by reviewing their budgets.The 2017 estimates for kindergarten and education-offered programs were obtained from government documents or informant interviews. Where kindergarten funding was not specified, estimates were made based on kindergarten and pre-kindergarten enrolment times per pupil spending in elementary school as provided by Statistics Canada and, if applicable, pro-rated for half-time programs. Spending on ECE programs at 3 percent of provincial budget was chosen as a benchmark because it approaches the 1 percent of GDP that is considered a minimum investment in the care and education of young children (UNICEF, 2008). It represents a modest and fair share for children in their preschool years (Figure M2).
Figure M2 ECE Budget as a Percentage of Provincial/Territorial Budget
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2. OECD, 2004. Page 72.
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