Daycare says Ontario's funding model threatens it with closure

A Toronto daycare that signed on to the national childcare program is now in such financial difficulty that its board is considering closure, a plight that advocates say reveals flaws in how Ontario funds the system.    

Sunnyside Garden Daycare, a non-profit that serves nearly 150 children in Toronto's west end, is appealing to the province and city for emergency funding to stave off a shutdown by the end of the year. 

"We are facing an urgent financial crisis that threatens the existence of our not-for-profit daycare," the centre's director Barbara Wannan wrote in a letter sent Thursday to Premier Doug Ford and Education Minister Stephen Lecce.

Ontario's funding model — in place since the province agreed to join the national program in 2022 — has had "devastating consequences" for the daycare centre, says Wannan in the letter, a copy of which was provided to CBC News.

She says without an infusion of cash, its board will have to choose between dropping out of the program or shutting down. 

Carolyn Ferns, policy co-ordinator of the advocacy group Ontario Coalition for Better Child Care, says Sunnyside Garden's situation is not unique.  

"All over the province, I hear from child-care centres that are struggling," Ferns said in a interview. "Things are really precarious for childcare programs right now financially." 

At issue, according to Ferns and the operators of multiple daycares around Ontario, is the province's formula for centres that have opted into the Canada-Wide Early Learning and Child Care program, the federal initiative designed to bring fees down to $10 per day by 2026.

Daycares that signed on in Ontario immediately had to cut the fees they charge parents in half, with the province committing to replace that lost revenue. 

Ontario based its replacement funding on the fees each daycare charged in March 2022, with annual increases of 2.75 per cent last year and 2.1 per cent this year. 

The rapid rise in the cost of living since then and the need to improve the pay of child-care staff to cope with a severe shortage of workers in the sector have outstripped those increases, said Ferns.   

"It's not enough to make up for the inflationary pressures that child-care centres are facing," she said. 

The province has repeatedly promised to revise the funding model, but announced earlier this month that its new formula won't be in place until 2025 and has yet to tell daycares what the new model will be.

The YMCA, the largest child-care provider in the province, has also warned of the risk of closures unless Ontario updates its funding formula to cover the actual cost of providing care.