Manitoba OKs $530M settlement after judge finds it improperly kept money from children in care

The province of Manitoba has agreed to pay out more than half-a-billion dollars after a judge found the government improperly withheld federal monies intended for children in care. 

The "historic settlement is a significant step forward in rectifying the discrimination endured by vulnerable children in care," according to a joint news release Monday from the government and plaintiffs.

The province has agreed in principle to pay $530 million after three class-action lawsuits were filed by Child and Family Services agencies. The deal is subject to court approval. 

In 2022, a judge ruled Manitoba's decision to order CFS agencies to give the money from the federal children's special allowance (CSA) to the province, which occurred from 2006 to 2019, was unconstitutional and discriminatory against Indigenous and disabled children. 

It's estimated the province improperly took more than $334 million — including $251 million from Indigenous CFS agencies — in benefits.

"This settlement represents a significant victory, unequivocally holding the province accountable for its unjust targeting of vulnerable children," Grand Chief Cathy Merrick of the Assembly of Manitoba Chiefs said in a statement. 

 Manitoba Keewatinowi Okimakanak called the agreement long overdue.

"Finally, First Nations children in the care of the CFS system who were denied a benefit by the government, will be compensated not just for the loss of benefits they were rightfully entitled to but for the terrible loss of opportunity the CSA was intended to provide," Grand Chief Garrison Settee said in a statement.

This federal money was meant to ensure children in care get the same federal funding that other children get through the Canada child benefit and child disability benefit.

The settlement will compensate every child affected by the province's actions, including interest and additional monies for other damages and costs through the creation of a resolution fund, the news release said. The funds will also cover legal fees. 

The province previously argued it deserved the money since it was paying the cost of looking after the children.

The clawback started in 2006 under the NDP government. The Progressive Conservatives, elected in 2016, ended the practice after three years, and in 2020 tried to ban any legal challenge against Manitoba. A judge struck down that section of the law.

The former PC government decided last year not to appeal the ruling that it improperly withheld the money.

Nahanni Fontaine, the NDP government's families minister, commended the settlement reached by the parties.