Ford has removed profit limits for daycare operators

To encourage more childcare centers to sign for $10 per day day care, the Ford government has decided to remove profit limits and provide less oversight for nonprofit operators, most of whom have refrained from participating in deals so far.

Currently, Ontario lags behind other provinces and territories in registering daycare operators to participate in Canada’s new national childcare program, largely due to the reluctance of nonprofit operators. This delay means that many Ontario families are currently waiting in uncertainty, unsure when they will receive a check reimbursement of 25% of child care costs or whether their child care center will sign off for $10 per day of child care altogether.

Ford fights for profit

It’s a problem Ford created when he made a tough bargain with the federal government last year, becoming an advocate for business by pulling off negotiations to ensure that nonprofit operators would be eligible to participate in $10-a-day child care and receive public money. “We have met with many nonprofit operators and have fought for them every step of the way and will continue to advocate for them to the federal and city governments, so all parents can benefit from these savings,” spokeswoman Grace Lee wrote in an email.

The inclusion of for-profit operators runs counter to the original goals of the federal government’s Multilateral Early Learning and Child Care Framework, which stipulates that public money should be used to support non-profit and public operators.

Now, Ontario is saddled with trying to appease a group of nonprofit operators who qualify to participate in $10 a day day care but don’t want to play by government rules. These rules initially included requiring nonprofit operators to limit their profits while also subjecting themselves to government oversight of how they spent public money. Knowing that the primary prerogative of the nonprofit business model is to maximize revenue, it should come as no surprise that nonprofit operators refuse to sign deals under these conditions.

Publicly, the nonprofit operator claims that $10 a day child care is a bad deal because it requires excessive government oversight and “patronization” that involves dimming every new toy and blanket. They also claim that the plan will bankrupt them because certain expenses do not qualify for public funding (eg, rent, mortgage payments). To be clear, nonprofit operators, like other businesses, are not against accepting public money to serve the public, they just don’t want this money to come with ties or scrutiny.

Divert public funds

The non-profit operators claim that they just want to have the freedom to spend money to create a high-quality environment for children. But we should be skeptical about how they will achieve this when, unlike non-profits and public operators, they will divert some of these funds towards profit, rather than reinvesting it into the centre.

Not-for-profit operators already have a track record of providing lower quality care compared to public and nonprofit childcare providers. Various studies have shown that nonprofit centers are overrepresented among centers of lower quality with nonprofit centers performing better on every measure of care—including personal care of children, use of materials, activities and teaching interactions associated with language development, teacher interaction with children, and staff communication with parents.

The new reduction in spending control, in addition to prohibiting municipalities from using quality as an eligibility requirement, means that Ontario is increasingly giving the green light to profit centers to use public money to achieve desired profit margins rather than providing quality childcare. This move can be contrasted with the way PEI and New Brunswick regulate nonprofit operators. Commercial operators in these provinces are also eligible to participate in $10 per day child care, but they are subject to quality, staff, and cost rules.

Nonprofit operators also claim that they will go bankrupt if they sign on to the program because certain ongoing costs do not qualify for public funding, including leases and loan repayments. As an ad hoc solution, the Ford government created two separate pots of money for operators: one for property taxes, rent, and mortgage payments; and others for additional costs including catering, cleaning, and purchase of new toys.

The widespread abuse of the Canadian Emergency Wage Subsidy (CEWS) is just one of the latest examples of how businesses, in the absence of adequate government oversight, will use the special pools of money set aside for them, to increase profits, rather than using public money intentionally. In this case, there were 1,200 complaints of businesses using CEWS to increase dividends to shareholders and executive salaries, rather than supporting their business operations during the pandemic.

Money for childcare and wages, not profit

Instead of paying non-profit operators mortgage on properties they could sell for a profit, while creating another pool of money that savvy operators could abuse and abuse, Ford should encourage these operators to change their status to nonprofits in the short term, or ideally bring them directly under public management.

By removing profit limits and setting aside more money for a non-profit daycare operator, Doug Ford ruined $10 per day of childcare. Ford seeks business interests that want to use public money without guaranteeing quality childcare and decent wages for childcare workers.

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