Tag: canada-wide early learning and child care plan

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Affordable Child Care Services vs Money for Parents

Those who oppose the $10 a day program often argue that there is a simple and better program to replace it – give money directly to parents instead.  The logic is, at first glance, persuasive.  If you give parents money, it seems like they should be able to purchase exactly the child care they need.  And competition among different providers should, you might think, keep fees down.  Programs that directly fund child care services, like the $10 a day program, are said to be bureaucratic and inflexible and to create huge shortages and long waiting lists. 

There is some truth here, but much falsehood, and much deliberate ignoring of the evidence on the impact of a “family allowance” approach.  I have just written a report for The Prosperity Project that examines the likely impacts of giving parents money instead of funding and providing child care services that parents can use.  I unearth a lot of new data about families that are using child care in Canada and the number of parents who want access to affordable, accessible, high quality child care. 

The evidence shows that this type of “family allowance” fails as public policy because it:

(a) isn’t what most families want

(b) doesn’t address families’ needs for child care

(c) would be much more expensive than the $10 a day program

(d) would have negative effects on women’s employment and the economy, and would increase the gender-based child penalty that mothers pay with reduced earnings

(e) has been tried before and hasn’t solved child care issues, and

(f) ignores the very large child benefit programs that already provide money to parents.

You should read the report in full (19 pages), or at least its Executive Summary (3 pages).  Below, I provide a few tidbits to encourage you to dig deeper.

  • As of 2023, when Statistics Canada collected large amounts of data from parents about child care and employment, there are 938,000 Canadian children using licensed or accredited child care services – the kind of services supported by the federal government program.  In fact, over three-quarters of children using any kind of child care are in licensed care.   In 8 of Canada’s 13 jurisdictions, average fees for this child care is down to $10 a day or less.  Other jurisdictions have lowered fees by at least half relative to fee levels in 2019-20.  In other words, although the press scarcely covers it, a very large number of Canadian children and families are already benefiting from licensed child care that is subsidized to be affordable and more accessible.
    • Licensed child care is not the only part of the set of services and benefits that will make up a fully developed early learning and child care system.  Many children benefit from full-day or part-day kindergarten at ages 4 and 5 years.  Many children and families benefit from paid maternity and parental leave for up to 12 or even 18 months.  If we put these all together, it is already true that in 2023 over 1.5 million children currently benefit from Canada’s early learning and child care and leave arrangements.  That is about 2/3rds of all children 0-5 years of age.  
    • Some people think that the reason some parents don’t currently use child care is because they don’t want to.  But, outside Quebec, most families (58%) that currently do not use any child care would like to use some type of non-parental child care if they can find what they need and want.  And, of these, the lion’s share – 62% – would like to use licensed child care, largely as a means to join or rejoin the workforce. 
    • Some people argue that it is mostly affluent parents that benefit from universal child care programs and that marginalized families and those from diverse backgrounds are left behind.  That is certainly true of market-based child care systems when fees are not controlled; high parent fees are only affordable by affluent families and many vulnerable families do not qualify for income-based subsidies.  However in fixed-fee systems like the $10 a day program, families from all backgrounds gain access.  I show a series of charts from Quebec making this point.
    • A family allowance program would have to give parents an amount of money that was equivalent, on average, to what they gain by having $10 a day child care.  This family allowance program would cost the federal government just over $28.5 billion annually and its net cost would be three times as much as the cost of providing child care services.  
    • Women who have children suffer substantial losses in earnings after the birth of a child.  Economists have found that mothers’ earnings decrease by 49% in the year of a child’s birth.  Even ten years later, women suffer from an average earnings loss of 34% relative to their earnings before childbirth. Universal child care has been found to substantially reduce these “child penalties”.  In other words, accessible child care services make an important contribution to increasing gender equity.

    Please read the full report and executive summary. 

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    WHAT COURSE-CORRECTIONS ARE NEEDED IN ALBERTA’S NEW EARLY LEARNING AND CHILD CARE ACTION PLAN?

    There are many opportunities for “course-corrections” built into the provincial and territorial Canada-Wide Early Learning and Child Care Agreements.  For instance, in the Alberta-Canada Early Learning and Child Care Agreement (ACELCCA), there is an Implementation Committee with federal and provincial representatives that has wide responsibilities to assess progress outlined in Section 6 of the Agreement.  The major opportunity for course correction comes in the form of a new Action Plan to be proposed by the Alberta government and agreed by federal representatives by April 1st, 2023.  The initial Agreement and its accompanying Action Plan (covering the first two years – 2021-22 and 2022-23) laid out a vision, objectives and specific programs and actions that would be taken to transform Alberta’s early learning and child care system.   Now, it’s time for a new Action Plan.  This Action Plan will determine what happens over the next three years to child care services that parents rely on.

    So what course-corrections should be included in this Action Plan? What should Alberta stakeholders and parents be insisting upon?  What should be the key must-haves that federal government representatives are looking for in this new Action Plan?

    IMHO, there are seven important course corrections that should be the centrepiece of the new Action Plan.

    1. Alberta should transition towards fixed-fee child care instead of having widely varying child care fees for parents to pay.
    2. Alberta needs to develop a new funding system that provides cost controls and financial accountability and encourages quality improvements.
    3. Alberta needs to ensure that lower-income families are not disadvantaged by the funding system but rather are encouraged to benefit from the use of child care
    4. Alberta needs to ensure that ECE wages are high enough to solve the staffing crisis and avoid lowering qualification requirements.
    5. The expansion of not-for-profit and public child care spaces needs to be prioritized in practice rather than simply in words.  This will require additional capital funding and support mechanisms.  Expansion of early learning and child care services needs to be planned, not haphazard.
    6. Planning of expansion should ensure that inclusion and flexibility goals are met.
    7. Alberta needs to report now and regularly on progress or lack of progress in achieving the goals of the Alberta-Canada Agreement.

    Let me try to briefly justify these priorities.

    1. Alberta should transition towards fixed-fee child care instead of having widely varying child care fees for parents to pay.

    Alberta has made a lot of progress in lowering child care fees since January 2022, moving faster than expected.  Great!  But it achieved this in an odd way.  Instead of lowering all fees by 50% (like Ontario) or having the same fee for all child care services (Newfoundland, now $15 a day), Alberta provided a new system of operating grants to lower fees by a constant dollar figure across centres. 

    Operating grants per enrolled space are $635 per month for centre-based infant care, $510 per month for centre-based toddler care, and $450 for centre-based care for children of preschool age.  In family day homes, there are operating grants of $350 per month for infant children, $325 a month for toddler children and $300 a month for children of preschool age.  Whatever the parent fee per month was at the end of 2021, it was lowered by these amounts in every centre and family day home that joined the program.

    Reducing parent fees with a fixed-amount operating grant (varying by child age category) has preserved differences in fee levels rather than eliminating them.  Albertans living in Calgary, where higher costs led to higher parent fees, have had their child care fees drop by much less than 50%.  In other parts of Alberta, fees have fallen more than 50%.  It should be a priority in the upcoming Action Plan to move closer to a fixed-fee system, so that parents in higher cost and lower cost situations face similar parent fees.   Alberta’s recently published Cost Control Framework and For-Profit Expansion Plan says that in 2023-24 parent fees for licensed child care will average $15 a day.  It is unclear what variation in fees will be permitted within this average.

    2. Alberta needs to develop a new funding system that provides cost controls and financial accountability and encourages quality improvements.

    If the costs faced by different operators are different but the child care fee faced by parents is the same or nearly the same, operators in high cost situations will have to receive larger amounts of operating funding to offset costs that are legitimately higher.  This principle is already well accepted for different age categories of children; operating grants for infant care are higher to offset the higher costs of providing child care for infants. 

    Providers that have higher costs because their early childhood educators have more years of experience and have higher educational qualifications should have these legitimate cost differences offset.  On the other hand, higher per-child costs that are due to under-enrolment due to profit-seeking expansion in areas that are already well-served should not be fully offset.  Higher costs due to exorbitant salaries for owner-administrators should not be fully offset.  There should be expenditure limits.  And so on.

    In order to develop a system where legitimate cost differences are offset, Alberta needs to research and develop a cost control or value-for-money framework to determine which cost variations should be offset and by how much.  On January 31st, 2023, Alberta published its new agreed “Cost Control Framework and For-Profit Expansion Plan”.  The Cost Control Framework might as well have been written on the back of a napkin; it provides no details about what cost variations will receive what amounts of support.   

    Section 6.3 of the Alberta-Canada Agreement promised that this cost-control framework would “ensure the sound and reasonable use of public funds, ensuring that costs and earnings of child care businesses are reasonable and that surplus earnings beyond reasonable earnings are directed towards improving child care services.”  These words are repeated in the recently published Framework, but there are no details on amounts of funding, on which factors will be rewarded with extra funding and which behaviours will be discouraged by remaining unfunded.  In short, there are insufficient details to judge whether the Cost Control Framework will have positive or negative effects.  The single item on which there is clarity is that child care operators can charge extra parent fees for what are called “Enhanced Services”.  Enhanced services include field trips, special programming and any other services that are innovative or creative that cost extra.  We can imagine the two-tier system of early learning and child care services that may result.  It’s surprising and disappointing that federal representatives on the Implementation Committee in Alberta were willing to accept it. 

    Have a look at these examples from Quebec and New Zealand to see what real funding systems and cost control frameworks actually look like.  Alberta has a lot of work in front of it to design a new funding system and get feedback from the sector.

    3. Alberta needs to ensure that lower-income families are not disadvantaged by the funding system but rather are encouraged to benefit from the use of child care

    A fixed-fee child care system can make child care affordable for nearly all parents; however, even a fixed fee of $10 a day is an important barrier to child care access and labour force participation for some lower-income families. 

    With the fee reductions in January 2022 and accompanying changes in the child care subsidy system, lower income families have seen the smallest percentage improvement of all income groups in the fees they pay.  Calgary families earning less than $60,000 annually with one preschool child and many families with more than one child will still pay out more than 10% of their after-tax income for licensed child care.  Further amendments to the child care subsidy system could reduce these affordability barriers.

    Further, it is desirable to provide increased child care access to lower-income families independent of activity requirements (employment, seeking employment or school).  This would require some additional changes to subsidy eligibility requirements.

    4. Alberta needs to ensure that ECE wages are high enough to solve the staffing crisis and avoid lowering qualification requirements.

    As is true in most of Canada, early childhood educators in Alberta are paid high-school-wages not college-wages.  Level 2 and Level 3 early childhood educators in Alberta require a college certificate or diploma but receive much lower hourly wages than other occupations requiring college qualifications.  They receive wages similar to other occupations where only a high school education is required. That’s the main reason there is a crisis in recruiting and retaining qualified staff in Alberta child care centres.

    On top of this, the hourly wages of early childhood educators and assistants in Alberta are below the Canada-wide average.  And the hourly wages of competing occupations in Alberta are above the Canada-wide average.  Substantially raising wage levels of ECE 2s and ECE 3s should be a priority for the upcoming Action Plan. Alberta desperately needs a wage grid for its Early Childhood Educators.   This would be a wage grid of minimum acceptable wage levels calibrated by education/certification level and by amount of relevant job experience, and providing incentives for ongoing professional development.  Provision of benefits is important as well.

    There are three certification levels for early childhood educators in Alberta:
    Level 1 ECE (3-credit course in early learning and child care or equivalent; 54 hours of online training);
    Level 2 ECE (1-year ELCC Certificate or equivalent; 720 hours of training);
    Level 3 ECE (2-year ELCC Diploma or equivalent; 1,445 hours of training). 

    Raising wage levels of Level 2 and Level 3 ECEs will be essential to maintaining quality levels and meeting the stated target of a 15 percentage point increase in their numbers.  In June 2021, 60% of Alberta’s certified ECEs were at Level 2 or Level 3.  An increase of 15 percentage points in these certification levels would mean that 75% of ECEs had these qualifications.  The total number of certified staff envisioned in the previous Action Plan for 2025-26 is 22,243.  To meet the 75% target, Alberta would need to have 16,682 ECEs at Levels 2 and 3 by 2025-26, or nearly 8,800 more Level 2 and Level 3s than it had in June 2021 – more than doubling the numbers of these ECEs.

    Alberta has long had a wage top-up program.   It provides all certified ECEs in licensed facility-based and home-based child care programs with a wage enhancement.  As of January 2023, wage top ups are $2.64 per hour for Level 1, $5.05 for Level 2, and $8.62 for Level 3.  According to Statistics Canada’s Labour Force Survey, the average hourly wage for early childhood educators and assistants in 2020-2021 was $18.80 per hour, which includes the effect of the wage top-ups that existed before recent increases.  Even at the 90th percentile of the wage distribution, this “high-paid” educator only earned $24.48 an hour in Alberta.

    5. The expansion of not-for-profit and public child care spaces needs to be prioritized in practice rather than simply in words.  This will require additional capital funding and support mechanisms.  Expansion of early learning and child care services needs to be planned, not haphazard.

    There has been very little evidence of the expansion of child care spaces in not-for-profit or public child care centres, despite the ACELCCA commitment that this would be a major priority in 2022.  The current amounts of capital funding available are low – between $5,000 and $6,000 per new child care space.  On a 50-space child care centre, where the capital costs could easily be in the millions of dollars, capital funding is $300,000 or less.  Given restrictions that financial institutions generally place on access to borrowing by not-for-profit institutions, Alberta’s plans for not-for-profit expansion are bound to fail. 

    Similarly, there is no evidence of progress on the development of an expansion plan for child care services over the 2023-2026 period for not-for-profit and public child care services.  Even the new Cost-Control Framework and For-Profit Expansion Plan provides not the slightest hint of the existence of any planning mechanisms to guide expansion to where it is most needed.  There need to be planning tools, there needs to be consultation on planning, and for not-for-profit and public child care services there needs to be development support and capital funding mechanisms.  Planning mechanisms should take into account Alberta’s persistent under-enrolment problem that drives up per-unit child care costs and should propose methods for better matching of enrolment and capacity.

    There is evidence that unplanned development of child care services does not deliver equitable access.  Full-day coverage rates in 2021 varied from 14.8% in Leduc to 37.6% in Lethbridge.  Full- and part-day coverage rates in 2021 varied from 18.6% in Leduc to 48.7% in Medicine Hat.

    Over time, there will need to be much greater expansion of licensed child care services than is currently planned (likely a doubling of current capacity).  It would make sense to develop the planning mechanisms and supports now for this future expansion. The Roadmap to a Quality Early Learning and Child Care System in Alberta has many good ideas about planning a transformed early learning and child care system.  

    6. Planning of expansion should ensure that inclusion and flexibility goals are met.

    It is unclear what mechanisms Alberta is using to achieve its commitment on inclusivity: “Alberta commits to develop and fund a plan to ensure that vulnerable children and children from diverse populations … have equitable access to regulated child care spaces, in proportion to their presence in the population.” The mechanisms should be clarified in the forthcoming Action Plan.

    7. Alberta needs to report now and regularly on progress or lack of progress in achieving the goals of the Alberta-Canada Agreement.

    Alberta has not yet provided reports on key child care indicators that it agreed to in the ACELCCA.  Alberta was to have reported progress on a wide range of indicators by October 2022 (see Section 5.2.2 of the Agreement); unfortunately, there is no evidence that this data has been provided. 

    We are told in the original two-year Action Plan that “Alberta’s existing data collection is comprehensive; mechanisms are in place to monitor the growth and quality of the child care system.”  This has not translated into publicly available reports that would allow us to judge progress achieved since the Alberta-Canada Agreement was signed.  There is no report on baseline data apart from that provided in the original Action Plan.  There is no report on progress which would allow for the determination of course-correction priorities since the agreement was signed.  This mirrors the lack of progress on developing cost control (i.e., accountability) measures and the lack of progress on planning for the expansion of child care facilities.

    Alberta does not currently report regularly on the number of facilities and the numbers of staff who have been granted exemptions to the certification/qualification requirements so that the facilities in which they work can continue to provide services despite not meeting the letter of the regulatory requirements.   This should include reporting on the number of staff in Level 1 ECE positions that have not yet completed their required orientation training, but are nonetheless acting in a Level 1 position. This is important data to monitor the development of Alberta’s early learning and child care system.