Agenda Index City of Vancouver

ADMINISTRATIVE REPORT

TO: Standing Committee on City Services and Budgets
FROM: Director of Community Services, Social Planning
SUBJECT: Childcare Endowment Reserve
 

RECOMMENDATION

GENERAL MANAGER’S COMMENTS

COUNCIL POLICY

The Civic Childcare strategy, approved by Council October 1990, recognized the need to ensure the availability of start-up and operating subsidies to sustain those new childcare facilities being opened in high density neighbourhoods, as a result of rezoning negotiations or City initiated projects. In may 1991, Council approved the creation of the Childcare Endowment reserve.

On December 15, 1994, Council approved the terms and conditions of the Childcare Endowment Reserve, including eligibility criteria and the process of accessing these funds. In April 1996, Council clarified that the City Childcare Endowment Reserve was to be established as an interest bearing fund.

PURPOSE

In July 1999, Council requested a report back within six months, regarding the efforts made to resolve the financial difficulties of the City Childcare Endowment Reserve. This report outlines the work accomplished to date and recommends additional strategies for future action.

BACKGROUND

The need for licensed infant/toddler care in Vancouver continues to grow and there are long waiting lists at every centre, particularly in the downtown core. Through community and City initiatives, the number of spaces has risen to just over 500, but because of the affordability and funding issues, maintaining the current stock of spaces has been extremely difficult. It was in an attempt to deal with these very issues that the Civic Child Care Strategy, approved by Council in 1990, called for the province to institute an infant/toddler incentive program and approved in principle, a civic operating subsidy approach for those City-owned childcare centres created as a condition of rezoning or City projects. It was during the Bentall rezoning discussions that the decision was made to create the City Childcare Endowment Reserve.

As discussed in the July 1999 report, the Childcare Endowment Reserve approach has been challenging from its inception. A full discussion of those challenges was provided in that report and four key issues were noted:

… the existing Endowment Reserve is being seriously eroded by the size of the “per space” annual pay-outs, the lack of required contributions to the fund by certain developers, the lower than anticipated interest rate and the continued build-out of eligible infant/toddler spaces
… the eligible infant/toddler spaces would be seriously destabilized and possibly face closure if there was a drastic or sudden reduction to the Endowment Reserve infant/toddler subsidy
… the lack of any specific plans by senior levels of government to specifically address the infant/toddler funding and affordability issues
… the need to limit the expansion of further infant/toddler services until alternate operating funding can be secured.

Council approved an immediate 30% reduction in the 1999 “per space” infant/toddler operating subsidy rate and directed Social Planning to strike a taskforce on infant/toddler care sustainability with a six month “report-back” timeline.

DISCUSSION

In the late summer, terms of reference for the proposed taskforce were drawn up and plans were made to proceed with the taskforce as approved by Council in July. However, with the transfer of childcare from the Ministry for Children and Families to the Ministry of Social Development and Economic Security in August, the provincial childcare policy context and the key players changed significantly. By late September, it was no longer clear whether the City should be spearheading infant/toddler sustainability discussions through a City taskforce or whether it would be more strategic to encourage and support community driven advocacy initiatives. By mid October, the changes in the childcare political landscape at both the provincial and community levels, necessitated re-thinking the taskforce approach as a way to resolve the Endowment Reserve difficulties.

After considerable deliberation in late October, it was decided that a three-prong approach would be a more manageable and strategic at least in the short term. It was therefore decided that:

… The City Childcare Co-ordinator would meet with representatives of the 3 childcare operators eligible for the Endowment Reserve funds, to explore what immediate actions could be taken to address the urgent financial concerns of the existing Endowment Reserve.

… The City Childcare Co-ordinator would meet with representatives from the Vancouver Society of Children’s Centres to initiate a new plan for future development and funding of those childcare centres negotiated as a condition of rezoning, but not yet built.

… The City Childcare Co-ordinator would explore and recommend opportunities to support community advocacy and public education on infant/toddler care sustainability issues. In the longer term this might still include providing staffing and resource support to a taskforce focused on this issue.

Action taken re: #1:

In late October, the City Childcare Co-ordinator worked with Finance to refine the financial projection model developed for the Childcare Endowment Reserve. In early November, the City Childcare Co-ordinator met with representatives from the Vancouver YWCA, VSOCC and Collingwood Neighbourhood House and reviewed with them a number of financial projection scenarios. Additional scenarios were produced at the operators’ request and an analysis of the pros and cons of each scenario was considered. (See appendix A for summary.) In mid December, consensus was reached by all parties that unless the City wasprepared to commit significant new civic dollars to the Reserve, the existing Endowment Reserve cannot be made sustainable and keep all the existing eligible infant/toddler spaces open. The operators indicated that any significant or sudden reduction in the operating subsidy would immediately result in closures, and that if the City could not commit additional resources to the Reserve, at least a ten year timeline was needed to work for improved childcare funding support from senior levels of government. The parties also agreed that while the City should continue to play a partnership role in childcare, the primary
mandate for addressing the ongoing sustainability and affordability of childcare rests with the Province.

Staff are therefore recommending that the existing Endowment Reserve be wound down over a ten year period. It is also proposed that further reductions to the existing civic infant/toddler subsidy be phased-in over a two year period and then the operating subsidy rate be leveled out at $1,650 for the final nine years - albeit eroding by inflation. (See Appendix B for financial projection summary.) While the reduction will create financial uncertainties as parent fees rise in response and the operators need to retrench their existing services (e.g. the closure of Granny “Y”s by Vancouver YWCA), it does buy some time for both the City, the 3 operators and the larger child and family serving community to advocate collectively for increased senior government funding of childcare. This proposed direction also still allows VSOCC to receive the $98,000 designated for the start-up of Quayside so that this service which only opened in September 1999 can survive its start-up period. It should be noted that while the 3 operators are not happy about the winding down of the Endowment Reserve, they appreciated being involved in the process of making recommendations about how to deal with the issue and have indicated their willingness to live with this approach.

If Council accepts the above direction, in principle, then direction to Law about renewing the Operating Agreements with each eligible operator and authorization to release payments for 2000 is required.

Action taken re: #2

Once having achieved some consensus regarding future directions for the existing Reserve, attention was turned to the development and funding of the those childcare facilities negotiated as a condition of rezoning, but not yet built. The discussions with the Vancouver Society of Children’s Centres, the agency that would be operating these new facilities, are still underway but some creative ideas regarding possible partnerships with the Vancouver School Board and the Vancouver/Richmond Health Board have been generated to date. Also some research has been done on the financial implications of clustering infant/toddler care services versus including these services in an age group service continuum.

It is recommended that the new Childcare Co-ordinator continue to work with VSOCC to develop a funding plan regarding the future development of the new centres in False Creek North, the Marathon lands and Citygate. As noted in the July report, 120 more infant/toddler spaces and developer payments totaling $3.7 million have been negotiated as part of the future development.

Action taken re: # 3

Creating the climate for resolution of the larger infant/toddler sustainability issue by senior levels of government, still requires a great deal of work. This was clearly evident when the Ministry of Social Development and Economic Security released its discussion paper on childcare and the issues of infant/toddler sustainability were hardly mentioned. The report noted the need for core funding for Young Parent Programs attached to high schools, but only proposed a 20% increase in the daycare subsidy rate for low income parents and no increase in the infant/toddler incentive grant or the Compensation Contribution Program baselines. In the community think tanks undertaken by Westcoast Childcare Resource Centre through a civic childcare grant recently approved by Council, participants from many sectors highlighted the need to stabilize and expand affordable, good quality childcare options, particularly for children under the age of three. The issue has also emerged in the recent Windows of Opportunity consultations and planning.

It is staff’s assessment that the City can and should continue to play a key role in supporting community efforts to advocate for action. The City can also help to raise the profile of the issue by sharing the statistics about the needs for infant/toddler care especially in the downtown core, bringing the issue to the attention of the provincial government and encouraging and facilitating dialogue with business, labour and the voluntary sectors in Vancouver and across the GVRD. While supporting a high profile taskforce may again be deemed appropriate as events unfold in the months ahead, in the short term, staff recommend that the July report on the Childcare Endowment Reserve and this report, be forwarded to the relevant provincial officials, as part of the City’s official response to the Hon. Moe Sihota’s request for feedback on future provincial childcare directions.

CONCLUSION

This report provides an update on the work undertaken on the Childcare Endowment Reserve sustainability issue since July 1999. It also recommends:

… the winding down of the existing Childcare Endowment Reserve over a period of ten years,
… approvals for the Year 2000 payments,

… the schedule and the method for reducing infant/toddler operating payments over a two year period,
… development of a specific funding plan prior to any future development of infant/toddler care in City-owned facilities,
… the city and community working together to create a positive climate for increased senior government funding for childcare, particularly infant/toddler care.

- - - - -

No. Strategy Explored Action Required Comments
1 Existing Reserve to be sustainable and its value maintained Immediate reduction in the “per space” infant/toddler operating subsidy to $640 per year Inadequate subsidy to keep spaces open.
NOT RECOMMENDED
2 Existing “per space” subsidy of $2,100 to be maintained & Reserve enhanced so it is sustainable Capital contribution of $5 million required Not realistic to find this size of contribution.
NOT RECOMMENDED
3 A contribution equivalent to the Bentall contribution to be added to the Reserve for Library Square & Collingwood Neighbour-hood House, and Reserve to be made sustainable & its value maintained One-time Capital Contribution of $1,275,000 required. “Per space” subsidy to be reduced to $1,250 per year Might be possible to find capital contribution, but operating subsidy still too low to guarantee spaces would remain open.
NOT RECOMMENDED
4 Existing Reserve to be made sustainable but value eroded by inflation Reduction of “per space” subsidy to $968 per year Inadequate subsidy to keep spaces open.
NOT RECOMMENDED
5 Existing Reserve to be eroded over extended period to “buy advocacy time” and “per space” subsidy to be fixed at viable level to keep spaces open Wind down existing Endowment Reserve over 10 years. Over 2 years phase in reduction to “per space” subsidy:
Year 2000 $1,900
Year 2001 $1,650.
“Per space” calculation to be based on original licensed capacity.		 Based on conservative interest rate, projections of 4%, the Reserve will last at least 10 years under this approach. If phased-in over 2 years, operators feel it is possible to keep spaces open. The operators will also be approaching CCFL to request a 1 or 2 space increase in licensed capacity
RECOMMENDED

Financial Project Summary - not electronically available.

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