Child care centers across Ontario are at risk of closing if the province does not soon update how they are compensated under the $10-a-day national program, warns the largest operator.

This call from the YMCA and other service providers comes as the province seeks a significant increase in the number of child care spaces. When Ontario signed on to the program in 2022, it committed to creating 86,000 spaces, although the province’s budget watchdog estimates demand will exceed this supply by more than 220,000 spaces.

YMCA child care programs represent a fifth of all licensed sites in the province, and while the nonprofit organization is a strong supporter of the $10-a-day program, it says the current funding model is not sustainable.

“Unfortunately, while cost savings are passed on to families, the cost burden on operators like the YMCA has increased,” the charity told the government in a pre-budget report.

“That’s because the current approach to funding revenue replacement is insufficient, leaving many nonprofit operators running deficits and facing uncertain expectations as we negotiate for pressure funding with each municipality.”

Fees paid by parents for child care were halved, with the provincial government replacing that revenue to centers using its share of federal funding Ottawa distributed to provinces and territories when it signed onto the program.

But some operators say this calculation misses the mark.

Traditionally, child care centers raised parent fees when they faced rising expenses like staffing costs, utilities, rent, heating and supplies. However, any operator wanting to sign on to the plan had to freeze their fees in March 2022, and many voluntarily froze them in 2020, not wanting to raise prices during the COVID-19 pandemic.

This means the government revenue replacement model is based on rates that do not reflect the true current cost of providing child care, operators say, and the 2.1 per cent increase Ontario factored in for 2024 to account for inflation is barely enough. That figure for 2023 was 2.75 per cent.

Sharon Serebry, director of the Ontario Coalition for Independent Child Care Centres, who also runs a child care center in the Peel region, said: “We hear from more and more operators prepared to close their centers and leave this profession behind.”

“Although we are receiving revenue replacement, it has not been enough for many operators as they continue to struggle to stay afloat during very difficult economic times.”

What the YMCA and others want to see is what they call a “full cost recovery” model.

Caroline Ferns, policy coordinator at the Ontario Coalition for Better Child Care, said operators should be able to present budgets and, if costs are reasonable, they should be covered.