Child care operators in Ontario will soon be compensated $10 per day in the national program in a way that the province says will cover the real cost of providing care, after many said they were struggling to keep their doors open under the current framework.

Education Minister Todd Smith is set to announce the long-awaited new funding formula on Thursday, saying he believes the new formula will prevent closures and provide operators with certainty and stability.

He said in an interview, "Given the feedback and extensive consultations that have been conducted on the new funding formula, we are completely comfortable that those who are working and those who want to work will be able to do so in the province, creating those much-needed spaces that families are looking for."

The new funding framework, which will come into effect on January 1st, announced that as of the same day, the fees paid by parents will be reduced further. They have already dropped by about 50 percent to an average of $23 per day, and next year they will fall to an average of $19, with a maximum of $22.

They will be further reduced to an average of $10 per day by March 2026, a date that has been pushed back from a previous commitment in September 2025.

However, the updates on how operators will be compensated for the lower parent fees do not come with any new wage increases or wage grid for early childhood educators, which advocates and many operators have said is key not only to expanding the sector but also to maintaining existing spaces.

But Smith said that under the new funding formula, operators will have greater flexibility in their spending, making some more able to raise staff wages.

Currently, the government covers the amount of money parents save through reduced fees, but centers say that simply replacing revenue based on fees that were frozen in 2022 does not cover the real cost of providing care.

Officials said the new funding formula will ensure that no operators in the $10-a-day program will be left at a loss.

Starting next year, operators will receive a base amount of funding based on several factors such as the number of spaces they operate, the number of children they serve in each age group, and the region they are located in.

Officials clarified that about half of operators will have their costs fully covered by this amount, and there will also be a "legacy increase," so that current operators in the program can cover expenses that exceed typical costs, such as higher food service costs to provide kosher food or higher rent based on their location.

The formula will set an average profit margin of eight percent for for-profit operators and an average surplus of eight percent for non-profit operators.

The government also hopes that the new structure will help both new and existing operators create more spaces, adding a growth increase to the formula.

Ontario has committed, under its agreement with the federal government, to provide 86,000 new child care spaces. But so far, while approximately 51,000 new spaces have been created for children aged five and under, which is the age group covered by the national program, only 25,500 of these spaces fall within the $10-a-day system, officials say.

The growth increase will provide operators with a sum of money to create spaces based on their geographic area.

Smith and the Association of Municipalities of Ontario recently sent a joint letter to federal Minister Gina Sudds, saying that the cap on for-profit spaces in Ontario's agreement is hindering the expansion of child care in the province, and asking her to raise it.

Sudds said in her response that the delay in the province's release of the new funding formula has created uncertainty in the system, and she wanted to see this new structure along with more data before making a decision.

The two ministers are set to meet soon to discuss the issue.