Many new daycare spaces in Alberta still don't qualify for government funding

Hend Shelkamy Ali has seen the routine over and over: parents tour her new daycare facility, they love what it has to offer and they're eager to sign up — until they learn it doesn't qualify for the new government subsidies.

"I had a parent come here before and he was really, really upset — like, banging on my wall," she said.

"He was very, very, very angry."

The situation is confusing and frustrating for parents and daycare operators alike, Ali said.

She started building her business in 2020, before the new federal-provincial childcare funding agreement was written. The agreement was signed in November 2021 and has already cut daycare costs roughly in half for many Alberta parents.

But there's a little-understood aspect of the deal: it doesn't currently apply to new or expanded daycare spaces that operate on a for-profit basis.

In Alberta, unlike many other provinces, the majority of daycares operate as for-profit businesses.

Existing for-profit daycares were grandfathered in as part of the federal-provincial deal, which also extended the subsidies to about 2,500 additional spaces that were in the process of getting up and running. Those spaces were quickly snapped up by last spring.

That's left daycare operators who opened more recently doubly in the lurch, as the subsidies help not only to reduce fees for parents but also to top up wages for daycare staff.

A new phase of the federal-provincial deal is supposed to take effect by April 2023, extending the subsidy to more for-profit operators, along with conditions on how they can use the money. But details are still being worked out and will need to be approved by both the provincial and federal governments.

"It's stressful to sit here watching the days tick by, and not really know what's coming down the pipe," said Krystal Churcher with the Association of Alberta Childcare Entrepreneurs.

At a loss

In the meantime, in order to compete, Churcher said some new daycare operators have opted to operate at a loss by offering the subsidized rate to parents without actually getting the subsidy, on the hope that they will qualify sometime next year.

The situation is threatening the livelihood of some daycare operators, she added, especially those who made big investments in their businesses only to learn, months or years later, that they aren't eligible for the subsidies that competing daycares enjoy.

She said it's common for new daycare operators — who are usually women and, often, new Canadians — to sign lease contracts that last a decade or more and make them personally liable in the event that they can't pay the rent.

Churcher, herself, runs a daycare in Fort McMurray. She was planning to open another daycare in Calgary but cancelled the project due to the uncertainty surrounding the subsidies.  

The provincial government did not respond to questions from CBC News about the topic.

An official with the federal Ministry of Families, Children and Social Development, who was not authorized to speak on the record, said high-level staff with the federal and provincial governments are still having productive discussions about the details of next year's funding arrangement.

The terms of the federal-provincial agreement stipulate that a "For-Profit Expansion Plan" is to be proposed by Dec. 31, but it's not clear if that will be done on time. Daycare operators say they've heard little or nothing about the plan since last spring, when it was in its early stages.

The plan is to include a "cost control framework" that would put conditions on how private daycare operators could use future funding.

The goal is "to 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," according to the text of the agreement.

The text also says: "Canada and Alberta agree on the importance of communicating with citizens about the objectives of this Agreement in an open, transparent, effective and proactive manner through appropriate public information activities."

Non-profit centres prioritzied

In signing onto the deal with Ottawa, Alberta agreed to prioritize not-for-profit daycare spaces.

As such, non-profit daycare operators are not subject to the same restrictions, and also qualify for additional grants to open new spaces.

Ali says she has been told there's one way she could secure subsidies for her new daycare: convert her business to a non-profit model. That's something she's not willing to do.

So far, she's been able to survive. There is limited daycare space in her area and strong demand from parents, many of whom have been willing to pay the full, non-subsidized rates. For others who can't afford it, she offers discounted rates, but even those are too high for some families.

"A lot of the children that come to my centre are from families that are well-off," she said.

"I feel it's the lower-income families here who are not having a fair advantage compared to these other children."

As Ali was setting up here business and getting the necessary licences, she said there were no warnings or explanations from either level of government that the subsidies would not be available to her when she opened.

"I still can't believe they treated us like that," she said.

"Had I known two years before, would I have signed and put myself in this huge risk? Of course not."