Improvements to Child Care Business Practices CMSM/DSSAB Training - EFIS February 28, 2011

Grants for Student Needs 2 Overview  The transfer of child care funding and contract management responsibilities to the Ministry of Education (MEDU) as of January 1, 2011 has provided the ministry with the opportunity to introduce some modest improvements to child care business practices, with respect to:  Financial reporting  Service targets  Financial flexibility  The Service Contracting process.  These improvements are being introduced in order to:  Respond to feedback from the Consolidated Municipal Service Managers/District Social Services Administration Boards (CMSMs/DSSABs);  Enable greater consistency and efficiencies in the child care reporting and contract management process; and  Address recommendations from the Auditor General (AG).

Grants for Student Needs 3 Improvements to Child Care Business Practices Business Practice: Budgeting and Expenditure Process CYS Process (From)EDU Process (To) -The funding was negotiated between the ministry and CMSMs/DSSABs throughout the year, and adjustments were made to the allocations (contract) to match the spending. -There are 3 concepts; 1) Funding (allocation) 2) Expenditures 3) Entitlement -Funding (allocation) is set at the beginning of the financial reporting cycle/calendar year and does not change throughout the year. -The entitlement (funding CMSMs/DSSABs is entitled to) may fluctuate throughout the year depending on their level of expenditure, flexibility policy and the service targets..

Grants for Student Needs 4 Improvements to Child Care Business Practices Business Practice: Timing of Service Contract CYS Process (From)EDU Process (To) -Contract and budget submission typically issued in February; target date of June 30 for signed submission returned to ministry. -In 2011, service contract package to be issued in early March, and signed contract to be submitted to ministry by April 30, In 2012, service contract issued in November and signed contract returned to ministry by Dec 31.

Grants for Student Needs 5 Improvements to Child Care Business Practices Business Practice: Frequency of Financial Reporting CYS Process (From)EDU Process (To) 6 stage process: -Budget submission (around March 31) -1 st quarter report (due May 1) -2 nd quarter report (due Aug 19) -3 rd quarter report (due Nov 19) -Year-end Report (due March 4) -Year-end reconciliation (due 6 months after year- end) 3 stage process: -Budget submission (estimates) due April 30 -Mid-year report (revised estimates based on year-to-date actuals up to June 30 and projections to Dec 31) due Aug 30 -Year-end report due April 30 Business Practice: Financial Reporting Mechanism CMSMs/ DSSABs reported through a Microsoft excel package. CMSMs/DSSABs will report through EFIS, (Education Finance Information System), a web-enabled system EDU uses for school boards.

Grants for Student Needs 6 Improvements to Child Care Business Practices Business Practice: Sanctions Policy for Submission of Late Reports CYS Process (From)EDU Process (To) -Progressive sanctions policy for late reporting of submissions that included the ability to withhold payments. -Late submissions subject to an automatic cash flow withholding provision as follows: - First 30 days = 1% of total annual allocation (represents in most instances 50% of annual administration detail codes) days = 2% of total annual allocation (represents 100% of admin detail codes) days = 5% of total annual allocation (represents in most instances 3%of the annual program related detail codes.) - Once late submission is received by ministry, monthly payments will revert back to normal process and all withheld funds will be restored.

Grants for Student Needs 7 Improvements to Child Care Business Practices Business Practice: Service Targets CYS Process (From) EDU Process (To) - CMSMs/DSSABs report on approx 100 targets through service contract; - Failure to achieve targets did not automatically result in funding recovery. -Establishment of 5 contractual service targets (representing 52 of the existing targets and roughly 70-80% of the CMSM/DSSAB allocation) which are tied to the service contract: 1) Average) monthly # of children served (fee subsidy – based on a mix of 100% and 80% funding) 0 – 12 2) Average monthly # of children served (special needs resourcing) 3) Average monthly # of children served (OW formal and informal 0-12) 4) Average monthly # of children served (based on 100% fee subsidy) 5) Cumulative total # of children served (based on extended day fee subsidies) -Failure to meet the 5 targets by 10% in aggregate will result in a 1% reduction in cash flow for every 10% missed to reflect underachievement of targets. -Continued reporting on the rest of the service targets remains status quo.

Grants for Student Needs 8 Improvements to Child Care Business Practices Business Practice: Application of Financial Flexibility Policy CYS Process (From)EDU Process (To) - Financial flexibility was allowed in year to move dollars on a one time basis provided targets were substantially met. - CMSMs/DSSABs have in-year flexibility to move funds as often as needed without prior approval from the ministry provided they meet the flexibility criteria. - While CMSMs/DSSABs will no longer be required to have substantially met their service targets in order to apply financial flexibility, a funding recovery will be applied should the CMSMs/DSSABs not meet their service targets.

Grants for Student Needs 9 Improvements to Child Care Business Practices Business Practice: Financial Flexibility Policy – Child Care Fee Subsidies and Extended Day Fee Subsidies CYS Process (From)EDU Process (To) -No reallocation of funds in or out of 100% Early Learning and Child Development Operating (A661) was permitted. -Flexibility is permitted between funding lines Early Learning and Child Development Operating (A661) and 100% Child Care Fee Subsidies (A663)/Extended Day Fee Subsidies (A664) provided the following conditions are met: 1) Funding for Extended Day Fee Subsidies and Child Care Fee Subsidies (A663) is exhausted; 2) CMSMs/DSSABs have not expended their total allowable amounts for Extended Day Fee Subsidies.

Grants for Student Needs 10 Improvements to Child Care Business Practices Business Practice: Financial Flexibility Policy – Administration Costs CYS Process (From)EDU Process (To) -Program funding could be transferred to cover administrative costs only with prior Ministry approval. -Requests will no longer be permitted for reinvestment of program dollars into administrative costs.

Grants for Student Needs 11 Improvements to Child Care Business Practices Business Practice: Health and Safety CYS Process (From)EDU Process (To) -Health and Safety expenditures would be considered through an in- year reinvestment request from the CMSM/DSSAB which was reviewed and approved by the Ministry on a case by case basis which typically took place during the Q3 reconciliation process. - Flexibility is permitted to use funds from ELCD Operating/A661, or A663 ELCD – 100% Child Care Fee Subsidy to address health and safety needs without prior Ministry approval as long as the needs being addressed are for licensed centres not in compliance or at risk of not being in compliance with licensing requirements under the Day Nurseries Act. - The maximum amount to be reinvested from program funds for health and safety will be calculated based on an average of $1,000 per licensed centre.

Grants for Student Needs 12 Next Steps  Issue pre-populated Service Contract and Budget Submission package – week of March 4.  Signed Service Contract and Budget Submission submitted to Ministry – April 30,  Continue providing support to and consult with CMSMs/DSSABs as changes to child care business practices are implemented throughout 2011.