Wage Subsidy General Information Q & A
(January 2007)
Wage Subsidy Purpose
1. What is wage subsidy?
Wage subsidy is funding which was designed to improve
the salary and benefit levels of employees working in
licensed child care programs or as home child care providers
through licensed home care agencies. The people who
should benefit from this program are those who fill
permanent (full or part-time) positions.
This funding is intended to help stabilize child
care staffing by funding more reasonable wages without
having a direct impact on child care fees paid by parents.
The term wage subsidy includes the following three
types of funding:
- Direct Operating Grant - introduced by the
provincial government in 1987 for child care centres
and in 1988 for home child care providers.
- Home Child Care Provider Enhancement Grant
- introduced by the provincial government in 1992
- Child Care Wage Enhancement Grant - introduced
by the provincial government in 1991
2. How does an agency/service provider apply for
wage subsidy funds?
The Region maintains a list of all licensed child
care agencies in Peel (complete with effective date
and licensing capacity), therefore, we will contact
eligible service providers directly should wage subsidy
become available. This process eliminates the need for
operators to apply for subsidy funding as the Region
follows the policy developed in consultation with our
community stakeholders.
3. How are wage subsidy funds distributed?
Wage subsidies will be distributed according to the
Ministry of Children and Youth Services May 2006 Wage
Subsidy Guidelines and the calculations set out in the
1995 MCYS Wage Subsidy Guidelines and Procedures and
the Regional policy developed in 2001.
Program Eligibility Requirements
4. What types of agencies are eligible to receive
wage subsidy funds?
Eligible agencies include licensed child care programs,
licensed home child care agencies and their providers.
5. What are wage subsidy amounts based on?
The 1995 Ministry's guidelines, centre-based programs
receive subsidy based on operating capacity and home
child care programs receive subsidy based on the average
actual enrolment for the previous year.
6. What types of staff members are eligible to receive
wage subsidy?
Eligible permanent child care staff include the following
permanent positions:
- Teachers - ECE and other;
- Resource Teachers;
- Cooks;
- Housekeepers and Janitorial staff;
- Supervisors/Administrators;
- Clerical staff;
- Home Visitors;
- Bus Drivers.
7. What types of staff are not eligible to receive
wage subsidy?
The following staff members are not considered to
be permanent and are not eligible for wage subsidy:
- Persons working on a short term project;
- Students and staff whose salaries are paid
by a government program;
- Persons paid on a fee-for-service or contract
basis, for example an accountant, janitorial services,
lawyer, etc.
8. Are child care operators entitled to wage subsidy?
Employees on payroll in a program position such as
on site supervisor, program staff, cook and housekeeper
are entitled to wage subsidy. Services that are contracted
out such as the cleaning of a facility to a maintenance
company or catering company are not entitled to wage
subsidy. An operator who is not on payroll as part of
the required staff is not entitled to wage subsidy.
9. Should fully qualified staff be paid more wage
subsidy funds than other staff?
The agencies' Management or Board of Directors are
responsible to develop a wage subsidy distribution policy
that supports the payment of wage subsidy to eligible
staff. The agency must ensure that wage subsidy to employees
will not exceed $9,534.00 per FTE position. Once the
policy is approved, the agency is required to communicate
in writing, to staff and home child care providers how
subsidy funding is distributed, as well as any changes
that may occur in distribution. A copy of this policy
should be sent to the Region of Peel.
Reporting Obligations & Funding Condition
10. If my agency receives wage subsidy, what are
the reporting obligations?
Agencies that receive wage subsidy funding are required
to submit annual financial statements, as required in
the Financial Reporting Policy/requirements and a yearly
Wage Subsidy Utilization Statement - Special Purposes
Report.
- Under $20,000: When the combined payment for
the provision of day nursery services, pay equity
and wage subsidy is less than $20,000 an un-audited
income statement & balance sheet along with
any accompanying notes, and a Wage Subsidy Utilization
Statement - Special Purpose Report must be submitted
annually. The un-audited financial statement is
due within four (4) months of the Agency's fiscal
year end. The un-audited Wage Subsidy Utilization
Statement Special Purposes Report is due by January
31 of the year immediately following the period
the Wage Subsidy is provided for.
- Over $20,000: When the combined payment for
the provision of day nursery services, pay
equity and wage subsidy is equal to, or more than
twenty thousand dollars ($20,000.00) in the fiscal
year, the Agency is responsible for submitting
to the Region of Peel an audited financial statement
as set out by the Canadian Generally Accepted Accounting
Principles (GAAP), in addition to an audited
Wage Subsidy Utilization Statement - Special Purposes
Report, in accordance with Section 5 of the
Service Agreement. The aforementioned audits must
be executed by an accredited public accountant
and signed as approved by the Owner/ Board President.
The audited financial statement is due within four
(4) months of the Agency's fiscal year end. The
audited Wage Subsidy Utilization Statement - Special
Purposes Report is due by January 31 of the year
immediately following the period of the Wage Subsidy
Utilization Statement - Special Purposes Report.
- Commercial Operators: The Wage Subsidy Utilization
Statement - Special Purposes Report is signed by
the Agency's Owner and Accountant/Financial Representative
for the period January 1 to December 31 for the
previous year.
- Non-Profit Operators: The Wage Subsidy Utilization
Statement - Special Purposes Report is signed
by the Board President and the Agency's Treasurer/Accountant
for the period January 1 to December 31 for
the previous year.
Agencies that receive wage subsidy funding are required
to promptly report any changes in staffing which would
affect their wage subsidy entitlement. In addition,
an annual survey of agencies is conducted to review
the use of wage subsidy funding.
11. What happens if a Service Provider does not spend
the entire wage subsidy funds allocated to them in a
given year?
Should service levels of a funded agency decline
during the year, any excess wage subsidy funds
will be recovered by the Region of Peel. If wage subsidy
funds are not used to capacity for two consecutive
years, the funded amount will be recalculated accordingly.
Any surplus wage subsidy funds will be re-allocated
to the community. Any excess in-year wage subsidy
funds will be re-allocated according to the Wage Subsidy
Re-Allocation Policy.
Wage Subsidy
Calculations Guidelines (Per 1995 Ministry Guidelines)
12. The common terms used when referencing wage subsidy
are:
- FTE: full-time equivalent: refers to the number
of equivalent full-time positions that are required
to meet ratios that work for a child care provider.
- Operating capacity: for centre-based child
care, the operating capacity is the number of children
the program is staffed for on an ongoing basis.
This is less than or equal to licensed capacity.
- Permanent employee: a full or part-time position
which is part of a child care program's regular,
ongoing staffing component.
- Wage subsidy: means a subsidy for the enhancement
of salaries and benefits for employees of
day nurseries and private-home day care agencies.
13. What are the prescribed Ministry Guidelines used
to calculate the Direct Operating Grant ("DOG")
for licensed child care centres?
- These calculations are based on the Ministry
Guidelines set out in 2000.
- DOG calculation:
[(Operating capacity × Age weightings × Months
open per year) divided by (Hours of Operation
per week range)] x $4.836 = Amount of DOG
Age
weightings
|
|
Hours
of operation per week ranges
|
Age group
|
Points per space |
|
Hours program
operates |
Range
|
Infant
|
36
|
|
1 - 9 hours/week
|
8
|
Toddler
|
24
|
|
10 - 19 hours/week
|
4
|
Pre-School
|
15
|
|
20 - 39 hours/week
|
2
|
Kindergarten
|
10
|
|
More than 39 hours/week
|
1
|
Special Needs
|
30
|
|
|
|
School-Age
|
8
|
|
|
|
Example: The DOG for a child care centre licensed
for 32 preschool children operating 12 months
a year from 7am – 6pm with 24 preschool children
is calculated as follows:
Operating Capacity = 24
Age Weighting = 15 points
per space
Hours of Operation Per Week = 11
hours x 5 days = 55 hours per week, therefore
Hours of Operation Per Week Range = 1
[(24 x 15 x 12)
/ 1] x $4.836 = $20,891.52
14. What are the prescribed Ministry Guidelines
used to calculate the Home Child Care Provider
Enhancement Grant ("PEG") /Direct Operating
Grant for licensed child care agencies?
These calculations are based on the Ministry Guidelines
set out in 2000.
- PEG/DOG calculation:
(Average daily enrolment × 17.95 points × Months open per year)
x $4.836 = Amount of Wage Subsidy
- Note: 17.95 is the combined total of the Home
Child Care Provider Enhancement Grant
and the Direct Operating Grant.
15. What are the prescribed Ministry Guidelines
used to calculate the Child Care Wage Enhancement
Grant ("WEG")?
WEG calculation: for licensed child care services:
For Licensed Child Care Services:
Number of FTE positions × $2570 = Amount of
WEG
Previous maximums set by the ministry prior to transfer of responsibility
in 2001.
Administrative employees and home visitors employed
by the home child care agency are eligible to receive
the Wage Enhancement Grant portion of Wage Subsidy.
Note: Number of FTE Positions refers to the full
time equivalents employed at least 35 hours per
week and 52 weeks annually. Positions employed for less
than 35 hours per week are prorated to determine the
fraction of FTE. Example: The fraction FTE
for an FTE position employed 10 months per year, 20
hours per week (standard work week is 35 hours) is calculated
as follows:
1 position x (10 months/12
months) x (20 hrs/35 hrs) = .48 FTE
Wage Subsidy Maximum Amounts (Per 2006 Ministry Guidelines)
Distribution of wage subsidy will not exceed $9534
per FTE position in either a non profit or for profit
program.
Note: The $9534 amount includes the combined
total of the
- full Direct Operating Grant (DOG) in the amount
of $6964, and the
- maximum Wage Enhancement Grant (WEG) in the
amount of $2570.
Although these are the maximum allowable amounts,
actual funding may not be sufficient to allow for each
eligible person to receive full funding at this time.
Wage Subsidy Reallocations - Amounts (Per Community
Consultations in Peel 2000)
The reallocation policy developed in consultation
with the community identified infant care services as
a priority due to the high ratios and staffing costs
required. For the purpose of re-allocating funds, licensed
child care programs that do not receive any wage subsidy
with infant programs will be considered first followed
by toddlers, preschool, kindergarten and school age
in date order. Eligible agencies may receive up to $3925
per FTE for the youngest eligible age grouping. The
amount of $3925 represents an average based on the benchmark
year of 2000.
Selling an Agency That Receives Wage Subsidy
16. What happens if a wage subsidy funded agency
is sold and ownership/leadership is transferred?
If an agency is sold and ownership/leadership is
changed, prior to the transfer of wage subsidy an assessment
is completed by the Region of Peel. The assessment will
determine the current level of wage subsidy. The Region
of Peel may transfer the wage subsidy funds to the new
agency based on the current level of funding. This will
only occur if there is no disruption of service.
Wage Subsidy - Approved Uses
17. Can the agency use a portion of the wage subsidy
to cover off the employer's contribution to non-mandatory
benefits?
Agencies are required to obtain prior approval from
the Region of Peel regarding non mandatory benefit costs.
18. Can the agency use a portion of the wage subsidy
to pay for the employer’s mandatory benefits such
as EI and CPP?
Wage subsidy funding can be used to cover the employer's
contribution for EI and CPP (WSIB and EHT if applicable)
on the wage subsidy amount provided to employees. The
employer cannot use wage subsidy funds to pay for the
entire employer's contribution of mandatory benefits
for the employee's entire salary.
19. Can wage subsidy be used to bring up a staff
member's salary to the level of other staff?
Wage subsidy is not intended to replace regular salary
increases. Wage subsidy enables licensed child care
programs to enhance staff salaries and benefits.
The agency is responsible to ensure all employees
earn the minimum wage before wage subsidy is applied
to their pay.
20. Are employees entitled to wage subsidy if they
leave the agency?
The employee is entitled to wage subsidy for the
length of time they were in the position.
21. Does the agency pay the 4% vacation pay for the
wage subsidy portion of the salary?
If the wage subsidy is paid out as part of an employee's
regular salary then 4% vacation pay must be paid to
the employee. If the wage subsidy funds are paid out
to the employee as a bonus, then there is no requirement
to pay out the 4% vacation.
22. Can wage subsidy funding be used to cover the
audit expense?
No, wage subsidy funding is not intended to be used
to offset the agency's financial expenses.
23. Can wage subsidy be used to finance regular salary
increases?
The intent of wage subsidy funding is to increase
staff wages not to replace regular salaryincreases.
Wage subsidy funds are to be used to increase
staff salaries in addition to regular salary increases.
24. Can wage subsidy be used to finance pay equity
requirements?
The intent of wage subsidy funding is to increase
staff wages not to replace pay equity. Wage subsidy
funds are to be used to increase staff salaries in addition
to pay equity settlements.
25. If our child care program is downsized, can I
redistribute the wage subsidy funding to the remaining
staff?
No. Wage subsidy funds allocated to positions which
no longer exist are to be declared as surplus
on the Child Care Wage Subsidy Special Purpose.
In addition, Service Providers are expected to immediately
report to the Region any significant program
downsizing which is expected to be ongoing. Such program/staffing
changes will result in recalculation of the amount
of wage subsidy the Service Provider is eligible to
receive.
