The Ministry funds some residential services directly, others through transfer payment, and some are funded indirectly by placing agencies such as Children’s Aid Societies through contracts with private per diem funded operators.

According to Ministry statistics provided to the Panel, approximately 80 percent of all beds are funded through transfer payment agencies (TPA), the majority of which are foster beds operated by Children’s Aid Societies (CASs). Approximately 17 percent of all beds are purchased on a per diem basis and the majority of these beds serve young people in the child welfare sector. In addition, some beds operated by children and youth mental health centres can also be purchased on a per diem basis, typically by CASs. The remainder of beds are operated and funded directly by Youth Justice Services (six secure custody/detention centres) and the Child and Parent Resource Centre (CPRI, a mental health assessment and intervention facility).

In 2013/14 a new child welfare funding model was introduced by the Ministry to support a significant transformation of Ontario’s child welfare system (MCYS, nd). The model allocates funding from a fixed child welfare operating envelope to all CASs based on each CAS’s share of socio-economic (measures of need) and volume-based (measures of service) factors. The new model is being implemented over a five-year period and CASs are required to submit and operate within a balanced budget plan. The model was developed in response to continually escalating expenditures based on historical child protection spending despite declining caseloads and is intended to better align funding to the needs of children and youth, families and communities. The total approved CAS budget allocation was $1.481 B in 2015-16 and has been essentially flatlined since 2013-14 when the new model was implemented. The Ministry indicates that it will continue to identify the best data sources available for socio-economic factors and may make changes to the data sources in future years. In addition, the ministry will undertake a review of the funding model prior to the end of the five-year implementation period (2017-18).

The Panel recognizes the significant effort culminating in the design and implementation of the current child welfare funding model, which provides flexibility to Children’s Aid Societies to allocate resources for residential beds.

In practice, the Panel observed through our consultations a general trend for CASs to discontinue the operation of their own group homes in favour of purchasing group home beds from private per diem funded operators. Despite feedback that CASs often viewed their own group homes as more effective, we heard that internal group care is more expensive, leading to the practice of purchasing external, less expensive beds. By contrast, but also driven by financial considerations, CASs advised us that placement in internal foster care is the most common practice, even though external foster care, which is more expensive, was often seen as most effective for young people.

Through our consultations, the Panel heard many concerns about the rate setting methodology as well as the rate review process. We observed that there are significant inconsistencies with respect to per diem rates across all sectors but particularly group homes in the child welfare sector. Stakeholders noted that compensation and infrastructure are excluded from the rate review process, resulting in poorly compensated staff in group homes and an inability to fund infrastructure requirements. There is no provision to address inflationary increases as inflation is not accepted as a criterion for adjusting a per diem rate. Incentives exist to create new programs, whether there is a compelling reason to do so or not, in order to trigger a rate review.

In child welfare and children and youth mental health, funding is inconsistent and there is little confidence that higher per diems for “treatment” are actually delivering a value-added and necessary service. It is not possible to validate the need for the higher per diems nor the services provided, given the lack of clearly defined outcomes and performance indicators. There is also no means by which to independently validate self-identified areas of expertise in most cases.

In the absence of clear standards for quality of care, the Panel observed that there is little financial accountability and no financial incentives or disincentives for operators to deliver high quality care.

The Panel frequently heard concerns about the use of Special Rate Agreements (SRAs), which typically involve funding for 1:1 staffing. It is intended that SRAs be used to provide funding above the approved per diem rate to address exceptional circumstances requiring additional support and supervision of young people with high needs. Often, Children’s Aid Societies and the Ministry have insufficient visibility into SRAs to ensure accountability for these expensive arrangements.

The Panel heard from stakeholders about the misuse of SRAs, including their continuation for excessive periods of time and instances of group homes using multiple SRAs to compensate for inadequate per diems. Vigilance and rigour in monitoring the use of SRAs is required in order to avoid significant costs being accrued to CASs. Where CASs have assigned staff to provide this oversight, the Panel was encouraged to hear that significant cost avoidance was achieved.

As referenced previously, the Ministry does not yet have a central bed registry corporately, regionally or by community. It is noted that the Toronto Region is piloting the Centralized Access to Residential Services (CARS), which seeks to create a central bed registry in the Toronto region. With the exception of Youth Justice, supply and demand is not well understood. The availability of this data across sectors would support a better and more integrated approach to service planning and funding. Given the low counts and significant excess capacity in youth justice secure and open custody, there is a significant and time-sensitive opportunity to optimize resources in the residential services sector by ensuring the right number of beds by type in the right locations.