The Ford government has cancelled its $28-million budget cut to children’s aid societies after growing concerns about the ability of cash-strapped agencies to protect Ontario’s vulnerable children.

The agencies learned in late September, when their provincial funding arrived, that the government is instead increasing last year’s $1.5-billion transfer to them by $23 million.

In an emailed statement to the Star, the ministry of children, community and social services said minister Todd Smith and associate minister Jill Dunlop decided it was best to keep funding “stable” while the government consulted the agencies about needed reforms.

The ministers’ “first priority is to listen and learn,” the ministry said. “Our government knows it is important to give the sector time and space to contribute to discussions about any changes. Keeping funding stable has provided time to work together to find solutions.”

Officials with Ontario’s 50 children’s aid societies applaud the government’s about-face. They add, however, that it will bring little relief to the 17 societies struggling with deficits that total $11 million.

The reversal prevents a bad situation from getting worse.

The government had signalled the $28-million cut in funding for children’s aid when it tabled its spending estimates in the legislature in May. With government popularity tanking, Premier Doug Ford has reversed other announced cuts, including to municipalities and to children with autism.

But a breakdown of the government’s $1.526 billion in funding by the Ontario Association of Children’s Aid Societies indicates the extra money won’t be lifting agencies from their deficit hole.

“It’s a bit of a shell game,” says Jennifer Wilson, executive director of the Kawartha-Haliburton Children’s Aid Society, referring to the extra funding.

Last year’s funding was for 49 children’s aid societies. This year’s money is for 50 societies, due to the designation of a new Indigenous agency.

By the OACAS’s calculation, according to a “briefing note” sent to society directors Sept. 25, the province’s 11 Indigenous agencies receive a $37 million increase in funding this fiscal year overall. Non-indigenous societies, on the other hand, suffer a $27 million funding decrease.

The net result is “an overall sector-wide increase of approximately $10 million,” the OACAS says.

But even that increase isn’t quite what it seems. For the past several years, the government has in essence clawed back money from a society’s budget to basically force administrative efficiencies, such as reducing costs by cutting overhead or sharing services with another agency. Last year, efficiency clawbacks from agencies totalled $10 million overall. This year, the budget clawback is $15 million.

Societies are required by law to balance their budgets. In July, the board of directors at the Brant Children’s Aid Society resigned en masse, accusing government underfunding of putting “the safety of our community’s vulnerable children at risk.”

In late September, executive directors of children’s aid societies met in Sudbury for a grim financial review. A PowerPoint based on funding figures gathered by the OACAS showed participants two starkly different views of their sector.

Under the heading, “What the ministry sees,” a slide showed a sailboat gliding smoothly on a sunset-coloured sea. The next slide, “What we tell the ministry,” showed desperate survivors in crowded rescue boats watching the Titanic sinking.

The PowerPoint also illustrated a great divide among children’s aid societies: small, rural societies struggle with deficits while large urban ones enjoy budget surpluses. Of the 17 agencies in deficit, 15 are rural.

Smaller agencies argue the divide results from a funding formula that favours urban agencies by pegging dollars to socio-economic factors, such as the number of children in a catchment area. They want the government to revise the formula.

“There may be a distribution problem if we have big agencies who have surpluses and small ones who generally can’t pay the bills at the end of the year,” says Phyllis Lovell, chief executive officer of Bruce Grey Child and Family Services.

“There are some organizations that are in big trouble, that are really going to hit a wall this year,” she adds in a phone interview.

Lovell saw her agency’s budget reduced by 2 per cent this year to almost $19 million — the same reduction it has faced every year since 2012. She’s so far managed to keep the budget balanced without layoffs.

“Next year, we’re an organization that will have incredible difficulty living within our funding allocation because we’re so stretched,” Lovell says. “We found every efficiency that we can. We are staffed as lean as we can be.”

Children’s aid societies with surpluses are not free to use the leftover funds. Surpluses can only be used to cover eligible expenditures — including staff training or buyouts for staff reductions — and only with ministry approval. If all surplus funds could be used, children’s aid deficits would decrease to $5.4 million from $11 million .

Kawartha-Haliburton Children’s Aid Society, with a budget of almost $24 million, doesn’t have the luxury of a surplus fund to tap into.

It learned in September that its annual base funding was reduced by $72,000. The agency’s executive director, Jennifer Wilson, foresees a $600,000 deficit this fiscal year.

In an interview, Wilson described as a “fundamental flaw” the fact that agencies only receive their funding six months into the fiscal year. That leaves those who receive less than expected scrambling.

The main driver of Kawartha’s deficit, Wilson says, is the lack of foster parents. That forces the agency to use foster homes run by private companies, which by law can have no more than four children.

“They are more expensive,” Wilson says of the company-operated foster homes. “They’re children for profit.”

Wilson, who says she’s “uncomfortable” with a system that uses children for profit, hopes to reduce her deficit with a community push for more foster parents.

Kawartha and other agencies are also being financially challenged by the transfer of Indigenous children to newly formed Indigenous children’s aid societies. Funding to agencies transferring children has been reduced. But transfers are proceeding more slowly than expected, leaving agencies caring for children they don’t have funding for.

The transfer process accounted for most of the Brant society’s deficit of $1.7 million. Wilson notes the province has now tweaked the “transitional funding model” to better reflect the number of children being transferred.

Agencies also saw sudden deficits when the Ford government last fall reduced the amount it paid when foster parents committed to giving children a permanent home, either through adoption or caring for them until age 18. The government used to pay 75 per cent of that cost; it now pays 25 per cent.

In its emailed response to the Star, the children’s ministry made clear its consultation is looking at possibly reforming all aspects of child protection, including “how best to promote more prevention, early intervention and community-based services.” It will also look at increasing shared services among agencies, at ways to increase the number of foster parents and at finding more permanent placements, including adoption.

Children’s aid executives welcome the government’s review — known as the “modernization” initiative — but await its results with some trepidation. They note there have been several major government reviews of child protection in the last decade.

“I’ve been around long enough to be reformed, transformed and now we’re being modernized,” Lovell says. “The people that populate this sector run the spectrum from completely cynical about whether this is an empty exercise to people — and I would put myself in this category — who try to be hopeful and optimistic that they’ll listen to service users.”

Ontario’s child protection system serves some 12,000 kids that have been taken from abusive or neglectful parents and placed in foster or group homes, according to the OACAS.

Sandro Contenta is a reporter and feature writer based in Toronto.