The Legal Staffing Strategy That Can Reduce Your CWELCC Wage Costs by Up to $100,000 Per Year

A January 2026 investigation by The Local revealed that Ministry of Education approvals for non-ECEs working in ECE-designated roles jumped 1,156 per cent over the last five years in Ontario. In 2020 to 2021, the Ministry approved 159 of these hires. In 2024 to 2025, it granted 1,997. Provincially, 16 per cent of licensed child care centres hired one or more non-ECEs in ECE roles in a single year.

These Director Approvals allow operators to place individuals who are not Registered Early Childhood Educators into positions that legislation requires to be held by RECEs. The individuals need only be 18 years old, hold a clean criminal record, and have a first aid certificate. They are not regulated by the College of Early Childhood Educators and cannot be held accountable to its professional standards.

Most commentary on this trend focuses on quality and workforce policy. Those concerns are legitimate. But there is a parallel financial story that has received almost no attention, and it runs directly through the CWELCC cost-based funding formula.

The formula does not know whether your program staff is a registered RECE or a Director Approval hire. It pays the same benchmark allocation either way. That gap between what the formula funds and what operators are actually required to pay creates a financial incentive that is worth understanding plainly.

How the Funding Formula Works

Starting in 2025, cost-based funding replaced the previous revenue replacement model. Under the old model, centres received specific funding streams including Workforce Compensation grants tied to staff qualifications and wage levels.

Under cost-based funding, all of this is consolidated into a single benchmark allocation. The staffing component of your benchmark, known as Component A1, is calculated as follows:

The Ministry publishes a staffing benchmark rate for each age group. For preschool in a community setting, that rate is $41.54 per operating space-day in 2026. You multiply that rate by your total preschool operating space-days, then multiply by the program staffing ancillary multiplier of 1.134. The result is your A1 component.

What the formula does not ask: how many of those staff are RECEs? What are their actual wages? Are they being paid the wage floor, the WCF ceiling, or something in between?

The formula assumes a benchmark level of staffing cost that is consistent across all centres of similar size and age group mix. A centre with fully qualified, well-compensated RECE staff receives the same A1 calculation as a centre where Director Approval hires fill the same positions at significantly lower wages.

The Numbers for a 16-Space Preschool Centre

To make this concrete, consider a 16-space preschool centre operating 261 service days. Under Ontario regulations, a preschool room requires two-thirds of program staff to be RECEs. For a room of this size, that means the operator must have at least one RECE in a program staff role.

Assume the centre has one program staff FTE and one supervisor FTE. The operator has a choice about who fills those roles and what they are paid.

All calculations use 1,820 annual hours as the full-time equivalent and 17.5 per cent employer benefits covering CPP, EI, WSIB, and supplementary benefits.

RECE Staff at the 2026 Wage Floor

The 2026 CWELCC guidelines set wage floors that enrolled centres must meet for RECE-designated staff. The floor for RECE program staff is $25.86 per hour, including base wage, General Operating Fund, WEG, and WCF combined. The floor for RECE supervisors is $26.86 per hour.

At the wage floor:

• RECE program staff: $25.86/hr x 1,820 hrs = $47,065 in wages, plus $8,236 in benefits. Total: $55,301 per year.
• RECE supervisor: $26.86/hr x 1,820 hrs = $48,885 in wages, plus $8,555 in benefits. Total: $57,440 per year.
• Combined total employer cost: $112,741 per year.

RECE Staff at the WCF Ceiling

Many operators pay wages that reflect the WCF program ceilings. The WCF ceiling for RECE program staff is $28.00 per hour. For RECE supervisors, it is $31.00 per hour. These are competitive wages that reflect meaningful investment in qualified staff retention.

At the WCF ceiling:

• RECE program staff: $28.00/hr x 1,820 hrs = $50,960 in wages, plus $8,918 in benefits. Total: $59,878 per year.
• RECE supervisor: $31.00/hr x 1,820 hrs = $56,420 in wages, plus $9,874 in benefits. Total: $66,294 per year.
• Combined total employer cost: $126,172 per year.

Non-RECE Staff at Low Market Rates

Now consider the same centre, same 16 spaces, same 261 service days, same CWELCC allocation. The operator uses a Director Approval to fill the program staff role and hires a non-RECE supervisor. Neither position is subject to RECE wage floors. The operator pays market rates that reflect the lower credential requirements.

At $20.00 per hour for program staff and $22.00 per hour for the supervisor:

• Non-RECE program staff: $20.00/hr x 1,820 hrs = $36,400 in wages, plus $6,370 in benefits. Total: $42,770 per year.
• Non-RECE supervisor: $22.00/hr x 1,820 hrs = $40,040 in wages, plus $7,007 in benefits. Total: $47,047 per year.
• Combined total employer cost: $89,817 per year.

The Gap

Both centres receive the same CWELCC benchmark allocation for the same 16 preschool spaces. The funding formula does not differentiate between them.

The wage cost difference:

• Non-RECE staff vs RECE at the wage floor: $112,741 minus $89,817 = $22,924 per year in staffing cost savings.
• Non-RECE staff vs RECE at the WCF ceiling: $126,172 minus $89,817 = $36,355 per year in staffing cost savings.

That $22,924 to $36,355 does not disappear. It remains within the centre's Program Cost Allocation as eligible cost headroom. It can be directed toward other eligible expenses. It can contribute to the Allocation in Lieu of Profit and Surplus, which is itself capped by formula. And in practice, for for-profit operators, it becomes part of the margin the business retains.

This is not speculation about bad actors. It is the direct arithmetic of a funding formula that was designed around typical staffing costs and typical wage levels, without a mechanism to verify that those costs are actually being incurred at the credential level the benchmarks were designed to fund.

What the Benchmarks Were Built to Cover

The Ministry's Schedule A benchmarks are based on statistical analysis of sector wage data. They were built to represent the typical cost of providing child care with a qualified RECE workforce receiving appropriate compensation. The WEG and WCF components are built into the benchmark to fund wages up to the WCF ceiling.

In other words, the formula was designed to fund RECE wages. When Director Approval hires replace RECEs at lower wages, the benchmark allocation does not adjust downward. The funding that was intended to cover RECE compensation is still paid out. It is simply no longer going to RECE compensation.

This is a structural gap in the cost-based funding design. It was presumably not the intent. But the intent does not change the arithmetic.

The 1,156 Per Cent Increase in Context

The Local's investigation found that for-profit centres are approximately 66 per cent more likely than non-profit centres to hire non-RECEs for ECE roles. This is not surprising given the financial logic described above. Non-profit operators reinvest surplus into their organization. For-profit operators distribute margins to owners. The incentive to reduce staffing costs within a fixed allocation is structurally different for each.

The investigation also found that Director Approvals for supervisory roles jumped 633 per cent, with 17 per cent of newly hired supervisors provincewide not holding an ECE degree in 2024 to 2025. Supervisors manage staff, liaise with parents, and ensure compliance with provincial standards. When supervisor roles are filled by non-RECEs, the accountability gap is particularly consequential.

The Ministry has not publicly addressed the 1,156 per cent increase. The Local reported that it did not receive a response to a request for comment.

What Enrolled Operators Should Understand

If you are an operator using Director Approvals, you are operating within the current rules. Director Approvals are a legal mechanism and the Ministry grants them. The concern raised here is not about individual compliance. It is about the systemic incentive structure that the cost-based funding formula creates.

If you are an operator committed to employing qualified RECE staff and paying competitive wages, you are spending more than the minimum. That spending is an eligible cost. It reduces the gap between your eligible cost claim and your Program Cost Allocation. It reduces the risk of a year-end recovery. And it is the foundation of the quality argument for your centre's continued participation in CWELCC.

The political pressure on the funding formula to address this gap is growing. The ONN Care Scorecard, the B2C2 report on Director Approvals, and the AECEO's advocacy for a $35 per hour RECE wage grid all point toward a next multi-year agreement that may introduce credential-linked funding conditions or strengthened wage floor requirements. Whether that happens, and on what timeline, depends on negotiations that have not yet produced public details.

What operators can control today is their documentation. If you are employing RECEs and paying wages above the floor, your standardized financial report and payroll records are the evidence. The case for maintaining the current funding formula for compliant operators is built on that evidence, not on assertions.

Source: Wendy Glauser, "Ontario's Daycares Are Increasingly Staffed by Underqualified Hires," The Local, January 20, 2026. Building Blocks for Child Care, Director Approvals Report, January 2026. Ontario Ministry of Education, CWELCC Cost-Based Funding Guideline, April 2026.