Should You Stay in CWELCC? What Operators Considering Opting Out Need to Know

Across Ontario, a growing number of licensed child care operators are asking a question that would have seemed unthinkable a few years ago: Is it better to leave CWELCC?

Milton operators made headlines in late 2024 when several centres announced they were opting out of the program. Private operators across the province have circulated petitions calling for revisions to the cost-based funding formula, citing financial strain, administrative burden, and restrictions on how they can run their businesses.

This is a real conversation happening in boardrooms and kitchen tables across Ontario. Before you decide, you need to understand the full financial picture.

Why Operators Are Considering Leaving

The transition to cost-based funding in 2025 changed the economics of CWELCC participation significantly. Under the previous revenue replacement model, operators received predictable funding regardless of their actual cost structure. Under cost-based funding, your allocation is tied directly to eligible expenses - and if your costs exceed the benchmarks, or if your eligible cost claim is not fully documented, you may face a year-end recovery.

Revenue reduction is one of the most cited concerns. Some centres have reported revenue reductions of 7 to 25 per cent under the cost-based model compared to their previous revenue replacement funding. This depends heavily on program mix, operating capacity, and how effectively the benchmark formula is applied to their specific situation.

Administrative burden is another significant factor. FIN code reporting, monthly reconciliation, eligible cost assessments, and SSM documentation requirements have significantly increased the administrative load on operators, many of whom are running small businesses without dedicated financial staff.

Many operators also report SSM communication challenges - waiting weeks for responses from their Service System Manager, receiving vague or inconsistent guidance, and feeling that their specific concerns are not being addressed. And the eligible cost framework limits how funding can be used, which some operators feel conflicts with their ability to run a sustainable business.

What You Give Up by Leaving

Before opting out, operators need to understand what leaving CWELCC means financially. Your entire benchmark allocation - which for a typical centre can range from $150,000 to $600,000 or more per year - disappears immediately.

As of January 1, 2025, only CWELCC-enrolled centres are eligible to provide Child Care Fee Subsidy for families. Leaving CWELCC means your subsidized families lose access to support, which directly affects enrolment. Wage Enhancement Grant and Workforce Compensation Funding are also available only to enrolled centres - these amounts are built into your benchmark allocation and support competitive wages for your staff.

Once you leave, you can charge market rates - but you also lose the subsidy that was making your centre affordable to many families. The question is whether you can fill spaces at market rates in your community.

Before You Decide - Model Your Numbers

Many operators who feel financially stressed in CWELCC are not capturing their full entitled allocation. Common issues include not optimizing service days and operating capacity before submitting to their SSM, missing growth top-up opportunities from new spaces created in the year, not calculating rolling top-up from prior year amounts correctly, and claiming expenses that attract scrutiny without proper documentation while missing eligible expenses that are defensible.

Before opting out, use ChildcareFundingIQ to calculate your full entitled allocation under every provision of the 2026 formula. Run the scenario analysis. See what your allocation looks like at different service day and capacity levels. You may find that the program is more viable than it appears.