Social programs significantly affect some of Ontario’s most vulnerable citizens. Social assistance, by far the largest expenditure component, provides the most basic income and employment supports to the impoverished and people with disabilities. Child protection services, delivered through a network of Children’s Aid Societies, keep Ontario’s children safe and healthy. And developmental services support local programs and services that promote inclusion and involvement of citizens with a developmental disability.
Despite the valuable services that social programs provide, our mandate requires us to consider their fiscal impact. From 2000 to 2010, spending on social programs grew by an average of 6.0 per cent per year — well above the rate we will need to return the provincial budget to balance by 2017–18. A number of factors contribute to this, most notably those related to social assistance. Demand for the Ontario Disability Support Program (ODSP) has increased by about five per cent per year over that period. Caseloads for Ontario Works (OW) too have grown, though only following the global economic downturn in 2008–09, after remaining more or less unchanged since the start of that decade. Following a period in the 1990s when social assistance rates were increased and then cut dramatically, changes were brought about in 2004 that would increase rates by 13 per cent over eight years.1 And in 2008, the province committed to uploading almost the entire municipal share of social assistance2 as part of the Provincial-Municipal Fiscal and Service Delivery Review. Together, these factors have driven the increases in social assistance spending that have contributed significantly to the overall growth of spending on social programs in recent years.
The result is that expenditure growth at this level is not sustainable in the current fiscal context. To return the provincial budget to balance by 2017–18, we can allow social program spending to grow, but at a much constrained rate.
Recommendation 8-1: Hold growth in social programs spending to 0.5 per cent per year.
At 0.5 per cent per year, social programs are one of few areas — along with health, elementary and secondary, and post-secondary education — where we recommend any government spending increase out to 2017–18. This stands in sharp contrast to the recommended annual decreases of 2.4 per cent for all other program spending. We propose a number of recommendations in this chapter that will bend down the cost curve. Depending on demand for social programs, which will in part be determined by economic conditions, these recommendations may not be sufficient to keep spending within the recommended limit. Accordingly, further reforms may be required. In this regard, we note that two other Commissions are addressing social programs — social assistance and child welfare respectively — and they will be reporting later in 2012.
There are two types of social programs. Most spending is carried out through mandated and entitlement-based programs, meaning benefits or service levels are set by law. These benefits and services, such as social assistance and the Ontario Child Benefit (OCB), accounted for two-thirds of total sector spending in 2010–11.
Other programs are discretionary in nature. These programs are not entitlement-based and so clients who qualify for these services are not guaranteed to receive them right away. These programs include support for child and youth mental health, developmental services, child care subsidies and childhood development programs.
The distinction between entitlement-based and discretionary programs is important in the fiscal context. When demand for entitlement-based programs rises (for example, when assistance caseloads increase), so too does funding; clients are entitled to those benefits. This is not the case for discretionary programs: when demand outstrips supply, the result is a waiting list.
Managing expenditures, particularly for entitlement-based supports, means the government will have to achieve more by operating more efficiently. Program design and delivery will need to be integrated and aligned across different government ministries and delivery agents. Various levels of government will need to work together to determine the most efficient ways to provide services for those most in need.
Attaining this integration and transformation will require the government to evaluate and align its policies and service delivery methods from a client-based perspective. When vulnerable people need support, they and their families do not care which level of government or government department is responsible for providing that support — they just want help, which could be more accessible and more effectively planned and delivered.
The province delivers 45 different income-based benefit programs through many service providers and under several different funding arrangements. For instance, social assistance programs are delivered by the province, municipalities and First Nations delivery agents, but are mainly provincially funded. The OCB is funded by the province, but administered and delivered by the Canada Revenue Agency. And housing programs can be funded by various levels of government and non-governmental organizations and can be delivered by municipal, provincial or third-party delivery agents.
When these activities lack co-ordination across delivery agents, gaps and duplications of effort often result. Many programs require unique applications, apply different income tests using various definitions of income, and produce separate payments. Moreover, some programs assess eligibility only once while others do so monthly. Consequently, administrative efforts are unnecessarily replicated across benefit programs, leading to inefficiencies. And those in need are forced to navigate through a complex array of access points for the supports they dearly need, creating significant access issues.
This array of program delivery models and eligibility criteria can lead to further unintended consequences. Many social programs are universal, some are income-tested and still others are based on specific need. These conflicting eligibility requirements can create inequities and can result in barriers to seeking employment or pursuing higher earnings. In the context of social assistance, this is commonly referred to as the “welfare wall,” where individuals face losing supports — be they income or in-kind benefits, such as the Ontario Drug Benefit (ODB) program — shortly after finding work or when passing a specific income threshold.
There is scope to do this more efficiently:
Positive steps have been taken towards simplifying access to Ontario’s income-tested benefit programs. In March 2011, the Ontario Benefits Directory was launched, providing one-stop access to information for more than 40 programs and tax credits organized by population segment and type of benefit. Similarly, the Ministry of Community and Social Services recently introduced a new single-window access point to developmental services and supports; clients can find information about community resources and go through a standardized application process for provincially funded services and supports. This must only be the beginning: The government should move to improve client access by creating a single point of access for benefits and a co-ordinated interface for clients.
Improving the delivery, administration and equity of the broad spectrum of Ontario’s benefits system is critical to ensuring that strong support exists for those clients who most need it. More and better data measuring client outcomes is also needed to determine program effectiveness and to understand how programs interact; the utmost care must be taken to continue to respect and protect personal information and privacy. Nevertheless, transforming the delivery of Ontario’s benefits system into a fully integrated model represents a clear opportunity to simultaneously make programs more effective and reduce costs in the long run.
Recommendation 8-2: Move aggressively towards a fully integrated benefits system that simplifies client access, improves client outcomes and improves fiscal sustainability through greater program effectiveness and reduced administrative costs.
Recommendation 8-3: A fully integrated benefits system should seek efficiencies by, at a minimum, centralizing income testing and payment delivery; automating the processing of applications, eligibility and payments; automating income verification; consolidating program delivery; and standardizing eligibility criteria.
Recommendation 8-4: Collect the information necessary to deliver and evaluate a fully integrated benefits system. In doing so, continue to respect and protect personal information and privacy.
Our approach to social assistance has been different from other policy areas in that the Commission for the Review of Social Assistance in Ontario (SAR Commission), under Frances Lankin and Munir Sheikh, is already actively engaged on the subject matter.3 However, the SAR Commission is not due to release its final report until late 2012, well after this report is completed. Because of the considerable impact that social assistance has on the province’s finances, we too must propose recommendations.
Our focus has been to apply the themes that run through our reviews of all sectors, such as achieving efficiencies in administration and service delivery, rationalizing jurisdictional oversight and shifting from measuring inputs to outcomes. By no means, however, do our recommendations address all aspects of social assistance that warrant reform; for that we defer to our colleagues on the SAR Commission and lend them our full support. For example, we say little about the structure and level of benefits. We are cognizant that we are leaving to them not only the need to broaden the scope of review beyond what we have covered, but also to deepen the analysis, even in areas where we have made recommendations. Social assistance programs are very complex and we have had neither the time nor the resources to fully analyze the likely impact of our reforms on cost and quality, though they appear promising.
Finally, while we believe our suggestions will bend down the cost curve, we recognize they may well be insufficient to keep spending within the annual 0.5 per cent growth cap if demand for these services continues to grow appreciably. On that too we would respectfully request the views of the SAR Commission.
Social assistance consists of two programs: the provincially delivered ODSP and locally delivered4 OW. Both ODSP and OW recipients are eligible for drug coverage under the ODB program, among other benefits. Caseload levels for OW, which provides temporary income support, are closely tied to economic conditions such as unemployment; ODSP is less responsive to these conditions. Policy changes affecting eligibility criteria and administrative procedures can also significantly affect demand, as we saw in the mid-1990s when eligibility criteria for social assistance programs were tightened.5
Since the mid-1990s, ODSP caseloads have increased by approximately five per cent a year. Factors contributing to this increase include changes in the economic environment, policy changes that created financial incentives for clients to move from OW to ODSP, and a broadening of the definition of disability, primarily through court decisions.6 As a result, ODSP caseloads have exceeded those of OW — even through the recent economic downturn (as illustrated in the chart that follows).
In the absence of policy changes, social assistance spending is projected to grow by roughly five per cent per year. Containing growth to 0.5 per cent annually would mean reducing total social assistance spending by over $2 billion per year by 2017–18 relative to what it would have been in our Status Quo projection.
Through our review, we have uncovered evidence of higher costs and reduced quality of services due to maintaining two separate social assistance programs delivered by two levels of government. Compared to a single program, there are clear overlaps in administration, and variations in specific benefit levels between programs can lead to inequitable outcomes. Better co-ordination could lead to fiscal and quality rewards, but as we have pointed out in other program areas, efforts that support better co-ordination can themselves be an inefficient use of time and other resources. Further, and more profoundly, the continued operation of separate programs perpetuates the antiquated idea that all those eligible for disability supports are unemployable. In fact, 54.9 per cent of Ontarians between the ages of 15 and 64 who self-identified as having a disability participated in the labour market in 2006; we believe this figure could and should be even higher.7
We urge the SAR Commission to examine models for improving service delivery and in particular for improving employment services for recipients of OW and ODSP. Consolidating OW and ODSP into a single program and delivering it at the local level seems to offer promise. This would reduce outdated divisions between the two clienteles and facilitate the connection to other local services. But it would also require reforms to best utilize the employment services available from Employment Ontario (EO).
Equal attention must therefore be given to how to better integrate EO with social assistance. This needs to be done regardless of whether OW and ODSP continue to be delivered separately or are combined and delivered at the local level. An efficient referral system from case workers is essential.
An advantage of integrating social assistance with EO is that all job seekers would be served by the same entity, further reducing the stigma for people receiving social assistance. Economies of scale could clearly be achieved by having all job seekers served by the same employment service.
Recommendation 8-5: The Commission for the Review of Social Assistance in Ontario should examine system design options that deliver a more efficient and higher-quality service to social assistance recipients. This examination should consider combining Ontario Works and the Ontario Disability Support Program, and having the combined program delivered at the local level. It should also address the further integration of employment services available through Employment Ontario.
A more efficient, higher-quality program should:
There are two other features we would like to see in social assistance programs, but where we recognize much more work is required before firm recommendations can be offered. We once again hope the SAR Commission can address these items.
First, to the extent possible, the benefits of the two main social assistance programs should be consolidated. There could, for example, be a common base level of supports and benefits with additional, targeted supports for persons with disabilities. The complexity of the current design of those benefits would make this a difficult task and, if not done with care, it could actually cost more.
Second, we hope the SAR Commission will examine the prospects for moving towards an audit-based accountability structure rather than the current intensive use of verification and compliance. We have been struck by the enormous resources required from both government and recipients to cope with the current system that could otherwise be put to better use. However, we are also cognizant that, to be successful, an audit-based program would have to be carefully constructed to have the appropriate checks and penalties.
Efficiency gains and improvements to service quality can be made if clients are thoroughly assessed upon entering the program and given targeted supports, from self-serve resources to high-intensity, face-to-face support with a case worker, based on their individual needs.
Recommendation 8-6: Undertake a thorough initial assessment of new entrants into social assistance to identify the degree of intervention required to help them return to the labour market. Triage new entrants to appropriate supports according to this assessment.
With a focus on reattaching people to the workforce, the employment and training component of social assistance becomes even more crucial. Chapter 9, Employment and Training Services, highlights recent efforts to integrate employment and training services through EO. However, additional benefits are likely possible if the employment services provided through Ontario Works and ODSP are further integrated with EO. Such integration would address program overlap and duplications; likely improve client service and client outcomes; and could reduce costs of employment services and demand for social assistance. Examples of these services include job search supports, work experience programs, skills training, supports for self-employment, and the screening and matching of participants to employers.
Recommendation 8-7: Streamline and integrate other employment and training services with Employment Ontario, including the bulk of the employment and training service component of social assistance, in a carefully sequenced manner.
Many people with disabilities are able and want to work. Yet we are only now beginning to understand what is needed to accommodate people with physical disabilities in the workplace, and we are even further away from doing so for those with mental disabilities.
Recommendation 8-8: Prepare and support people with disabilities who are entering the workplace. Work with employers and fellow employees to properly understand and accommodate the specific needs of the individual in the workplace.
About 22 per cent of people with severe or very severe disabilities now receive social assistance in Canada. Most people are unemployable or have only a tenuous attachment to the paid labour force. This population would be better served by a national basic income program instead of social assistance.8
A growing number of organizations have criticized the federal Employment Insurance (EI) program for not meeting the needs of the modern labour market. In 2010, Ontarians contributed about 40 per cent of EI premiums, yet received only 32 per cent of benefits and 31 per cent of funding allocated for training. It is unclear to what extent reform of the EI system might reduce pressure on Ontario’s social assistance budget. However, it is clear that unemployed Ontarians do not now receive equitable income support and appropriate training opportunities to facilitate their return to the workforce. In addition, an increasing proportion of people who are either new workers (new immigrants) or youth in non-standard employment (such as part-time, multiple jobs, temporary employment) do not quality for EI.9 The Final Recommendations of the Mowat Centre EI Task Force, if implemented, would be a considerable improvement.
Recommendation 8-9: Advocate for federal reforms in two key areas:
Should the growth of social programs spending be reduced below the 0.5 per cent target — whether because of policy reforms, reduced demand for social programs, or other reasons — the savings should be used to make reforms that eliminate barriers that prevent people from moving back to the workplace. Three areas in particular require attention.
To qualify for social assistance, potential recipients must divest all liquid assets above a certain threshold. This threshold varies by category, such as single person, non-disabled, etc. However, these asset caps for OW were cut dramatically in the mid-1990s and have barely been raised since. As of December 2011, for example, a single parent of one child receiving OW was allowed to have no more than $1,645 in liquid assets — less than the estimated cost of moving from a shelter into a basic bachelor apartment.10 Depriving social assistance recipients of these most basic means of climbing the “welfare wall” is counterproductive.
Second, in Chapter 5, Health, we discuss reforms to the ODB that would make eligibility for the ODB solely dependent on income as opposed to age or, more importantly for this chapter, social assistance status. Currently, all recipients of a social assistance benefit unit (the social assistance recipient and his or her dependants) receive ODB coverage in each month they qualify for social assistance but lose this benefit (along with other extended health benefits) shortly after finding employment. The loss of extended health benefits represents a strong disincentive to work — thus contributing to the “welfare wall.”
Dealing comprehensively with these two issues would probably absorb any savings below the recommended 0.5 per cent expenditure annual growth rate. In the unlikely event that funds remain, we recommend that the basic needs and shelter amounts of social assistance be raised to fill any gap. However, any changes to these amounts should be supported with a clear evidence base.
Recommendation 8-10: If growth in expenditures for social programs is contained below the 0.5 per cent annual growth rate, reinvest savings into social assistance, with priority given to:
Like social assistance, we have approached child welfare differently than most other policy areas out of deference to the ongoing work of the Commission to Promote Sustainable Child Welfare, which was created in November 2009 with a three-year mandate.11 Its previous reports and papers are consistent with recurring themes in this report such as the endless search for efficiencies and a clear focus on evidence-based policy-making. Containing the annual rate of expenditure growth at 0.5 per cent will nonetheless be immensely challenging for a sector that has grown by five per cent per year on average over the past eight years. Three elements in any solution will be increasing the capacity of Children’s Aid Societies (CAS); adopting an accountability framework tied to outcomes rather than inputs or processes; and strengthening the links between child welfare and other sectors through better service integration.
Recommendation 8-11: Continue implementing reforms to child welfare proposed by the Commission to Promote Sustainable Child Welfare. This must include building on reforms to Children’s Aid Societies, implementing an outcome-based accountability structure and strengthening links between the child welfare sector and services in other sectors, such as education, post-secondary education, and employment and training services.
The Ontario Child Benefit (OCB) provides up to $1,100 annually per child and aids about one million children in almost 530,000 families. The OCB is a non-taxable, income-tested monthly benefit paid to low- to moderate-income families with children under age 18.
The OCB has transformed children’s benefits by providing support to all low- to moderate-income families with children, regardless of the source of their income. The OCB treats all children in these families equally and makes it easier for parents to move from social assistance to employment; previously, because child benefits were provided through social assistance, parents would lose benefits for their children as well as themselves upon finding employment.
While this is commendable in terms of helping to remove the “welfare wall,” we note that the 2011 Ontario Budget committed the government to increasing the maximum support level further to $1,310 annually per child, at an additional cost of $245 million per year when fully implemented. However, the Commission has recommended that if social program spending grows by less than 0.5 per cent annually, then any savings should be channelled into specific social assistance measures; accordingly, further increases in the OCB should not be considered at this time.
Recommendation 8-12: In light of the Commission’s recommendation to reinvest savings achieved by holding the increase of social program spending below the recommended 0.5 per cent annual growth rate into specific social assistance reforms, the government should retain the current maximum level of the Ontario Child Benefit.
Discretionary social programs are overseen by many government ministries and broader public-sector partners with varying levels of capacity. Despite this degree of variation, there are common trends across services:
Given that the province provides most of the funding for social programs, it must lead change in these programs, and work with all its partners to deliver better or more effective services at less cost.
This means mapping out a vision to better integrate human service delivery and the associated policy work. Such an approach is consistent with the goal of transforming benefits — better service integration helps simplify client access, improve outcomes and reduce overhead costs.
As noted by the Ontario legislature’s Select Committee on Mental Health and Addictions, mental health and addictions services in Ontario are fragmented, spread across several ministries and offered in various care settings.12 The government has taken steps to reduce this fragmentation by developing a comprehensive strategy for mental health services.
Recommendation 8-13: Reconfigure child and youth mental health services to consolidate agencies and improve service delivery and integration both within the sector itself and with other sectors such as children’s services, health, education and youth justice.
Greater integration of services for children and youth should be expanded beyond mental health. As with the alignment of other services, co-operation across ministries and with other levels of government (particularly at the municipal level) will be key. This may require a redefinition and/or restructuring of ministry roles and responsibilities.
Recommendation 8-14: Integrate children’s services to enhance early identification and intervention.
Recent developmental services legislation13 recognizes that individuals with a developmental disability can live independently with the appropriate supports and that they and their families want more choice and flexibility in choosing supports that meet their needs.
Shifting funding from transfer payment service agencies to service recipients over time could encourage changes in the developmental services sector by promoting a more competitive and market-driven approach to the provision of services and supports, based on individual need and demand. If the individuals and families had the purchasing power to choose the community participation supports they preferred, service agencies would be driven to realign in response to this market.
Recommendation 8-15: Move towards consolidating developmental services funding for community-based support programs into a single direct funding program.
The youth justice sector has changed significantly since the introduction of the federal Youth Criminal Justice Act in 2003. The greater focus placed on community-based interventions has resulted in a decrease in the use of youth justice facilities, some of which are underused and require considerable capital investment to keep operational. Current facilities should be continually evaluated for their contribution to achieving the sector’s policy objectives. Where excess capacity can be demonstrated and a more efficient option exists, strategic closures should occur and those assets should be put to more productive uses or divested entirely.
Recommendation 8-16: Reduce excess capacity in the youth justice system through strategic closures of facilities.
The non-profit sector is an often-overlooked contributor to the Canadian economy. In 2007, the value-added or gross domestic product (GDP) of the non-profit sector was $35.6 billion, accounting for 2.5 per cent of the total Canadian economy. This share increases to 7.0 per cent when hospitals, universities and colleges are included, reaching $100.7 billion in 2007.14 Excluding hospitals, colleges and universities, the non-profit sector employs 600,000 people and has over five million volunteers, supporting a wide variety of sectors including health, education, environment and social services in Ontario. These same non-profit organizations in the province have annual revenues of $29 billion, 45 per cent coming from earned income, 29 per cent from federal and provincial government grants and service contracts, and 26 per cent from gifts, donations and other sources.15
Most non-profit organizations (53 per cent) in Ontario are completely volunteer-run, having no paid staff.16 We must not underestimate the contributions of volunteers to care for our elderly, retrain the unemployed, educate our children and care for our environment. Steps should be taken to ensure that these organizations continue to get funding. However, there is room for improvement in terms of streamlining administration and ensuring that accountability frameworks focus on outcome metrics. In addition, multi-year agreements can help create predictable budget cycles for non-profit organizations.
Recommendation 8-17: Reform funding practices in the non-profit sector to increase flexibility and reduce administrative costs by focusing on measuring outcomes rather than inputs.
There is also room for improving the responsiveness of the government to the non-profit sector. The Commission notes the precedent set by the Open for Business initiative that creates a single window through which business can engage all government ministries. We believe a similar model would be helpful to the non-profit sector, which is just as varied and diverse as the private sector.
Recommendation 8-18: Provide a single point of access within government for the non-profit sector to improve and broaden relationships across ministries that enter into contracts with the non-profit sector, using a model such as the Open for Business initiative.
Non-profit and for-profit organizations may be able to take new approaches to achieve more cost-effective social outcomes. A prime example is Social Impact Bonds (SIBs). Through a SIB, a government contracts with a partner organization to deliver a particular service, with payment conditional on improvements to an associated social outcome. If the social outcome is achieved, the social impact bondholder receives a risk-adjusted rate of return from the government, while the government saves money because the improved social outcome offsets future expenditures. The United Kingdom has undertaken the best known pilot to date, a criminal justice project in Peterborough, U.K.; early results show promise.17
Recommendation 8-19: Undertake pilot projects using Social Impact Bonds across a range of applications.
Child and Youth Mental Health
1. Commission for the Review of Social Assistance in Ontario, “A Discussion Paper: Issues and Ideas,” 2011, p. 11; R.D. Kneebone and K.G. White, “Fiscal Retrenchment and Social Assistance in Canada,” Canadian Public Policy 35 (2009), no. 1, p. 26.
2. Only the administration costs of OW will be a shared expense once OW financial and employment assistance is fully uploaded in 2018.
3. For more information, go to http://www.socialassistancereview.ca/home.
4. For OW, as of January 2011 this included 37 consolidated municipal service managers, 10 district social services administration boards and 100 First Nations.
5. R.D. Kneebone and K.G. White, op. cit., p. 33.
6. For example, a recent court decision determined that the government was violating the Ontario Human Rights Code by not allowing addictions to drugs and/or alcohol addictions as sufficient criteria to qualify a person as “a person with a disability” as defined in the ODSP legislation.
7. R. Miner, “People Without Jobs, Jobs Without People: Ontario’s Labour Market Future,” Miner and Miner Management Consultants, downloaded from http://www.collegesontario.org/research/research_reports/people-without-jobs-jobs-without-people-final.pdf.
8. M. Mendelson, K. Battle, S. Torjman and E. Lightman, “A Basic Income Plan for Canadians with Severe Disabilities,” 2010, Caledon Institute for Social Policy.
9. “Making It Work,” Final Recommendations of the MOWAT Centre Employment Insurance Task Force, 2011.
10. J. Stapleton, “Why Don’t We Want the Poor to Own Anything?” 2009, George Cedric Metcalf Charitable Foundation.
13. Services and Supports to Promote the Social Inclusion of Persons with Developmental Disabilities Act, 2008, when fully proclaimed, will replace the existing Developmental Services Act.
14. Statistics Canada, “Satellite Account of Non-Profit Institutions and Volunteering,” Catalogue no. 13-015-X, downloaded from http://www.statcan.gc.ca/pub/13-015-x/13-015-x2009000-eng.pdf.
15. Imagine Canada, “The Nonprofit and Voluntary Sector in Ontario: National Survey of Nonprofit and Voluntary Organizations Fact Sheet,” 2005, downloaded from http://library.imaginecanada.ca/files/nonprofitscan/en/nsnvo/factsheet_voluntary_sector_ontario.pdf.
17. For more information, see the Social Finance website at http://www.socialfinance.org.uk/resources/social-finance.