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Social Assistance Rate Restructuring and the Ontario Child Benefit

Social Assistance Rate Restructuring and the Ontario Child Benefit. Prepared by: Cindy Wilkey, JoAnne Frenschkowski, Jennefer Laidley (May 2008) Income Security Advocacy Centre www.incomesecurity.org. Workshop Overview. Structural change overview

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Social Assistance Rate Restructuring and the Ontario Child Benefit

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  1. Social Assistance Rate Restructuring and the Ontario Child Benefit Prepared by: Cindy Wilkey, JoAnne Frenschkowski, Jennefer Laidley (May 2008) Income Security Advocacy Centre www.incomesecurity.org

  2. Workshop Overview • Structuralchange overview • How the Ontario Child Benefit works • How social assistance rates will be affected by the Ontario Child Benefit • A new benefit: Transition Child Benefit • Some family income examples

  3. Structural Change: History • 1988 – “Transitions” report • 1997 - Federal / provincial / territorial agreement on NCB and NCBS • Ontario Child Benefit (OCB) recommended in many social assistance redesign initiatives: • Ontario Municipal Social Services Association • Caledon Institute / John Stapleton • “Transitions Revisited” • Toronto Daily Bread Food Bank • Toronto Social Services Action Plan • MISWAA (Modernizing Income Security for Working-Age Adults)

  4. Structural Change: Theory • Social assistance can be a barrier to economic independence • Social assistance is stigmatizing - Tax delivered benefits move income supports beyond stigma; think of Old Age Security • Same approach should be used for child benefits: • Income tax delivered, based on family income • Portable: available regardless of source of income • Non-stigmatizing • Reliable: not affected by parental eligibility for social assistance • BUT: less responsive to changes than social assistance

  5. Structural Change: Results • Means a gradual move of benefits for children out of social assistance and into Ontario Child Benefit • From social assistance  tax-delivered, income-based benefit • Requires SA rate restructuring & integration • Other forces at play: • Move to simplify SA rules • Matthews Report / OMSSA • Move to look more comprehensively at poverty • MISWAA/Ontario Poverty Reduction Strategy

  6. The Ontario Child Benefit: What is it and who will benefit? • Announced in the 2007 provincial budget • Directed at low-income families with children under age 18 • One-time “down payment” on the OCB made in July 2007 • Monthly OCB payments will start as of July 2008 • OCB eligibility piggy-backs on NCBS eligibility • Like the CCTB and NCBS, the OCB amount will be based on the previous year’s income • OCB payment will come as part of the CCTB/NCBS cheque paid on the 20th of the month

  7. Maximum OCB amounts: July 2008-July 2011 By July 2011, families on social assistance should see a net benefit of at least $50 per child per month as a result of the OCB.

  8. The Ontario Child Benefit: Eligibility Criteria In order to be eligible for the OCB: • Must be the primary caregiver (single parent, spouse, common-law partner) of one or more children under age 18, in a low-income family; and, • Must file a tax return; and, • Must be eligible and register for the Canada Child Tax Benefit; and, • Must be a resident of Ontario; and • Must have status in Canada.

  9. The Ontario Child Benefit: Who gets the Maximum? OCB benefits ↓ as net family income ↑ • In July 2008, eligible families will receive the maximum OCB if their net family income ≤ $20,000. • The OCB will be reduced by 8¢ for every dollarof net family income over $20,000. • The Ontario Ministry of Finance on-line calculator can help you estimate your benefit http://www.fin.gov.on.ca/english/budget/ontariobudgets/2007/ocb/calc.html

  10. OCB and net family income

  11. OCB Benefits:Calculating “Net Family Income” Families determine their net family income by calculating their total income, which includes: • Social assistance income (reported in T5 form) • Earnings from employment • Other income (CPP, EI, WBC, UCCB benefits) Then, they make any deductions to obtain net income. Spouses must add their respective net incomes to obtain net family income.

  12. OCB Income Eligibility: Reportable Social Assistance Income Income included in OW/ODSP T5 includes: • Basic Needs & Shelter allowances • Fuel • Back-to-School & Winter Clothing allowances • Special Diet allowance • Northern allowance • ODSP work-related benefits • Personal Needs allowance (OW) • Transition Child Benefit (new OW/ODSP benefit) But does not include: • Assistance for Children with Severe Disabilities (ACSD) • Temporary care allowance • ODB, dental or vision care benefits, hearing aids, wheelchairs & repairs, ADP approved items • Excess repayments/reimbursements

  13. Joint Custody and the OCB • Eligibility for the OCB is tied to the CCTB/NCBS rules • Parents with joint custody get the CCTB/NCBS in alternating 6 month periods, if the Canada Revenue Agency is aware of the joint custody arrangement. • OCB payments are expected to follow the same payment schedule

  14. Rate Restructuring • When? July/August 2008 • What? • Only rates for families with dependent children under 18 • no change for singles/couples without children, children over 18 • Basic Needs only • Shelter allowance unchanged • Back-to-School and Winter Clothing Allowances discontinued as a lump sum: • delivered monthly as part of the OCB.

  15. Rate Restructuring Three moves: • Rates “integrated” with NCBS and OCB • Rates also “rationalized” • Increase “internal consistency” • Reduction and eventual elimination of “older child differential”

  16. Rate Integration with OCB / NCBS

  17. Rate Rationalization /Reduction of Older Child Differential • Rate Rationalization: • Consistent formula for Basic Needs: • Reduction of Older Child differential

  18. Rate Integration with the NCBS/OCB: What is the effect on Family Income? • Government committed that: • Rate restructuring will not leave any family on OW or ODSP worse off than they were before, taking into account the 2007 OCB down payment. • Do the new rates meet this commitment? • For most families, yes. • But after restructuring some families fall short: • In 2008/9, single parents on OW with older children will end up behind the $21 benchmark increase set by the 2007 down payment. • But, by 2011, they should reach the same $50 net new income target as other families.

  19. Income Trends for Families on Social Assistance – 1989-2007Adapted from National Council of Welfare, Welfare Incomes 2005

  20. Transition Child Benefit • New Benefit for both OW and ODSP • s.58.3 OW Reg 134/98; s.45.3 ODSP Reg 222/98 • Necessary complement to rate restructuring: • Basic Needs reduction is based on receipt of maximum NCBS and maximum OCB • For a variety of reasons, there are many families who do not receive the maximum NCBS/OCB – they would be worse off after restructuring without TCB.

  21. Transition Child Benefit • Maximum amount of TCB • OW $172 • ODSP $148 • The formula for calculating actual benefit is in the regulations. • Intended to cover the difference between the existing SA rate structure and the restructured rates.

  22. Transition Child Benefit • Who can expect to be eligible: • Recipient (or spouse) who is not getting any OCB or NCBS where s/he: • Did not file an income tax return for the previous taxation year; • Is a newcomer to Canada (i.e. refugee claimant); • Has recently moved to Ontario; • Has a newborn child; • Experienced a catastrophic income change; • Is facing administrative delays. • Recipient/spouse who gets less than the maximum amount of the OCB for at least one dependent child. • Usually because income is above the cutoff

  23. Transition Child Benefit Those not eligible: • A child receiving Temporary Care Assistance under Ontario Works; • A dependent of a dependent under Ontario Works; • Persons not on social assistance in their own right and getting only ACSD on behalf of a child; • Residents of interval and transition homes, once they are no longer eligible for the equivalent to basic needs and shelter; and • Residents of emergency hostels.

  24. Transition Child Benefit Additional Eligibility requirements: • Parents potentially eligible for NCBS/OCB must make reasonable efforts to access the benefit - • will be given up to 4 months to establish eligibility for NCBS/OCB • Discretion to extend beyond 4 months, if continuing to make reasonable efforts • TCB will have to be repaid, if retroactive NCBS/OCB benefits received. • Recent regulation ensures that retro payment cannot reduce income below $2.50

  25. Transition Child Benefit: Joint Custody • Recent Case: Oliveira v. Ontario, 2008 ONCA 123 • In a joint custody situation, parent entitled to: • 100% shelter allowance for children each month, • may be entitled to full drug and dental each month, • only entitled to 50% basic needs for the children • Where parent is only getting CCTB/NCBS/OCB for 6 months of the year: • Will the parent be entitled to the Transition Child Benefit for the other 6 months? • How will that eligibility be determined? Data sharing with CRA? Recipient reporting? • There are many answers we don’t have yet. Detailed Policy Directives will be issued by OW and ODSP this spring.

  26. Rate restructuring: Easy and Difficult Case Examples • The following examples explore how the benefits we have been discussing interact in different family income scenarios. • Please note that the actual figures used are estimates for discussion purposes only. For example, • Very simplified OW/ODSP incomes have been used for ease of comparison. • To illustrate the net income effect due to the OCB and rate restructuring, we have held the CCTB/NCBS payments at 2007/8 levels in both the before and after restructuring examples.

  27. Family #1 OW single parent Single mother with 2 children over 13 OW only – no outside income • 2007 net family income = $12,840 (from line 236 on her Income Tax Return – this is not total income, it is the income figure that is used to calculate the amount of the NCBS and the OCB) • NCBS for July 2008 = $312 • OCB for July 2008 = $100 • TCB for August 2008 = $ 0 (Ineligible because receiving max NCBS and OCB)

  28. Family #1 OW single parent *approximation for comparison purposes

  29. Family #2 OW – refugee claimant Single mother with 2 children, refugee claimant, not landed • OW only – no outside income • 2007 net family income = $14,562 • NCBS in July 2008 = $0 (not eligible) • OCB in July = $0 (not eligible) • TCB in August 2008= $344

  30. Family #2 OW – refugee claimant Transition Child Benefit calculation: $172 X # of children $344 less: OCB - $ 0 less: NCBS-$43.76-$41.99 - $ 0 Monthly TCB benefit = $344

  31. Family #2: OW – refugee claimant

  32. Family #3 ODSP – no outside income Couple with 2 children • ODSP only- no outside income • 2007 net family income= $23,590 • NCBS for June 2008 = $260 (out of $312) • OCB for June 2008 = $76 (out of $100) • TCB in August 2008 = $46

  33. Family #3 ODSP– no outside income Transition Child Benefit calculation: $148 X # of children $296 less: OCB - $ 76 less: NCBS-$43.76-$41.99 - $174 Monthly TCB benefit = $ 46

  34. Family #3 ODSP – no outside income

  35. Family #4 ODSP +max special diet Couple with 2 children • ODSP + $250 special diet for each parent • Net family income = $29,590 • NCBS for July 2008 = $145 • OCB for July 2008 = $ 36 • TCB for Aug 2008 = $201

  36. Family #4 ODSP +max special diet Transition Child Benefit calculation: $148 X # of children $ 296 less: OCB - $ 36 less: NCBS-$43.76-$41.99 - $ 59 Monthly TCB benefit = $201

  37. Family #4 ODSP +max special diet

  38. Discussion of other examples • We are looking for scenarios where the effectiveness of the Transition Child Benefit can be tested. • Can you think of others?

  39. What Next: • Information and advocacy in the short run: • Political pressure building to restore the Back-to-School and Winter Clothing Allowances. • Municipal and School Board are passing resolutions • Some Municipalities are considering a special benefit to be paid this year to ease the transition in the first year. • ISAC will continue to work with the various Ministries and the Premier’s office around identified problems • MCSS Communication Strategy: • ODSP and OW staff have received training • Cheque inserts have gone out to ODSP and OW recipients • Some OW/ODSP offices are providing training to local agencies • Some OW/ODSP offices have started meeting with clients to explain the transition. There may also be public information sessions in some municipalities. In the longer term, advocacy groups are looking for: • faster implementation of the OCB, • increases to the OCB maximum and • a larger net OCB for families on social assistance

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