Social Assistance Rate Restructuring and the Ontario Child Benefit

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

• Structural change 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

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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 years 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.
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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 dollar of
  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/ontariobu
  dgets/2007/ocb/calc.html

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OCB and net family income
11
OCB BenefitsCalculating 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.

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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

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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

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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.

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Rate Restructuring

• Three moves
• Rates integrated with NCBS and OCB
• Rates also rationalized
• Increase internal consistency
• Reduction and eventual elimination of older
  child differential

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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

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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.

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(No Transcript)
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Income Trends for Families on Social Assistance
1989-2007Adapted from National Council of
Welfare, Welfare Incomes 2005
21
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.

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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.

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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

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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.

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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

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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 dont have yet.
  Detailed Policy Directives will be issued by OW
  and ODSP this spring.

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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.

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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)

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Family 1 OW single parent
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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

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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

32
Family 2 OW refugee claimant
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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

34
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

35
Family 3 ODSP no outside income
36
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

37
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

38
Family 4 ODSP max special diet
39
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?

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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 Premiers 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