July Updates to 2026 Ontario Child Care and Early Years Funding

Ministry of Education
Early Years and Child Care Division

315 Front Street West, 11th Floor,
Toronto ON M7A 0B8

2026: EYCC04

To:               Consolidated Municipal Service Managers (CMSMs) and
                       District Social Services Administration Boards (DSSABs)

From:        Matthew Desrosiers, Director, Funding Branch
                       Whitney Wilson, Director, Early Years Branch
                       Early Years and Child Care Division

Date:          July 21, 2026                   

Subject:  July Updates to 2026 Ontario Child Care and Early Years Funding

Thank you for your ongoing leadership and commitment as we continue to invest and make strides in our work together to deliver affordable, accessible, inclusive and high-quality child care to Ontario’s families.

The ministry recognizes that CMSMs/DSSABs continue to play a critical role in the implementation of Canada-wide Early Learning and Child Care (CWELCC) and in support of the ministry’s engagement with the federal government, and appreciates the time and effort required to provide additional information and respond to ministry requests.

As you may be aware, on June 19, 2026, the federal government announced an additional $5.4 billion nationally over the current and next fiscal year for the CWELCC system. We will continue to engage with the federal government to advance a sustainable path forward for the CWELCC system in Ontario and remain committed to keeping CMSMs/DSSABs informed as such discussions unfold. In the meantime, this memo provides supplemental technical updates and information to support municipal planning for 2026 and beyond, including:

  • Details on the Information Technology (IT) Modernization Transformation Fund;
  • 2026 incremental allocations for EarlyON programs;
  • Wage Enhancement Grant (WEG) and Home Child Care Enhancement Grant (HCCEG) sustainability;
  • Updates on CWELCC space target monitoring and a “mini” recalibration;
  • 2025 Early Learning Child Care (ELCC) Infrastructure Fund and Start-up Grants Reporting;
  • Innovation Fund Outcomes Reporting Framework; and
  • Guideline updates to continue to improve clarity and transparency of the ministry’s guidance on child care and early years funding, as well as providing details on the IT modernization initiative.

Child Care and Early Years IT Modernization Transformation Fund

As you know, the ministry is developing a new child care and early years digital tool (“new digital tool”) as part of the child care and early years IT modernization initiative.

The ministry is providing time-limited funding to support CMSMs/DSSABs and EarlyON service providers (including Indigenous-led EarlyON Child and Family programs) with the implementation of the first release of the new digital tool.

The new digital tool will have four unique releases, released over multiple years, focusing on:

  1. EarlyON Child and Family Centres, including Indigenous-led EarlyON Child and Family programs;
  2. Child care search and application;
  3. Fee subsidy, including a fee subsidy estimator, application, and case management;
  4. Funding, contract management and financial reporting between CMSMs/DSSABs and licensed child care centres, home child care agencies and EarlyON Child and Family Centres.

Each release will be rolled out across CMSMs/DSSABs in waves, and 2026 transition funding will be provided only to CMSMs/DSSABs transitioning to the new digital tool in this calendar year; allocations are outlined in Appendix A.

The eligibility requirements for the use of this funding are outlined in a new section of the Ontario Child Care and Early Years Funding Guidelines (Chapter 3, Division 4: Child Care and Early Years IT Modernization Transformation Fund). Note: the eligibility requirements in Chapter 3, Division 4 currently reflect the first release, and eligibility will be expanded and clarified for each subsequent release, as appropriate.

Broadly speaking, this funding is to be used for administrative and implementation-related expenditures associated with CMSM/DSSAB and EarlyON service provider transition activities, including staff time for coordination and training, development of internal business processes, translation, data migration and validation, and required hardware. For some CMSMs/DSSABs, a portion of the funding has been earmarked specifically for service providers to support their transition.

The ministry will continue to provide further information and guidance as implementation progresses across CMSMs/DSSABs and through each distinct release.

Please contact ITModernization@ontario.ca if you have any questions about this new fund.

2026 Incremental Allocations for EarlyON Programs

We are pleased to provide information on new, incremental allocations for 2026 for the EarlyON program. This builds on funding announced on August 25, 2025, and provides a total of $17.95 million in new one-time funding to CMSMs/DSSABs for 2026 to help stabilize EarlyON programs and ensure continued access to high-quality early learning support for children and families.

EarlyON programs are vital to the communities they serve and provide high-quality early learning experiences for families. Through this funding, the ministry is taking additional steps to help address concerns from CMSMs/DSSABs about pressures EarlyON programs may be facing.

Please refer to Appendix B for details on incremental allocations.

Wage Enhancement Grant (WEG) and Home Child Care Enhancement Grant (HCCEG) Sustainability

In recent years, the number of instances where reported spending on WEG/HCCEG above allocations has increased significantly. Where necessary, the ministry has provided temporary funding to cover these financial pressures. However, this practice is creating a structural pressure that is likely unsustainable over the longer term, potentially requiring changes.

As stated in Chapter 3, Division 1: Local Priorities Guideline, Local Priorities – Flexibility Funding should be used to cover any additional WEG/HCCEG requirements first to avoid the need for adjustments to budget schedules.

The ministry acknowledges that CMSMs/DSSABs are key partners in the success of Ontario’s licensed child care system and recognizes the vital role that Registered Early Childhood Educators play during the critical years of a child’s development. The ministry remains committed to supporting child care professionals working in eligible centres/agencies.

Ontario will continue to engage the federal government on the future of the CWELCC system in Ontario, with workforce supports remaining a key priority. Pending the outcome of these discussions, Ontario will be considering next steps to support the sustainability of WEG/HCCEG funding.

CWELCC Space Targets

Ontario remains committed to meeting its province-wide target of 86,000 net new CWELCC spaces. To support ongoing engagement, the ministry continues to closely monitor progress towards this goal and take action in support of meeting that target. To that end, the ministry has conducted a “mini” recalibration to address issues previously identified and, as a result, three CMSMs/DSSABs will see a change in their total space targets.

CMSM/DSSAB July 2026 Recalibration Total CWELCC Space Target
City of Greater Sudbury +71 4,444
County of Simcoe +64 12,993
Regional Municipality of York -135 39,348

Corresponding funding allocations have also been updated accordingly, as shown in Appendix B. All CMSMs’/DSSABs’ space targets are shown in Appendix C. For clarity, these targets represent the total licensed CWELCC spaces that should exist in your regions once growth is complete.

2025 Early Learning Child Care (ELCC) Infrastructure Fund and Start-up Grants Reporting

In March 2025, the ministry provided ELCC Infrastructure Fund funding to support not-for-profit infrastructure projects with a goal of increasing inclusion in child care for underserved communities through the creation of new CWELCC spaces. As set out in Chapter 5: Infrastructure Guideline, CMSMs/DSSABs are required to submit a report back to the ministry for this funding.

Attached you will find the 2025 ELCC Infrastructure Fund and Start-Up Grant Report Back templates, which include a report back for both the ELCC Infrastructure Fund and Start-Up Grant. These reports will be used to support future policy development and meet federal reporting requirements.

Please complete the reporting templates and submit them to the ministry as follows:

  • Complete all tabs for the reporting period January 1, 2025, to December 31, 2025, only.
  • Submit completed reports to the ministry no later than August 21, 2026.
  • Ensure your EFIS identification number is included in the file name.
  • Submit reports via email to: earlyyears.branch@ontario.ca 

Note that this data request from the ministry is in addition to the reporting requirements set out in the Infrastructure Guideline (refer to sections 1.E and 2.F).

Innovation Fund Outcomes Reporting Framework

As outlined in section 1.C of Chapter 3, Division 2: Innovation Fund Guideline and in addition to the EFIS reporting requirements outlined in Chapter 7: EFIS Reporting Requirements, CMSMs/DSSABs will be required to submit an outcomes report related to their Innovation Fund projects/initiatives. A formal request for the outcomes report and standardized reporting template will follow in fall 2026.

The ministry may ask for information per project/initiative related to the following:

  • Overview of activities and engagement: Describe the initiatives funded through the Innovation Fund and the types of partners or stakeholders consulted or engaged in developing and delivering these efforts (e.g., quotes, examples, participant feedback/surveys, number of participants).
  • Reach and outcomes: Summarize who was supported (participant groups and scale) and highlight key outcomes observed, such as impacts on recruitment, retention, and the advancement of equity-informed workplace practices (e.g., concise qualitative/quantitative evidence, relevant metrics).

Information related to this request is being provided now to help CMSMs/DSSABs plan their data collection.

Updates to Guidelines

Updates to the Ontario Child Care and Early Years Funding Guidelines have been made to improve clarity and address outstanding issues:

  • Chapter 1 provides clarification that cost-based funding allocations may include operating capacity or contingency holdbacks. To confirm, there are no cost-based funding holdbacks for 2026.
  • Chapter 2, Division 2 provides additional clarification on the roles of overseeing and secondary CMSMs/DSSABs as they relate to funding active homes, including:
    • definitions for “new active home”, “overseeing” and “secondary” CMSMs/DSSABs;
    • clarification that active homes within secondary CMSMs/DSSABs should continue to receive growth top-up until funding responsibility is transferred to the overseeing CMSM/DSSAB after an updated specified date; and,
    • clarification for secondary CMSMs/DSSABs to inform overseeing CMSMs/DSSABs on both benchmark and growth top-up amounts paid to affected agencies.
  • Chapter 2, Division 2 provides clarifications related to in-year adjustments to Cost-Based Funding Allocations, highlighting that all such adjustments must be done on a go-forward basis, including those stemming from corrections in respect of past years.

Updates to the guidelines have also been made to outline the program parameters and requirements related to the IT modernization transformation initiative:

  • Chapter 1 updates to reflect the implications of release of the new digital tool on administration funding.
  • *New* Chapter 3, Division 4 outlines the details of the IT Modernization Transformation Fund (See above).
  • Chapter 6 updates to reflect the use of the new digital tool for EarlyON programs and services.
  • Chapter 7 updates to outline the reporting requirements of the IT Modernization Transformation Fund.

All updated guidelines will be available on the Funding Guidelines webpage.

Next Steps

To ensure alignment with this update, Transfer Payment Agreements for 2026 will be amended and shared with affected CMSMs/DSSABs. These amendments will reflect the latest changes outlined in this memo. Amended agreements and corresponding payments based on these updates are expected to follow in the coming months.

We want to reiterate our sincerest appreciation for your continued partnership as we work towards strengthening child care and early years programs and services in Ontario.

 

Sincerely,

Original signed by:

 

Matthew DesRosiers                                                           Whitney Wilson
Director, Funding Branch                                                    Director, Early Years Branch

cc: Holly Moran, Assistant Deputy Minister, Early Years and Child Care Division
      Karen Puhlmann, Director, Child Care Branch

Appendix A: 2026 Early Years IT Modernization Transformation Fund Allocations

Appendix B: 2026 Total Allocations (Revised July 2026)

Appendix C: Revised CWELCC Space Targets – July 2026