social assistance rate restructuring and the ontario child benefit prepared by: cindy wilkey, joanne...
TRANSCRIPT
Social Assistance Rate Restructuring and the
Ontario Child Benefit
Prepared by: Cindy Wilkey, JoAnne Frenschkowski, Jennefer Laidley (May 2008)
Income Security Advocacy Centrewww.incomesecurity.org
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
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)
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
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
The Ontario Child Benefit: What is it and who will benefit?
o Announced in the 2007 provincial budget
o Directed at low-income families with children under age 18
o One-time “down payment” on the OCB made in July 2007
o Monthly OCB payments will start as of July 2008
o OCB eligibility piggy-backs on NCBS eligibility
o Like the CCTB and NCBS, the OCB amount will be based on the previous year’s income
o OCB payment will come as part of the CCTB/NCBS cheque paid on the 20th of the month
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.
The Ontario Child Benefit: Eligibility Criteria
In order to be eligible for the OCB:o 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,
o Must file a tax return; and,
o Must be eligible and register for the Canada Child Tax Benefit; and,
o Must be a resident of Ontario; and
o Must have status in Canada.
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/ontariobudgets/2007/ocb/calc.html
OCB and net family income2008 OCB Amounts (based on net family income and # of children)
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
under$20,000
$22,500 $25,000 $27,500 $30,000 $32,500 $35,000 $37,500 $40,000 $42,500
2007 Net Family Income
Am
ount
of O
CB
OCB for family w/1 child
OCB for family w/2 children
OCB for family w/3 children
OCB Benefits:Calculating “Net Family Income”
Families determine their net family income by calculating their total income, which includes:
o Social assistance income (reported in T5 form)o Earnings from employmento 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.
OCB Income Eligibility: Reportable Social Assistance IncomeIncome included in OW/ODSP T5 includes:
o Basic Needs & Shelter allowanceso Fuelo Back-to-School & Winter Clothing allowanceso Special Diet allowanceo Northern allowanceo ODSP work-related benefitso Personal Needs allowance (OW)o Transition Child Benefit (new OW/ODSP benefit)
But does not include:o Assistance for Children with Severe Disabilities
(ACSD)o Temporary care allowanceo ODB, dental or vision care benefits, hearing aids,
wheelchairs & repairs, ADP approved itemso Excess repayments/reimbursements
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
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.
Rate Restructuring
Three moves: Rates “integrated” with NCBS and
OCB
Rates also “rationalized” Increase “internal consistency”
Reduction and eventual elimination of “older child differential”
Rate Rationalization /Reduction of Older Child Differential
Rate Rationalization: Consistent formula for Basic Needs:
Reduction of Older Child differential
Single Parents
Single Adult Rate
+ “Single Parent
Supplement”
+ “Older Child Supplement”
= Total
OW $211 $144 $17 $372
ODSP $554 $143 $59 $756
Couples Couples
Rate
+ “Older Child Supplement”
= Total
OW $420 - $17 $437
ODSP $821 - $59 $880
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.
* 1 child under 13,
Maximum Monthly Rates In June 2008, with annualized allowances and existing NCBS deduction
Ontario Works Cheque Child Benefit Cheque
+ Yearly Benefits
Case Type Basic Needs
+ Max Shelter
less NCBS = Total CCTB +NCBS = Total
MONTHLY CHEQUE TOTAL B2S/WC
Allowance
Adjusted Income* Nov 2007
Single Parent + 1 Child * $480 $549 $122 $907 $107 $166 $273 $1,180 $15 $1,195
Single Parent + 2 Children** $615 $595 $226 $984 $214 $312 $526 $1,510 $34 $1,544
Couple + 1 Child* $512 $595 $122 $985 $107 $166 $273 $1,258 $15 $1,273
ODSP Cheque Child Benefit Cheque + Annualized
Benefits
Case Type Basic Needs
+ Max Shelter
less NCBS = Total CCTB +NCBS + Total
MONTHLY CHEQUE TOTAL B2S/WC
Allowance
TOTAL
Single Parent + 1 Child*
$829 $700 $122 $1,407 $107 $166 $273 $1,681 $15 $1,695
Single Parent + 2 Children**
$1,001 $759 $226 $1,534 $214 $312 $526 $2,060 $34 $2,094
Couple + 1 Child *
$940 $759 $122 $1,577 $107 $166 $273 $1,850 $15 $1,865
*Adjusted to include
the value of the Back to
School Allowance
& the Winter
Clothing Allowance calculated
on a monthly
basis
Maximum Monthly Rates as of July/August 2008, with Ontario Child Benefit
Ontario Works Cheque Child Benefit Cheque
Case Type Basic Needs
+ Max Shelter
= Total CCTB + NCBS +OCB =Total
MONTHLY CHEQUE TOTAL
Change in monthly cheques
Net change in monthly
income after Restructuring*
Single Parent + 1 Child*
$355 $549 $904 $107 $166 $50 $323 $1,227 + $47 + $32 Single Parent + 2 Children**
$372 $595 $967 $214 $312 $100 $626 $1,593 + $83 + $49 Couple + 1 Child *
$420 $595 $1,015 $107 $166 $50 $323 $1,338 + $80 + $65
ODSP Cheque Child Benefit Cheque
Case Type Basic Needs
+ Max Shelter
= Total CCTB + NCBS +OCB =Total
MONTHLY CHEQUE TOTAL
Change in monthly cheques
Net change in monthly
income after Restructuring*
Single Parent + 1 Child* $697 $700 $1,397 $107 $166 $50 $323 $1,720 + $39 + $25 Single Parent + 2 Children** $756 $759 $1,515 $214 $312 $100 $626 $2,141 + $81 + $47 Couple + 1 Child * $821 $759 $1,580 $107 $166 $50 $323 $1,903 + $53 + $38
*Net change takes into account the loss of the Back to School and Winter Clothing Allowances The OCB down-payment of $250 in July 2007 delivered the equivalent of $21 of this net increase
Income Trends for Families on Social Assistance – 1989-2007Adapted from National Council of Welfare, Welfare Incomes 2005
Total Maximum Family Income on Social Assistance (Ontario Works), 1989 to 2007, Lone Parent, One Child
under 6, (2007 dollars) and After-Tax Low Income Cut-Off$1
6,79
6
$18,
822
$19,
281
$19,
633
$19,
604
$19,
614
$18,
193
$14,
940
$14,
731
$14,
224
$13,
515
$12,
950
$12,
365
$11,
923
$11,
492
$11,
469
$11,
247
$11,
235
$11,
458
$1,7
75 $2,0
50
$2,3
74
$2,2
66
$2,2
49
$2,2
56
$2,2
07
$2,1
72
$2,1
36
$2,4
85
$2,9
08
$3,1
11
$3,3
77
$3,5
22
$3,5
86
$3,6
87
$3,7
95
$4,5
19
$5,0
36
LICO 2007, $21,851
$0
$4,000
$8,000
$12,000
$16,000
$20,000
$24,000
'89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07
Year
To
tal A
nn
ua
l In
co
me
Federal Child Benefits and GST Credit (UCCB begins July 2006)
Provincial Social Assistance and Tax Credits (Ontario Child Benefit begins July 2007)
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.
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.
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
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.
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
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.
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.
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)
*approximation for comparison purposes
Family #1 OW single parent
June 08 August 08
OW Basic needs + shelter 1,022 984
BTS/WC 38 0
OCB 0 100
CCTBBB* 214 214
NCBS* 312 312
TCB 0 0
Total income 1,586 1,610Change +/- + $24
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
Family #2 OW – refugee claimant
Transition Child Benefit calculation:
$172 X # of children $344less: OCB - $ 0 less: NCBS-$43.76-$41.99 - $ 0
Monthly TCB benefit = $344
Family #2: OW – refugee claimant
June 08 August 08
OW Basic needs + shelter 1,248 984
BTS/WC 38 0
OCB 0 0
CCTBBB 0 0
NCBS 0 0
TCB 0 344
Total income 1,286 1,328Change +/- + $42
Family #3 ODSP – no outside income
Couple with 2 children
o ODSP only - no outside incomeo 2007 net family income= $23,590
o NCBS for June 2008 = $260 (out of $312)
o OCB for June 2008 = $76 (out of $100)
o TCB in August 2008 = $46
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
Family #3 ODSP – no outside income
June 08 August 08
ODSP Basic needs + shelter 1,826 1,764
BTS/WC 38 0
OCB 0 76
CCTBBB 214 214
NCBS 260 260
TCB 0 46
Total income 2,338 2,360Change + $22
Family #4 ODSP + max special diet
Couple with 2 children
o ODSP + $250 special diet for each parento Net family income = $29,590
o NCBS for July 2008 = $145o OCB for July 2008 = $ 36o TCB for Aug 2008 = $201
Family #4 ODSP + max special diet
Transition Child Benefit calculation:
$148 X # of children $ 296 less: OCB - $ 36less: NCBS-$43.76-$41.99 - $ 59
Monthly TCB benefit = $201
Family #4 ODSP + max special diet
June 08 August 08
ODSP Basic needs + shelter 1,940 1,764
BTS/WC 38 0
OCB 0 36
CCTBBB 214 214
NCBS 145 145
TCB 201
Total Income 2,337 2,360Change +/- + $23
Discussion of other examples
o We are looking for scenarios where the effectiveness of the Transition Child Benefit can be tested.
o Can you think of others?
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