Province gives little explanation for installing supervisor to run Peterborough’s children’s aid society

Ontario Minister of Children, Community and Social Services Michael Parsa has appointed a supervisor to run the Kawartha Haliburton Children’s Aid Society (KHCAS), saying he does not “have confidence” in the society’s ability to address its “growing deficit and operational issues.”

But Parsa and his ministry have offered little detail about what “operational issues” led to the decision to install Rosaleen Cutler as interim supervisor of Peterborough-based KHCAS last Wednesday, and why the ministry rejected the agency’s own plan to reduce its deficit. Cutler, who recently served as interim CEO of the York Region Children’s Aid Society, will “oversee and operate” the society for up to one year, according to the statement.

Cutler will take over from KHCAS’s board of directors and executive director Jennifer McLauchlan to “reinstate good governance and fiscal sustainability” at the society, Parsa’s statement said.

Like many children’s aid societies across the province, KHCAS is currently facing a deficit amid what child protection leaders have said is inadequate provincial funding. 

KHCAS’s board of directors resigned en masse on Wednesday after learning of the minister’s decision the day before. In a brief statement, the board said all members had tendered their resignations “with profound sadness.”

Multiple reviews of KHCAS in recent years have “identified a number of significant risks related to the overall operations and financial management of the society,” according to Parsa’s statement. 

The ministry declined to provide information about what those “significant risks” were when asked by Peterborough Currents. An emailed response from the ministry reiterated that it “no longer has confidence” in KHCAS. According to the ministry, Parsa appointed Cutler “after considering” the society’s response to the ministry’s concerns.

Earlier this month, Peterborough Currents reported that KHCAS  — which serves Peterborough city and county, the City of Kawartha Lakes and Haliburton County – recently resorted to placing two teens in a hotel due to a shortage of licensed homes for children in care.

The placement of children in unlicensed settings like hotels, offices and trailers is a province-wide problem that sparked the Ford government to launch an audit of children’s aid societies last month. Ontario’s ombudsman is also investigating the practice.

Parsa didn’t raise any specific concerns about KHCAS’s use of unlicensed settings, but his statement said the province requires children’s aid societies to place kids and teens in settings that are “safe, appropriate and meet the child’s needs.”

Core provincial funding for KHCAS has trended downward during Ford government’s tenure

KHCAS’s audited financial statements show it has run several deficits in recent years. The society has blamed last year’s deficit on “years of funding reductions” by the provincial government and rising costs to place children in care.

The financial statements show base provincial funding for KHCAS has trended downward since 2017, the year before the Ford government took office. Annual provincial funding for KHCAS hit a high of $24 million in 2016/17 and has decreased every year since then, reaching a low of $21.3 million in 2023/24, according to the statements.

However, the province has provided KHCAS with additional one-time funding to eliminate the agency’s deficit on three occasions since 2020, the financial statements show. Parsa referred to those one-time funding boosts in his statement, which noted the province has given KHCAS $4.6 million “over and above” the society’s annual funding allocations since 2020.

Provincial funding for KHCAS, by year

Even with a one-time funding boost worth $2.7 million in 2023/24, the society ended its most recent fiscal year with a deficit of nearly $2.9 million, according to the statements.

KHCAS devised a multi-year deficit management plan earlier this year that aimed to eventually reduce spending by $7.6 million. One plank of that plan was the elimination of 25 staff by next year, as the agency announced in July. At the time, the union representing KHCAS staff said the layoffs would put children at “serious risk.”

Speaking to Trent Radio in July, local Progressive Conservative MPP Dave Smith said the province had made recommendations to KHCAS on how to address the deficit without resorting to layoffs. But he didn’t provide any clarity on what those recommendations were. “I have not seen the recommendations myself,” said Smith, who represents the riding of Peterborough-Kawartha.

KHCAS board member Lynne Buehler told Currents at the time that implementing the province’s recommendations may result in cost savings. But in some cases realizing any savings would require additional upfront investment, as with a recommendation to put more resources into recruiting foster parents in order to reduce residential care costs, she said.

The Ministry of Children, Community and Social Services told Currents in a statement earlier this month that funding for children’s aid societies has risen by $129 million, or nine percent, in the last decade. Meanwhile, the number of children and youth in care has decreased by 30 percent and staffing at children’s aid societies has increased by approximately three percent, the statement said.

In a letter to Parsa sent earlier this month, the union representing KHCAS staff acknowledged that the number of children and teens in care has decreased. But costs are still rising, according to the letter, because the children coming into care have increasingly complex needs — a result of the lingering impacts of the COVID-19 pandemic and “increases in substance use, homelessness, poverty [and] mental health challenges.”

Currents requested an interview with Smith last Thursday but he did not reply.

KHCAS spending on salaries and benefits, by year

The deficit management plan KHCAS presented to the ministry in recent months was “aggressive, but responsible and achievable,” Buehler told Currents last week.

But in the end, the ministry rejected that plan and appointed Cutler to temporarily run the society instead, Buehler wrote by email.

“We are so very sad and we worked so hard to avoid this,” Buehler wrote. “The vast majority of the society's budget is either payroll or the care that staff have deemed necessary for kids in our communities. The only way to cut the expenditures is by either reducing staffing or care. Both have consequences."

A breakdown of KHCAS's expenses in 2023/24

Executive director “has been doing the best that she can,” according to union president

KHCAS child protection worker Ruby Taylor said she suspects the ministry rejected the deficit reduction plan because the board had not been willing to make the level of spending cuts the province expected.

“I would have to guess that it was … the board saying we cannot provide quality service in this community by cutting any more than we've done,” said Taylor, who is also president of OPSEU Local 334, which represents KHCAS staff.

The statement from KHCAS’s board of directors said its members “can no longer meet their fiduciary duty” after the appointment of a supervisor.

“The board worked diligently to avert this from happening; however, the difficulties we experienced are echoed across the sector and were not repairable within the structures and guidelines we must work within,” it said.

“Although there will be difficult days ahead, we know that the staff and leadership team at Kawartha-Haliburton Children’s Aid Society will continue to provide excellent care and service to the children, youth and families in our communities,” the board’s statement continued.

While Taylor acknowledged that the union doesn’t “always see eye-to-eye” with KHCAS management, she said the agency’s deficit is not the result of “mismanagement” by the board or the executive director.

Taylor said she believes McLauchlan, KHCAS’s executive director, “has been doing the best that she can.”

“It is an impossible task for them to manage and to provide good quality service in our communities with the money that is provided to us” by the province, she added.

Lack of licensed group homes and foster homes is driving up costs

Taylor said provincial funding for child protection has not been enough to keep pace with dramatic increases in the cost of residential care for kids and teens in recent years. 

A province-wide shortage of licensed group homes, treatment centres and foster homes means KHCAS has had to place some kids and teens in unlicensed homes that charge $60,000 or more per month per child, Taylor said. 

KHCAS “would never choose” to place kids and teens in these expensive, unlicensed settings if the agency had other options, she said.

It’s much less expensive to place children with foster parents, but fewer people have been signing up to take on that responsibility in recent years, she said. A decade ago, there were 180 foster families in the region KHCAS serves. Now there are only 30, she said.

The amount the agency paid to board children and teens in group homes, treatment facilities and foster homes rose by 48 percent, or more than $3 million, in the 2023/2024 fiscal year compared to the year before, according to KHCAS’s financial statements.

The province is “fully aware of the placement crises that we're in,” Taylor said.

Residential care expenses incurred by KHCAS, by year

The ministry’s response to Currents did not say whether the appointment of the supervisor to run KHCAS was part of the Ford government’s ongoing review and audit of children’s aid societies.

That review “will allow us to ensure societies remain focused on providing high-quality services and supports as well as the safety of children and youth receiving services,” the email said.