Alberta’s Affordability Agreement Funding Cap: Impact on For-Profit Child Care Providers

Rising costs of living create challenges for, especially, families with young children. To address child care accessibility and affordability, the Alberta and the federal government entered into the Canada-Wide Early Learning and Child Care Plan’s Affordability Grant (the “Affordability Agreement”), a program that benefits parents, and also impacts business owners and child care providers.

This article will provide context for the Affordability Agreement and serve as a high-level guide for child care providers on how to receive funding under the Affordability Agreement based on recent legislative and policy changes.

Background

The Canada-Wide Early Learning and Child Care Plan (“CAC”) was announced by the federal government in April 2021 and had the broad aim of building a nationwide child care system that focused on affordability, accessibility, quality, and inclusivity. The federal government committed $30 billion over 5 years in support of these goals nationwide.

After significant negotiations, the Affordability Agreement was signed between the Alberta and the federal government in November 2021. This agreement secured $3.8 billion over five years and allowed Alberta greater flexibility with its funding to accommodate both for-profit and not-for-profit (NFP) providers.

The purpose of the Affordability Agreement

Under the Affordability Agreement^[1], Alberta committed to:

• Reducing average child care fees to $10/day by 2026
• Creating 42,000 new licensed spaces by 2026
• Ensuring inclusivity and support for children with diverse needs
• Investing in the early childhood educator workforce

The Affordability Agreement was meant to specifically promote the development of not-for-profit programs in Alberta rather than promoting growth in the predominant private child care sector. This funding was implemented under the Affordability Grant and the Child Care Subsidy. The Affordability Grant provides funding directly to providers to reduce parent fees while the Child Care Subsidy provides income-tested support directly to families.

How to receive a Grant

To operate a child care establishment in Alberta, a facility-based program license must be obtained in accordance with the Early Learning and Child Care Act.^[2] Accordingly, an NFP child care agency must secure the appropriate licensing and ensure that each location complies with all relevant legislation. Once licensed and in an agreement with the Government of Alberta, recipients must, among other things:

• comply with all responsibilities and requirements of the Affordability Grant Funding Guide^[3] and the Affordability Grant Financial Reporting Guide^[4]
• not claiming funding for Child Care Spaces^[5] over and above their Funded Licensed Capacity^[6]
• comply with all provisions of its agreement with the Government of Alberta
• only use the funding received pursuant to the agreement by operating the “Program” - which is the licensed facility-based program (the child care facility)

Effects on Not-For-Profit and For-Profit Programs

The Affordability Grant provides funding for the development of not-for-profit and for-profit child care programs. As of May 15^th, 2025, for-profit child care programs reached the funding cap and are no longer eligible for Affordability Grant funding, subject to the following exceptions:

• An existing program already has a signed 2025-26 Affordability Agreement
• An existing program applies to increase their number of spaces through a licence variance (with demonstrated need and a good compliance history)
• A licensing applicant is in the final stage of the licensing process, having received an email confirming their application is under final review and/or is with the regional officer for inspection as of May 15, 2025
• A newly licensed program opens on or before September 30, 2025, in the high-waitlist communities of Grande Prairie, Red Deer, Lethbridge, Fort McMurray and Canmore/Banff
• A program has a signed Child Care Space Creation Grant agreement and opens anywhere in Alberta within the designated period set out in their grant agreement^[7]

As a result of this cut to for-profit funding, several programs that were depending on this funding have had to pivot their programs into not-for-profit companies to retain the necessary funding under the Affordability Grant.

What does this mean?

For-profit child care providers that do not meet any of the listed exceptions above are unlikely to remain eligible for funding under the Affordability Agreement. These providers may need to consider restructuring as not-for-profit corporations in order to access future funding.

Our Corporate Commercial Law Team advises child care providers on funding eligibility and restructuring options under the Affordability Agreement. Please contact us for guidance tailored to your circumstances.