City Sitting on Poverty Relief Funds
September 9, 2005

An internal audit has revealed the city has over $600,000 in unspent monies that are supposed to be used for alleviating severe child poverty in Hamilton. Most of the monies have been sitting idle for several years and the failure to use them violates provincial rules.

The dollars originate with the National Child Benefit program that provides between $98 and $121 a month for each child in very low income families. The full payment is made to families with annual incomes below $22,615, with partial benefits available up to the $35,000 level.

This federal government program was launched in 1998 to reduce child poverty, but the Mike Harris government decreed the payments were "unearned income" and deducted them dollar for dollar from Ontario Works (OW) and Ontario Disability Support Program (ODSP) payments. In 2004, this policy clawed back $250 million from Ontario's poorest families including about $13 million from low-income Hamiltonians.

Twenty percent of these clawed back monies - about $2.6 million a year - are provided to city council which is supposed to use them for programs targetted to low-income families. But Ann Pekaruk, the city's internal auditor, told councillors this week that there's more than $600,000 in unspent funds in city coffers. She said most of the excess dates back to 2001 "when there were no staff devoted to this".

Pekaruk pointed out that "carryovers greater than 10% of the annual funds received are not allowed. Yet the City has exceeded this level for several years." She warned that the province "could withhold further funding until the carryover amount drops to the acceptable level or even ask that the excess be returned."

Flamborough councillor Dave Braden asked staff to explain " how is it we are not spending money we have access to?" Jo-Anne Priel, the head of the social and public health services department agreed that it's "not good we're not spending as we should be, because there's lots of need".

Approximately 22% of Hamiltonians live in poverty. At least 6300 families including about 10,500 children subsist on Ontario Works welfare, and an additional 1,000 families rely on ODSP.

The revelations of the unspent monies come in the wake of a multi-pronged campaign by social service groups who are pressing the province to stop the clawbacks, and asking the city to find the $2.6 million to continue the programs now funded locally by clawback funds. They are also asking the federal government to make provincial clawbacks illegal and to increase the child benefit grants.

City council went on record in August "that the Province of Ontario be requested to stop the clawback of the National Child Tax Benefit Supplement and ensure this federal money reaches all low-income families in Ontario". This step was promised by Premier McGuinty in last year's election campaign.

However, the cancellation could put in jeopardy about 40 programs that the city currently funds out of the clawback monies. In June, councillors asked staff "to explore funding the City of Hamilton 's portion of the National Child Benefit Clawback deficit, on an annual basis, through Hydro Dividend funds, commencing in 2006, to an upset limit of 2.7 million dollars per annum."

The city received $18.2 million this year from Hamilton Utilities Corporation, the city-owned company that runs Hamilton Hydro. However, city treasurer Joe Rinaldo responded in August that these were one-time monies and therefore not appropriate to replace the clawback monies. Councillors subsequently asked staff to try and find monies in the 2006 budget.

Mayor Di Ianni argued there was a "compelling case" to end the clawbacks which he said " penalizes - and I don't think that's too strong of a word, but it does - those individuals on assistance". He said he hoped that staff "can find some formula that phases things in I think it might be acceptable to council. "

Background information about the clawback issue can be found on the CATCH website at http://hamiltoncatch.org/pdfs/NCBS%20Clawback%20Brief.pdf

and  

http://hamiltoncatch.org/pdfs/2004NCBFundedPrograms.pdf.

The auditor's report on the program is available at http://www.city.hamilton.on.ca/clerk/agendas-minutes-reports/
Strategic-Planning-Budgets/2005/Sep07/Sep07-CM05023.pdf.