Thousands of Toronto parents with children in school-based child care centres will see their annual fees jump by more than $500 under the city’s 2012 budget, advocates warn.

The increase comes at a time when daycares are already raising fees to cover the loss of 4- and 5-year-olds to all-day kindergarten, says Jane Mercer of the Ontario Coalition for Better Child Care.

“How much more can cash-strapped daycares and parents endure?” said Mercer, who will address the city’s budget committee on the issue Wednesday.

“This is cutting the budget on the backs of young parents and children who can least afford it,” she added.

High school science teacher Cheryl Woods, who pays about $19,000 in annual daycare fees for her two boys, ages 3 and 6, can’t believe her costs might rise by $1,000 next year.

She estimates daycare already eats up almost one-third of her take-home pay.

“I’m fortunate that my husband’s business is doing very well right now,” said Woods, 36, whose children attend Red Apple Daycare at Blessed John XXIII Catholic School in East York.

“But I can’t imagine how families who don’t have two good incomes will survive,” she added.

The fee increase would result from a proposal to end the city’s 13-year agreement with school boards to cover heat, hydro and other occupancy costs for about 380 school-based child care centres and 10 family resource centres. The agreement, which affects about 20,000 children, costs the city $5.8 million annually.

Under the proposed cut, parents of 12,000 children who don’t receive daycare subsidies would begin paying occupancy costs of about $2 per day starting next June, boosting their monthly fees by between 5 per cent and 8 per cent.

Since the city would still pay occupancy costs for the family resource centres and about 8,000 children who receive daycare subsidies, the net annual savings would be about $3.3 million by 2013, budget documents say.

If approved by city council, the cut would end an indirect subsidy to parents who don’t otherwise qualify for subsidies and would help chop 10 per cent from the city’s 2012 operating budget.

“What we’re really trying to do is make the system more equitable,” said Elaine Baxter-Trahair, the city’s general manager of children’s services. “Right now we’re giving full-fee families who happen to attend a child care in school a benefit our full-fee families do not have elsewhere in the system.”

But child care advocates say daycare across Toronto is riddled with inequities, including unequal access to daycare spaces and subsidies.

The proposed cut comes a month after Baxter-Trahair released a report saying the city’s child-care system is in crisis and that chronic provincial underfunding, rising parent fees and all-day kindergarten may force hundreds of the city’s 900 centres to close by 2014.

“I acknowledge there is an affordability issue in child care going forward,” she said Tuesday.

Annex-area father Stuart Henderson, 34, is bracing for a $28,000 annual daycare bill next year when his infant son, Noah, joins his 2 ½-year-old son, Angus, at a daycare centre in King Edward Public School in May.

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For Henderson and his wife, Sarah Lowy, the prospect of paying an extra $1,000 a year comes as a shock.

“It’s not easy to have one child in daycare, let alone two or three,” he said in an interview.

“This is hitting young professionals trying to get started in their careers, earning entry-level salaries,” said Henderson, a historian on a two-year university teaching contract. “It’s not the time when we can be incurring these kinds of costs.

“It is like buying a car every year. How many families can afford to do that?” he added.

Henderson is worried that families in the centre may be forced to opt for lower-quality informal care or have one parent quit their job and stay home.

Daycare advocates note that once the city agreement is gone, school boards will continue to raise occupancy fees to reflect rising costs, making child care even more unaffordable.

They say the city hasn’t accounted for the increased administrative costs school boards will face collecting those fees from centres that are already having trouble paying their bills.

“It’s just foolhardy to end a long-standing agreement with the school boards that kept occupancy costs low for both parents and the city for so many years,” said Mercer.

“We don’t want to be racing to the bottom,” she added. “We want to be bringing costs down, quality up, and making more daycare available and affordable for everyone.”

The cut is in addition to a proposal to close three city-run daycare centres serving 100 children for savings of about $1 million.