An Inuvik daycare owes more than $100,000 in rent to the Town of Inuvik and might have to close its doors if it doesn't find new funding.

The Children First Daycare hasn't paid its $10,000 monthly rent to the town since December 2014. Its board says high costs, such as wages, electricity and heating bills, water damage last year and declining enrolment are creating a budget deficit — and that the daycare has no money left to pay the rent.

"By the time all the costs were paid, there was nothing left to pay the town," said Mike Harlow, president of the Children First Society board.

Mike Harlow Children First Society Inuvik

"By the time all the costs were paid, there was nothing left to pay the town," said Mike Harlow, president of the Children First Society board. (David Thurton/CBC)

The town has said it won't evict its tenants but it continues to invoice the daycare. It said the daycare has racked up $149,000 in back payments to date.

"We have every intention of making those payments. But right now that's not possible if the centre is to remain open," Harlow said.

Children First opened the $6 million facility in Inuvik in 2013, following years of fundraising by the society. On average, it has about 50 children enrolled on a full-time basis.

Closure could have 'severe impact'

Closure is a prospect that looms over the centre, according to a business analysis funded by the territorial government that was presented to Inuvik town council this week.

"Without significant intervention, the Children First Society will likely be forced to close its doors or, possibly, into bankruptcy," the report said.

It said raising fees isn't an option because most families in Inuvik wouldn't be able to afford it, which could reduce enrolment revenues.

The authors of the report recommend wage cuts to staff and increasing fundraising by 20 per cent. However, they doubt the effectiveness, saying the daycare's "lean budget" and the town's "fundraising fatigue" makes "the goal of breaking even an unlikely objective without intervention from the society's funding partners."

Inuvik Children First Daycare

The Children First Daycare opened in Inuvik in 2013. On average, it has about 50 children enrolled on a full-time basis. (David Thurton/CBC)

Funding partners and creditors like the Town of Inuvik say they can't offer any more money to the daycare.

But Mayor Jim McDonald said he will be talking to his territorial and federal counterparts about the situation.

"Closing the daycare could have a severe impact on the community," McDonald said.

Underfunded system

Children First said in addition to its piling rent payments, it's also facing a budget deficit this year that could be as high as $100,000.

Board president Harlow says these financial issues are symptoms of an underfunded early child care system.

"This society and the centre provides a very valuable service," he said. "There is a cost associated with providing that service and the current system in which funding is allocated doesn't necessarily work to meet those needs."

Harlow said the board is hopeful for change this year, because new territorial and federal governments have said they are committed to better funding early childhood education.