Investing in Early Learning Ventures to Promote Child Care Quality and School Readiness March 2014

benefits to society health care savings justice system savings education system savings more productive workforce high-quality early care and education learning opportunities child- teacher relationships health & safety classroom management family engagement staff qualifications curriculum & assessment learning environment professional development staff–child ratios strong leadership

learning opportunities child- teacher relationships health & safety classroom management family engagement mediocre early care and education weak business foundation staff qualifications curriculum & assessment learning environment professional development staff–child ratios strong leadership

The Quality Problem Child care market challenges: “Parents can’t afford to pay, teachers can’t afford to stay, there’s got to be a better way” Lack of consistent demand for quality Insufficient product differentiation and information for parents Low profitability Limited or no economies of scale Costly quality-improvement regulations Weak federal, state, and local infrastructure to support child care quality

benefits to society high-quality early care and education learning opportunities child- teacher relationships health & safety classroom management family engagement staff qualifications curriculum & assessment staff–child ratios learning environment strong leadership professional development strong business foundation

ELV leverages funding until Alliances reach sustainabilit y Affiliate pays a fee for services Alliance pays license fee for technical and staff support Alliance services save Affiliate time and money Families invest in child care Affiliate reinvests savings into quality improvements that directly affect children The Early Learning Ventures Shared Services Model Affiliate Providers Children and Families Alliance “Hubs”

How It Works—The Details Hub agencies called “Alliances” help child care providers: Attain critical economies of scale ‒ Purchasing ‒ Procurement ‒ Marketing ‒ Human resources Streamline business functions ‒ Registration and enrollment ‒ Accounting support ‒ Tuition billing and collection ‒ Payroll Program and staff development ‒ Curriculum, assessment, “best practices” resources ‒ Child development tracking ‒ Staff training and professional development

Early Learning Ventures Model Child Care Provider Business Sufficiency High-Quality Care and Education Child Care Provider The Innovation: Moving Toward Quality Provides business infrastructur e to improve operations Helps providers reallocate resources to build quality

Model saves providers time and money Providers reinvest savings into quality Governmen t uses savings to invest through PFS model Savings to government: -licensing efficiencies -health outcomes -education savings -financing efficiencies Early Learning Ventures Model The ELV Model as a PFS Opportunity

Child Care Providers Benefit From… Child Care Providers ‒ Stronger business infrastructure ‒ Financial stability ‒ Professional development ‒ Increased licensing compliance Outside economists conducted study to examine ROI for providers Results indicated up to $8.08 return per dollar and up to $114,400 five-year return for providers Experience benefits from:

Child Care Providers Benefit From… Children and Families Access to higher quality care and education Benefit from health and nutrition programs provider is able to offer Experience stronger family engagement and staff– child interactions

Child Care Providers Benefit From… State and Local Government More efficient and effective licensing procedures Stronger educational outcomes as a result of increased quality Improved health outcomes as a function of programs offering better nutrition and child well-being supports High performing intermediary to support scaled financing and quality improvement initiative s

One of the most ingenious and impactful organizations promoting access to quality early care and education, Early Learning Ventures (ELV), combines the power of technology and the resourcefulness of community partners to increase the supply of high quality, affordable early care and education. To maximize the reach and impact of its work, and to overcome traditional barriers to financing and scale, ELV partners strategically with a diverse range of community-based partners, building comprehensive fully integrated bridges between small, market- based child care providers and the often siloed child care regulatory, quality improvement, and subsidy systems. Spun out of the David and Laura Merage Foundation in Colorado, ELV is serving over 550 child care businesses, impacting 30,000 plus children, and returning $8 for each dollar invested.

Improved Efficiencies for Child Care Licensing Alliances help facilitate compliance by: ‒ preparing and organizing providers for licensing visits ‒ automatically populating regulatory documents ‒ assisting providers in applying for and meeting requirements of state/federal programs (e.g., CACFP) Increases efficiency of licensing division ‒ time needed for typical regulatory visits could be reduced by 50% ‒ allows visits to be more quality-focused rather than compliance- focused ‒ helps strengthen partnerships between licensing specialists and providers ELV model has potential to save state hundreds of thousands of dollars each year

Promoting Positive Health Outcomes Nearly 15% of U.S. households experience food insecurity –Households with children under six at greatest risk ELV works with partner providers to support improved nutrition ‒ Access to Healthy Options for Preschoolers trainings ‒ CORE enhancements to streamline CACFP accountability ‒ ELV support resulted in healthful vended meals provided for 900 additional children per day in six month period Adequate nutrition linked to healthy cognitive development, increased academic achievement, and decreased rates of illness Nutrition

Promoting Positive Health Outcomes For each dollar spent on immunizations: ‒ $5.30 direct benefit ‒ $16.50 societal benefit ELV model improves immunization compliance by: ‒ tracking each child’s immunization status ‒ prompting parents when additional immunizations needed Immunizations shown to improve health of children and lower health care costs Immunizations

Promoting Positive Education Outcomes ELV model creates greater access and increased quality of early care and education options ‒ Business efficiencies allow providers to expand and direct more resources to quality improvements ‒ Curriculum, assessment, and “best practices” resources ‒ Regular training and professional development opportunities High-quality early care and education translates to: ‒ Greater school readiness ‒ Reduced rates of grade retention ‒ Reduced need for special education ‒ Increased high school graduation rates Significant savings for the education system and benefits society as a whole to have better educated more productive future workforce

ELV Alliance Core

Current Number of Affiliates

Current Number of Children Served

Tier Membership

Affiliate Retention

ELV Model Expansion New State Affiliate Projections TOTAL

ELV Model Expansion Projected Number of Children Served

ELV Model Expansion New Statewide Alliance Pathway to Profitability

Forecast Key Assumptions Initial Setup Fee Personnel & Travel Outreach Training Data Entry Computer Hardware Monthly/Annual Fee Personnel & Travel Quality Improvement Efforts Technology Assistance Financial Services Support Bad Debt/Merchant Processing Fixed Costs General & Administrative Personnel

Key Forecast Assumptions Per Quarter Growth Rate, decreasing over time Per Year conversion to Tier 2 & 3, increasing over time Capacity reached end of year 4 90% Retention year to year 100% 12 months scholarship affiliate fee 3% Inflation Outreach/Training/Maintenance requirements Personnel – Y1: 4 FTE – Y2: 6 FTE – Y3: 8 FTE – Y4: 11 FTE – Y5 & Thereafter: 9 FTE Cost to Provider – Tier 1: $100 per year – Tier 2: $2,400 per year – Tier 3: $8,500 per year Year 6 – 10 assume a net change in churn & additions, no change expenses and pricing