Financing Early Education Preschool Policy Briefing June 22, 2004 W. Steven Barnett, Ph.D. National Institute for Early Education Research Copies and details available from: (732) ,

Presentation Overview Why does early education financing matter?  Access is incomplete and unequal  Quality is too low  Families struggle with the cost  Voters want government to step in America can afford a better policy  Total cost is low  Public and private sectors can share costs  The cost of missed opportunities is higher

America Faces Serious Challenges  Sustaining economic growth  Increasing productivity and competitiveness  Increasing educational achievement  Meeting future public commitments --Social Sec., Medicare & Medicaid 75% of 2040 budget  Ensuring a better future for America’s children

Early Education can be part of the Solution Increases Educational Success and Adult Productivity  Cognitive abilities, achievement, & school success  Social behavior  Employment, earnings, and tax revenue Decreases Costs of Government  Schooling (special ed. & grade retent.)  Social services  Crime  Health care

Cognitive Readiness Gap

Social Readiness Gap

Costs of Early Education The Cost of Early Education Depends on the Design  Ages served  Hours of the program  Quality—teacher qualifications, class size, etc.  Targeted or universal  Systems costs--start up and infrastructure What are benchmarks for cost?  Per pupil costs of K-12 education: $8,733  Per pupil costs of Head Start: $6,934  Per pupil state expenditure on PreK: $3,455* * Does not include local share of costs.

Early Education Finance in Perspective (FY 2005 Budgets) American economy, annual GDP = $12.0 trillion Federal annual spending = 2.4 trillion State and local annual spending = 1.2 trillion Social Security and Medicare = 800 billion Agri-business subsidies = billion Head Start = 6.9 billion State Pre-K = 2.5 billion UPK= $10-30 billion

Revenue Sources  New taxes and gaming revenue  Borrowing (deficits, bonds for tax cuts, facilities)  Obtain more existing education funds (Title I)  Displace other noneducation spending (economic devel.)  Tax breaks  Parent fees (sliding scale, core v. care)

Conclusions  Access and quality problems require public finance  Quality pre-K for all is good national policy  We need a solution for everyone  The cost is modest  Options include tax increases, tax cuts, borrowing, spending shifts, and parent fees