Universal Preschool: Much to Gain but Who Will Pay?

Author: Scott Scrivner (Public/Private Ventures) and Barbara Wolfe (University of Wisconsin - Madison) / October 1, 2002

FCD Working Paper Series

This FCD Working Paper focuses on feasible ways to finance universal pre-school.  The authors describe early-childhood education programs in other industrialized countries and discuss a variety of proposed financing methods.

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The main focus of this report has been to explore ways to finance a preschool program that would be universally available to all four-year-olds in the country, a program that would be of at least moderate quality (and in many places of high quality) and would be consistent with the recommendations of experts that four-year-olds have much to gain, and society has much to gain, from providing a stimulating, caring preschool experience for all four-year-olds.

We provide a comparison of the various policy proposals discussed above that currently address the topic of financing ECE for four-year-olds. We do so in order to allow the reader to more easily assess the similarities and differences between these schemes and to identify common themes. Because financing is the topic considered in this paper, we devote the greatest amount of attention to the most important dimensions of program financing. However, because financing may be closely tied to the type of early education program provided and our goal is to analyze the feasibility of financing of a developmentally appropriate and high-quality full-day full-year universal program, we also consider the extent to which proposals meet this goal. Finally, we identify strengths or unique features included in the proposals.

Considering the group of proposals as a whole, we are struck by the diversity and creativeness of the policy recommendations offered. In terms of quality, Blau's focus on ECE quality and especially the idea of creating a financial incentive so that parents will be induced to pay more attention to quality is clearly worthy of serious consideration in developing future proposals for universal preschool for four-year-olds.

Included in this set of attractive ideas is providing parents with appropriate quality information and trying to find ways to encourage parents to act on quality recommendations based on developmental research in selecting a preschool for their children. (The other aspects of his plan such as discontinuing TANF seem more problematic in terms of the income of these families. If, however, such funds were diverted toward pre-k and child care they could contribute significantly to the financing of preschool for children in low income families.)

In terms of the financial contribution of parents, nearly all financing proposals include some share paid by parents based on ability to pay. The proposal by Vast to use a system similar to the financial aid system for higher education is a promising suggestion. A system such as this, based on income considerations more broadly defined than the percentage of federal poverty line standard, would ensure that our impression of low-income children in need of public subsidy is not defined overly narrowly (the student loan component and endowment would seem far less likely to be successful as Vast also notes).

The majority of proposals reviewed focus on providing preschool for four-year-olds in low-income families rather than a universal program. The exceptions are the current programs in Georgia and several other states and our own proposal. Sawhill and Thomas focus on poverty alleviation and combining a number of smaller policy modifications and by doing so highlight the extent to which we could work within or only slightly modify the existing system if additional funds were available to do so. This has the attraction of feasibility but would not achieve the goal of universal preschool. The lottery financing model used in Georgia's Voluntary PreK program gives focus to the extent to which states can raise revenue to fund existing or proposed systems of ECE. We have some doubts, however, on the wisdom of building a universal preschool system based on financing from state lotteries both in terms of stability of the revenue stream and the incidence of the "tax."

Another consistent theme, however, is that the sources from which needed funds would be drawn are rarely specified. This reliance on what we have labeled general revenues is likely a legitimate reflection of the need to tailor policy proposals to the resources at hand when the proposal is considered. Yet lack of a clear funding source may also hinder a proposal's progress from concept to law. It is for this reason that we developed our proposal with attention to the method by which revenues would be raised.

Our proposal is based on ability-to-pay as reflected in the existing tax system, and focuses on parents as the main financial contributors. By using a ten-year period over which parents would contribute, it avoids reducing the current income of these families by more than 1 to 5 percent. Current public funds targeted at children of lower income families (CCDF and TANF funds for childcare) could be used to improve the quality of programs especially for these children whom research suggests have the most to gain from high quality preschool. There would be issues with the need for initial dollars before the system reached an equilibrium and which parents would enroll their children.

Other developed countries have universal preschool programs for four-year-olds. As suggested by our analysis of existing financing proposals, some combination of 1) parental contributions based upon a broadly defined concept of ability to pay, possibly using several years over which they make their contribution, 2) a financial incentive to select a preschool program that meets certain dimensions of quality, and 3) public subsidies for children in lower income families, could serve as the core to finance such a program in the United States. If combined with the elimination of some of the current tax subsidies for childcare for children in this program and the use of additional one-time or short-term funds from other sources, such a program could be started rather quickly at least on an experimental basis at modest additional cost to the U.S. Treasury. The country has much to gain from pursuing such a strategy.

We note that parents in Seattle, WA show a willingness to pay for full-day kindergarten as two elementary schools charge participating parents $200 per month and use the proceeds to subsidize class reduction initiatives in addition to funding the program (Gewertz, 2002). Although it is not clear whether this demand directly reflects parents' appreciation of the value of early childhood education as opposed to a need for an affordable child care alternative, it does demonstrate a desire for expanded ECE services. A recent nationwide poll of 800 registered voters placed education second only to jobs and the economy as their top priority (Education Week, 2002). And, in listing priorities for education dollars, early-childhood education was cited as their top priority by twenty- four percent of respondents to the poll. In order to accomplish this we need a feasible financing scheme. This report has been designed to review existing proposals and provide a basis for moving the goal forward. The analysis above suggests a way to achieve a goal of near universal preschool for four-year-olds.