Photo: Kate Samp for Strategies for Children
Photo: Kate Samp for Strategies for Children

Early education is a proven way to help children succeed, but a key challenge for policymakers is figuring how to pay for these programs.

That’s why the Center on Enhancing Early Learning Outcomes (CEELO) has just released a discussion guide on “State Financing Strategies for Early Education and Care Systems.” The guide helps policymakers understand which investment strategies could work in their communities.

When it comes to early education, policymakers often face two persistent financing problems.

First, “it is more often the case that available funding, rather than the true costs of quality programs, determine funding decisions,” and second, policymakers often lack “a comprehensive picture of all the available resources that could be utilized for a given program because of the generally siloed nature of funding (e.g., by agency or funding stream rather than by goal or service).”

So while “some state and local investments are increasing,” other states are not “investing sufficient dollars to ensure all children have access to high-quality programs.” 

To ensure that all children do have this kind of access, policymakers need a “deep understanding of financing strategies and a willingness to engage in finance reform.”

Deciding What to Pay For — and How to Pay for It

What should policymakers pay for? That depends on their goals.

They could focus on “one or more of the following program priorities:”

• expanding access to early childhood education slots

• improving the quality of new and existing programs

• improving the workforce’s education and/or wages

• ensuring accountability for monitoring, supporting, and improving program effectiveness

• allowing parents to choose the right program for their children

• providing communities with greater flexibility to meet local needs, and

• supporting a specific service delivery strategy — such as programs placed in public schools or those run by community-based providers

Financing Strategies

The guide proposes three broad finance reform goals:

• increasing efficiency

• increasing revenues, and

• increasing the stability and sustainability of funding

A chart outlines a number of strategies for achieving these goals. The chart includes each strategy’s pros and cons as well as Internet links to examples of how various states have implemented these strategies.

One strategy is the use of tax credits. The pros of this approach include the fact that funding does not need to be appropriated each year. Among the cons? Tax credits can be a tough sell in some states. One successful example of the use of tax credits is Louisiana where, “Between 2008, when the credits took effect, and 2011, utilization of the credits resulted in millions of dollars in new investments in child care quality,” according to a recent report from the National Women’s Law Center.

Another strategy is blending funding streams. The advantage of blended streams is that they can create more flexibility and enable providers to offer more comprehensive services. A potential disadvantage, though, is that it can take more work for providers to monitor the use of blended funds. States are, however, making this approach work. Colorado has a data system called Blending Revenues Across Interagency Departments. And Illinois, Pennsylvania, and Oregon also blend funds, according to the Ounce of Prevention Fund’s report, “Blending and Braiding Early Childhood Program Funding Streams Toolkit: Enhancing Financing for High-Quality Early Learning Programs.”

Three other related topics that policymakers should consider are:

• human capacity: the leadership, experience, knowledge, public support, and skills needed for a financing strategy to succeed

• governance/authority: any necessary legislative or regulatory policies or costs, and

• organizational capacity: any state and local infrastructure needed to provide oversight

Now that so many elected officials are talking about the power of high-quality early education programs, it’s time to shift the conversation to how policymakers can deploy innovative and lasting ways to pay for these programs.