Should early childhood education be financed by state governments, the federal government, or both?

One important governance issue discussed in my new book, From Preschool to Prosperity, is whether pre-K and other early childhood programs should be primarily financed by state governments or the federal government.

I’m a political pragmatist. I think either approach can work. What will prove to be politically feasible is hard to predict. However, I think that for preschool, there are advantages to state governments playing a leading role, with some federal support. In contrast, I suspect that any full-scale commitment to child care and parenting programs will require more federal involvement.

As discussed in the book, and in a previous blog post, the evidence suggests that pre-K provides broad benefits, with pre-K programs not only improving the future prospects of low-income children, but also helping children from middle-class families. These broad benefits provide a rationale for universal pre-K programs.

Universal pre-K programs are likely to attract broad voter support, particularly once they are in place. Therefore, I think it is certainly politically feasible for state governments to decide to operate universal pre-K programs, and some state governments, for example Oklahoma, have done so.

The cost of universal pre-K also seems feasible for state and local governments to finance. I estimate the additional costs of universal pre-K at around $25 billion annually. While this is a lot of money, the figure must be put in the context of the large size of the U.S. economy and of government operations. This $25 billion amounts to 1.75% of overall state and local taxes, and 4% of what we currently spend on K-12 education.

The federal government could also finance universal pre-K. However, the federal government already has a lot on its plate in dealing with the implementation of health reform, and dealing with the growing needs of an aging population. There is some wisdom in focusing federal attention where state and local governments are much less likely to do a good job.

In addition, although we know quality pre-K works, there is still uncertainty over what program designs work the best, for example in terms of what curriculum is the best and what teacher training approach is the best. This argues for allowing for considerable state and local flexibility in program design, to allow for innovation. Such flexibility may be somewhat easier with state financing than with federal financing.

However, if we want to learn from such innovation, federal involvement in funding evaluation of state and local pre-K programs would be quite helpful. The benefits of pre-K program evaluation accrue to programs everywhere, not just in the state in which the program being evaluated is located. These external benefits of evaluation imply that states on their own will tend to underfund evaluation studies, which can be corrected with federal funding of high-quality evaluations.

A similar argument supports federal funding for evaluation of alternative pre-K curriculums. The entire nation benefits from learning, for example, whether the Boston pre-K program’s use of the Building Blocks curriculum helps explain its unusually large test score effects.

Federal funding might also be quite helpful in supporting teacher mentoring and training. Underinvesting in quality can be politically tempting for state governments facing fiscal challenges. Some extra federal funds to support quality initiatives would help overcome this temptation.

For child care programs that operate in early childhood, such as Educare, federal financial support is likely to be necessary for these programs to operate at anything close to full-scale. As discussed in the book and previous blog posts, the evidence is that high-quality child care provides much greater benefits to low-income children than middle-income children. Therefore, research supports targeting such child care subsidies on low-income families.

These quality early child care programs are quite expensive, costing $16,000 per year for five years during early childhood. To operate at a full-scale that serves all disadvantaged children would cost over $50 billion per year. This cost is about 4% of state and local taxes.

It is politically difficult for state and local governments to generate political support for a program that requires a 4% tax increase for state and local voters, but then all the direct benefits go to disadvantaged families. As argued in the book and in previous blog posts, there are spillover benefits of such programs for everyone in society. However, the tax increase is still a tough initiative to sell to many state and local voters.

At the federal level, the interests of the poor tend historically to have had somewhat greater political clout (although hardly overwhelming clout) than at the state and local level. The federal government also has somewhat higher revenue-raising capacity as well.

Parenting/home visiting programs such as the Nurse Family Partnership also tend to have benefits only for lower-income families. This also argues for the need for federal support. On the other hand, these programs are considerably cheaper than free child care from birth to age 5. A full-scale NFP offering services to all first-time disadvantaged mothers would probably cost about $4 billion per year nationally. This cost is less than one-half of 1% of state and local taxes, so this seems more feasible for a sizable state and local involvement.

Full-scale implementation of a package of early childhood education programs seems more likely if we elicit the support of all levels of government. If each level of government focuses on areas where it has a comparative advantage, we are more likely to achieve a full-scale program package that is economically and politically sustainable.

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