I have previously discussed Governor Snyder’s proposal to expand Michigan’s pre-K program, called the Great Start Readiness Program (GSRP). Since then, different versions of this expansion have passed both the Michigan House and Senate.  However, the final compromise has not yet emerged.

Governor Snyder proposed expanding GSRP funding by $65 million, from $110 million to $175 million. The Senate keeps this gross funding increase, while the House whittled the funding increase down to $38 million. However, there also are important substantive changes that these various bills make to the GSRP program.

Research suggests that the substantive changes made by both the House and Senate may weaken the program. As discussed in my previous post, GSRP has had strong research evidence of success. However, underfunding of the program over the past 10 years has threatened the program’s success.  Governor Snyder’s proposals took some modest steps to expand per-pupil funding. The Michigan House and Senate are cutting back on the Governor’s proposal, and adding in other requirements that are problematic in an under-funded program.

Here are some concerns:

(1)    Quality costs money.  Michigan isn’t paying enough to consistently expect quality results, and the House and Senate changes aren’t helping.  GSRP currently provides funding for half-day slots at $3,400 per slot. Research suggests that this isn’t enough to consistently get high quality slots, which currently almost certainly costs more than $4,000 per slot, and probably closer to $4,500 (see my previous blog post for a discussion of this research evidence). It also is less than Michigan’s historical funding for GSRP, which over the program’s history from 1991 to 2004 averaged, in today’s dollars,  after adjusting for inflation, $4,300 per slot.

Governor Snyder proposed increasing the funding per slot to $3,625, which is the first real per-child funding increase for the program in 12 years. This did not move funding up to the program’s historical real average, or to what would likely be needed to ensure quality results, but it at least was a meaningful step. The House-passed bill increases funding per slot, but only to $3,500 per slot, which barely covers annual inflation. The Senate-passed bill keeps the current funding of $3,400 per slot.

At $3,400 or $3,500 per slot, the only way to ensure quality results is for local entities administering the program to cross-subsidize the program with other revenue. This is increasingly difficult for local school districts to do, given other budget problems facing many Michigan school districts. And cross-subsidization is almost impossible for most private pre-K providers to do.

The consequence is that this low level of funding makes it more difficult for GSRP providers to deliver quality results. The low level of funding also may make local school districts and private providers more reluctant to be active participants in expanding the program.       

(2)    Low funding makes it difficult to meet the revised program’s goals of expanding private pre-K participation.  The Governor’s proposal, as well as the Senate version, requires that 20% of funding go to private providers.  The House version increases this percentage to 30%. This requirement is difficult to combine with low funding per slot and expectations of consistently high-quality programs on a large scale.

While private pre-K programs can provide quality pre-K services, and give parents more choice, these programs have more limited options for cross-subsidizing the program. It is certainly possible for a private pre-K program to on a limited scale find pre-K teachers who are quality teachers who are willing to work for low salaries.  It is less realistic to expect this to happen on a large scale.

Therefore, the 20% or 30% requirement, when coupled with low funding per slot, raises the possibility that some private pre-K providers will not be able to provide GSRP’s customary level of quality. In that case, the intermediate school districts who are allocating funds will be faced with some difficult choices. There are some provisions for state waivers for these percentage involvement levels for private providers, and such waivers are helpful, but the concern is that intermediate school districts may feel some pressure to fulfill the 20/30% requirement even if this does not maximize program quality.    

(3)    The Senate and House bills both have some language that attempts to do more income targeting of the GSRP program, but which may end up stigmatizing the program and limiting positive peer effects.

The program currently requires that 75% of participating children must be below 300% of the poverty line. (Children above 300% of the poverty line must have at least two “risk factors” to be eligible.) The House bill requires that 80% of participating children must be below 200% of the poverty line, with a sliding fee scale required beyond 200% of the poverty line.  The Senate bill requires that 100% of participating children must be below 300% of the poverty line. (The Senate has language about sliding scale fees beyond 300% of the poverty line, which is difficult to interpret.) The Senate bill also has a somewhat complex system of prioritizing children based on how far their family’s income is below 300% of the poverty line.

On the one hand, given scarce funds, we would like to allocate those funds to children in higher need. On the other hand, we know that there are positive peer effects in preschool. Children do better in an income-integrated program. Parents and the general public may have greater support for a program that potentially serves a broader mix of children.

What might be considered based on research to improve the GSRP program? I have three suggestions.

First, we should consider significantly increasing per-child funding for GSRP both for 2013-14 and 2014-15 to get the program back to closer to the $4,300 per child real historical level of funding for the program. Research suggests that this is what is needed to realistically ensure quality on a large scale. It is also what is needed to involve quality private sector providers on a large scale.

Second, authorize intermediate school districts or counties to ask for voter approval for permanent millages to supplement state-provided GSRP funds and to provide for early childhood program needs in preschool, child care, parenting programs, and other areas.  This is particularly important if the state is reluctant to expand its per-child funding. There is nothing wrong with local funding being an appropriate component of the funding for GSRP. But there needs to be some local revenue source for such funding. Allowing intermediate school districts or counties to supplement such funds allows for some local discretion in the per-child funding for GSRP and the number of slots provided. Furthermore, this funding could also deal with the many other early childhood needs other than preschool for 4-year-olds.  As outlined in my book, Investing in Kids, a variety of child care and parenting programs have shown good evidence of success.

Third, the state might want to do targeting by requiring a certain percentage of the state funding to go to children under a particular income level rather than a certain percentage of slots. If coupled with sliding fee scales, this would allow programs to include children from broader income levels, as long as the government subsidy for such children is not excessive. This would target government funds while allowing the positive peer effects that research has suggested from income-mixed classrooms.

State investment in quality pre-K programs can help enhance state economic developments. But to increase state earnings per capita, these investments need to be quality pre-K programs.  More slots alone are insufficient. Quality depends in part on regulatory requirements, and training and education. But such requirements should be accompanied by adequate funding, and by a regulatory structure that allows such desirable components as income-mixed classrooms.