As mentioned in a previous post, one political issue with early childhood programs is that their economic development benefits for state economies are (mostly) long-delayed.  Much of the benefits for state economies are from the better skills of former child participants when they become adults. Therefore, much of the earnings effects in state economies from early childhood programs do not occur for a generation.

In this post, and subsequent posts, I will explore possible short-run benefits of early childhood programs. This post explores the benefits of reductions in special education assignments.

Several studies show that early childhood programs cause large reductions in special education assignments. The reduction in special education assignments is often more than a one-third reduction.  Perry Preschool reduced the percentage of all school years in special education from 28% to 16%. The Abecedarian child care and preschool program showed reductions in students ever placed in special education assignments from 48% to 26%. The Chicago Child Parent Center preschool program showed reduction in students ever assigned to special education from 25% to 14%.

The additional annual costs per student from special education assignments average nationally over $10,000. These extra annual costs potentially accrue over 13 years (from kindergarten to 12^th grade), so the total cost of a special education assignment can be quite high.

In chapter 7 of Investing in Kids, I do some simulations of how program costs for early childhood programs compare with savings in special education costs in the short-run.  If we initiative a new or expanded early childhood program, these special education cost savings will start out small but then increase as additional cohorts go through the K-12 system. They reach their maximum and permanent value after 13 years, when the new or expanded early childhood program has had a chance to affect special education assignments for cohorts at all grade levels.

For a universal pre-k program, the simulation shows that as of 13 years after the program is begun, the special education cost savings reach a permanent level that covers 48% of the pre-K program’s annual costs. These cost savings increase fairly uniformly from program initiation, so that the cost savings are 4% after one year, 8% after two years, etc.

For a full-time full-year child care and preschool program from birth to age 5, similar to the Abecedarian program, the simulation shows that as of 13 years after the program is begun, the special education cost savings reach a permanent level that covers 34% of the program’s annual costs.  These cost savings also increase fairly uniformly from program initiation (3% after one year, etc.).

These special education cost savings are obviously quite large. They are sufficient within the first 10 or 15 years to cover a politically and economically significant share of the annual costs of early childhood programs.

However, these special education cost savings, by themselves, are insufficient to make the programs pay for themselves. Accounting for special education cost savings only modestly moves up how quickly early childhood programs have economic development benefits exceeding net program costs (after accounting for special education cost savings).

Consider a universal pre-k program. Without accounting for special education cost savings, it takes 24 years after the program is begun for the economic development benefits to exceed program costs.  With special education cost savings included in the calculation of net program costs, the number of years after program initiation for economic development program benefits to exceed net program costs is cut from 24 years to 19 years.

However, there are other possible short-run benefits of early childhood programs. Subsequent posts will consider the short-run benefits from increased property values, and synergies with adult training programs.