Designing better funding for early childhood programs

Steve Barnett and Jason Hustedt have a new issue brief for the National Institute for Early Education Research (NIEER), on financing early learning programs.  This issue brief analyzes many aspects of the financing of early learning programs. But I want to focus here on one key question:  what financing arrangements are most likely to provide sustained adequate support for high-quality early childhood programs?

Based on this issue brief, and my own reading of the evidence, funding for early childhood programs is most likely to be sustained at an adequate level if it is based on a formula that automatically provides so much per child eligible for a particular type of program. In other words, early childhood funding is more sustainable if the funding is part of an “entitlement” program.

For example, as Barnett and Hustedt discuss, Oklahoma has had sustained high levels of funding for pre-k for four-year olds. Oklahoma is the state that is closest to true universal access, with 71% of all four-year –olds in the state-funded pre-k program. With other four-year-olds in Head Start or private preschool, Oklahoma essentially has almost all four-year olds with access to high-quality preschool.  Oklahoma’s sustained high funding is in part due to pre-k funding being part of the state school funding formula.  School districts receive funding from the state of Oklahoma in part based on the number of four-year-olds enrolled in pre-k.

Under entitlement funding for early childhood programs, funding automatically grows as more children meeting eligibility requirements are enrolled.  Therefore, local programs can better respond to population growth or local needs.

Of course, even under “entitlement” programs, state legislatures can always change program eligibility rules or the funding amount per child. But the funding formula frames the political debate about early childhood programs in a way that is advantageous for early childhood programs. The formula endorses the belief that children in a certain eligibility category need this service, and need so much per child for an adequate quality service.  Cuts to eligibility requirements or funding per child can be more readily challenged as denying adequate services to a group that needs this service.

In contrast, if early childhood funding is provided through grants from a fixed size program, it is easier to cut the program without being accused of sacrificing needed services.  If the state legislature is providing $x for the program, with no explicit ties to children’s needs, then the grant amount seems arbitrary and easier to cut.

The advantages of entitlement financing is likely to not only be true for pre-k programs but for other early childhood programs. Even if an early childhood program is targeted at the disadvantaged, it is possible to finance it through an entitlement program that provides a funding amount per child (or family) for children meeting eligibility requirements who are provided with the specified service.

Setting up new entitlement programs is not easy. Policymakers are aware that entitlement programs are harder to cut, and easier to expand over time. Setting up a new entitlement program may require decisively winning the political debate over whether certain children need a particular service. Alternatively, it is possible to start with a funding formula that is of modest cost, but then over time expand the size and scope of the formula to cover additional children or a larger share of program costs.

If we believe that research shows that most or many children in a group will need a particular early childhood program service, then it makes sense to finance this program via an entitlement program with a formula that guarantees funding.  The funding structure of the program then matches the program’s rationale. In contrast, a fixed dollar allocation for a program implies that the program is a nice program, but is not really needed for most children meeting eligibility standards. Entitlement financing is more consistent with expanding programs so that they have the size and scope needed to have community-wide impact.

About timbartik

Tim Bartik is a senior economist at the Upjohn Institute for Employment Research, a non-profit and non-partisan research organization in Kalamazoo, Michigan. His research specializes in state and local economic development policies and local labor markets.
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