The adequacy of state pre-K funding for quality and access

The latest edition of “The State of Preschool-2014” was released on May 10, 2015 by the National Institute for Early Education Research. This annual release of data and analysis has become essential to understanding what is going on with publicly-funded pre-K in the United States.

Using this latest edition, in this post I analyze funding for age-4 pre-K, and compare current funding to what would be needed to ensure adequate quality for pre-K for all age-4 participants, and what would be needed to ensure both adequate quality and adequate access to pre-K for all age-4 children in the United States.

Based on the NIEER data, I estimate that in aggregate, total funding for state-sponsored pre-K for 4-year-olds was about $5.2 billion in the 2013-14 school year.  (All dollar figures in this blog post are stated in year 2013 dollars.) This total includes not only state funding for state-sponsored pre-K programs, but also what is known about local and federal funding for such pre-K programs. (An additional note for data wonks: To get this estimate, I used NIEER estimates of total pre-K funding per child by state, and multiplied it by the number of 4-year-olds in pre-K in each state, and then summed this product over all states. Because the NIEER estimates of per-child funding included both 3-year-olds and 4-year-olds, the implicit assumption is that this funding per child did not differ much between 3-year-olds and 4-year-olds, or that such differences canceled out when summed over states. )

NIEER also estimates what it would take for the state to have adequate resources per child to consistently deliver a high-quality program. The estimates of the per-child funding are derived from estimates from the Institute for Women’s Policy Research, in their 2008 report, “Meaningful Investments in Pre-K: Estimating the Per-Child Costs of Quality Programs”. For each state, these estimates of per-child funding reflect the mix of half-day vs. full-day and other length of program design features of the state’s pre-K programs – that is, the required per-child funding for quality would be much greater if a state had all full-day slots vs. all half-day slots. The estimates are then adjusted to 2013 national dollars, and also adjusted for cost differences across states, as described in NIEER (2015, p. 18), using estimates from Lori Taylor.

If we add how much it would take to consistently deliver quality programs for the CURRENT number of 4-year-old children served in each state, we come up with a figure of $7.4 billion. Therefore, current funding of $5.2 billion would be needed to be increased by $2.2 billion, or over 40%, simply to consistently deliver a quality program to all 4-year-olds being served by state-sponsored pre-K, in the mix of half-day versus full-day programs that is currently being delivered.

(Another data note: This calculation simply increases all states that are below the needed quality spending level per child to the needed spending level per child. States for which funding is currently above the estimated required funding level are not reduced. If we simply adjusted all states up or down to the estimated required spending level for quality, total required funding would be somewhat lower, at $7.1 billion.)

What would it take to offer universal access to quality pre-K to all 4-year olds in the United States? This depends upon what one assumes about how many families with 4-year-olds would participate in a program that offers universal access, but obviously does not require participation, as pre-K is a voluntary program. It also depends upon what one assumes about the length of the program in terms of full-day versus half-day.

Suppose we assume that the program is a full-day (six hour) academic year program, with a class-size ratio of 15 students to 2 teachers, and with the lead teacher paid wages and benefits similar to what is paid to public school kindergarten teachers.  Suppose further that we assume that in a voluntary program that offers universal access, the percentage of 4-year olds in state-sponsored pre-K would be similar to what it is today in Oklahoma, at 76.4% of all 4-year-olds. The remainder of families would have their 4-year-olds in Head Start, in private preschool or child care, or at home. As was done with NIEER, and as I have done in previous work, I rely on the IWPR cost figures.

The resulting estimate is that full-day universal-access high-quality pre-K would cost $31.1 billion per year. This is an increase of $25.9 billion over current state-sponsored pre-K funding. Although $26 billion is a great deal of money, this amounts to less than 2% of overall state and local government tax revenue. (See p. 70 of my book, From Preschool to Prosperity.)

However, the cost of universal access to pre-K could be considerably less if we assumed the program would not be full-day for all. For example, suppose we assume that the program would have the mix of full-day versus half-day that is true of current state-sponsored pre-K programs. Then the estimated total cost of universal access to pre-K would be $19.8 billion per year. This amount would be sufficient to enroll 76.4% of all 4-year-olds in a program whose funding allowed high-quality, but with the program mix skewed mostly to programs offering half-day services.

In the real world, I think that to achieve universal access, and elicit adequate participation from all income groups, it might be necessary to expand on current full-day options. Therefore, the best estimate is that a universal program offering some mix of half-day versus full-day services would probably cost between $20 billion and $30 billion per year.

How do these figures compare with where states were before the aftermath of the Great Recession, and the expiration of the federal stimulus, led to state budget cutbacks? In NIEER’s data, it appears that state pre-K funding was significantly cut after the 2009-10 school year. So, let’s look at funding in the 2009-10 school year, using estimates from the 2010 NIEER Yearbook.

In 2013 dollars, total funding in 2009-10 for state pre-K programs for 4-year olds was $5.6 billion. So funding in real terms in 2013-14 had dropped by $0.4 billion, from $5.6 billion to $5.2 billion.

In 2009-10, the total funding estimated that was needed to consistently deliver quality services was $6.1 billion. This is only $0.5 billion above the actual funding. In contrast, the “quality funding” gap for 2013-14 was $2.2 billion ($7.4 billion versus $5.2 billion). The increased quality funding gap, going from 2009-10 to 2013-14, is largely because the mix of pre-K services has shifted to either more hours or days of service, which increases the needed funding level per child.  A more minor factor is the number of 4-year-olds served in state pre-K funding increased slightly, from 1.11 million in 2009-10 to 1.16 million in 2013-14.   States have not increased real funding to match the expanded hours of service per child and the increased number of children served.

What would have been needed in 2009-10 to finance universal pre-K? Using assumptions similar to what was used for 2013-14, the estimated cost, in 2013 dollars, of universal full-day pre-K would have been $32.5 billion. This is slightly higher than the estimated cost of $31.1 billion in 2013-14, largely because the number of 4-year-olds declined slightly from 2009-10 to 2013-14.  However, the costs of universal high-quality pre-K, if we assumed the mix of part-day versus full-day services actually provided in 2009-10, would have been $18.1 billion, again in 2013 dollars. Overall, it seems likely that a real world high-quality universal pre-K program in 2009-10 would have cost somewhere in the range from $20 billion to $30 billion, similar to the estimated cost in 2013-14.

What do these figures indicate? First, we are still well-short of the resources needed to have full access in all states to high-quality universal pre-K. We would need somewhere between $15 billion and $25 billion in additional resources to achieve universal access to high-quality programs.

Second, there is a growing gap between current funding levels and what is needed to fund the current numbers of children and the current mix of services in a high-quality manner. The main concern is that under-funding of pre-K will reduce the effectiveness of pre-K programs in changing a child’s future life course. A secondary concern is that under-funding of pre-K may undermine public support for expanded pre-K.

Both access and quality matter greatly to the aggregate economic impact of pre-K. As we continue to recover from the recession, all levels of government need to devote additional resources to address both access and quality issues in current pre-K funding.

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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