Preschool for all?

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Investments in the education of young children can have strikingly large returns. High returns are not guaranteed, however. Errors of implementation can eat away at the expected benefits of any pre-kindergarten proposal. To get the biggest bang for its educational buck, Texas—and indeed every state—needs to focus its attention on high-quality pre-kindergarten education, delivered through a system of public and private partnerships.

A focus on high-quality pre-kindergarten is essential because most of the long-term returns to investments in young children come from improvements in their cognitive abilities, increases in their educational attainment and reductions in their need for remedial educational services. Research demonstrates that children who receive high-quality pre-kindergarten instruction outperform their peers on all of these dimensions. There is no evidence that children in low-quality programs show similar improvements.

A focus on public partnerships with the child care industry is also essential because most of the near-term returns to investments in young children come from the implicit value of the child care and the expected increases in the employment and earnings of parents. Pre-K initiatives that lack strong ties to the child care industry can lead to higher child care costs, reduced employment, and lower lifetime earnings for parents with younger children.

The road to such unintended consequences is fairly straightforward. Given the child/caregiver ratios required for a child care license in the state of Texas, the cost of caring for an infant is roughly three times the cost of caring for a preschooler. The difference in tuition for these two groups does not even begin to cover the difference in costs. Surveys suggest that tuition rates are no more than 50 percent higher for infants than they are for preschoolers. Because high-quality care for infants and toddlers is so labor intensive, the tuition paid by the parents of very young children may not even cover the wages for the staff needed to care for them.

Tuition payments for older children—particularly preschoolers—make up the difference and cover the rent. Pulling preschoolers out of the child care system would unbalance this equation. Tuition revenues would no longer cover the full costs of operating a child care center, and some centers would be forced to close. Tuition rates would have to rise in those that remain. Thus, the parents of infants and toddlers would face sharp reductions in the affordability and availability of high- quality child care.

Many low-income parents receive child care subsidies from the Texas Workforce Commission (TWC) and would be at least partially insulated from any increase in child care costs. However, the TWC has a waiting list with an average of 24,500 eligible, low-income children on it, and those parents have no protection from higher child care costs. Households which are not eligible for TWC assistance would also bear the full brunt of any increase in the cost of child care.

Meanwhile, costs would increase for the Texas taxpayer. The TWC estimates that it spent $531 million on child care subsidies for low-income families and foster children during the 2013 fiscal year. Even a modest 5 percent increase in the average cost of child care would force the state to pay an additional $26.6 million per year, just to maintain the same level of coverage. The only alternative would be to allow the TWC waiting list to balloon to nearly 30,000 low-income children, thereby pushing the burden of higher child care costs off onto those least able to afford it.

Last, but not least, pulling preschoolers out of the child care system would not be a cost-effective use of facilities. Many public schools are already bursting at the seams. Expanding public preschool programs would require them to build new buildings or rely heavily on portable classrooms. Meanwhile, space in licensed child care facilities would sit empty. It makes infinitely more sense to expand and improve the quality of the services within existing structures and institutions than to replicate the existing facilities on public school grounds.

The evidence suggests that the long-term benefits of a high-quality prekindergarten program are substantial, regardless of whether the program is provided by a public school, a Head Start program or a child care center. If public pre-kindergarten programs crowd out the private child care industry, however, many of the near-term gains to the parents of four-year-olds could be offset by losses to the parents of children three-years-old or younger. Therefore, maximizing the return on Texas’ pre-kindergarten investments means avoiding undue harm to the child care industry. Wherever Head Start programs and licensed child care centers can meet quality standards, they should be part of the state’s Pre-K investment portfolio.

Lori Taylor, Texas A&M University

Lori Taylor is director of the Mosbacher Institute for Trade, Economics and Public Policy at the Bush School of Government & Public Service.