Moving Forward: Voices from the Field

As we put together this multimedia guidebook, we spoke with nine national experts on early care and education systems and financing about their take on the National Academies’ Financing report, the current early care and education system, and other related topics. Below are key quotes from our discussions:

About the Transforming the Financing report:

• "The administrative burden is quite high, especially when providers are trying to mix funding from various funding streams and whatnot. So I think the need for a more integrated system is really a key takeaway from the report."
• "The report talks a lot about the business community and the need to really invest early on in the education of our young people because that is tomorrow's workforce and we all have a responsibility for ensuring that we're setting young people on a path for success."
• "The report didn't tackle the fundamental problem, which is that the business model doesn't work…..So in my opinion, the report really missed the boat by not saying there has to be industry consolidation."
• "More important than the cost estimate per se is the vision in chapter seven of what defines an effective financing structure and of what's needed to achieve this affordable, accessible, high quality early care and education system for all children and families."
• "It is important for policymakers to understand the limitations of the current system…specifically about the limitations of the financing mechanisms. There's a lot of work out there about the problems with low quality care, and the problems with not having children ready for school, and all that. But really the focus in the report is on how can we do this better by providing both adequate levels of financing, and the way in which we finance it to better support quality, to have a more harmonized system of financing so that neither families nor providers sort of fall through the cracks, and a more aggressive system to deal with affordability."

On financing generally:

• "We've got to separate out the elements of financing. Are we talking about revenue generation? Are we talking about revenue deployment? Are we talking about revenue accountability? There are diverse elements of this and to lump them together both strategically as well as with the futuristic idea, is really problematic."
• "[Revenue generation] is the issue that needs the biggest lift because we need inventive thinking there and inventive strategies."
• "With regard to revenue expenditures, we as a country have been too focused on pre-kindergarten, not really realizing that there's a long tail before children are four years old. Most countries that are doing a really good job with kids, really do begin early and invest in very diverse ways."
• "And on the revenue accountability side, we're spending money and we're not really being efficient about our use of resources….We're duplicating services, we're duplicating recruitments."
• "Questions that I would ask if I were talking about innovation: who is doing scalable work, because it's quite limited in my mind. That is the distinguishing characteristic, which is why we don't get anywhere."
• "Here's the challenge with revenue, basically it's general fund dollars, and it's like how do you leverage general fund dollars?…In states like Washington and Oregon, they have strong political support for appropriations. And they make big appropriations, and you've clearly seen states like that. States like Louisiana, which are trying to strategically leverage tax credits. You're talking about a big ticket item. It's a big ticket item, and they have to figure out how they're going to generate the revenue."

On the current system:

• "The levels of funding that we have really don't support providers in achieving high-quality care. There just aren't the resources in the system for those providers to provide the care that is required to really get the developmental benefits that we all know can occur during the early childhood period."
• "The system is failing them in any number of ways. In a system that was meeting the goals you'd have way more people eligible. You'd have providers being reimbursed at much higher rates to provide service to those kids, and you'd have much lower copays, particularly at the lower end of the financial spectrum. Again, all of that costs money. If you're having a conversation about early childhood finance, all of those are things that should be on the table."
• "The fact that there's a lot of families who are eligible, but the funding isn't adequate. There are families that fall through the cracks because they earn too much income for one subsidy, but not enough to take advantage of tax credits for example."

On the workforce:

• "The way to retain a qualified and experienced workforce is to pay them one, a living wage, but also a wage that meets the expertise and the experience that they're providing."
• "I think what's important in this report is just making the connection between low compensation and quality, or lack of quality. Even if someone has the skills and knowledge, if they are stressed financially, they may not be able to provide the high-quality care. And this is also a real challenge in terms of financing. How do we ensure that even if we throw more money at the system, some of it, or most of it results in higher compensation for the workforce?"

On cost modeling:

• "Cost modeling is incredibly important when you're thinking about system expansion so that you can give people a realistic understanding of what is and what isn't possible within big expected revenue…"
• "…we don't understand the money and how the money is actually flowing and where the inequities really are within the system."
• "A cost model is just a way to do financial forecasting….The report made its conclusions based on a cost model with certain assumptions and as states and localities do their own, the assumptions they make about what [to include] in the forecasting are critical."

On stakeholder engagement:

• "One of the questions that we want to capitalize on is what, if any role do local communities have in financing early childhood services. We're going to be talking about that… People who live at that [community] level need to be part of this mission and part of this conversation or engaged in it."
• "When you have an issue this complex that impacts so many people, it requires multiple stakeholders to come up with a consensus solution. The process of doing that just takes a certain amount of time and bandwidth, that if nobody is providing it, it just never happens. Then what you get is some not necessarily well-designed bill that either has muscle behind it or it doesn't. Then it passes, and then if it passes, there are all sorts of easily foreseeable problems that could have been prevented if there had been better stakeholder engagement, and then it becomes an operating nightmare."

On market rates:

• "Another challenge that states are dealing with is the problem with market rates. I think that we're at the point now in the early care and education system growth that market rates are not working anymore. And yet, while states have the ability to request an alternative rate setting strategy, very few of them are. States need to start thinking differently about how they set rates for early childhood."
• "It's going to be more expensive, but seriously the gap between market prices and the cost of delivering the service is probably not that great in most places for three-and four-year-olds, or at least four-year-olds. It's infants and toddlers. It's the zero to three population. That's where the gap is."

On multiple funding streams:

• "I think there are probably some people who would say, 'Oh we should have just one funding stream.' But there are some trade offs and some reasons why there's advantages to having multiple funding streams. They're really, to some extent, targeting different parts of the ECE market, or different families and children in different circumstances. So having the multiple streams has some advantages. But it makes it a more confusing system, and it leads to these problems with both the gaps in coverage, and then for providers, the burden of having to manage all these different funding streams. So a really important recommendation from the report is about figuring out how, at the state level, to coordinate the funding streams from these multiple sources so that it doesn't have to happen at the provider level."
• "Maybe we don't need all the different programs we have, but we need to think carefully about what are the roles of those different programs and the different financing mechanisms. Some financing mechanisms like subsidies may work better for families with low incomes, and tax credits may work better for families with middle income. But then you have to make sure you don't have a gap when people are kind of in between those two types of mechanisms."

Other considerations for the future:

• "We've got to get the field using automation, and using it effectively and smartly, because it's, again, that's another way to have industry consolidation is starting to get people maximizing automation so that they're actually replacing labor with technology wherever they can."
• "I think the extent to which we can explain to the business community their role in the financing of this work, and also the return on investment that happens when we do fully finance or when we attempt to create systems that support the child care base. Businesses know that their parents need child care. They don't really know what child care needs, and what child care providers need, or what CCR&Rs (child care resource and referrals) need. So a lot of it is the introduction and the education around how they could both support each other."
• "In some ways the only way that a conversation about finance takes legs is if someone really important is making it happen. It could be a legislator, it could be in the governor's office, it could be someone influential in the private sector or outside of government who brings people together to talk about it."

See the Glossary for key word definitions.