Old Policies, New Ways to Fund Preschool

Blog Post
May 2, 2006

Spurred by a growing body of research showing that high-quality preschool programs pay valuable educational dividends, policymakers are seeking ways to expand educational opportunities for three- and four-year-olds—particularly those most at risk of school failure. Forty-one states now have some sort of state-funded preschool programming, and more than half increased preschool funding in fiscal year 2006, according to Pre-K Now, a national advocacy group. In June, Californians will vote on Proposition 82, a “Preschool for All” initiative that would raise taxes on the state's highest earners to fund voluntary universal preschool for all California four-year-olds.

But expanding access to high-quality preschool at the state level is no easy task. Policymakers must find enough money to establish stable, high-quality services, align early childhood education with the existing K-12 system, and provide parents with sufficient options to meet their children's needs. Yet as policymakers work to make high quality preschool available to more families, they often overlook two policy and funding tools already in place in most states that could help them meet these challenges: state school finance systems and charter school laws. In parts of the country as different as Oklahoma and theDistrict of Columbia, lawmakers have used existing finance and charter school systems to promote stable, long-term preschool funding and increase both the quality and diversity of preschool offerings.

Expanding Preschool Via State Finance Systems

Most states fund preschool and elementary and secondary education from the same source: general state revenue. But they often distribute preschool and K-12 funds in very different ways. Regular school districts and charter schools get funding through a state aid formula based on enrollment and other factors.[i] Funding for preschool, by contrast, typically comes from an entirely separate—and much smaller—pot of money. In addition, state preschool and K-12 education programs are often carried out by entirely separate agencies.[ii]

States have valid reasons to separate preschool administration and funding from the elementary and secondary education system. The elementary and secondary school finance system was designed to fund public school districts, and policymakers are understandably wary that putting school districts in charge of preschools would lead to programs for three- and four-year-olds that look too much like another year of elementary school. But, in many states, this division between preschool and K-12 schooling means that preschool is treated like a less-deserving stepchild of public education, receiving less funding per child and held to lower standards, particularly for teacher quality. For example, while every state requires elementary school teachers to hold at least a bachelor's degree, 21 states do not require teachers in state-funded pre-kindergarten programs to hold a bachelor's degree, and most pay preschool teachers substantially less than kindergarten teachers in the state's public schools.[iii]

Further, while quality preschool programs look different from elementary schools, preschool will be most successful if the curriculum is designed to develop the emotional, social, and pre-academic skills children need to be prepared for elementary school, and if children's transitions between preschool and kindergarten are well-coordinated on both sides. Separating preschool from elementary and secondary education makes it more difficult to create this type of alignment. Policymakers work diligently to align academic standards across grades K-20, so that students are prepared at each level to advance to the next, but preschool programs, the first step in public education for many children, are not always well-integrated into these efforts.

Policymakers and the public often see preschool as childcare, not education. As a result, they frequently don't press for preschool funding or for features that are often found in high-quality preschool programs, such as well-planned and research-based curricula, teachers with bachelor's degrees, and small class sizes. Tying preschool programs to separate pots of money also makes the programs more susceptible to shifts in political and fiscal fortunes. According to the National Institute for Early Education Research, 11 states reduced pre-k funding between 2001-02 and 2004-05, and inflation-adjusted preschool spending per child declined by 7.3 percent nationally. During the same time period, per pupil expenditures on K-12 education rose nationally.

Although preschool programs differ from programs for older children in many ways, their effectiveness is diminished by their current conceptual, financial, and administrative isolation from the rest of public education. The best way to achieve greater parity between preschool and elementary and secondary public school systems is to fund preschool through existing statewide school finance systems. Oklahoma has dramatically expanded student access to quality pre-K programs using this strategy, allowing school districts to receive per-pupil state education funds for enrolling four-year-olds.

State school finance systems offer an efficient way to improve both preschool access and funding parity between preschool and K-12 education. But the strategy also has its limits, because state school finance systems are designed to fund public school districts—not the variety of community-based, faith-based, nonprofit, and private preschool programs that form a key part of early childhood education infrastructure. Policymakers must marry the state school aid funding approach to funding preschool with another state policy—charter schooling—in order to create a diverse marketplace of high-quality publicly funded preschool.

Charter Preschools: Promoting More Choices

Students have diverse developmental needs, and this is particularly true in the preschool years, when youngsters' development has greater variation—both from child to child and over time for the same child—than at older ages. Having a wide range of preschool programs—including those run by private, nonprofit, and community-based groups—as part of the system of publicly funded preschools is essential to providing parents a range of preschool options to address their children's needs. Policymakers can use the charter school model, which has successfully expanded parental options in elementary and secondary education, to make a wide variety of publicly funded preschool programs available to families as well.

Charter schools are publicly funded, publicly accountable to "authorizers" such as school systems or universities, and open to all students. But they operate largely independent of school district regulations and traditional collective-bargaining contracts. This has attracted new players with diverse educational strategies to enter public schooling. Expanding the charter school concept to the preschool level would allow private and community-based preschools, including Head Start programs, to become part of the state-funded preschool system; enable students to attend such preschools tuition-free and further increase parents' preschool options by creating financial incentives for new providers to enter the preschool market. TheDistrict of Columbia exemplifies how the charter preschool concept can be effectively combined with "statewide" preschool funding. To use this model, states need to have both a state aid formula that provides funding for preschool students and a charter school law that allows charter schools to receive state aid for enrolling preschoolers.

Chartering can also address two major implementation challenges facing state preschool programs: building the supply of quality preschool providers and controlling quality. Many states simply don't have enough quality preschool programs—public, private, or non-profit—to provide high-quality preschool for all the children who need it. Expanding access will require the creation of many new, high-quality programs. By using charter laws to give preschool providers access to public resources, state legislators can leverage the same entrepreneurial energy that has driven charter expansion to provide more quality preschool opportunities for needy youngsters.

In addition, the experiences of successful charter school authorizers can help policymakers hold publicly-funded preschool programs accountable for their students' success. The standardized tests used to gauge elementary and secondary students' learning aren't appropriate for preschool. Young children's abilities to master certain skills and concepts depend much more on their bodies' and brains' development than is the case for older children, and that development is sporadic—children might be able to do something one day they could not do the day before, and vice versa—and varied—children of the same chronological age might be at very different places developmentally. This is why assessment and early childhood experts council against using standardized assessments or attaching consequences to them before grade three. There are assessments designed specifically for preschoolers that can provide educators with useful information about how individual children are doing and can be used as part of broader evaluations of preschools. But they should not be used as the sole measures of preschool performance, the way standardized tests are used in K-12 accountability systems. Preschool accountability systems must be more nuanced, incorporating on-site observations, input and process quality measures, results of formative assessments, and professional judgment. Good charter school authorizers, like the District of Columbia Public Charter School Board, already use many of these measures to evaluate schools, providing a model for designing preschool accountability.

Benefits and Costs

Beyond the advantages of more stable funding, more diversity in preschool offerings, higher teacher standards, and the potential for greater accountability for result, incorporating preschool into state education finance systems and expanding charter preschools could strengthen the political coalition for both preschool and public school funding. Instead of pitting preschool and K-12 advocates against each other in an annual fight for funding, this approach could bring them together in a single alliance seeking greater investments in education and services for children of all ages.

Expanding preschool would, of course, be expensive. But a substantial body of research has found that preschool investments generate significant taxpayer savings over time through substantial reductions in grade-retention, special education placements, and crime among children who attend high quality preschool. Such students also earn higher salaries as adults. These benefits far outweigh the up-front costs of expanding the nation's preschool system.[iv]

State policymakers would be the first to note that they can't appropriate theoretical future savings to pay for present-day programs. But a strong understanding of the costs and benefits can improve the environment for new investments. Analyses inWisconsin and Louisiana, have found that the states will recoup about two-thirds to three-quarters of the cost of preschool investments before preschoolers graduate from high school, through savings that result from reduced grade retention and special-education placements.[v] Funding preschool through the same system that reaps much of the early returns on these investments simply makes sense.

In order to effectively use the charter strategy to expand access to preschool, policymakers in a number of states will have to change state policies that limit the growth of charter schools. For example, some states have strict caps on the total number of charter schools or limitations on where charter schools may operate. These limitations would force preschool charters into a zero-sum competition with applicants who serve the K-12 market. Legislators could address this concern either by raising or eliminating caps on charter schools, or, as a compromise, setting a specific, separate cap for charter preschools. The latter approach would allow them to expand preschool access incrementally.

In addition, policymakers in some states must take steps to improve the quality of charter school authorizing. Studies show that many charter school authorizers are not doing a very good job of establishing and sustaining high-quality charter schools.[vi]Policymakers can improve charter authorizing by increasing monitoring and accountability of authorizers for their schools' performance, providing technical assistance to small authorizers, and approving the creation of new authorizers—such as public universities or independent statewide charter boards—that have been shown to be higher quality authorizers in many states.[vii]This would have benefits for both K-12 charter schools and efforts to expand preschool charters.

There are many ways states can expand preschool access, and state policymakers need to choose the approach that best meets their unique demographic, economic, and educational contexts. But, by allowing charter and traditional public schools to receive per-pupil funding through the state school finance system, state officials could expand publicly supported preschool options in a way that minimizes bureaucracy, improves accountability, encourages a diverse provider network, and expands parental choice for high-quality, publicly-financed preschool education.

[i] According to the Education Commission of the States, 25 states and the District of Columbia use some type of foundation or base funding formula that provides per-pupil funding weighted to reflect students' educational needs. Another twelve states use a modified form of base or foundation funding system, and two provide states with exact amounts of funding per student.http://www.ecs.org/clearinghouse/59/81/5981.htm

[ii] Stone, Diana, “Funding the Future: States' Approaches to Pre-K Finance.” (Washington, DC: Pre-K Now. February 2006).

[iii] Barnett, Steven, et al. “The State of Preschool 2005: State Preschool Yearbook.” (National Institute for Early Education Research. March 2006.)

[iv] Barnett; Reynolds TK

[v] Belfield, Clive R. and Dennis Winters, “An Economic Analysis of Returns to Four-year-old Kindergarten in Wisconsin: Returns to the Education System.” (Washington, DC: Pre-K Now. September 2005); Belfield, Clive R., “An Economic Analysis of Pre-K in Louisiana.” (Washington, DC: Pre-K Now. June 2005).

[vi] Palmer, Louann Bierlein and Rebecca Gau, “Charter SchoolAuthorizing: Are States Making the Grade?” The Thomas B. Fordham Institute, June 5, 2003; U.S. Department of Education, Office of Educational Research and Improvement, “A Study of Charter School Accountability,” June 2001; Hassel, B.C. & Batdorff, M. “High-stakes: Findings from a national study of life-or-death decisions by charter school authorizers,” Public Impact, 2004.

[vii] Ibid.

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