The Third Rail: Funding Reform for Early Learning Programs

With early childhood education taking a more prominent role on national and state policy agendas in recent years, it’s not surprising that enrollment in early childhood education and care (ECE) programs is increasing. According to Child Trends, 61 percent of children participated in some type of center-based care before entering kindergarten as of 2012—up six percentage points since 2007. But despite these promising developments, Child Trends also found that children from lower-income families remain less likely to enroll in those programs than their wealthier peers.

That’s a problem for low-income children, given that the impact of high-quality early learning experiences is often greatest on children living in poverty.  While overall participation in ECE programs is up, federal programs that specifically target low-income families, like the Child Care and Development Block Grant (CCDBG) and Head Start, have long waiting lists. Due in large part to the Great Recession, about one in five American children now lives in poverty—and enrollment in these programs has not kept pace with these recent increases. In fact, Child Trends reports, the share of 3- to 5-year-olds living in poverty and enrolled in Head Start has actually declined between 2007 and 2011, from 42 to 33 percent.

The shortfall is happening because there isn’t enough money to go around. Low-income families are not typically choosing to pass up affordable and even free access to pre-K and child care. Instead, long waitlists in states around the country point to the real problem: Eligible families cannot enroll because Congress hasn’t funded enough slots for all eligible children. With only modest funding increases over the last decade—and a small surge of stimulus dollars in 2009—these programs are not able to reach the growing number of children in poverty.

Quality child care can play an important role in parents’ and children’s success, yet the high costs limit access for many families. The Child Care and Development Fund, comprised of about half appropriations and half entitlement funding, provides the main federal source of child care assistance for low-income families. Yet as CLASP explains only “18 percent of children eligible to receive assistance under federal rules were served in 2009. And given declining investments since then, child care assistance may be reaching an even smaller share of the eligible population today.” Nineteen states either weren’t accepting new families for federal child care assistance or had waiting lists, some of which topped tens of thousands of children, as of last year, according to the National Women’s Law Center.

There’s just one way to ensure programs like Head Start and CCDBG, which can both allow parents to work and children to excel, reach as far as they’re meant to: more funding. It’s a difficult ask, though, in the midst of a global recession and a combative political environment. But it’s why, in our recent report Beyond Subprime Learning: Accelerating Progress in Early Education, we still noted that lawmakers should make some big new investments in early learning—along with some major changes to those programs.

For CCDBG, we proposed modeling the subsidies after the Pell Grant program, which offers financial aid to low-income college students. That program sets no absolute income limit for eligibility; instead, it creates a formula based on income and family size, and awards grants to all eligible students on a sliding scale based on need. (CCDBG requires states to set an income limit, and many states have been lowering those levels over the past few years.) And all eligible Pell applicants are guaranteed their piece of the grant money, because it functions as an entitlement program (although, like CCDBG, it is funded with both appropriations and mandatory funding).

With some more money—the Pell Grant program spends more than $32 billion annually to provide 8.7 million students with grants, compared with CCDBG’s 1.5 million children served each month—a similar system could work well for CCDBG. A Pell Grant for child care would create income phase-outs rather than cutting off families arbitrarily, creating a disincentive to work; and it would allow more low- and middle-income families to access the programs. We proposed that Congress reappropriate some money from the tax code (think tax benefits and loopholes for high-income individuals, including the nearly $30 million for the child care credit that goes to families earning more than $500,000 annually) back to CCDBG. That way, lawmakers could provide better-targeted benefits as a front-end voucher, rather than a back-end tax credit, which research suggests is a more effective way to provide subsidies to families anyway.

There are, of course, risks to this approach. The Pell Grant program has struggled in recent years to meet its commitment to awarding grants to all eligible students, and costs have skyrocketed during the recession as family income fell and enrollment rose. However, it has also become a politically untouchable program in Congress: Despite the growing costs, lawmakers virtually always find the money to meet their obligations. Repositioning child care as a funding priority similar to that of the Pell Grant program could give it a similar status during the appropriations process. So although extra money to help the millions of families living in poverty is far from a guarantee in the current political environment, a Pell Grant for child care could be a good start.

To read more of our recommendations for CCDBG, Head Start, and other early learning programs, click here.