Table of Contents
- Frequently Asked Questions
- Moving Forward: Voices from the Field
- Introduction
- Landscape of Early Care and Education Financing
- Current Financing for Early Care and Education: Financing a Highly Qualified Workforce
- Current Financing for Early Care and Education: Affordability & Equitable Access
- Current Financing for Early Care and Education: Ensuring High Quality Across Settings
- Estimating the Cost of High-Quality Early Care and Education
- A Vision for Financing Early Care and Education
- Behind the Numbers
- Putting it into Context
- Learning from States and Other Countries
- Tools and Resources
- Graphics and Data Visualization
- Glossary
Glossary
| Glossary | ||
|---|---|---|
| Chapter 1 | ||
| Term | Definition | Reference |
| Early care and education (ECE) | Nonparental care for children from birth to kindergarten entry that occurs outside a child’s home. | [Transforming the Financing](https://www.nap.edu/catalog/24984/transforming-the-financing-of-early-care-and-education), p. 23 |
| ECE system | ECE programs and services as well as the policies, regulations, and financing that shape their operation and the professional training needed for each setting. | [Transforming the Financing](https://www.nap.edu/catalog/24984/transforming-the-financing-of-early-care-and-education), p. 26 |
| Funding | Money provided by organizations or by a government sector for a specific purpose. | |
| Financing system | The policies, regulations, funding streams, and financing mechanisms in the ECE system. | [Transforming the Financing](https://www.nap.edu/catalog/24984/transforming-the-financing-of-early-care-and-education), p. 26 |
| Compensation | The total amount of monetary and non-monetary pay provided to an employee in return for work performed; can include salary and benefits such as health insurance and pension. | |
| Competency | The specialized knowledge, skills, and abilities needed by educators and administrators who work with children from birth to eight years old. | Transforming the Early Education Workforce, “[Glossary of Key Terms”](https://www.newamerica.org/in-depth/transforming-early-education-workforce/glossary-key-terms/) |
| State pre-K | Programs that are funded, controlled, and directed by the state to serve three- and four-year-olds; must offer group learning experiences for a minimum of two days per week focused on early childhood education. | |
| Head Start | Provides high-quality early childhood education and health, nutrition, and family engagement and support services to three- to four-year-old children living in poverty. | |
| Early Head Start | Provides high-quality early childhood education and health, nutrition, and family engagement and support services to infants and toddlers living in poverty. | |
| Chapter 2 | ||
| Term | Definition | Reference |
| Tax credits | An amount of money that taxpayers can subtract from taxes owed. There are two types: 1. Refundable tax credits, where taxpayers get a refund even if the refund is more than they owe. 2. Non-refundable tax credits, where taxpayers get a refund only up to the amount that they owe. |
[Investopedia](https://www.investopedia.com/terms/t/taxcredit.asp) |
| Employer-based tax credits | Tax credits that allow employers to deduct from their income tax a portion of the cost of direct ECE subsidies provided to employees or the cost of ECE resource and referral services, up to a maximum amount. | [Transforming the Financing](https://www.nap.edu/catalog/24984/transforming-the-financing-of-early-care-and-education), p. 74 & 78 |
| Pay for success | Contracts that tie payment for service delivery to measurable outcomes. Payors, typically the government, pay back investors if the services delivered achieve a pre-agreed-upon result. | [Nonprofit Finance Fund](https://www.payforsuccess.org/learn/basics/) |
| CCDF (Child Care and Development Fund) | Funds states, territories, and tribal entities to develop and implement a subsidy program for low-income families with children under age 13 (the majority of children served are under 5; subsidies can be used for care of children ages 5–13 during non-school hours) and to improve the quality of child care available. State governments have discretion to establish policies around its application, such as family eligibility and copayments. | [Benefits.gov](http://benefits.gov) |
| TANF (Temporary Assistance for Needy Families) | Assists families with children when parents or other responsible relatives cannot provide for basic needs. The federal government provides grants to states to run the TANF program. Each state and territory decides eligibility criteria and benefits. | [HHS](https://www.hhs.gov/answers/programs-for-families-and-children/what-is-tanf/index.html) |
| CDCTC (Child and Dependent Care Tax Credit) | Helps working families reduce the cost of ECE by allowing them to claim a federal tax credit. | [TCWF](http://www.taxcreditsforworkersandfamilies.org/federal-tax-credits/child-dependent-care/) |
| DCAP (Dependent Care Assistance Program) | Allows parents to set aside pretax funds in a flexible spending account to pay for child or dependent care, for children up to age 13 and for qualifying dependent adults. | [Transforming the Financing](https://www.nap.edu/catalog/24984/transforming-the-financing-of-early-care-and-education), p. 70 |
| Shared services | A partnership model comprised of centers and family child care homes working together to share costs and deliver services. | Administration for Children and Families |
| Chapter 3 | ||
| Term | Definition | Reference |
| CDA (Child Development Associate) credential | A national credential awarded by the Council for Early Childhood Professional Recognition; it requires at least 120 hours of formal training within the last five years. | [Council for Professional Recognition](https://www.cdacouncil.org/) |
| Fiscal substitution | The amount of compensation increase a provider pays in response to inflation and labor market demands. | [Transforming the Financing](https://www.nap.edu/catalog/24984/transforming-the-financing-of-early-care-and-education), p. 94 |
| Compensation parity | Defined by Whitebook and McLean as “parity for salary and benefits for equivalent levels of education and experience, adjusted to reflect differences in hours of work in private settings, and including payment for non–child contact hours, such as paid time for planning.” | [Transforming the Financing](https://www.nap.edu/catalog/24984/transforming-the-financing-of-early-care-and-education), p. 162 footnote |
| Needs-based scholarships | Scholarship awards based on financial need. | |
| T.E.A.C.H. (Federal Teacher Education Assistance for College and Higher Education Grants) | Provides educational scholarship opportunities for current ECE educators, with support from public and private funding; grants also provide supplemental funding to students who plan to teach in a high-needs field in low-income schools. | [Transforming the Financing](https://www.nap.edu/catalog/24984/transforming-the-financing-of-early-care-and-education), p. 100 & 103 |
| Provider-oriented financing mechanisms | Distribute funds to providers to cover costs of delivering services; Head Start and public pre-kindergarten are two major programs funded this way. | [Transforming the Financing](https://www.nap.edu/catalog/24984/transforming-the-financing-of-early-care-and-education), p. 84 |
| Family-oriented financing mechanisms | Provide financial support for ECE directly to or on behalf of individual families; enable families to pay in part or in whole the cost of ECE services. | [Transforming the Financing](https://www.nap.edu/catalog/24984/transforming-the-financing-of-early-care-and-education), p. 84 |
| Workforce-oriented financing mechanisms | Distribute funds directly to the ECE workforce; examples include scholarships, pay incentives, tax preferences, and reduced-rate loans. | [Transforming the Financing](https://www.nap.edu/catalog/24984/transforming-the-financing-of-early-care-and-education), p. 85 |
| Wage supplements | Additional compensation, scholarships, or other tuition offsets to support ECE educators who pursue higher education, achieve a particular degree, or meet a retention milestone. | [Transforming the Financing](https://www.nap.edu/catalog/24984/transforming-the-financing-of-early-care-and-education), p. 171 |
| System-oriented financing mechanisms | Distribute funds to support system-level initiatives, such as statewide quality rating assurance systems, professional development systems, or sustaining programs in higher education. | [Transforming the Financing](https://www.nap.edu/catalog/24984/transforming-the-financing-of-early-care-and-education), p. 85 |
| Pell Grants | Federal need-based scholarships for college students. | [Transforming the Financing](https://www.nap.edu/catalog/24984/transforming-the-financing-of-early-care-and-education), p. 103 |
| Chapter 4 | ||
| Term | Definition | Reference |
| CCAP (Child Care Assistance Program) | Helps working families pay for ECE programs: family chooses the service provider and the state ensures that the provider is paid for the subsidized child. CCAP is primarily funded by CCDF (Child Care and Development Fund) money in states. | [Transforming the Financing](https://www.nap.edu/catalog/24984/transforming-the-financing-of-early-care-and-education), p. 68 |
| Chapter 5 | ||
| Term | Definition | Reference |
| QRIS (Quality Rating and Improvement System) | QRIS for early childhood programs have been developed and implemented at the state and local level. While considerable variability exists in their design and implementation, they all aim to improve child outcomes and make the extent of a program’s quality transparent to parents and the general public by assessing multiple indicators and combining them into a single summary rating of quality. | Transforming the Early Education Workforce, “[Glossary of Key Terms”](https://www.newamerica.org/in-depth/transforming-early-education-workforce/glossary-key-terms/) |
| Tiered reimbursement | Financial incentives tied to QRIS that provide higher subsidy reimbursement rates to programs with higher quality ratings. | [National Center on Early Childhood Quality Assurance](https://qrisguide.acf.hhs.gov/sites/default/files/QRIS_Financial_Incentives.pdf) |
| Chapter 6 | ||
| Term | Definition | Reference |
| On-site costs | Costs of maintaining high-quality staff; providing on-site staff supports and professional development; and non-personnel items such as curriculum, facilities, and equipment. | [Transforming the Financing](https://www.nap.edu/catalog/24984/transforming-the-financing-of-early-care-and-education), p. 158 |
| System-level costs | Two categories: (1) workforce development supports, such as ongoing professional learning and higher education, and (2) costs related to QRIS, such as systems improvement and accountability, data systems, licensing, and accreditation. | [Transforming the Financing](https://www.nap.edu/catalog/24984/transforming-the-financing-of-early-care-and-education), p. 158 |