Blog: The Educated Reporter

Paying for Pre-K: Communities See Success With Innovative Approaches

Gus The Bus is one of two mobile preschools serving more than 100 children in the Aspen, Colo., area. Photo by Jennifer Shideler/ Used with permission

Two used buses retrofitted into state-of-the-art preschool classrooms drive around several of Colorado’s most rural and isolated communities to bring high-quality preschool right to families’ doorsteps.

That’s just one innovative way to finance pre-K, said Jayne Poss, director of Preschool on Wheels at the Aspen Community Foundation. Speaking about ways to finance early childhood education at EWA’s recent National Seminar in Chicago, Poss said the program has been helping underserved 3- to 5-year-olds since the 2012-13 school year.

Before the project started, there was tremendous unmet need, she said. Only about a third of children in the rural area around the Rifle, New Castle and Silt communities had access to pre-K.

A lack of finances or transportation served as a barrier for many rural families, she said. Some didn’t have traditional work schedules and the community didn’t have enough capacity to meet the need.

During the first school year, Preschool on Wheels’ “Gus the Bus” served nearly four dozen children. Poss said they’ve since added another bus, called The Sunshine Bus, allowing them to accommodate more than 100 children.

Philanthropic dollars, private businesses and individuals have kept the mobile preschool project thriving. The Aspen Community Foundation’s Cradle to Career Initiative partnered up with Garfield Re-2 School District to serve the community. And the collaboration is representative of the innovative ways states and districts are delivering high-quality early learning.

“I think the research shows that preschool works,” said Melissa Sanchez, an associate editor for Catalyst Chicago, who moderated the EWA panel. Children with access to pre-K are more prepared for kindergarten and they’re more likely to reap the benefits later in life, she said.

“But we haven’t figured out to pay for it,” Sanchez said. “It’s important for reporters to cover early childhood education and how the financing aspect of it works because it can be tricky.”

Early childhood education is similar to the higher education financing landscape, said Anne Mitchell, co-founder of the Alliance for Early Childhood Finance. About 58 percent of the $70 billion poured into early children education comes out of families’ pockets. About 39 percent is government funding in the form of vouchers or tax credits and 3 percent comes from the private sector.

For years, states have been figuring out how to serve their youngest and most vulnerable children in a cost-effective way, Mitchell told the EWA audience. For example, California passed a measure in 1998 to tax tobacco in order to fund early childhood programs. Missouri has recently been considering a similar measure.

Louisiana is one of the most interesting states for pre-K finance, Mitchell said. The state boasts a comprehensive package of tax credits that provides families with a credit for paying pre-K costs. The higher quality the program, the higher the tax credit. Pre-K programs that are evaluated by the state’s quality ratings system are also eligible for tax credits based on the number of needy children they serve and the quality of their program.

States and districts are also picking up on the utility of social impact bonds, a type of contract between the public sector, private business or philanthropy and nonprofits, where investors pay up front for preschool services and they’re later paid back through public sector savings, like reduced special education costs.

Utah’s Salt Lake County is using the Pay for Success model. It’s an approach quickly growing in popularity that’s working in “one of the reddest states, where the thought about early childhood education is often tied directly to a sense of the state ripping babies away from the arms of their mothers,” said Fraser Nelson, director of Data and Innovation for Salt Lake County.

Social impact bonds and the Pay for Success model appeals to government because it’s a way to “contract for outcomes,” said Nelson at the EWA event.

It’s a way for government to invest in something, take it to scale and possibly capture some savings, she said. It passes risk onto investors, who can do some good for the community. And rather than just blindly funneling money into a project, the model is rigorously evaluated by institutions of higher education, which helps drive real results.

Nelson said she expects the model will lead to reduced special education costs and likely more savings down the line around substance abuse, bookings into the county jail, homelessness and more.

In Chicago, Sanchez said social impact bonds have become a political football. Teachers unions are using it as a weapon against Mayor Rahm Emanuel, railing on the idea and saying it allows private investors like Goldman Sachs to get richer. Sanchez asked Nelson if she has seen similar concerns voiced in Utah.

Nelson said that hasn’t been the case.

“These are fairly high-risk initiatives,” she said. “These aren’t necessarily things that will generate tremendous amounts of savings, so I can understand there’s concern that someone’s making money. But what they’re really making is interest on their loan.”

Social impact bonds and mobile preschools are serving children in place of a large federal or statewide investment in early childhood education. Sanchez asked if both programs are temporary, meant as a stopgap measure to convince government that a large-scale investment is worth it.

Paul Boger of Mississippi Public Broadcasting also asked the EWA panelists about how to convince state lawmakers that a large-scale investment is worth it.

Mitchell said the science behind early learning is most convincing. Nelson agreed, adding that cost savings is convincing, too.

“Money they can divert to other programs is a compelling story,” Nelson said.

But Mitchell said the cost savings argument isn’t as convincing to legislators because it takes a while to see a return on investment. By the time the savings start to roll in, there’s been legislative turnover.

Above all, “voluntary is a key word” when considering a large-scale program, Nelson said. Universal preschool proposals are always voluntary and it’s a crucial part of any plan that can appease hesitant, conservative lawmakers.