Study calls for overhaul of financial structure of early childhood education

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A new report from the National Academies of Sciences, Engineering, and Medicine has called for an overhaul of financial structure of early childhood education to ensure positive child development in early years and thereby generation of economic returns later on.

The report points out that current financing structure early care and education (ECE) is leaving many children without access to high-quality services. The report reveals as of now funding for the ECE comes from several individual programs with different revenue streams, constituencies, eligibility requirements, and standards. The funds are distributed to providers and families through mechanisms such as federally funded Head Start programs, public pre-kindergarten programs, tax preferences, and other methods.

Authors of the report point out the lack of harmonization among these financing mechanisms and this is leading to gaps in ECE affordability for some low-income families, economic segregation within ECE settings and classrooms, and underutilization of ECE services by middle-income families.

Further, many of these programs are under-funded and do not serve all children who are eligible to receive services. In order to allow all children and families access to ECE, federal and state governments should set uniform family payment standards that increase progressively across low-, moderate-, and higher-income groups, so families pay either no fee or an amount they can reasonably afford, based on established income criteria.

The share of costs that are not covered by family payments should be covered by a combination of support to ECE providers and assistance directly to families that is based on these income eligibility standards, the report notes.

The committee that carried out the study and wrote the report estimated potential contributions from families and the public sector over phases, recognizing that increases in ECE funding will need to occur over time.

By the final phase of implementation, the estimated total annual cost of providing high-quality early care and education for all children is at least $140 billion. If families contribute to the costs based on an affordable family payment schedule, the increase in public funding would grow from the current level of about $5 billion a year to $53 billion a year in the final phase. This would mean that public costs would increase to $82 billion and private costs would be $58 billion annually in the final phase.

The report also says that in order to provide high-quality care, a highly qualified workforce is essential, meaning educators and staff must be well-compensated, have affordable opportunities to access higher education, and receive appropriate ongoing support and professional development.

The committee recognized that implementing a new financing structure to ensure access to high-quality, affordable early care and education will take time and will require ample political will and leadership, but it also noted that there is great urgency in realizing this vision. Once in place, the committee said, these changes will attract highly qualified professionals, serve the needs of all families, and will allow the nation’s youngest children the opportunity for the best possible start in life.

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