Transforming the Financing of Early Care and Education (2018) / Chapter Skim
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7 A Vision for Financing Early Care and Education
7 A Vision for Financing Early Care and Education
Pages 195-240
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From page 195... ...
(Figure 7-1 represents these realities of the current system.) Given what science shows regarding the benefits of quality early learning experiences for positive childhood development and a lack of systemic progress to improve the quality of early care and education offered in the United States,1 an effective financing structure is needed to address these persistent problems.
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From page 196... ...
196 TRANSFORMING THE FINANCING OF EARLY CARE AND EDUCATION FIGURE 7-1 Landscape of current ECE financing structure.
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From page 197... ...
In the envisioned transformed and effective financing structure, an integrated system of laws and policies will ensure that each of the following goals is attained: • Financial support for early care and education will be based on covering the total cost of high-quality early care and education (i.e., the costs of service delivery with a highly qualified and adequately compensated workforce and system-level supports, including mech anisms for accountability and improvement) and will hinge on a consistent set of quality standards applied across a mixed delivery system.
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From page 198... ...
AN EFFECTIVE FINANCING STRUCTURE The previous chapters make clear that the current structure for ECE financing is fragmented and inconsistent. Current financing mechanisms tend to treat each part of early care and education -- service delivery, system supports, and workforce supports -- as a separate area, rather than as parts of an integrated system with interdependent components.
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From page 199... ...
A VISION FOR FINANCING EARLY CARE AND EDUCATION 199 FIGURE 7-2 Landscape of ECE financing structure during the transition period for phased implementation.
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From page 200... ...
200 TRANSFORMING THE FINANCING OF EARLY CARE AND EDUCATION FIGURE 7-3 Envisioned future ECE financing structure.
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From page 201... ...
This section discusses the key aspects of the financing structure: consistent, high quality-standards and cost-based payments; elimination of parental employment contingencies; harmonization of financing mechanisms to ensure access; and state-level coordination. Consistent High Quality-Standards and Cost-Based Payments Recommendation 1: Federal and state governments should establish consistent standards for high quality across all ECE programs.
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From page 202... ...
In this way, the federal funding would act as a policy lever to induce high-quality early care and education with a highly qualified workforce at the state level. Individual states should also set consistent, high quality-standards across any financing mechanisms for which they are the primary funders, including any ECE mechanisms that the state is funding out of consolidated funding streams, which may include funds from the federal government.
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From page 203... ...
ECE providers have access to free trainings as part of the "Early Achievers Professional Training Series"; relationship-based professional development such as technical assistance, rating readiness consultation, and coaching; scholarships for ECE professionals to pursue child development associ ate credentials, stackable state credentials, associate's degrees, and bachelor's degrees; and financial incentives, including needs-based grants, quality improve ment awards, and tiered reimbursement (Child Care Aware of Washington, n.d.; Washington State Department of Early Learning, 2015)
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From page 204... ...
A quality-oriented approach requires changing the basis on which reimbursement rates are determined so that rates reflect the total cost in each state or locality of high-quality early care and education, including the costs of service delivery with a highly qualified and adequately compensated workforce and system-level supports, including mechanisms for accountability and improvement.3 Such costs should also reflect the differential costs of serving children with different physical, emotional, and linguistic needs, especially the different staff qualifications, training, and structure required to meet those needs.4 Pegging reimbursement rates to the cost of delivering high-quality ECE services will increase stability and viability of providers and allow investments in quality improvements and the ECE workforce. Ensuring Access to High-Quality Early Care and Education for All Children The previous chapters identified four major limitations of the current financing mechanisms: they fail to serve many low-income families eligible for assistance, they fail to make high-quality early care and education affordable for other low- and middle- income families; the major familyoriented mechanisms (ECE assistance programs and tax preferences)
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From page 205... ...
The committee expands on this recommendation with three corollaries that we view as essential to fulfilling the intent of the general recommendation: 2a. ECE programs and financing mechanisms (with the exception of employer-based programs)
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From page 206... ...
Being able to access ECE services allows parents with young children to be employed, as research clearly demonstrates that reducing the cost of early care and education increases parental employment (see, e.g., Blau and Kahn, 2013) and that ECE access can be coordinated with access to services for training, education, and job placement, as exemplified in many two-generation approaches such as Head Start.6 5 However, divorcing family-oriented financing from an employment requirement does not prevent states from having the flexibility to provide assistance to families to purchase regulation-exempt ECE services under some circumstances.
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From page 207... ...
This progressive scale would reverse the current pattern, in which lower-income families not eligible for no-fee ECE options pay a larger share of household income than do higher-income families. Figure 7-4 illustrates such a financing structure, showing how the total cost of a high-quality ECE system would be covered using institutional support, family assistance, and if applicable, family contributions.
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From page 208... ...
Family Income Level FIGURE 7-4 ECE financing structure with harmonized financing mechanisms. NOTES: The total cost of providing high-quality early care and education per child is fixed, regardless of financing mechanism or revenue stream.
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From page 209... ...
Although harmonizing provider-oriented and family-oriented mechanisms has the potential to allow providers to invest in raising staff salaries and supports, recruiting qualified personnel, and expanding or improving facilities, the current ECE financing structure lacks the stability and ensured funding that would allow providers to invest in these quality improvements. Other public programs have addressed these problems through advanced, multiyear funding.
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From page 210... ...
Allowing states to coordinate multiple revenue streams and financing mechanisms should only occur after a state has demonstrated a readiness to implement a financing structure that advances the principles for high-quality early care and education, including adequate and integrated funding for service delivery with appropriate qualifications and compensation for the workforce, workforce supports, and systems supports such as mechanisms for accountability and improvement and the adoption of consistent high quality-standards. The exceptions to this coordinator role for states are the federal and state tax preferences that flow directly to families.8 To foster efficiency and reduce administrative redundancy, states, as coordinators, should distribute federal and state funds to providers and families and have ample flexibility to create an administrative structure to fit their needs.
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From page 211... ...
The EarlyLearn system encompasses three types of ECE programs and four funding streams, successfully combining funds from CCDBG, Head Start, New York State's Universal Prekindergarten program, and a city tax levy to support the system. At the federal level, ACS acquires funds from both CCDBG and a Head Start grant.
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From page 212... ...
Such a coordinated financing structure would retain multiple financing mechanisms, such as provider-oriented financing for Head Start programs and family-oriented financing for subsidies for ECE services through the Child Care and Development Fund (CCDF)
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From page 213... ...
Public Share of Costs Recommendation 4: To provide adequate, equitable, and sustainable funding for a unified, high-quality system of early care and education for all children from birth to kindergarten entry, federal and state governments should increase funding levels and revise tax preferences to ensure adequate funding. Existing financing mechanisms fail to serve many low-income families eligible for assistance and families ineligible for assistance but priced-out of accessing high-quality ECE services, indicating a need for greater public investments to ensure that all eligible children can participate in early care and education.
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From page 214... ...
If the costs of the recommended financing structure exceed that which policy makers are willing to allocate, then the potential results are either a failure to act or an allocation of funding inadequate, according to our analysis and assumptions, to achieve the committee's primary objectives of high-quality ECE services with a wellcompensated workforce that are affordable for all families. How the burden can best be distributed among levels of government and among revenue sources must be determined through political processes in which decision makers weigh different options for transitioning to and implementing a high-quality ECE system and weigh the benefits of such a system against the potential political and economic costs of reducing other public expenditures or raising taxes.
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From page 215... ...
In any case, the committee believes that most people would accept the view that regressive taxes -- those that take a higher share of income from lower-income taxpayers than the share they take from higher-income taxpayers -- would be unfair. For ECE financing, this fairness criterion would argue against financing based on,
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From page 216... ...
A good tax source for funding a transformed ECE financing structure would also generate substantial revenue that is relatively stable over economic cycles, is sustainable, and increases with the growth of population and average wages. Stability of the tax base over the economic cycle is a desirable characteristic for a revenue source used to finance a service, such as early care and education, that must be delivered consistently over time.
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From page 217... ...
Families' Share of Costs Recommendation 5: Family payments for families at the lowest income level should be reduced to zero, and if a family contribution is required by a program, that contribution, as a share of family income, should progressively increase as income rises. 11 The committee acknowledges, however, that some observers may object to relying on rev enue sources that grow with population and wages on the ground that the automatic revenue growth generated by such sources may keep policy makers from fulfilling their responsibility to closely monitor and evaluate funding levels.
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From page 218... ...
In the current system, some families are priced out of participating in paid ECE services due to unaffordable fees. Moreover, the fees paid by low- and middle-income families in the current system account for a much greater share of household income than the fees paid by more affluent families, resulting in a regressive financing structure that does not allocate limited funds to those most in need.
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From page 219... ...
Asking families to contribute some of the cost of early care and education mirrors the financing structure of the higher education, housing, and health-care systems, in which families are expected to contribute to the cost of services used. An affordable family contribution can result in a progressive financing structure that targets resources to those most in need, reduces public costs, and retains an additional revenue stream.
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From page 220... ...
experiences in Head Start/Early Head Start and some state and local universal prekindergarten programs, as well as kindergarten programs, demonstrate that no-fee approaches for certain programs eliminate financial barriers to utilization and could ensure that participation in early care and education does not depend on family circumstances, greatly improving access. Like systemwide no-fee approaches, requiring no family contributions for these programs helps to promote equity, reduce poverty, and limit the administrative burden on providers.
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From page 221... ...
During the transition period, the nonparental private sector will continue to be an important stakeholder and may build coalitions to support initiatives to bring about systematic change, leverage investments to drive implementation of a new financing structure, and hold the public sector accountable for improving quality in early care and education for children and for the ECE workforce. Engaging and developing public and private partnerships will also be important in planning for the transition to high quality, in order to leverage resources and build constituencies and commitment to moving toward high quality.
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From page 222... ...
, a public-private partnership that supports ECE programs, services, and policies, partnered with the Virginia Chamber of Commerce to host a meeting of high level stakeholders that emphasized the importance of the knowledge, skills, and abilities of the ECE workforce in predicting and delivering quality services. This meeting, titled "Upskilling Virginia's Early Educator Workforce," brought high-level and multi ector attention to the importance of the ECE workforce and the need for s a cohesive system of pre-service education and professional development sup ports (Glazer et al,, 2017)
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From page 223... ...
Scholarships for eligible educators cover tuition, fees, and the cost of books. The scholarship program, administered by VECF, incorporates alternative development options including dual enrollment for high school students interested in an ECE career and an apprenticeship program for incumbent ECE educators to access credit bearing coursework at no cost to them or their employer, as well as an onsite mentor/coach and wage enhancements at the conclusion of each successful apprenticeship year.b • A partnership of representatives from community colleges and universi ties, led by VECF, has designed 2+2 articulation programs (2 years of an associate-degree program that connects with [articulates into]
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From page 224... ...
Such a planning process would facilitate coordination at the federal level among federal agencies and other national stakeholders to streamline the financing for monitoring and technical assistance structures, coordinate federal supports for the professional development of the ECE workforce -- including supports to ensure diversity across professional roles -- and harmonize federal data collection and research efforts, among others. State-level and community-level plans could outline specific strategies for addressing quality components in their specific contexts, including 18 Funded through the Administration for Children and Families and state resources, State Advisory Councils on Early Childhood Education and Care are "charged with developing a high-quality, comprehensive system of early childhood development and care" and "ensure statewide coordination and collaboration among the wide range of early childhood programs and services in the state, including childcare, Head Start, IDEA preschool [prekindergarten]
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From page 225... ...
This section discusses special considerations, related to improved staff compensation, higher education, and professional development, that will be required during the transition to high-quality early care and education with a highly qualified workforce. Staff Compensation As described in the Transforming report, linking qualifications to compensation is an essential element of quality and higher compensation levels foster the recruitment and retention of a highly qualified workforce (Institute of Medicine and National Research Council, 2015, pp.
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From page 226... ...
Further, if only some children are subsidized, increased resources from these subsidies may not be sufficient to bolster salaries for all educator staff.20 On the other hand, some state prekindergarten programs have recently made strides on increasing base pay for ECE educators through contracts between funders and providers that set requirements on compensation levels that directly guarantee adequate compensation for ECE professionals (see Chapter 3)
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From page 227... ...
Recommendation 8: States and the federal government should provide grants to institutions and systems of postsecondary education to develop faculty and ECE programs and to align ECE curricula with the science of child development and early learning and with principles of high-quality professional practice. Federal funding should be leveraged through grants
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From page 228... ...
The incumbent ECE workforce should bear no cost for increasing practitioners' knowledge base, competencies, and qualifications, and those entering the ECE workforce should have financial assistance to limit their education costs to a reasonable proportion of postgraduate earnings, with a goal of maintaining and further promoting diversity in the pipeline of ECE professionals. Due to the ECE workforce's low levels of compensation, asking individuals to contribute out of pocket to their educational expenses or to cover them using loans that must be repaid with future wages is not feasible.
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From page 229... ...
Targeted financing mechanisms to support professionals with culturally, linguistically, and professionally diverse backgrounds who are pursuing opportunities for higher education will also be needed, to reduce the racial and ethnic stratification present across job roles in the current ECE workforce. States should also promote greater alignment of higher-education programs with the core competencies needed by ECE professionals, including pedagogical leadership, to ensure positive outcomes for children.
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From page 230... ...
Moreover, states, the federal government, and other stakeholders should work together to evaluate outcomes and monitor curricula and processes of both new and existing programs for ECE educators, to ensure that minimum quality standards are met by all ECE higher-education programs, that the skills and competencies of the students they serve are meaningfully improved through higher-education experiences, that programs retain and graduate students in these fields, and that costs are proportional to postgraduate earnings. This quality assurance role will be particularly important if the demand for higher-education programs in ECE fields increases.
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From page 231... ...
ASSESSING PROGRESS TOWARD QUALITY Recommendation 9: The federal and state governments, as well as other funders, should provide sustained funding for research and evaluation on early childhood education, particularly during the transition period to ensure efforts to improve the ECE system are resulting in positive outcomes for children and in the recruitment and retention of a highly qualified workforce.
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From page 232... ...
Associational research does not show that degree attainment by ECE educators is systematically linked to improvements in classroom practices or child outcomes, and there have not been compelling causal studies examining the effects of increases in ECE educator education levels on key outcomes of interest (see e.g., Bogard, Traylor, and Takanishi, 2008; Early et al., 2007)
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From page 233... ...
The possession of stronger qualifications will strengthen the case for increasing compensation for the ECE workforce to the levels needed to recruit and retain a highly qualified workforce, will elevate the stature of the ECE workforce to levels appropriate to their responsibility, and will improve the well-being of ECE professionals. That said, adding qualification requirements without attention to the many other systems changes necessary (as outlined in this report and the Transforming report)
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From page 234... ...
In addition, as documented in Chapters 5 and 6, a large number of ECE programs in some areas of the country are estimated to need major improvements or entirely new facilities, but no national-level survey of ECE facilities has been conducted. To understand the financing needed during the transition for ECE facilities, which are an important component of a high-quality ECE system, a facilities needs assessment, together with an analysis of real estate markets, should be completed to determine which communities need capital investment in newly constructed facilities and which may be better served by renting or retrofitting existing commercial space.
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From page 235... ...
It is essential that such a system allow for learning over time, include data that allow for tracking over time, ensure coverage across different types of programs, measure quality beyond structural inputs to include processes and outcomes, and use methodologies appropriate for studying policy and systems change to understand how different quality components are progressing in the context of each other. Assessment of professional practice is an important element of a financing structure, in that it is needed to measure and reward performance.
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From page 236... ...
As part of this process, linking workforce outcomes to specific higher-education programs would enable an understanding of the specific processes that best prepare ECE professionals to work with young children. Ongoing Data Collection and Research Recommendation 10: The federal government should align its data collection requirements across all federal ECE funding streams to collect comprehensive information about the entire ECE sector and sustain investments in regular, national, data collection efforts from state and nationally representative samples that track changes in the ECE landscape over time, to better understand the experiences of ECE programs, the ECE workforce, and the developmental outcomes of children who participate in ECE programs.
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From page 237... ...
This could be accomplished either through repeated cross-sectional data collections or through repeated longitudinal studies. The NCES Early Childhood Longitudinal Study, Birth Cohort, and the earlier Study of Early Child Care and Youth Development, sponsored by the National Institute of Child Health and Human Development, provide useful models.23 Both studies provided a detailed look at children's early childhood experiences and have been used extensively by researchers to examine the impacts of policy and practices on children's learning.
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From page 238... ...
Implementing a new financing structure to ensure that all children have the opportunity to access affordable, high-quality ECE options will take time and will require ample political will and leadership. However, there is great urgency in realizing this vision.
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From page 239... ...
We have articulated a vision for a financing structure that will support the total cost of a high-quality ECE system and will give ECE providers access to the resources they need to recruit and retain a highly qualified workforce. In our vision, if families are required to pay for services, they should pay an amount they can reasonably afford, whatever their racial, ethnic, geographic, or socioeconomic context.
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