Transforming the Financing of Early Care and Education (2018) / Chapter Skim
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2 The ECE workforce consists of practitioners working in ECE settings and includes, for example, educators (lead educators, assistants, and aides) , administrators, and coaches (also called "mentors")
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The ways in which funds are distributed and to whom they are distributed can have effects on which children are served, which families benefit, and whether the care delivered is of high quality, as well as affecting the well-being and qualifications of the ECE workforce. Drawing from the Transforming report and from the science of child development and early learning, the committee extracted six principles for high-quality early care and education.
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Financing a Highly Qualified Workforce Principle 1: High-quality early care and education requires a diverse, competent, effective, well-compensated, and professionally supported workforce across the various roles of ECE professionals. A highly qualified ECE workforce is essential to the provision of highquality ECE services.
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Despite increased awareness of the need to improve the foundational knowledge and the skills and competencies of the ECE workforce, financial supports for ongoing professional learning and higher education are generally provided only on a limited basis and, like financing for improved compensation, typically are neither integrated into nor coordinated with the financing of direct service delivery. Existing resources and financing mechanisms are insufficient to overcome the barriers, which include affordability, access, and availability, that ECE educators face when pursuing professional education and training.
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Head Start, state Child Care Assistance Programs, and state-funded prekindergarten programs tend to target resources to low-income families, while tax preferences benefit middle- and upper-income families. The current lack of harmonization among these financing mechanisms leads to gaps in ECE affordability for some low-income families, economic segregation within ECE settings and classrooms, and under-utilization of ECE services by middleincome families.
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Resources for quality improvements within existing funding streams are not specifically earmarked for quality improvements or provided at high enough levels to effectively incentivize and promote quality. While quality rating and improvement systems are commonly used, these systems vary greatly between states and are limited in their capacity to support and reward workforce supports for developing a highly qualified workforce.
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Such a financing structure would ensure that the following objectives are met: • Support for early care and education will be based on paying the total cost of high-quality early care and education (i.e., the costs of service delivery with a highly qualified and adequately compen sated workforce and system-level supports, including mechanisms for accountability and improvement) and will hinge on a consistent set of quality standards across a mixed delivery system.
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Recommendation 3: In states that have demonstrated a readiness to implement a financing structure that advances principles for a high-quality ECE system and includes adequate funding, state governments or other statelevel entities should act as coordinators for the various federal and state financing mechanisms that support early care and education, with the exception of federal and state tax preferences that flow directly to families.
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Such a harmonized set of financing mechanisms would benefit all ECE providers by creating financial stability and enabling investment in the ECE workforce; it would benefit all families by allowing them to select among high-quality providers that meet their needs and preferences. Because most tax preferences that assist families come from the federal tax code, elimination of state flexibility regarding eligibility for ECE assistance programs and restructuring of tax preferences to be equitably progressive across income groups is required to avoid affordability gaps that arise for many middle-income families.
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In order to realize the potential for positive child development and early learning outcomes possible with early care and education, improved and equitable access to high-quality early care and education is needed. To maintain the multiple financing mechanisms that support early care and education, while also eliminating the heavy administrative burden placed on ECE providers, who must manage the various sources of funding, state governments should act as coordinators of most of the revenue streams and financing mechanisms supporting early care and education, but only 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 coordinated funding for service delivery, workforce supports and adequate compensation, and system supports such as mechanisms for accountability and improvement.
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These multiple sources of revenue may come from families, employers and the private sector, the public sector, or various combinations of these sources, but revenue should be raised in ways that ensure that the burden of neither family payments nor tax revenue collection falls disproportionately on those with the fewest resources. As ECE costs increase over the phased transition period, the public's share of cost will necessarily increase because higher quality-standards and cost will make ECE services less affordable for additional families unless they receive public or private assistance.
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These stakeholders have the potential to play a critical role by advocating for policies and leveraging available dollars to support high-quality ECE services and systems, particularly during the transition from its current broken state to an effective, high-quality ECE system. In short, the nonparental private sector, specifically private funders engaged in supporting high-quality early care and education, should work with public funders and other key stakeholders, including national and statewide coordinating bodies, as well as interested parent, provider, and ECE workforce representatives, to develop and implement local-, state-, and national-level strategic business plans to guide transitions toward a reformed financing structure for high-quality early care and education with a specific emphasis on business, financial, and systems strategies.
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While the transition to a highly qualified and adequately compensated workforce is taking place, testing the market's response to changes and accountability to ensure that the workforce is receiving improved compensation will also be necessary. Given the ECE workforce's low levels of compensation, asking ECE professionals 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 during the transition to high quality.
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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. 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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The committee recommends that this be accomplished through greater harmonization and coordination among multiple financing mechanisms and revenue streams and through greater uniformity in standards to incentivize quality. It will require significant mobilization of financial and other resources shared across the public and private sector, including a more equitable distribution of the share from family contributions and a commitment to major increases in public investment.
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