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Financing Strategies For Early Care and Education

The growing demand for child care calls for the development of innovative approaches to financing early care and education in order to increase the supply of available services, help parents afford quality care and education for young children, and ensure investments in training and in other quality measures. The following are some of the topical highlights from the studies cited in this document:

  • In recent years, both the public and private sectors have made significant new investments in early care and education. These investments are largely the result of the growing awareness of the long- and short-term impact of such investments.
  • As of FY 2008, States are appropriating $13.6 billion of State funds to early care and education for services such as child care, prekindergarten, home visiting, and other early learning strategies.
  • Some States are restructuring State policy to maximize current funds. Other States are looking to nontraditional sources for early childhood financing, including beer or cigarette taxes, developer impact fees, lottery and gambling revenues, tobacco settlement money, and private funds from businesses or foundations, among others, to increase support for early care and school-age services.
  • One of the major challenges in coordinating early care and education services is blending funds. Different funding streams are governed by a number of Federal, State, and local agencies. Regulations and program priorities are not necessarily aligned. Program managers and policymakers are working together to align existing funding and regulations and identify unnecessary or duplicative spending.

The following is a sample of organizations and publications with information about innovative approaches to increase and improve early care and education financing nationally and in States and communities. Additional resources are available via NCCIC's Online Library, which can be accessed at http://nccic.acf.hhs.gov/library/index.cfm?do=oll.search. NCCIC does not endorse any organization, publication, or resource.

Organizations

Publications

  • Early Care and Education State Budget Actions: FY 2007 and FY 2008 (April 2008), includes data provided by State fiscal staff gathered through a survey of the 50 States and Territories about appropriations in FY 2007 and FY 2008. This resource is available at http://www.ncsl.org/print/cyf/budget_report.pdf.

  • Increasing State Investments in Early Care and Education: Lessons Learned From Advocates and Best Practices (Spring 2008), published by Voices of America’s Children, describes lessons learned and future guidance resulting from child advocates’ successful efforts in 10 States to increase public funding for early care and education programs. This resource is available at http://www.aecf.org/~/media/PublicationFiles/ECE%20Report.pdf.

  • Funding the Future: States’ Approaches to Pre-k Finance: 2008 Update (February 2008), by Diana Stone, published by Pre-K Now, provides an overview of fiscal resources that States use to fund prekindergarten programs, including general revenue and revenue from lottery funds, gaming, "sin" taxes, tobacco settlements, and income taxes. This resource is available at http://www.preknow.org/documents/FundingtheFuture_Feb2008.pdf.

  • Financing and Sustaining Out-of-School Time Programs in Rural Communities (January 2008), by Kathryn Sandel and Soumya Bhat, published by the Finance Project, provides descriptions of funding sources and financing strategies to assist service providers, community leaders, and other stakeholders in securing and sustaining funds for rural out-of-school-time programs. This resource is available at http://www.financeproject.org/publications/OSTRuralYouth.pdf.

  • Building Early Childhood Facilities: What States Can Do to Create Supply and Promote Quality (2007), by Carl Sussman with Amy Gillman, National Institute for Early Education Research and Local Initiatives Support Corporation, outlines strategies for successfully financing, designing, and developing high-quality preschool facilities. The full report lays out each strategy in detail and discusses the advantages and disadvantages of each policy option. The brief and full report are available at http://www.lisc.org/content/publications/detail/5940.

  • Making Smart Investments in Afterschool: A Policy Primer for State and Local Leaders (2006), by the Afterschool Investments Project, provides concrete ideas for State and local policymakers about how to address three important after-school challenges: (1) State and local system building, (2) promotion of access to programs, and (3) program quality improvement. Examples of promising practices are presented from around the country. The report includes information about how State and local policymakers can shape policies to support after-school programs more effectively. This resource is available at http://nccic.acf.hhs.gov/afterschool/policyprimer.pdf.

  • Short Take No. 3: Developing Fiscal Analyses and Children’s Budgets to Support ECCS, (2006), by Project THRIVE, National Center for Children in Poverty, Mailman School of Public Health, Columbia University, provides approaches, tips, and examples of early childhood budgets and sources of funding. This resource is available at http://www.nccp.org/publications/pdf/text_677.pdf.

  • Beyond the Usual Suspects: Developing New Allies to Invest in School Readiness (May 2004), by Charles Bruner, State Early Childhood Policy Technical Assistance Network, provides information on how advocates might work to build a broader set of allies in the promotion of an early childhood agenda to improve school readiness. This resource is available on the Web at http://www.finebynine.org/uploaded/file/usual_suspects.pdff.

  • Early Learning Left Out: An Examination of Public Investments in Education and Development by Child Age (February 2004), by Charles Bruner, Victor Elias, Debbie Stein, and Stephanie Schaefer, for Voices for America's Children and Child and Family Policy Center, tracks State, Federal, and school district investments in children’s education and development. It discusses the impact of public investments on education and developmetn of children in the context of the research on brain growth and child developmetn, and the research on potential returns on investment from early learning programs. This resource is available at http://www.aecf.org/upload/publicationfiles/ec3655k756.pdf.

  • Selected Resources on Financing Early Childhood Systems to Support Inclusive Options for Young Children with Disabilities (February 2004), compiled by the National Early Childhood Technical Assistance Center (NECTAC), lists special projects, organizations, and national centers with information about financing inclusive child care. This resource is available at http://www.nectac.org/~pdfs/pubs/financemini.pdf.

  • Financing Access to Early Education for Children Age Four and Below: Concepts and Costs (2004), by Richard N. Brandon, prepared for The Brookings-University of North Carolina Conference on Creating a National Plan for the Education of 4-Year-Olds. This resource is available at http://www.hspc.org/publications/pdf/preK-Brookings_Final.pdf.

  • “How States Fund Full-Day Kindergarten” (June 2003) State Notes, Education Commission of the States, shows how each State’s funding formula addresses kindergarten. Specifically, this StateNote addresses two key questions: 1) How do States’ funding formulas for half-day kindergarten and full-day kindergarten compare? and 2) How do States’ funding formulas for full-day kindergarten and first grade compare? It notes that nine States provide more funding for full-day kindergarten than is provided for half-day programs, and 39 States fund both full-day and half-day kindergarten at the same level. This resource is available at http://www.ecs.org/clearinghouse/45/60/4560.doc.

  • Financing Early Care and Education: Primer for County Leaders (April 2003), by Louise Stoney, for the National Association of Counties, provides a brief overview of early care and education finance from the perspective of local elected officials. It includes a summary of key State and Federal funding streams, as well as information on ways that county leaders can get involved in early care and education financing. This resource is available at http://www.naco.org/Content/ContentGroups/Programs_and_Projects/Early_Childhood/EarlyCarePrimer.pdf.

  • Policy Brief: Finding the Funds: Opportunities for Early Care and Education (January 2003), by Richard N Brandon, for the Human Services Policy Center, discusses the advantages and drawbacks of potential approaches to direct additional revenues to early care and education (ECE). Approaches include: (1) modifications to existing ECE and K-12 education programs; (2) private contributions from employers (i.e., philanthropy); (3) general revenue funds: multiple source of State and Federal revenues; (4) taxes dedicated specifically to ECE, early childhood, or education; and (5) loans and revolving funds. This resource is available on the Web at http://www.buildinitiative.org/docs/Brandonfindingfunds.pdf.

  • Blending and Braiding Funds to Support Early Care and Education Initiatives (2003), by Margaret Flynn and Cheryl Hayes, highlights the successes and lessons learned in blending early childhood funding streams. Financing strategies are presented that State and local policymakers, community leaders, and program coordinators can employ to align, coordinate, and integrate discrete, categorical funding streams. This resource is available at http://www.financeproject.org/Publications/FP%20Blending%20Funds%201_24.pdf.

  • A Closer Look: Lessons From Local Initiatives for Children (2003), by Laurie Miller and Karen Schulman, by the Children’s Defense Fund, examines how collaborative efforts to improve early childhood services play out at the local level, and what factors aid or inhibit the potential that these efforts will positively impact the services children and families receive. This resource is available at http://www.childrensdefense.org/site/DocServer/acloserlook.pdf?docID=1581.

  • Financing Early Care and Education: A Strategy Guide for Municipal Leaders (2003), by the National League of Cities, Institute for Youth, Education, and Families, provides a basic summary of how early care and education programs and services are currently funded and discusses strategies that city leaders can employ to coordinate and/or provide additional financial support for early childhood efforts in their community. This resource is available at http://www.nlc.org/ASSETS/E0D4AD06523146E7AF919B0C3685C30A/IYEF_ECE_Strategy_Guide_Financing.pdf

  • State Networks of Local Comprehensive Community Collaboratives: Financing and Governance Strategies (2003), by Erika Bryant and Carol Cohen, the Finance Project, provides information from a variety of state-local collaborative networks that have been formed to support efforts to improve comprehensive supports and services for children and families. The brief analyzes the financing and governance strategies that these networks employ and provides examples of initiatives that have used particular strategies. This resource is available at http://www.financeproject.org/Publications/collaborative.pdf.

  • Financing Child Care in the United States: An Expanded Catalog of Current Strategies (2001), by Anne Mitchell, Louise Stoney, and Harriet Dichter, sponsored by the Ewing Marion Kauffman Foundation, is a compendium of innovative public- and private-sector strategies for financing child care services, including different strategies for generating new revenue and increasing current revenue. Each strategy is illustrated by in-depth profiles and analyses of current State/local initiatives. This publication is available at http://www.kauffman.org/pdf/childcare2001.pdf.

Updated August 2008

 
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