Financing strategies: where do we go from here

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Financing strategies where do we go from here?

• Anne Mitchell
• Louise Stoney
• Alliance for Early Childhood Finance
• State Child Care Administrators Meeting
• Washington, DC
• August 7, 2003

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The field has learned a lot about ways to
increase revenue

• TANF
• State pre-kindergarten
• Head Start partnerships
• State-funded community initiatives (like
  Smart Start)
• Innovative sources (Financing Catalog)

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But weve also learned that it isnt so easy..

• There is no silver bullet
• There is no pot of gold at the end of the
  rainbow.
• There is no single solution
• We need major REFORM

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We dont just need more money, we need finance
REFORM

• We know a lot about mechanisms to increase
  revenue
• We dont know enough about how to fit them
  together into a finance system
• The current finance delivery system has serious
  flaws
• Pouring more money into a flawed finance delivery
  system isnt the answer
• Tinkering with the current system will only
  result in modest improvement

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What are we financing?

• High-quality early care and education SERVICES
  that
• offer children opportunities for early learning
• support families with a range of year-round, full
  and part-day services
• provide comprehensive services to children and
  families who need them
• retain and reward well-qualified staff

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Support to Meet Standards Initially
Quality Standards
Quality Early Care and Education System
Infrastructure to Maintain Quality Standards
Consumer Engagement
Ongoing Financial Assistance
Practitioner/ Teacher Engagement
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What are we financing?

• An
• early care and education
• SYSTEM!

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What we have now is...

• Many unconnected financing mechanisms
• Several subsystems, but no discernible unified
  system of early care and education

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Whats wrong?
The price parents can afford to pay is less than
the cost of quality ECE.

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Whats wrong?
Public investment is uneven, nearly full support
in some cases and limited or no support in others.

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Whats wrong?
Basing public subsidy on the price of services in
a free market is fatally flawed.

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Whats wrong?
Current funds do not serve all families.

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Whats wrong?
Current funding does not support the full range
of child and family needs.

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Whats wrong?
Theres very little investment in infrastructure.

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Whats wrong?
Theres accountability for quality and/or child
outcomes in a few subsystems and none at all in
others.

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Whats wrong?

Its not a system, its a bunch of silos.
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• Now is it clear why we need
• Early Childhood Finance
• REFORM?

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Principles of Reform

• Focus on all families, not just poor families.
• Everyone contributes.
• Fund services and infrastructure.
• Diversify sources and assume layered funding.
• Combine portable direct financing.
• Frame ECE as an investment.
• Incorporate accountability.

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Principles of Reform

• Focus
• on all families, not just poor families.

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Principles of Reform

• Everyone
• contributes.

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Principles of Reform

• Frame early care and education as an investment.

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Principles of Reform

• Fund services
• and infrastructure

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Principles of Reform

• Diversify sources
• and
• assume layered funding

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The ECE Layer Cake
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Principles of Reform

• Combine portable direct financing
• Portable financing is tied to a specific child or
  family follows them to the program/services
  they select
• Direct financing directly supports an institution
  or industry

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Cost/Price Analysis in Child Care and Higher
Education.
100
90
Tuition
42
80
Fees
70
Institutional
87
Total Cost
Subsidy
60
50
40
58
30
20
13
10
0
All child care centers 1993-94
All private non-profit
colleges 1995-96
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Principles of Reform

• Incorporate accountability
• connect funding to standards.

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Reform requires a new kind of Leadership

• Stay focused on system REFORM
• Remember that form can follow function
• It wont be easy change is always uncomfortable

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Leadership for innovation in finance

• Colorado
• Market-driven strategies (Educare, School
  Readiness Tax Credit grants) and
• System reform (consolidated pilots, learning
  clusters).

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Leadership for innovation in finance

• California
• Paid Family Leave, financed through the
  Temporary Disability Insurance system.

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Leadership for innovation in finance

• Tax policy in New York (DCTC Occupational Tax
  Credit) and Maine (Quality tax credit)
• Community reform in many places (North Carolina,
  Kansas City, Rochester NY, Seattle).

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If you want to join the Early Childhood Finance
Learning Community...

• Go to
• www.earlychildhoodfinance.org