Financing strategies: where do we go from here?

1. 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

2. 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)

3. But we’ve also learned that it isn’t 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

4. We don’t just need more money, we need finance REFORM • We know a lot about mechanisms to increase revenue • We don’t 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 isn’t the answer • ‘Tinkering’ with the current system will only result in modest improvement

5. 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

6. Support to Meet Standards Initially Quality Standards Quality Early Care and Education System Infrastructure to Maintain Quality Standards Consumer Engagement Practitioner/ Teacher Engagement Ongoing Financial Assistance

7. What are we financing? An early care and education SYSTEM!

8. What we have now is... Many unconnected financing mechanisms Several subsystems, but no discernible unified system of early care and education

9. What’s wrong? The price parents can afford to pay is less than the cost of quality ECE.

10. What’s wrong? Public investment is uneven, nearly full support in some cases and limited or no support in others.

11. What’s wrong? Basing public subsidy on the price of services in a ‘free’ market is fatally flawed.

12. What’s wrong? Current funds do not serve all families.

13. What’s wrong? Current funding does not support the full range of child and family needs.

14. What’s wrong? There’s very little investment in infrastructure.

15. What’s wrong? There’s accountability for quality and/or child outcomes in a few subsystems and none at all in others.

16. What’s wrong? It’s not a system, it’s a bunch of silos.

17. Now is it clear why we need Early Childhood Finance REFORM?

18. 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.

19. Principles of Reform Focus on all families, not just poor families.

20. Principles of Reform Everyone contributes.

21. Principles of Reform Frame early care and education as an investment.

22. Principles of Reform Fund services and infrastructure

23. Principles of Reform Diversify sources and assume layered funding

24. The ECE Layer Cake Parent Fees Employer Subsidy Community Foundation CCDF Preschool Head Start CACFP

25. Principles of Reform Combine portable & direct financing Portablefinancing is tied to a specific child or family & follows them to the program/services they select Direct financing directly supports an institution or industry

26. 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

27. Principles of Reform Incorporate accountability – connect funding to standards.

28. Higher DCTC linked to standards • ECE Occupational Tax Credit • linked to standards • Other business or individual tax • benefits linked to standards Department of Tax and Finance • Tiered Rewards for child care • linked to standards • Training and quality grants • linked to standards Department of Public Welfare • Pre-K funding • Early Intervention • Professional Licensing • Early Childhood Food and • Nutrition Programs • All linked to standards Department of Education Quality Early Care & Education System Funds for child care centers at the courts or delinquency prevention linked to standards Judiciary/Office of Court Administration Standards for Programs Standards for Practitioners • ECELS training • Healthy Child Care America • All linked to standards Department of Health Learning Guidelines (Outcomes for Children) Agreement with Federal Regional Office to create administrative/fiscal links to common standards Head Start Funds for construction of ECE facilities linked to standards Quasi-Public Construction Authority • Campus-based child • care programs • Practitioner education • All linked to standards Higher Education Agreements with United Way, community foundations, etc. to link $ to common standards Private Sector

29. Reform requires a new kind of Leadership • Stay focused on system REFORM • Remember that form can follow function • It won’t be easy: change is always uncomfortable

30. Leadership for innovation in finance Colorado • Market-driven strategies (Educare, School Readiness Tax Credit & grants) and • System reform (consolidated pilots, learning clusters).

31. Leadership for innovation in finance California Paid Family Leave, financed through the Temporary Disability Insurance system.

32. 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).

33. If you want to join the Early Childhood Finance “Learning Community”... Go to: www.earlychildhoodfinance.org