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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 MeetingWashington, DCAugust 7, 2003

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TANF $

State pre-kindergarten $

Head Start partnerships

State-funded community initiatives (like

Smart Start)

Innovative sources (Financing Catalog)

The field has learned a lot about ways to increase revenue

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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

But we’ve also learned that it isn’t so easy…..

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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

We don’t just need more money, we need finance REFORM

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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

What are we financing?

Quality Early Care and Education

System

Quality Standards

Consumer Engagement

Ongoing Financial

Assistance

Support to Meet Standards Initially

Practitioner/Teacher

Engagement

Infrastructure to Maintain

Quality Standards

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Anearly care and education

SYSTEM!SYSTEM!

What are we financing?

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Many unconnected financing mechanisms

Several subsystems, but no discernible unified system of early care and education

What we have now is...

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

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

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What’s wrong?

Basing public subsidy on the price of services in a ‘free’ market is fatally flawed.

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What’s wrong?

Current funds do not serve all families.

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What’s wrong?

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

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What’s wrong?

There’s very little investment in infrastructure.

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

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What’s wrong?

It’s not a system, it’s 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

CACFP

Head Start

Preschool

CCDFCommunity FoundationEmployer Subsidy

The ECE Layer Cake

Parent Fees

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Principles of ReformCombine 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

Cost/Price Analysis in Child Care and Higher Education.

13

87

58

0

10

20

30

40

50

60

70

80

90

100

To

tal Co

st

All child care centers 1993-94

All private non-profitcolleges 1995-96

Tuition &Fees

InstitutionalSubsidy

42

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Principles of Reform

Incorporate accountability –

connect funding to standards.

•Pre-K funding •Early Intervention•Professional Licensing•Early Childhood Food and Nutrition Programs

All linked to standards

Department of Education

•Tiered Rewards for child care linked to standards•Training and quality grants linked to standards

Department of Public Welfare

Agreement with Federal Regional Office to create administrative/fiscal links to common standards

Head Start

Agreements with United Way, community foundations, etc. to link $ to common standards

Private Sector •Campus-based child care programs•Practitioner education

All linked to standards

Higher Education Funds for construction of ECE facilities linked to standards

Quasi-Public Construction

Authority

Funds for child care centers at the courts or delinquency prevention linked to standards

Judiciary/Office of Court

Administration

•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

•ECELS training•Healthy Child Care America

All linked to standards

Department of Health

Learning Guidelines (Outcomes for Children)

Standards for

Practitioners

Standards for

Programs

Quality Early Care & Education System

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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

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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