Old Policies, New Ways to Fund Preschool

Spurred by a growing body of research showing that high-quality preschool programs pay
valuable educational dividends, policymakers are seeking ways to expand educational
opportunities for three- and four-year-olds—particularly those most at risk of school failure.
Forty-one states now have some sort of state-funded preschool programming, and more than half
increased preschool funding in fiscal year 2006, according to Pre-K Now, a national advocacy
group. In June, Californians will vote on Proposition 82, a "Preschool for All" initiative that
would raise taxes on the state's highest earners to fund voluntary universal preschool for all
California four-year-olds.

But expanding access to high-quality preschool at the state level is no easy task. Policymakers
must find enough money to establish stable, high-quality services, align early childhood
education with the existing K–12 system, and provide parents with sufficient options to meet
their children's needs. Yet as policymakers work to make high quality preschool available to
more families, they often overlook two policy and funding tools already in place in most states
that could help them meet these challenges: state school finance systems and charter school laws.
In parts of the country as different as Oklahoma and the District of Columbia, lawmakers have
used existing finance and charter school systems to promote stable, long-term preschool funding
and increase both the quality and diversity of preschool offerings.

Expanding Preschool Via State Finance Systems

Most states fund preschool and elementary and secondary education from the same source:
general state revenue. But they often distribute preschool and K-12 funds in very different ways.
Regular school districts and charter schools get funding through a state aid formula based on
enrollment and other factors.[i] Funding for preschool, by contrast, typically comes from an
entirely separate—and much smaller—pot of money. In addition, state preschool and K–12
education programs are often carried out by entirely separate agencies.[ii]

States have valid reasons to separate preschool administration and funding from the elementary
and secondary education system. The elementary and secondary school finance system was
designed to fund public school districts, and policymakers are understandably wary that putting
school districts in charge of preschools would lead to programs for three- and four-year-olds that
look too much like another year of elementary school. But, in many states, this division between
preschool and K-12 schooling means that preschool is treated like a less-deserving stepchild of
public education, receiving less funding per child and held to lower standards, particularly for
teacher quality. For example, while every state requires elementary school teachers to hold at
least a bachelor's degree, 21 states do not require teachers in state-funded pre-kindergarten
programs to hold a bachelor's degree, and most pay preschool teachers substantially less than
kindergarten teachers in the state's public schools.[iii]

Further, while quality preschool programs look different from elementary schools, preschool will
be most successful if the curriculum is designed to develop the emotional, social, and pre-
academic skills children need to be prepared for elementary school, and if children's transitions
between preschool and kindergarten are well-coordinated on both sides. Separating preschool
from elementary and secondary education makes it more difficult to create this type of
alignment. Policymakers work diligently to align academic standards across grades K–20, so that
students are prepared at each level to advance to the next, but preschool programs, the first step
in public education for many children, are not always well-integrated into these efforts.

Policymakers and the public often see preschool as childcare, not education. As a result, they
frequently don't press for preschool funding or for features that are often found in high-quality
preschool programs, such as well-planned and research-based curricula, teachers with bachelor's
degrees, and small class sizes. Tying preschool programs to separate pots of money also makes
the programs more susceptible to shifts in political and fiscal fortunes. According to the National
Institute for Early Education Research, 11 states reduced pre-k funding between 2001–02 and
2004–05, and inflation-adjusted preschool spending per child declined by 7.3 percent nationally.
During the same time period, per pupil expenditures on K–12 education rose nationally.

Although preschool programs differ from programs for older children in many ways, their
effectiveness is diminished by their current conceptual, financial, and administrative isolation
from the rest of public education. The best way to achieve greater parity between preschool and
elementary and secondary public school systems is to fund preschool through existing statewide
school finance systems. Oklahoma has dramatically expanded student access to quality pre-K
programs using this strategy, allowing school districts to receive per-pupil state education funds
for enrolling four-year-olds.

State school finance systems offer an efficient way to improve both preschool access and funding
parity between preschool and K–12 education. But the strategy also has its limits, because state
school finance systems are designed to fund public school districts—not the variety of
community-based, faith-based, nonprofit, and private preschool programs that form a key part of
early childhood education infrastructure. Policymakers must marry the state school aid funding
approach to funding preschool with another state policy—charter schooling—in order to create a
diverse marketplace of high-quality publicly funded preschool.

Charter Preschools: Promoting More Choices

Students have diverse developmental needs, and this is particularly true in the preschool years,
when youngsters' development has greater variation—both from child to child and over time for
the same child—than at older ages. Having a wide range of preschool programs—including those
run by private, nonprofit, and community-based groups—as part of the system of publicly
funded preschools is essential to providing parents a range of preschool options to address their
children's needs. Policymakers can use the charter school model, which has successfully
expanded parental options in elementary and secondary education, to make a wide variety of
publicly funded preschool programs available to families as well.

Charter schools are publicly funded, publicly accountable to "authorizers" such as school
systems or universities, and open to all students. But they operate largely independent of school
district regulations and traditional collective-bargaining contracts. This has attracted new players
with diverse educational strategies to enter public schooling. Expanding the charter school
concept to the preschool level would allow private and community-based preschools, including
Head Start programs, to become part of the state-funded preschool system; enable students to
attend such preschools tuition-free and further increase parents' preschool options by creating
financial incentives for new providers to enter the preschool market. The District of Columbia
exemplifies how the charter preschool concept can be effectively combined with "statewide"
preschool funding. To use this model, states need to have both a state aid formula that provides
funding for preschool students and a charter school law that allows charter schools to receive
state aid for enrolling preschoolers.

Chartering can also address two major implementation challenges facing state preschool
programs: building the supply of quality preschool providers and controlling quality. Many states
simply don't have enough quality preschool programs—public, private, or non-profit—to provide
high-quality preschool for all the children who need it. Expanding access will require the
creation of many new, high-quality programs. By using charter laws to give preschool providers
access to public resources, state legislators can leverage the same entrepreneurial energy that has
driven charter expansion to provide more quality preschool opportunities for needy youngsters.

In addition, the experiences of successful charter school authorizers can help policymakers hold
publicly-funded preschool programs accountable for their students' success. The standardized
tests used to gauge elementary and secondary students' learning aren't appropriate for preschool.
Young children's abilities to master certain skills and concepts depend much more on their
bodies' and brains' development than is the case for older children, and that development is
sporadic—children might be able to do something one day they could not do the day before, and
vice versa—and varied—children of the same chronological age might be at very different places
developmentally. This is why assessment and early childhood experts council against using
standardized assessments or attaching consequences to them before grade three. There are
assessments designed specifically for preschoolers that can provide educators with useful
information about how individual children are doing and can be used as part of broader
evaluations of preschools. But they should not be used as the sole measures of preschool
performance, the way standardized tests are used in K-12 accountability systems. Preschool
accountability systems must be more nuanced, incorporating on-site observations, input and
process quality measures, results of formative assessments, and professional judgment. Good
charter school authorizers, like the District of Columbia Public Charter School Board, already
use many of these measures to evaluate schools, providing a model for designing preschool
accountability.

Benefits and Costs

Beyond the advantages of more stable funding, more diversity in preschool offerings, higher
teacher standards, and the potential for greater accountability for result, incorporating preschool
into state education finance systems and expanding charter preschools could strengthen the
political coalition for both preschool and public school funding. Instead of pitting preschool and
K-12 advocates against each other in an annual fight for funding, this approach could bring them
together in a single alliance seeking greater investments in education and services for children of
all ages.
Expanding preschool would, of course, be expensive. But a substantial body of research has
found that preschool investments generate significant taxpayer savings over time through
substantial reductions in grade-retention, special education placements, and crime among
children who attend high quality preschool. Such students also earn higher salaries as adults.
These benefits far outweigh the up-front costs of expanding the nation's preschool system.[iv]

State policymakers would be the first to note that they can't appropriate theoretical future savings
to pay for present-day programs. But a strong understanding of the costs and benefits can
improve the environment for new investments. Analyses in Wisconsin and Louisiana, have found
that the states will recoup about two-thirds to three-quarters of the cost of preschool investments
before preschoolers graduate from high school, through savings that result from reduced grade
retention and special-education placements.[v] Funding preschool through the same system that
reaps much of the early returns on these investments simply makes sense.

In order to effectively use the charter strategy to expand access to preschool, policymakers in a
number of states will have to change state policies that limit the growth of charter schools. For
example, some states have strict caps on the total number of charter schools or limitations on
where charter schools may operate. These limitations would force preschool charters into a zero-
sum competition with applicants who serve the K-12 market. Legislators could address this
concern either by raising or eliminating caps on charter schools, or, as a compromise, setting a
specific, separate cap for charter preschools. The latter approach would allow them to expand
preschool access incrementally.

In addition, policymakers in some states must take steps to improve the quality of charter school
authorizing. Studies show that many charter school authorizers are not doing a very good job of
establishing and sustaining high-quality charter schools.[vi] Policymakers can improve charter
authorizing by increasing monitoring and accountability of authorizers for their schools'
performance, providing technical assistance to small authorizers, and approving the creation of
new authorizers—such as public universities or independent statewide charter boards—that have
been shown to be higher quality authorizers in many states.[vii] This would have benefits for
both K-12 charter schools and efforts to expand preschool charters.

There are many ways states can expand preschool access, and state policymakers need to choose
the approach that best meets their unique demographic, economic, and educational contexts. But,
by allowing charter and traditional public schools to receive per-pupil funding through the state
school finance system, state officials could expand publicly supported preschool options in a way
that minimizes bureaucracy, improves accountability, encourages a diverse provider network,
and expands parental choice for high-quality, publicly-financed preschool education.

[i] According to the Education Commission of the States, 25 states and the District of Columbia
use some type of foundation or base funding formula that provides per-pupil funding weighted to
reflect students' educational needs. Another twelve states use a modified form of base or
foundation funding system, and two provide states with exact amounts of funding per student.
http://www.ecs.org/clearinghouse/59/81/5981.htm

[ii] Stone, Diana, “Funding the Future: States' Approaches to Pre-K Finance.” (Washington, DC:
Pre-K Now. February 2006).

[iii] Barnett, Steven, et al. “The State of Preschool 2005: State Preschool Yearbook.” (National
Institute for Early Education Research. March 2006.)

[iv] Barnett; Reynolds TK

[v] Belfield, Clive R. and Dennis Winters, “An Economic Analysis of Returns to Four-year-old
Kindergarten in Wisconsin: Returns to the Education System.” (Washington, DC: Pre-K Now.
September 2005); Belfield, Clive R., “An Economic Analysis of Pre-K in Louisiana.”
(Washington, DC: Pre-K Now. June 2005).

[vi] Palmer, Louann Bierlein and Rebecca Gau, “Charter School Authorizing: Are States Making
the Grade?” The Thomas B. Fordham Institute, June 5, 2003; U.S. Department of Education,
Office of Educational Research and Improvement, “A Study of Charter School Accountability,”
June 2001; Hassel, B.C. & Batdorff, M. “High-stakes: Findings from a national study of life-or-
death decisions by charter school authorizers,” Public Impact, 2004.