Growth in States’ Early Childhood Spending Opens Business Opportunities

Associate Editor

State policymakers are poised to fund early childhood education at unprecedented levels.

A recent 50-state scan by the Education Commission of the States shows that funding for early childhood programs, particularly pre-kindergarten, has been increasing over the past two years. This year alone, 38 bills were signed into law in 25 states, although some had more to do with policy and centralizing governance of early childhood initiatives than boosting funding, the Denver-based organization reports.

Funding for preschool programs increased for the second consecutive year, with states introducing new scholarship programs, or re-allocating dollars used for K-12 education, according to an announcement about the study.

Policy analyst Emily Workman wrote the recently released “2013 Legislative Session: P-3 Policies” report, indicating that states are looking for innovative ways to direct funds towards early learning programs, and, as a result, are permitting districts to use revenues in new and creative ways.

Judging from a Markeplace K-12 review of the report, more opportunities for businesses that serve the youngest children may emerge next year, and beyond, in the following areas:

  • Providing preschool programs
  • Educating preschool teachers
  • Developing assessments of preschool children
  • Enhancing reading/literacy
  • Creating home-visit programs
  • Parent education and support programs
  • Providing quality rating or improvement systems

“When government is investing in early childhood, it’s investing in children who are underserved,” Bruce Atchison, director of the Early Learning Institute at the commission, said in a interview. “The private piece is the business community, the philanthropic community, state foundations, and entrepreneurs who see the value in this work, and step up to the plate.”

In May, the Business Roundtable, an association of CEOs interested in influencing public policy, issued a call to action for states and the federal government to provide more early childhood education.Estimates of the return on investment of high-quality programs for low-income children range from $4 to $7 for every $1 spent. However the research is clear: the return on investment is linked to quality; simply increasing participation without ensuring program quality will not produce positive results.”

Earlier this year, New York-based financial services firm Goldman Sachs and investor J.B. Pritzker agreed to pay for the expansion of an early-childhood program in the 67,000-student Granite, Utah district via a social-impact bond. The so-called “pay-for-success” loan seeks to achieve a positive social outcome, and reduce future costs, by investing in prevention and intervention programs in the public sector.

At the national level, President Barack Obama has called for strengthening early-childhood education, outlining his vision to help states expand prekindergarten to low- and  moderate-income 4-year-olds in his State of the Union Address. In November, bipartisan legislation was introduced to help that vision become a reality. Politics K-12 blogger Alyson Klein describes the likely trajectory of that bill.

For more about the commission’s report, or to follow developments in early childhood policymaking, check out Christina Samuels’ Early Years blog.  

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