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Transforming Financing in Early Care and Education

February 28, 2018
Kim Dancy
New America

Ask any new parent about the costs of early care and education, and you’ll hear a single resounding theme: it’s expensive. At the same time, compensation for childcare workers averaged just $21,000 last year – far lower than many would think is appropriate for someone tasked with such an important and difficult responsibility. But while the financial struggles on both sides are palpable, even these numbers vastly understate the issue due to the fact that the quality of the education and care many children receive–and that many families struggle to afford–remains out of line with what we know about what young children need to develop and grow.

In 2015, the Institute of Medicine (IOM) and the National Research Council (NRC) of the National Academies published a groundbreaking report that sought to address these issues. Firmly grounded in the science of how young children learn and develop, Transforming the Workforce for Children from Birth Through Age 8: A Unifying Foundation, promoted a wholesale rethinking of how we approach working with young children, including ensuring professionals who work with young children are supported in building the competencies necessary to do their jobs well. Just last week, the National Academies of Sciences, Engineering, and Medicine published a follow-up study, Transforming the Financing of Early Care and Education, a consensus study specifically focused on how to fund early care and education for children from birth to kindergarten entry that is consistent with the vision outlined in Transforming the Workforce.[1]

The report makes the case that funding for early care and education is both inadequate and ineffective. For one thing, families struggle to pay for care, often opting out of care altogether or seeking lower-quality options than what would be most beneficial for their child’s development. At the same time caregivers struggle to make ends meet on the low salaries their jobs provide, much less pursue the higher education opportunities many experts say would make them better at their jobs (including the Transforming the Workforce authors).

In addition to providing insufficient resources, our current financing system suffers from fragmentation across programs that serve different goals and distribute funding in different ways. The main financing programs include the direct provision of services through, for example, government contracts with providers (Early Head Start and Head Start and state-funded pre-K programs) and subsidies to families to assist with childcare costs (child care development block grants). Each of these offerings has different eligibility rules, quality standards, funding sources, and constituencies, indicating that funding for early education is not just inadequate and difficult to navigate for families, but also overly complex and burdensome to providers.

In improving this inadequate and ineffective system of financing, the committee envisions a transformed, effective financing structure that builds on several principles for high-quality early care and education. First, professionals play a critical role in caring for and providing support to children as they learn and grow, and any systems-level reform will require a diverse, competent, effective, well-compensated, and professionally supported workforce. Second, families should not be limited in their choices of providers by personal characteristics such as race or ethnicity, socioeconomic status, ability status, or geographic region. Third, financing must be adequate, equitable and sustainable, and provide incentives for quality, but must also be efficient and avoid placing unnecessary administrative barriers on providers or the families they serve. Fourth, families should have choices about whether to participate in formal childcare, and flexible options such as home-based care, part-time care, and care at off-peak hours are critical to maintaining access for all children. Fifth, appropriate facilities are key to children’s development and financing should not ignore facilities maintenance, improvement, and development. Finally, systems for ongoing accountability, transparency, and evaluation are key to understanding whether and to what degree progress is being made.