Transforming the Financing of Early Care and Education: Recent Report Recommends Strategies for an Effective ECE Financing Structure

Like many of our partners and colleagues, GPG has been closely reviewing the much anticipated, recently released report Transforming the Financing of Early Care and Education. The report emphasizes the importance of accessibility, affordability, and quality of ECE provided outside the child’s home. It outlines how a financing structure should support high standards; a highly qualified workforce; and equitable access for families from all socioeconomic, racial, ethnic, ability, and geographic backgrounds. It also outlines a financial model and phased implementation plan to create a financing structure to accomplish this.

Notably, the report also puts forth a price tag for funding ECE for children from birth to kindergarten entry that is accessible, affordable to families, and of high quality. Once fully implemented, through a four-phase implementation process, the committee projects a total cost of at least $140 billion per year ($53 billion more than current level of public investment).

The report also outlines many of the challenges that ECE advocates and stakeholders have come to understand. We found the following concise description of the problem compelling:

“The inadequacies of the current financing structure stem not necessarily from having multiple financing mechanisms but from these mechanisms neither being harmonized in ways that avoid gaps in access nor structured to improve ECE service quality. These flaws are exacerbated by overall levels of funding that are not sufficient to support either provision of high-quality early care and education or its affordability by families at all income levels.” (5-16)

At GPG, we are interested in the connection between the Financing report and the Transforming the Workforce for Children Birth through Age Eight (TWB8) report. Particularly, we want to consider how we can collaborate to ensure that financing systems in California support the state’s TWB8 Implementation effort and other efforts to support a well-prepared, equitably compensated workforce. The Financing report draws from the TWB8 report and from the science of child development and early learning, to outline six principles (see below) for high-quality early care and education. From these principles, the Financing committee developed a set of criteria by which to judge the existing financing mechanisms that make up the current, fragmented financing structure and developed a set of recommendations (see below) to create an effective and integrated financing structure.

Beyond our appreciation for this comprehensive report and cost estimate, we were honored to be invited to present at a national meeting on the Transforming the Financing report, hosted by the National Academies of Sciences Engineering and Math. The meeting, held on May 23, 2018, focused on three areas of recommendation from the report:

  1. How changes to the financing of early care and education can incorporate specific support for a highly qualified, adequately supported, and well-compensated workforce;
  2. How comprehensive strategic planning across the public and private sectors can support reforms in financing for early care and education; and
  3. How coordination at the state level can support the restructuring of financing for early care and education.

GPG Vice President Caitlin Lawrence-Toombs spoke on a panel about the ways California is considering system-alignment to increase practitioners’ knowledge and competencies and to support institutions and systems of postsecondary education to align ECE curricula with: 1) the science of child development and early learning, and 2) principles of high-quality professional practice. The meeting gave us an opportunity to connect with national colleagues to generate ideas for implementing recommendations from the Financing report. Our biggest take-away was the need for significant focus on the implications of the Financing report recommendations at the state level, including the need for financial modeling for states. We hope to stay connected with others working to support implementation of recommendations from TWB8 and the Financing report to learn from efforts in other states and national partners.

We look forward to sharing our learnings from this comprehensive new report and collaborating with our partners in California to work towards a more comprehensive and effective financing structure for ECE in the Golden State. If you would like to learn more about Transforming the Financing of Early Care and Education report you can contact FinanceECE@nas.edu.

Principles

Financing a Highly Qualified Workforce
  • Principle 1: High-quality early care and education requires a diverse, competent, effective, well-compensated, and professionally supported workforce across the various roles of ECE professionals.
Affordability and Equitable Access
  • Principle 2: High-quality early care and education requires that all children and families have equitable access to affordable services across all ethnic, racial, socioeconomic, and ability statuses as well as across geographic regions.
Ensuring High-Quality across Settings
  • Principle 3: High-quality early care and education requires financing that is adequate, equitable, and sustainable, with incentives for quality. Moreover, it requires financing that is efficient, easy to navigate, easy to administer, and transparent.
  • Principle 4: High-quality early care and education requires a variety of high-quality service delivery options that are financially sustainable.
  • Principle 5: High-quality early care and education requires adequate financing for high-quality facilities.
  • Principle 6: High-quality early care and education requires systems for ongoing accountability, including learning from feedback, evaluation, and continuous improvement.

Recommendations

Recommendation 1:
Federal and state governments should establish consistent standards for high quality across all ECE programs. Receipt of funding should be linked to attaining and maintaining these quality standards. State and federal financing mechanisms should ensure that providers receive payments that are sufficient to cover the total cost of high-quality early care and education.
Recommendation 2:
All children and families should have access to affordable, high-quality early care and education. ECE access should not be contingent on the characteristics of their parents, such as family income or work status.
Recommendation 3:
In states that have demonstrated a readiness to implement a financing structure that advances principles for a high-quality ECE system and includes adequate funding, state governments or other state-level entities should act as coordinators for the various federal and state financing mechanisms that support early care and education, with the exception of federal and state tax preferences that flow directly to families.
Recommendation 4:
To provide adequate, equitable, and sustainable funding for a unified, high-quality system of early care and education for all children from birth to kindergarten entry, federal and state governments should increase funding levels and revise tax preferences to ensure adequate funding.
Recommendation 5:
Family payments for families at the lowest income level should be reduced to zero, and if a family contribution is required by a program, that contribution, as a share of family income, should progressively increase as income rises.
Recommendation 6:
A coalition of public and private funders should support the development and implementation of a first round of local-, state-, and national-level strategic business plans to guide transitions toward a reformed financing structure for high-quality early care and education.
Recommendation 7:
Because compensation for the ECE workforce is not currently commensurate with desired qualifications, the ECE workforce should be provided with financial assistance to increase practitioners’ knowledge and competencies and to achieve required qualifications through higher-education programs, credentialing programs, and other forms of professional learning. The incumbent ECE workforce should bear no cost for increasing practitioners’ knowledge base, competencies, and qualifications, and the entering workforce should be assisted to limit costs to a reasonable proportion of postgraduate earnings, with a goal of maintaining and further promoting diversity in the pipeline of ECE professionals.
Recommendation 8:
States and the federal government should provide grants to institutions and systems of postsecondary education to develop faculty and ECE programs and to align ECE curricula with the science of child development and early learning and with principles of high-quality professional practice. Federal funding should be leveraged through grants that provide incentives to states, colleges, and universities to ensure higher-education programs are of high quality and aligned with workforce needs, including evaluating and monitoring student outcomes, curricula, and processes.
Recommendation 9:
The federal and state governments, as well as other funders, should provide sustained funding for research and evaluation on early childhood education, particularly during the transition period to ensure efforts to improve the ECE system are resulting in positive outcomes for children and in the recruitment and retention of a highly qualified workforce.
Recommendation 10:
The federal government should align its data collection requirements across all federal ECE funding streams to collect comprehensive information about the entire ECE sector and sustain investments in regular, national, data collection efforts from state and nationally representative samples that track changes in the ECE landscape over time, to better understand the experiences of ECE programs, the ECE workforce, and the developmental outcomes of children who participate in ECE programs.