Focusing Federal Preschool Funding on the Children Who Need It
Instead of an unworkable universal pre-K system, Head Start Accounts can fund early childhood education for low-income families.
Senator Chuck Schumer plans to pass a $3.5 trillion dollar budget before the August recess. The measure is expected to include funding to establish a new universal preschool program for 3- and 4-year-olds. President Biden has proposed $200 billion in new spending for pre-k.
The plan will likely reflect HELP Committee Chair Patty Murray’s Child Care for Working Families Act. According to her office, the legislation would:
“establish a child care and early learning infrastructure that ensures working families can find and afford the child care they need to succeed in the workforce and children can get the early education they need to thrive. This legislation would make child care affordable for working families, expand access to preschool programs for 3- and 4-year olds, improve the quality of care for all children, and increase compensation and provide training for child care workers. Overall, the CCWFA would jumpstart our economy by creating roughly 700,000 new child care jobs, help 1.6 million parents — primarily mothers — go back to work, and lift one million families out of poverty.”
With Congressional Democrats planning to use the reconciliation process to pass new spending with narrow majorities, it’s possible that President Biden and Senate Democrats may succeed in establishing new preschool and child care entitlement programs on a party-line vote. But before they do, lawmakers should consider cost-effective options to use existing federal fund to improve American children’s preschool benefits to promote equal opportunity.
The opportunity to improve Head Start’s value for working families
A good place to start would be reforming the federal Head Start program. Since 1965, Head Start has provided preschool, childcare, and other services for low-income children and their parents. In 2019, Congress spent more than $10 billion on the Head Start program, which served nearly a million children. The program’s current cost per-enrollment is more than $11,000 annually.
But decades of experience has shown that Head Start has not delivered the long-term benefits that were envisioned when the program was created and expanded over the years.
In 2012, a long-anticipated national evaluation found that by third grade children who attend Head Start were no better off than their peers who did not enroll. The study revealed that disadvantaged children who did not enroll in Head Start actually received more time in care than their peers who enrolled in the federally-funded program, since Head Start only requires providers to offer 448 hours per year (or 3.5 hours for 128 days per year).
In 2016, the Obama Administration implemented new rules to require Head Start providers to increase the minimum hours of care provided from 448 to 1,020 hours per year, which is similar to the K-12 school calendar. The Obama Administration reasoned that additional time in Head Start would improve children’s development and benefit working parents by offering more child care. But Head Start providers resisted the change and, in 2019, the Department of Health and Human Services reversed the new rule.
How working parents could use $10,000 per child
Rather than providing an indirect benefit by subsidizing Head Start centers, Congress could instead provide a direct cash benefit to eligible children that could be used to purchase preschool or child care services. For example, Congress could award Head Start Accounts, establish allowable uses, and require states to oversee how funds are spent in a manner similar to 529 programs or state-funded education savings account programs. Doing so would increase the short- and long-term benefits of how Head Start funds are currently used.
In a December 2019 report for FREOPP, I compared how families could use a $10,000 Head Start benefit to purchase private child care or to enroll in state-funded pre-k programs:
Allowing parents’ greater options to choose among preschool and child care providers would significantly improve the program’s value. In 37 states, the per-child cost of the Head Start program is more than the average cost of full-time child care for a 4-year-old. Moreover, state-operated public preschool programs provide more hours of care at a lower per-child cost than Head Start in more than a dozen states.
For a working parent, increasing the number of hours of free child care provided through Head Start from 448 hours to 1,020 would provide 572 additional hours of care. This is enough child care to allow a parent to work the equivalent of 14 extra weeks per year. Working parents could earn an extra $4,290 per year by working those extra hours, assuming they earned the federal minimum wage of $7.50. This would amount to at least a 20 percent increase in earnings for a working mother with two children who is eligible to enroll in Head Start.
Parents could also choose to reserve some of their child’s current Head Start funding for future use in an education savings account. Funds could be spent on K-12 tuition or for future college or job training expenses.
It’s worth stressing that a $1,000 investment in a children’s savings account yields similar social-emotional benefits to the Head Start program, which costs ten times more per child.
There’s good reason to believe that providing low-income children with savings for education would yield long-term benefits. Washington University researchers studied an Oklahoma program that provided $1,000 to children at birth in a “child development account,” with funds saved for college. The researchers found that the program yielded social and emotional benefits for participating children, and reported that the benefits were “similar in size to at least one estimate of the effect of the Head Start program.” It’s worth stressing that this $1,000 investment in a children’s savings account yielded similar social-emotional benefits to the Head Start program, which costs ten times more per child.
Why Congress should not establish a universal preschool benefit
As Congress considers the Biden Administration’s proposal to establish universal preschool, lawmakers should consider the potential downsides of creating a new benefit for all children, including those from middle- and upper-income families.
First, there is little reason to believe that all 3- and 4-year old children need to be enrolled in preschool. Many parents choose to keep their children at home and have alternative preschool and childcare arrangements if necessary. Establishing a new federal universal preschool benefit would have the unintended consequences of discouraging parents from keeping their children at home.
Second, establishing a massive new federal pre-k program, which according to Senator Murray will involve creating 700,000 new jobs, may result in constrained supply in preschool and childcare centers or reduce the quality of the care provided. The Head Start program has been found to be vulnerable to widespread fraud and abuse, as the Heritage Foundation’s Jonathan Butcher documented. A 2020 federal audit even found that federal overnight couldn’t ensure that Head Start programs provided safe drinking water. A vastly larger universal federal preschool program would likely face similar challenges.
Third, federal preschool, child care, and K-12 education policy has historically focused on providing benefits to low-income children and other at-risk student groups who need additional assistance to ensure that they have an equal opportunity to succeed. Providing a universal preschool benefit (including to middle- and upper-income families) would unnecessarily subsidize children that do not need federal assistance to thrive during childhood. With the nonpartisan Government Accountability Office and Congressional Budget Office warning that the United States is on an unsustainable fiscal course, it is imprudent to provide a costly new government benefit to families who do not need assistance.
Congress should focus aid on disadvantaged children
Rather than establishing a universal benefit, Congress should use current and future preschool and child care to assist children from lower-income families. Moreover, Congress should improve the efficiency of how federal resources are used to maximize the benefits for disadvantaged children and working parents.
Transforming the current indirect Head Start benefit into direct financial assistance through Head Start accounts would give low-income families the ability to choose the right preschool or child care provider, to significantly increase the hours of care provided, and even potentially save for future education expenses (including college or K-12 school tuition).
If Congress is committed to increasing federal spending on preschool and child care benefits, lawmakers should provide direct aid through Head Start accounts. Decades of experience has shown that government-provided preschool through Head Start has not provided lasting benefits to disadvantaged children. Providing direct financial assistance for immediate and future educational needs would provide greater value and meaningfully advance the nation’s longstanding goal of establishing equal opportunity in American education.
