How Much Will It Cost to Make Pre-K Truly Universal in New York State?

The research is clear: High-quality full-day pre-K can significantly improve children’s success in school and beyond, producing major savings for the public school system and the broader community as well. The short-term savings for schools accrues from reduced need for costly remedial services, grade retention, and special education. In the long run, the return on investment is much higher, netting benefits for children, families, the schools, and taxpayers. That’s because children who participate in these programs are more likely to be reading on grade level by third grade, graduate high school and go on to college, and become productive tax-paying citizens. Economists put the return as $7 for every $1 invested, thanks to reduced costs for social services and criminal justice. Pre-K graduates are also healthier. Nobel laureate James Heckman argues there is no better investment the U.S. can make in developing our full human potential.

CEE, in partnership with the Center for Children’s Initiatives, recognizes these enormous gains for New Yorkers in our new proposal, Making Pre-K Truly Universal in New York. This eight-year roadmap starts with four-year olds in high-need districts and expands to provide pre-K access to all three year olds and four year olds statewide by the eighth year.

Frank Mauro, the executive director of the Fiscal Policy Institute, an independent, nonpartisan, nonprofit research organization based in Albany, has conducted a careful cost analysis of our plan, which builds on the current state investment of $410 million in pre-K. In the first year, the plan would invest an additional $225 million to provide full-day service to approximately 20,000 four year olds in high-need districts. In the second year, the state would invest $476 million; this would cover about 40,000 four year olds in high-need districts.

This new investment is made in addition to necessary increases in K-12 funding, and assumes the state will pay the full costs of expanding pre-K in the first two years—and until districts have full funding levels necessary to meet Campaign for Fiscal Equity (CFE) v. State sound basic education requirements. The plan envisions local districts picking up an appropriate share of the costs, depending on their local wealth and levels of need, starting in the third year, if the CFE standards are met.

The chart below offers a guide to both the implementation plan and the costs. By year 8, the total cost to the state and local school districts will be approximate $2.4 billion—an increase in overall education spending of about 4%. That’s a bargain, given the incredible benefits that will accrue to children, schools, families, and taxpayers.

State Cost in 2013-14 Dollars in Excess of 2013-14 Universal Pre-K Allocations

 

Phase-in Year Children Accommodated                                     Total New Costs to the State
1 All four year olds in first third of high-need districts $225,551,405
2 All four year olds in two-thirds of high-need districts 476,102,810
3 All four year olds in high-need districts 569,070,535
4 All four year olds in high-need
districts and half of remaining districts
313,323,746*
5 All four year olds statewide 361,166,058
6 All four year olds, plus three year olds in first half of high-need districts 628,267,316
7 All four year olds, plus three year olds in high-need districts 895,368,574
8 All three and four year olds statewide 1,050,342,365

* Local districts start paying a local share of pre-K costs according to K-12 “state sharing formula.”

When truly universal full-day pre-K for all four year olds in every district in the state is achieved in year 5, the cost to localities (much of which will be paid by more affluent districts) will be $674 million. When the program is fully implemented, providing access to all three and four year olds, the costs to localities will be $1.4 billion (much of which will be paid by the more affluent school districts).

(Note that we provide these long-term cost calculations for general illustrative and discussion purposes; we recommend that New York conduct a statewide analysis of the actual costs of the pre-K program beginning in year 1 and adjust expenditures to actual costs in year 3.)

Cost Offsets

Economist Clive Belfield estimates that, within a few years of implementation, 40-60% of pre-K expenditures will be offset by savings to the K-12 education system. Long-term economic benefits to society (in added income, tax revenues, lower crime rates, lower health costs, and the like) are much greater (see the summary of research in our report, pp. 37-40).

Furthermore, if President Obama’s pre-K initiative is adopted, 25-95% of these costs will be reimbursed by the federal government.

How These Costs Were Calculated

For our base per-pupil amounts, we used the current rates for preschool programs in the high-need Abbott districts in New Jersey—effective, high quality programs for which detailed cost data are available. The rates for New York City were set to equal those for the Abbott districts in Hudson County, NJ, which are close to NYC in terms of proportion of students from low-income households, cost of living, and so on. Those rates are (a) for full-day public school programs: $13,224; (b) for full-day community provider programs: $14,865; and (c) to supplement federal funds for Head Start programs: $8,213. The base per-pupil amounts for other New York State districts reflect a combination of each district’s pupil need index and its regional cost index relative to the New York City figures (e.g., for Rochester, the rates would be $14,069, $15,815, and $8,739, respectively and for Williamsville (Erie Co.), the rates would be $7,889, $8,868, and $4,900, respectively).

These rates include small class sizes, master teachers, family workers, social workers, outreach programs, parent workshops, medical supplies and screenings, and preschool intervention and referral teams.

On same day as we released our roadmap, the Citizens Budget Commission (CBC) also released a report on the challenge of making pre-K universal in New York. CBC calculates somewhat higher total incremental costs for the program than we do, citing a range of costs from $3 billion for a scenario that, like our analysis, is based on the cost of the NJ Abbott programs to $4.2 billion, based on a second scenario that assumes that the cost of pre-K programs in New York State will be the same as the costs for K-12 programs. There is no reasonable basis for CBC’s second scenario. The Abbott pre-K programs are the highest priced in the nation. Assuming that costs for high-quality programs in New York State would be appreciably higher than these is unfounded. In fact, we believe that with close attention to cost-effective programming, actual New York rates can be lower.

CBC’s cost projection based on the NJ rates is somewhat higher than ours mainly because of different assumptions about how many students would be eligible for the program. CBC uses the total census figures, while we base our estimates on the average number of children that actually enroll in public school programs K-6 over a three-year period. The latter count recognizes that many students do not actually attend publicly offered programs for a variety of reasons. Finally, while we both make the conservative budgetary assumption that all families of participating four year olds will opt for the full-day program, the CBC report assumes the same for three year olds. We assume that it is much more likely that about a third of those children’s families will opt for half-day programs.

Based on their analysis, CBC expresses concern that universal pre-K is too costly and recommends a targeted approach providing pre-K only for children from low-income households. We disagree. As we have shown, the costs of providing universal pre-K are considerably lower than CBC projects; in addition, research indicates that the universal approach is more effective both in providing greater access to children from low-income households and in effecting academic results (see the summary of research in our report, pp. 37-40).

Happily, we do agree with CBC on many points. Their report, like ours, cites the abundant research on the benefits of high quality pre-K programs. They note the ample returns on investments in pre-K both in improved academic achievement and in near-term savings to the education system and long-term benefits to society as a whole. They emphasize that the data are particularly strong on the benefits for children from low-income households. We agree that pre-K is a great investment.

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