Iowa Children in Focus
The Price of Preschool and the Cost of Losing It
IPP News Release: Quality Preschool: Good Economic Development Tool
Posted February 24, 2011
Policy brief (4-page PDF)

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IOWA CITY, Iowa — A statewide quality preschool program should be viewed as a strong economic development tool, a nonpartisan analysis reported today.

"The research is clear that a quality program not only helps families, but promotes long-term economic development for the state," said Andrew Cannon, research associate for the nonpartisan Iowa Policy Project.

"In fact, the research also is clear that a quality public preschool system for 4-year-olds will produce an economic return on public dollars — a better investment than the risky and more traditional strategies of tax breaks for business."

Cannon's report, "The Price of Preschool and Cost of Losing It," comes as Iowa lawmakers are deciding whether to keep, scrap or modify the statewide voluntary preschool program passed in 2007 to improve quality preschool access for Iowa 4-year-olds.

The IPP report examines one aspect of that discussion — credible expectations of an economic and fiscal return on such early childhood investments. The report notes research suggests that preschool programs have a significant return.

"The findings of this research suggest that Iowa should be strengthening its investment in early childhood education, not cutting it," the report stated, though it does not examine whether the Iowa program meets all the goals policy makers should seek.

By the 2010-11 school year, 325 of Iowa’s 361 school districts had received funding from the state and were participating in the program either with school district preschool programs, or by passing funds on to participating community preschools. Enrollment in public programs has expanded from 8,255 in 263 districts in 2006-07, to 19,799 in the 325 districts this year.

The program provides all Iowa 4-year-olds — regardless of income level — with up to 10 hours per week of preschool instruction with a licensed teacher. In addition, participating preschools must provide opportunities for family involvement beyond the 10 hours spent in the classroom, a key component of many of the most successful preschool programs.

"Because the program has only been operating for three school years, there is little information on its impacts," the report stated. "However, what little information is available at this early point is encouraging."

The report noted early improvements that were reported in the Dynamic Indicators of Basic Basic Early Skills (DIBELS) in early literacy skills as kindergartners.

Cannon reported that a growing body of literature suggests that investment in early childhood education has one of the highest measurable returns to the public of any investment — public or private.

"Unlike state and local governments’ traditional economic development programs, which include corporate tax breaks, tax credits, and other forms of subsidization, investment in early childhood education has a measurable return on investment over a given number of years," Cannon wrote.

By contrast, he said, research by the Iowa Fiscal Partnership and others shows that corporate tax subsidies represent an expensive strategy that accomplishes little if any job creation.

"A principle of fiscally responsible government is to do what works and stop doing what doesn’t work,” the report stated. "Quality early childhood education has been shown to yield significant benefits to the individual participants, to society and to state budgets. The benefits of traditional economic development programs, on the other hand, are short-term, at best, and highly suspect in general.

"Universal preschool ... is an investment that research shows is more likely to pay off for individuals, the public at large, and the state’s budget than traditional economic development strategies of tax breaks for businesses."