Fiscal estimates suggest quality early childhood education is costly yet beneficial

The annual cost of operating a high-quality child care or early education center in southeast Wisconsin is an estimated $11,000 per child, more than double the cost of a typical program in the region today, according to the Public Policy Forum’s latest report from its three-year research initiative on early childhood care and education.

The report, “The Price of Quality: Estimating the Cost of a Higher-Quality Early Childhood Care and Education System for Southeast Wisconsin" stresses that only high-quality programs reap the long-term benefits our region needs most, such as better student achievement and improved graduation rates.

Noting that many other states have invested in child care quality improvement policies in order to capture those long-term benefits, the report intends to help policymakers cost out their options for improving child care quality in Wisconsin. The report provides fiscal estimates on a status quo scenario, a mid-level option and a high quality scenario for state policymakers to consider. While the report’s estimates include only the seven-county southeast Wisconsin region, the policy decisions likely will be made at the state level.

Main findings include:

· The direct costs of operating the region’s current system of early childhood care and education is an estimated $370.5 million annually to serve over 66,700 children. To operate the same sized system at a high-quality level would cost an estimated $671 million annually;

· Policies aimed at maximizing quality would be the most expensive, while a more modest improvement in quality in the region would result in total direct costs of $506.2 million;

· While taxpayers pay for direct costs only to the extent that they subsidize costs for low-income families, certain indirect costs are paid for by taxpayers, including regulation and monitoring of child care providers. These indirect costs would increase if policies were put in place to improve quality in the region and are estimated to total almost $7.5 million during the initial phases of any quality improvement initiative;

· The long-term economic and social benefits that can result from improved quality care and education are maximized when the care is of the highest quality. In addition, the benefits for at-risk and low-income children are larger than for other children.

The report presents several policy options for policymakers, ranging from low-cost and low-return on investment to high-cost and high-return. The least costly option is to maintain the current regulatory system and the focus on fraud prevention. The most costly option is to reform the system as a whole, requiring smaller caregiver-child ratios and requiring caregivers to have four-year degrees, for example. Other options include incremental improvements in quality over a period of time, focusing on improving quality for the neediest children, or a Quality Rating and Improvement System that gives parents information about the relative quality of programs. The report also analyzes five different models for financing quality improvement initiatives.

The Governor and the Legislature have child care on their radar screens right now in light of the serious fraud problems that have arisen in the Wisconsin Shares program. For the sake of children and our regional economy, stamping out fraud in Wisconsin Shares must also involve consideration of how to improve quality. This report’s overview of costs and policy options aim to provide context for upcoming legislative deliberations.

The cost of Milwaukee's drop-outs, and what to do about it

A new report by the Alliance for Excellent Education estimates the economic costs to cities of having high drop-out rates. In the four-county Milwaukee metro area, it is estimated that cutting the drop-out rate in half, or having an additional 3,200 high school graduates annually, would result in an additional $7 million in annual state and local property, income, and sales tax revenue, due to the higher salaries and increased spending associated with being a high school graduate. The graduates themselves "would together earn nearly $41 million in additional wages over the course of an average year compared to their likely earnings without a diploma." The report also notes that in the Milwaukee area, of the 98 high schools analyzed, 23 were found to be "drop-out factories" in which fewer than 60% of freshman progress to their senior year on time.


How to remake these "drop-out factories" back into schools is the focus of another new report, this one by the National Governors Association (NGA) Center for Best Practices. The report recommends four actions that state governors can take to tackle high drop-out rates:

1. Promote high school graduation. The NGA suggests that governors increase the age of compulsory school attendance, weight graduation rates heavily in school accountability schemes, and appoint a drop-out czar or other high-level official to be accountable for statewide improvements.


2. Target youth at risk of dropping out. State data systems can be designed to help identify at risk students as early as possible, making them eligible for intervention and support programs prior to high school.


3. Re-engage youth who have dropped out. Re-entry programs for juvenile offenders can be an important tool for getting drop-outs back into school. States can also create financial incentives or rewards for schools that successfully matriculate and graduate former drop-outs.


4. Provide rigorous, relevant options for earning a high school diploma. This includes offering an array of high school programs focused on job readiness for those students planning to enter the workforce after high school.

As an NGA report, the recommendations are aimed at state policymakers. But some of these policies could be adopted at the local level. Connections between school and work are an example of an area in which an effective local policy might even be better than a state-wide effort.


Drop-outs are a costly problem for the regional economy and southeast Wisconsin cannot afford to wait for whomever next holds the governor's office to tackle this problem. With support of local political and business leaders, best practices could be implemented at the district level sooner, rather than later.