Early Childhood

Huge demand for preschool aid far exceeds scholarships offered

PHOTO: Scott Elliott
Vada Schafer, a student at Shepherd Community Center's preschool, is pleased with the clown she colored in during a visit by Gov. Mike Pence in 2014.

Preschool aid for poor families proved wildly popular in the first-ever enrollment period for a new city-backed program: more than four times as many children applied than the 1,300 scholarships available.

“We could not be more pleased,” Deputy Mayor Jason Kloth said. “If you look at the success rate of these programs elsewhere, in the earlier years they tend to have lower participating rates.”

Not in Indianapolis.

A lottery will be used to select which of the 4,967 qualified applicants will receive up to $6,800 annually for children who attend full day preschool and at least $2,500 for half day programs. Families should hear next week.

Indianapolis Mayor Greg Ballard championed the five year, $40 million public-private aid program starting last summer and finally won funding from a divided city council, which approved an initial $4.2 million to pay for the first year in March.

The program struggled to garner political support despite intense business community lobbying and a $20 million commitment of private matching dollars from a group of companies led by Eli Lilly and Co.

The program aims to serve the poorest children first: those from families with annual income below $55,000 for a family of four. About 87 percent of applicants had income at or below that level. About 98 percent of applicants had annual income of $80,500 or less for a family of four.

Last summer, Ballard’s office estimated as many as 6,000 poor Indianapolis families would place their children in preschools if they had financial assistance. It nearly met its goal of 5,000 applicants.

“The application phase indicates overwhelming demand for this program,” Kloth said.

The program, which is open to poor families across Marion County, saw the most applicants coming from zip codes within Indianapolis Public Schools that the city deems “high need” because of the number of families in extreme poverty. About 1,200 applicants came from families that live in the poorest neighborhoods of IPS, which is expanding its preschool options, too.

Lawrence Township saw 638 applicants from high-need zip codes. Another 611 came from high-need zip codes in Perry, Decatur and Pike townships.

The city’s recruitment campaign was led by the United Way of Central Indiana and the Neighborhood Resource Center.

The United Way’s Christie Gillespie, vice president for community impact, said outreach included ads on billboard and radio but also community meetings and visits to community events, churches, barber shops, beauty salons and even door-to-door.

The city worked in conjunction with the new, smaller state pilot preschool program to jointly promote both options as ways for poor families to get assistance to pay for preschool.

The next step is to ensure there are enough preschools that qualify as “high quality” to enroll all the scholarship winners. To receive scholarships, preschools must be rated a 3 or 4 on a the state’s voluntary four-step rating system, which means they offer safe, healthy facilities with education programs.

As part of the city program, United Way is assisting preschools to earn high enough ratings to qualify to create more space for scholarship winners.

“A big part of the whole pool of money that was raised through the private sector, the intent was that we would increase the resources we have for capacity building,” Gillespie said. “That’s all about increasing seats at level 3 and level 4.”

Right now, United Way estimates the city is about 100 spaces short of enough room for all 1,300 scholarship winners to enroll in high-rated preschools — a gap they expect to close before children begin arriving in the fall.

“We feel pretty good about that,” Gillespie said. “Now are those seats in the high-need areas where they need to be? Those are moving targets we will be watching weekly.”

Sticker shock

In Illinois, child care costs eclipse rent, making it one of least affordable states  

The average annual cost of child care now outpaces what families spend on a year of rent in Illinois, according to a new report that examines child care costs nationwide.

Illinois is one of the 15 least affordable states in the country, according to the report from the Virginia-based nonprofit Child Care Aware of America. The nonprofit examined costs across the United States and adjusted them for median income and cost of living.

“Families are seeing that child care is a significant portion of the bill they have to pay,” rivaling the cost of college tuition, rent, and even sometimes mortgage payments in some areas of the country, said Dionne Dobbins, senior director of research at Child Care Aware.  

The average annual cost of center-based care for an infant in Illinois has reached $13,474 — which is a staggering 52 percent of the median income of a single-parent family in the state and nearly 15 percent of the state’s median married couple’s income.

That figure put it 13th among the least affordable states, which were ranked by the percentage of a single-parent family’s income spent on child care. Massachusetts topped out at nearly 65 percent of a single-parent family’s median income for center-based infant care.

In Illinois, care for toddlers and older children before and after school also consumed a greater percentage of a family’s income compared with other states. Illinois ranked 14th for toddler care as a percentage of median income, with an average cost of $11,982 for full-time toddler care at a center.

The state was among least affordable for the cost of three months of summer care.

 

Illinois offers a child care subsidy intended to offset the costs of care for low-income working families, but that program has been rocked by shifting eligibility requirements and compliance issues. Participation in the program has dropped by a third since 2015, when Gov. Bruce Rauner’s administration changed eligibility requirements.

Dobbins said that, across the United States, child care subsidy programs are under pressure as states tighten compliance and lower reimbursement rates. In some states like Illinois, rising minimum wages have rendered some families ineligible for subsidies or staring down co-pays that they can’t afford.

Dobbins said that nationally, only one in six children eligible for subsidized child care actually ends up using it.

 

Paying for pre-K

To fund pre-K, advocates in Indiana pitch tax credit scholarships, ‘pay for success,’ tax hikes

PHOTO: Scott Elliott / Chalkbeat
Preschoolers at Shepherd Community Center.

Early childhood education advocates are suggesting new ways for the state to fund prekindergarten — by bringing in investments from local communities and corporations.

In a new report released Tuesday by the Indiana University Public Policy Institute and Early Learning Indiana, advocates recommended the state look into tax credit scholarships, social impact bonds, food and beverage tax revenues, or local referendums to pay for expanded pre-K access.

“I don’t think it should be shouldered just by the government or by the private sector alone,” said Madeleine Baker, CEO of the Early Childhood Alliance in Fort Wayne, who co-chaired the report’s advisory board. “I think there needs to be partnership across the board. Everybody has to have skin in the game.”

Tuesday’s report kicks off a renewed campaign to expand early childhood education in Indiana, which is shaping up to be a budget battle in the upcoming legislative session that starts in January.

It could be fairly easy for the state to launch tax credit scholarships for pre-K programs, since Indiana already spends $14.5 million on the school choice strategy. Businesses and individuals receive a 50 percent tax credit on donations to scholarship funds for students from low- and middle-income families to cover the cost of private school tuition in grades K-12.

With social impact bonds — often called “Pay for Success” models — private investors contract with the government to provide money up-front for early childhood initiatives, which is paid back if the programs are successful. Illinois, along with Idaho and Utah, uses the strategy.

Passing a local property tax increase or an option income tax is an increasingly popular option for funding early childhood education with long-term revenue. But raising taxes is a tough sell in Indiana, and likely more so in the state’s rural areas.

An effort to pass a local referendum for early childhood education in Indiana has failed before. In Columbus, voters refused to back a referendum in 2012 that would have supported a public-private partnership widely pointed to as a success.

The other new ideas for funding streams — tax credit scholarships and social impact bonds — also come with trade-offs, said Bruce Atchison, principal of early learning for the Education Commission of the States.

“If you have a big corporation that’s going to put half a million dollars into that, that’s great,” Atchison said. “But when the corporation moves from the state or has a downturn in profits, it might not be so willing. So the long-term sustainability of the social impact bond piece becomes a concern.”

While the report did not include a big-picture estimate for how much more money the state should spend on pre-K, it did put a price tag on the cost of not investing in early childhood.

Employers in Indiana lose $1.8 billion each year from workers taking time off or leaving their jobs because of child care issues, the report said. Those absences are equivalent to losing 31,000 full-time employees and result in costs to businesses for paying for parents’ time off, hiring and training new workers, and paying for overtime or temporary workers.

The report also said the state loses $1.1 billion in economic activity each year from people reducing their spending if they lose out on wages because of child care issues.

It’s a popular argument in support of pre-K: Early childhood education benefits the workforce, both this generation and the next. Advocates say increasing high-quality pre-K seats helps parents stay or get back into the workforce while preparing young children with essential skills.

“Economic development speaks to Republicans,” said former Indianapolis mayor Greg Ballard, a Republican himself who championed pre-K and co-chaired the advisory board. “I’m hoping they look at these figures and say, hey, maybe that’s something we should be looking at.”

He added that he hopes the ideas for public-private partnerships — which he used to launch Indianapolis’ pre-K program — will also speak to the Republican lawmakers who dominate the legislature.

“I don’t think there’s yet a general understand that this should be done for many reasons, not the least of which is economic development,” Ballard said. “It’s just not in our psyche yet that this is part of who we are as Hoosiers.”

The state’s pre-K program, known as On My Way Pre-K, is in the fourth year of its five-year pilot. At a cost of $22 million per year, it is available in 20 counties and pays for roughly 4,000 4-year-olds from low-income families to attend the high-quality pre-K provider of their choice.

If the state is to continue funding the pre-K program, advocates’ best shot for securing money is in the upcoming session, when lawmakers craft the state’s two-year budget.

Expanding pre-K is likely to have the support of Republican Gov. Eric Holcomb, who pushed in 2017 for an earlier expansion of the program to more rural areas of the state.

The issue has already won the support of Republican state schools chief Jennifer McCormick, who said earlier this month that too many Hoosier children enter kindergarten unprepared.

Advocates cite research showing the long-term returns on investment of pre-K and a study showing the success of pre-K in Oklahoma. They even point to research showing where Tennessee’s pre-K program fell short as an example of how important it is to maintain high quality standards for pre-K.

A recent report also showed that universal preschool in Washington, D.C., helped more mothers return to the workforce.

But funding is still likely to be a sticking point: How much money will lawmakers be willing to invest in pre-K?

“In a budget year, everyone has a request for something,” said Tim Brown, general counsel and director of policy for the Indy Chamber, in an interview last month with Chalkbeat.

Advocates say they are still struggling to convince people that pre-K is a worthwhile investment that amounts to more than daycare.

Indianapolis Mayor Joe Hogsett, a Democrat, said he believes pre-K has already proved its worth. Researchers have been studying the early outcomes of the state’s pilot program, which is showing both academic gains for children, and an increase in work and education opportunities for parents.

“I think the results of those programs are self-evident, that they do make a critical difference to get our young people off to a great start in life,” Hogsett told Chalkbeat recently. “So I hope that those results will speak volumes as the legislature crafts its next biennial budget.”