Creating Universal Preschool in California Would Create Benefits That Surpass Costs

Investing public money to make preschool available to every 4-year-old in California would generate an estimated $2 to $4 in benefits for every dollar spent, according to a RAND Corporation study issued today.

The study estimates that the cost of a high quality universal preschool program would be more than offset by benefits such as a drop in the amount of special education provided, less grade repetition among K-12 students, less youth and adult crime, and a more productive state workforce.

“There is strong and growing evidence that providing children a year of high quality preschool before they enter kindergarten boosts their achievement over a long period of time and prevents many problems,” said Lynn Karoly, a RAND senior economist and lead author of the report. “Our analysis shows that an investment in universal preschool in California would provide a net economic benefit to the state.”

Researchers from the RAND Labor and Population program say the amount of broad benefits that California would receive from sponsoring universal preschool would depend on certain assumptions, such as how much each child would benefit from preschool.

The study estimates that California society would break even by the time a child enrolled in universal preschool reaches age 14. That is the age at which cumulative benefits to California society first exceed the program costs.

“What the study does for the first time is to look at the potential benefits of a universal preschool program, rather than a program targeted only at kids who are at higher risk for educational and behavioral problems,” Karoly said. “We already know you can get a high return by just targeting the kids who are most disadvantaged.”

The RAND study was funded by the David and Lucile Packard Foundation as a part of its Preschool for All initiative, a multi-year effort aimed at educating the public about the merits of preschool and developing a workable policy to create universal preschool in California.

“It’s a simple equation. Investing in preschool leads to a stronger workforce, better jobs, reduced juvenile crime, and an increased standard of living for all Californians,” said Lois Salisbury, director of the Children, Families and Communities Program at the David and Lucile Packard Foundation. “And it also happens to be great for kids.”

Preschool education is an increasingly common experience for the nation’s young children, with 66 percent of U.S. 4-year-olds and 43 percent of 3-year-olds enrolled in some type of program during 2001. In California, about 65 percent of the state’s 4-year-olds are enrolled in preschool.

But there are wide variations in enrollment rates based on factors such as a child’s race, family income and parents’ education. Enrollment is lowest for Hispanic children. While just 36 percent of 4- and 5-year-olds in California whose mothers have not completed high school are enrolled in early education programs, 65 percent of children whose mothers have a college degree attend preschool.

The federal government supports preschool education targeted to disadvantaged children, primarily through the Head Start program that serves about 900,000 children nationally.

Thirty-six states provide additional support to make preschool available to disadvantaged children. Only Georgia and Oklahoma have preschool programs available to all 4-year-olds, although additional states such as New York and Florida have signaled a commitment to creating universal preschool.

California’s current preschool program targets children who are at risk of school failure, reaching about 9 percent of the state’s 4-year-olds in 2002-2003.

Karoly and colleague James Bigelow analyzed the economic benefits of investing in universal preschool in California by examining a growing number of studies that demonstrate the value that preschool education has for disadvantaged children. Those studies show that preschool advances children’s academic achievement scores, lowers the chance children will repeat grades or use special education, and increases the likelihood that children will complete high school.

In addition, studies have shown that preschool can decrease the likelihood of contact with the criminal justice system during adolescence and adulthood, and improve employment rates and earnings average during adulthood.

RAND researchers assumed universal preschool in California would be a part-day voluntary program open to all 4-year-olds. The program also was assumed to meet national quality guidelines, including having a teacher with a four-year college degree leading each class.

Researchers estimated such a program would enroll 70 percent of the state’s 4-year-olds, with another 10 percent enrolled in private programs. The study assumes the remaining 20 percent would not attend preschool.

Universal preschool for California 4-year-olds is estimated to cost an additional $1.7 billion annually. But that investment would result in an estimated $4.4 billion in new benefits to California over the lives of each group of children that completes a year of preschool, according to the study.

Those benefits were calculated by estimating the benefits experienced by those children who otherwise would not have attended preschool and those who would likely attend a higher quality program under the plan.

For each group of 4-year-olds that completes a year of preschool, researchers foresee 13,800 fewer children retained in school, 62,500 fewer years spent in special education, 10,000 additional high school graduates and 7,300 fewer juvenile arrests.

Some of the benefits created by universal preschool, such as reduced spending for special education costs, would flow directly to the state, Karoly said. But an even greater portion of the benefits would accrue to society at large, through improvements such as lower crime rates and a better-prepared workforce.

Karoly said there also would likely be other benefits that researchers could not quantify. Those include increasing the state’s labor force in the near term because more mothers would be able to hold jobs, and making California a more desirable location for businesses.

As a result, an improved preschool system more generally may be viewed in comparison with other strategies to help a region foster economic development, according to the report.

While researchers based their analysis on a state-supported preschool system open to all children, they note that if resources are constrained, policymakers also may want to consider the value of an expanded effort targeted to at-risk children.

Targeted efforts increase the amount of benefit per dollar invested, Karoly said. But such an approach also creates administrative issues and costs in determining eligibility, may exclude some children who would benefit from preschool, and are less likely to create economically integrated preschool classes, she said.

The RAND Labor and Population Program examines issues involving U.S. labor markets, the demographics of families and children, social welfare policy, the social and economic functioning of the elderly, and economic and social change in developing countries.

A printed copy of “The Economics of Investing in Universal Preschool Education in California” (ISBN: 0-8330-3779-X) can be ordered from RAND’s Distribution Services (order@rand.org or call toll-free 877-584-8642).