Report
The Economics of Investing in Universal Preschool Education in California
Mar 28, 2005
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A one-year, universal, high-quality preschool program in California would, for a $4,300-per-child cost beyond current public preschool spending in the state, generate
Research has shown that well-designed preschool education programs serving disadvantaged children can generate benefits to government and the rest of society that outweigh program costs. As a result of such evidence, there has been a growing conviction among U.S. business leaders, policymakers, and the public that children benefit from structured programs preparing them for school entry. That conviction has been accompanied by increasing enthusiasm for public-sector investment in preschool.
This national trend is reflected in California, where interest in a publicly funded “preschool for all” program has been growing. That prompted The David and Lucile Packard Foundation to ask the RAND Corporation for answers to two questions:
In estimating costs and benefits, the RAND researchers assumed a high level of program quality, meaning that the universal preschool program would meet nationally recognized standards for class sizes, staff ratios, staff qualifications, and other features associated with better outcomes for children. They also assumed a part-day, voluntary program that would enroll 70 percent of the state’s 4-year-olds. Cost estimates were based on data on teacher salaries and other costs in California.
Benefits of universal preschool were based on scientific evidence of the effects of high-quality preschool on disadvantaged children. These effects include reduced remedial education services and increased educational attainment by program participants, reduced abuse and neglect of participants, reduced victimization by crimes committed by participants, increased wage and salary compensation of participants and increased taxes realized by government, and reduced need for child care for participants. Other likely benefits of preschool participation were not included because of data limitations. Adjustments were made for lower-risk children and for children already enrolled in preschool under the existing system who would likely realize fewer benefits under a universal system. All future benefits and costs were discounted to present values at 3 percent per year.
The findings may be summarized as follows:
NOTES: Dollar amounts are per child in 2003 dollars for California society as a whole and are the present value of amounts over time where future values are discounted to age 3 of the participating child using a 3 percent annual real discount rate.
Other issues are relevant to the decisions involved in adopting universal preschool and implementing it. For example, the RAND research assumes a one-year, universal, high-quality program. A two-year program would generate greater benefits but probably not in proportion to the higher cost. A program targeted at disadvantaged children would be less costly and generate more benefits per dollar expended. However, it would incur administrative costs of determining eligibility, would risk stigmatizing participants, and would unavoidably miss some children in families who could benefit but do not meet the eligibility criteria or are confused about the eligibility rules. Attempting to save money by reducing the emphasis on high quality would presumably reduce benefits, but it is not possible to say by how much.
The RAND researchers noted two further lines of reasoning that support adoption of a universal preschool program in California:
This report is part of the RAND Corporation research brief series. RAND research briefs present policy-oriented summaries of individual published, peer-reviewed documents or of a body of published work.
The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.