Pre-K Investment Yields Bonuses for Children, Families, Communities & Government Budgets

Groundbreaking Study Released in PA by Keystone Research Center Shows a Statewide Program for Three- and Four-Year-Olds Would Start Paying for Itself in Pennsylvania in 10 Years
Date of Press Release: 
May 2, 2007

By 2050, Universal Statewide Program Would Produce 12 Dollars in Benefits for Each Dollar Invested

Harrisburg - If PA wants to build a strong economy, increase earnings, reduce crime, and balance budgets, a good place to start is with high quality pre-kindergarten for the state's children, according to a new study by the Economic Policy Institute that was released in Pennsylvania by Keystone Research Center.

Investing in pre-K, whether it's a program open to all of the Pennsylvania's three- and four-year-olds or one targeted to the 25 percent of children most in need, yields large, measurable economic benefits for children, families, communities, and the state, according to the study.

The pre-kindergarten issue is on the agenda because Governor Ed Rendell has proposed Pennsylvania Pre-K Counts, $75 million to enroll 11,000 children in quality pre-schools run by school districts, Head Start, nursery schools and child-care centers. The money would be available statewide, but focus on children who are at risk of school failure.

The new EPI study, Enriching Children, Enriching the Nation, by economist Robert G. Lynch, adds a crucial new dimension to previous research that solidly documented the positive effects of high-quality pre-kindergarten education for children. Lynch's research shows that the pre-K investment pays off for society and government as well as children.

KRC economist Mark Price said: "A high quality pre-K program should be a central part of a larger, comprehensive public investment in early childhood development from prenatal care through age five."

Lynch's research estimates the societal, economic, and budgetary gains that would flow from investing now to build either a universal or a targeted pre-K program that is implemented nationwide.

His analysis is based on data from the Chicago Child-Parent Center Program, which provides center-based, comprehensive education, and family support services to economically disadvantaged children from pre-kindergarten (ages three or four) to early elementary school (up to grade three/age nine). It is the oldest federally funded pre-kindergarten program in the nation after Head Start, and the oldest extended early childhood program.

"Investing in high-quality pre-K isn't only good for children and society, it's also great for government budgets," says Lynch, whose new study measures the economic, crime, and budgetary benefits of high quality pre-K against its costs. "Governments can realize huge savings in areas such as remedial education, law enforcement, and child welfare, and will experience increases in tax revenues. Add to that the benefits of less crime and a more highly skilled workforce, and that makes pre-K spending one of the smartest moves governments can make."
In just 10 years, Lynch's study shows, a fully funded pre-K program for at-risk PA children would generate cost savings for the state budget that exceed the annual state investment.  A universal program serving all the nation's children would pay for itself in just 17 years.

Ruby Takanishi, President of the Foundation for Child Development, a major supporter of Lynch's research, said "The nation's educational report card, the National Assessment of Education Progress (NAEP), shows that only about 40 percent of white and Asian fourth graders were proficient in reading in 2005, and fewer than one-in-five of black, Hispanic/Latino, and all low-income children. Quality pre-kindergarten, and quality K-3 education to sustain gains made in pre-K, are essential to prepare children for lifelong learning and productive engagement in their communities."

Lynch not only shows the overall gains to be realized from instituting high quality pre-K nationwide, but also breaks out the major sources of these gains and the benefits to the participating children and their families. In the year 2050, Lynch shows that the total benefits of a targeted program would be more than 12 times as high as its costs. In that year, the combined annual benefits from government budgetary gains, increased compensation to individuals, and savings to individuals from reduced crime would add up to $9.9 billion in Pennsylvania.

For a universal program the total budgetary, crime, and earnings benefits would be even greater, $26 billion in 2050, exceeding program costs more than eightfold in that year.

To put in context the gains that are possible from pre-K investment, Lynch noted: "Analysts point to stock market, with its average annual gains of about 6 percent between 1871 and 1998, as the model of a sound investment. Yet with returns that have been measured at 16 percent or more annually, good pre-K programs far outperform the stock market."

The Keystone Research Center is an independent, non-profit, nonpartisan research institute that conducts research to promote a more prosperous and equitable Pennsylvania.  KRC is known nationally for its research on the early childhood workforce.  National and Pennsylvania studies of the early childhood workforce written by KRC, released by EPI, and funded by the Foundation for Child Development, can be found at http://keystoneresearch.org/issues-guides/early-childhood-workforce.