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Pre-k "Savings": The Ugly Truth and the Good News About It

A new report funded by the Max and Marjorie Fisher Foundation looks at the potential benefits of increased pre-k access for the state of Michigan and the city of Detroit. (h/t Eye on Early Education) The researchers find that the total "per-child" savings to the state and residents of Michigan for each additional at-risk child served in pre-k total $32,075--and more than double that in the city of Detroit.

I'm all for my home state spending more on pre-k. Goodness knows the kids in Detroit and other parts of the state would benefit. But I'm also always a little uncomfortable with this sort of cost-saving claims. Pre-k advocates love to talk about the "return on investment" from pre-k, touting early childhood programs that "save the public $10 for every $1 spent," and my former colleague Lisa Guernsey has written a great analysis of both the truths and the problematic nature of some of these claims. My greatest discomfort here is that the lion's share of the "benefits" touted in these studies accrue to a diffuse public, through reductions in negative things that might otherwise been expected to happen to people but won't. While these are in one sense real benefits, it's equally true that it's impossible to know to whom they accrue, the people to whom they will accrue don't actually know themselves that they're reaping the benefits, and people don't really care about statistical deaths/lives/casualties. Moreover, it makes no sense to claim that such savings can "pay for" pre-k, because their diffuse nature makes it impossible to recapture them to cover pre-k costs. There are real--and significant--taxpayer and government savings from pre-k, but the really flashy high-value savings come from benefits far down the road, such as reduced crime and prison costs, and are also hard to capture to pay for pre-k. And when early childhood advocates cite such diffuse and distant benefits to claim that the "value of investing in school readiness for just one child at risk of academic failure in Detroit, Michigan, is...about $100,000," I worry that the perception such claims are oversold may actually increase skepticism about the value of pre-k investments, rather than building support.

So, that's negative me. But there's another piece of information in this report that I think makes a very solid case for the value of investments in pre-k, and ought to be both more frequently cited by advocates and leveraged in pre-k financing discussions. The researchers who wrote the Fisher Foundation report find that improving Michigan children's school readiness would yield $2,374 per child served in reduced special education and grade retention costs during the time the child is enrolled in pre-k. In Detroit, the figure is even higher--$3,376. When you consider that the state of Michigan only spends about $4,453 per child enrolled in pre-k (which is, admittedly, on the low side), those figures look pretty striking. Moreover, because cost savings accrue to the K-12 public education system in a relatively short timeframe from when children finish pre-k, it is truly possible to think about mechanisms that might allow for the recapture of some of these savings to offset pre-k costs. For example, states or districts could potentially fund the costs of pre-k expansion or quality improvements using Social Impact Bonds that tie investor returns to achieving targets for reduced special education placement, grade retention, and resultant savings. Alternatively, states could build pre-k into finance systems in a way that both costs and savings accrue to the same system. If nothing else, these figures suggest that the true cost of pre-k is far less than what states or districts must put out upfront per-child, because significant numbers of children will actually complete the same number of years of schooling regardless of whether or not the state funds pre-k--the choice is simply whether they complete an additional year in pre-k or by being held back in a later grade (which often costs significantly more). Given that formulation, the choice should be obvious to policymakers.

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