This memorandum is in response to your request for an analysis of Senator Elizabeth Warren’s proposed Universal Child and Learning Act. For additional information and questions, you may contact us at email@example.com or firstname.lastname@example.org.
Overview of the Issue and Policy
Universal pre-k is an important topic because it has broad impacts on health, education, and economic stability. Research demonstrates that the first years of a child’s life have significant implications on their long-term success. Children who have access to high-quality early childhood education and child care have better long-term outcomes than their peers. By the time low-income children enter kindergarten, they perform worse on cognitive ability tests than children from higher-income households. Pre-kindergarten also has significant economic and societal benefits. Families who can afford and access pre-kindergarten can enter the workforce and spend more disposable income on other needs like food or housing. A recent study found that the lack of child care in the United States costs $57 billion a year in lost revenue, productivity, and earnings.
Even though high-quality pre-k has significant positive externalities, the United States’ child care market does not provide an adequate supply of child care at an affordable price. Families with infants need to pay almost an average of $16,000 per year to afford high-quality child care. For many families, this translates to paying an average of 9 to 36 percent of their total income on child care. In addition, the quality of pre-kindergarten in the United States varies significantly state-by-state. The National Institute of Early Education Research found that only six state-funded pre-k systems met quality standards. Child care workers are also severely underpaid, which disincentives job-seekers from becoming child care workers and impacts the quality of the child care system. In 2019, the median pay for child care workers was only $11.65 an hour.
The United States’ current public investment in the child care market is inadequate to rectify the market failures. The primary child care programs at the federal level are Head Start and Early Head Start and the Child Care and Development Fund (CCDF). While these programs are effective, they only serve very low-income families and offer inadequate funding to support all low-income families. Only 15 percent of eligible families receive child care subsidies through CCDF.
The Universal Child and Learning Act would establish a network of locally run child care centers and would increase affordability by ensuring that no family would pay more than seven percent of their income on child care. It would also ensure that families under 200% of the federal poverty limit (FPL) would pay nothing for child care. In addition, child care center workers would see increased wages that are competitive with public school teachers. This would address one of the main issues with the labor supply of child care workers. The federal government would cover eighty percent of the cost for low-income children, defined as under 200 percent of the FPL, while covering fifty percent for families above 200% of the FPL. Families above this income threshold would pay a sliding scale fee with no family paying more than seven percent of their income.
Senator Warren originally proposed the policy in February 2019 during her presidential campaign. She was one of the first Democratic candidates to propose a universal pre-k plan during the campaign. Currently, the policy has not been implemented, but it has 40 co-sponsors in the House and 6 in the Senate. In addition, many federal, state and local government through Head Start and Early Head Start. This is the country’s first and largest pre-kindergarten program. It serves roughly one million children, but only half of all eligible children are served because of funding constraints. In addition, 1.4 million children are enrolled in a state-funded pre-kindergarten program.
The proposed policy builds upon the model of Head Start and Early Head Start program. Under Head Start, nonprofits and for-profit agencies receive grants from the Department of Health and Human Services to administer Head Start. The standards are set by the federal government to ensure quality and consistency, while the program is administered at the local level. This is a key component of Senator Warren’s proposed policy. It would replicate this system so that localities and communities are providing child care, while the federal government sets the quality standards and provides funding.
Analysis of the Policy
The proposed legislation would ensure that all children in the United States regardless of their family’s economic status have access to high-quality preschool programs beginning at age three. By subsidizing the majority of the cost of pre-k, the policy would reduce costs for child care centers and allow them to supply a greater quantity of child care. As discussed in the above section, the current child care market does not provide an adequate supply of child care. In addition, public child care programs, such as Head Start, do not fill in the demand gap. Subsidizing the cost of child care will cost child care centers less to supply child care seats. As a result, they will be able to supply more child care seats, and families will pay a lower cost. An independent analysis from Moody’s estimates that 5 million additional children under age 5 would be able to access pre-kindergarten. In addition, the cost of child care would decrease with the average American family paying less than $6,000 a year, a 17 percent decline from the current structure.
According to Moody, the legislation would cost approximately $70 billion a year. This analysis takes into account multiple assumptions including that most families will utilize center-based child care versus family child-care. Center-based care is more expensive at $14,500 per child versus $11,000 per child. These costs also include increases in teacher pay. Some of these estimates could vary depending on the cost of quality improvement and teacher training. In addition, the policy would improve quality by increasing teacher pay and making the child care industry more competitive with similar professions. For example, a job-seeker with a degree in education will be more willing to become a child care teacher instead of a K-12 public school teacher.
The United States federalist system of government could create administrative issues with the implementation of the policy. The policy essentially shares decision-making between federal, state, and local entities. The federal government funds the program and sets the quality standards, while states and localities actually implement the pre-k system on the ground. This requires significant coordination between different levels of government, which can pose challenges. In addition, each state government may implement the policy differently, which could create wide disparities in the quality of child care state-by-state. One way to address these administrative concerns would be for the federal government to create federally operated child care centers. This could streamline the policy but create huge efficiency issues as all the existing child care centers would need to transition away from their current operations.
One potential equity consideration is that while the policy provides free pre-k to families under 200 percent of the FPL, families over the income threshold have to pay a certain percentage of their household income. While no family would have to pay more than seven percent of their household income, this could still represent a significant financial barrier for some families. For example, a family of four in Louisiana with one infant and one toddler needs to make $69,732 a year to cover the basic cost of living. Yet a family of four at 200 percent of the federal poverty limit still only makes $53,000 a year. This means that many families would still struggle to make ends meet. One way to remove this obstacle would be to raise the income level so that families under a higher percentage of the FPL receive free pre-k.
There are multiple policy considerations that can be taken into account. Under the proposed policy, families under 200 percent of the FPL access pre-kindergarten for free. Families above this income threshold pay an income-based fee on a sliding scale. The income limits could be adjusted so that more or fewer families access the program for free. This would increase or decrease the overall cost of the program. An additional design component is the cost per pre-kindergarten seat. Under the policy, the cost per seat would be established by the federal government, which is another component that could be changed. The analysis from Moody’s assumes a $14,5000 cost per child care seat but this could increase if additional considerations are included. For example, mental health services for children could be an additional service that could be provided. This would increase the cost of each child care seat but would improve the quality of child care and be beneficial to children.
While this policy does achieve the overall objectives of universal pre-k, there are additional policies that could be considered. Senator Bernie Sanders proposed a similar policy, but it would provide free pre-k to all families. This would cost significantly more but would eliminate most child care costs for families. In addition, President Biden has proposed his own child care plan as part of the American Families Plan. This plan proposes to provide free pre-k to 3 and 4-year-olds. His plan is similar to Senator Warren’s plan and would partner with states to offer pre-k. Another consideration is to utilize existing federal programs and simply increase funding for Head Start and the Child Care Development Fund.
Recently, there have been significant pushes to expand the federal government’s investment in child care. The American Rescue Plan Act invested $39 billion in the child care system. While these one-time funds do not achieve universal pre-k, they do represent momentum at the federal level to invest more public dollars in child care.
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