Early Childhood Education: Preschool Participation, Program Efficacy, and Federal Policy Issues

Early Childhood Education: Preschool Participation, Program Efficacy, and Federal Policy Issues

Order Code RL31123
CRS Report for Congress
Received through the CRS Web
Early Childhood Education:
Preschool Participation, Program Efficacy,
and Federal Policy Issues
Updated January 19, 2006
Gail McCallion
Specialist in Labor Economics
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress

Early Childhood Education: Preschool Participation,
Program Efficacy, and Federal Policy Issues
Summary
Between 1990 and 2003, the percentage of 3- to 5-year-olds in the United States
enrolled in some kind of preprimary (center-based or kindergarten) education
increased from 59% to 65%. At the same time, data indicate that some children need
more assistance to be ready to learn effectively when they enter kindergarten, and that
many school-age children are having difficulty becoming proficient readers. These
events have increased the focus on the role of preschool education and care.
Research on the effects of quality early childhood education and care programs
indicates positive short-term effects in terms of cognitive functioning, school
readiness, and social behavior; and also supports positive long-term effects for
children from “model” early intervention programs. Long-term results from more
“typical” programs, such as Head Start, are less conclusive.
Most researchers have found high-quality early childhood programs to have
several factors in common: low teacher-child ratios, well-trained and well-paid
teachers, and low staff turnover rates.
The principal federal programs presently providing funding for early childhood
education and care are: Head Start; Title I, Part A of the Elementary and Secondary
Education Act (ESEA); the William F. Goodling Even Start Family Literacy
Programs; the Individuals with Disabilities Education Act; the Early Reading First
Program; the Child Care and Development Block Grant; the Social Services Block
Grant; and the Early Learning Fund.
The number of states that have provided some funding for preschool programs
has increased considerably over time, from 7 in 1980 to 38 in 2002-03. Although the
benefits of preschool to society can be difficult to quantify, more research has
emerged examining the costs and benefits of governmental investments in preschool.
Several of these studies have projected that the benefits of such investments will
exceed the costs.
Congress is considering what role is appropriate for the federal government in
providing and setting standards for early childhood education and care, and how to
best enhance the supply of quality early childhood education and care. At the same
time, issues have been raised about what form federal aid for early childhood
education and care should take, whether such aid should be targeted or universal,
how to coordinate new federal initiatives with existing federal programs, and how to
avoid supplanting or discouraging state initiatives for early childhood education and
care. This report will be updated periodically.

Contents
Children Served . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Research on Efficacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Federal Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
State Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Policy Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Weighing Costs and Benefits of Universal Preschool . . . . . . . . . . . . . 13
Universal vs. Targeted Preschool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Sponsorship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
List of Tables
Table 1. Child Care Arrangements of Preschool Children,
Not Yet Attending Kindergarten by Age: 2001 . . . . . . . . . . . . . . . . . . . . . . 3
Table 2. Child Care Arrangements of Preschool Children
3-5 Years Old, Not Attending Kindergarten,
by Child and Household Characteristics: 2001 . . . . . . . . . . . . . . . . . . . . . . . 5

Early Childhood Education:
Preschool Participation, Program Efficacy,
and Federal Policy Issues
Between 1990 and 2003, the percentage of 3- to 5-year-olds in the United States
enrolled in some kind of preprimary (center-based or kindergarten) education
increased from 59% to 65%.1 At the same time, data indicate that some children
need more assistance to be ready to learn effectively when they enter kindergarten;
and that many school-age children are having difficulty becoming proficient readers.
National Assessment of Education Progress (NAEP) data for 2005 indicate that only
31% of 4th graders are at or above the proficient level in reading. For 4th graders
eligible for free/reduced-price lunches (i.e., from relatively low-income families),
only 16% are at or above the proficient level.
In addition, the scientific community has fueled interest in early childhood with
research indicating that the early years are crucial for brain development and, that
there is a connection between the stimulation young children receive from their
preschool teachers or care givers and success in later learning and intellectual growth.
This research has altered the way scientists see the development of the brain; most
now believe that the neural circuitry of the brain is not fixed at birth but develops
partly in response to early experiences. Research has shown that the first three years
of life are the period of most rapid brain growth, and that there are certain “windows
of opportunity” for certain kinds of learning (language, for example). Scientists have
discovered that beginning in early adolescence, brain development occurs through
the “pruning” of unnecessary synaptic connections. Those synapses that receive the
most use in childhood are the likeliest to become permanent; those that are unused
are the most likely to be eliminated.2 However, researchers also caution that early
intervention should not be viewed as a panacea; people continue to learn, and the
human brain continues to incorporate new information, throughout life.
This report examines what we currently know about preprimary programs,
including numbers of children served and their family characteristics; as well as data
on the efficacy of preprimary programs in enhancing later learning and other life
skills. Current federal programs that serve preschool age children are described, and
policy issues which may arise as the federal role in early childhood education is
debated are discussed.
1 U.S. Department of Education, Office of Educational Research and Improvement,
National Center for Education Statistics, The Digest of Education Statistics 2004.
2 Rima Shore, Rethinking the Brain, Families and Work Institute, New York, NY, 1997.

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Children Served
In examining the number and growth of preprimary education programs, we
immediately confront the question of how to conceptually and empirically separate
education from child care in programs for young children. While the focus of this
report is on early childhood education, it is difficult to empirically differentiate
between early education and child care because in early childhood settings the two
are often intertwined. Many experts believe that both are required for a quality
environment for young children:
... care and education cannot be thought of as separate entities in dealing with
young children. Adequate care involves providing quality cognitive stimulation,
rich language environment, and the facilitation of social, emotional and motor
development. Likewise, adequate education for young children can occur only
in the context of good physical care and of warm affective relationships.3
Available national-level data on early childhood education does not delineate
time spent in education activities versus child care. Existing data do differentiate
between center-based versus other settings (relative care and family day care centers)
for child care and early childhood education. This discussion of national data focuses
on center-based programs, broadly defined, because program names (day care center
versus preschool for example) do not necessarily correlate with whether a program
has an academic component or not.4 Some “day care centers” may contain an
academic component, while some “preschools,” for example, may not. Center-based
programs include day care centers, nursery schools, prekindergarten programs,
preschools, and Head Start programs. For these reasons the data on children’s
participation in early childhood education are based on center-based preprimary
programs, broadly defined. Because federal and state preschool policies focus largely
on children between the ages of 3 and 5, data for this age group are considered in
more detail in this report. However, it is important to note that many children
younger than three also participate in some form of nonparental care. Table 1
provides data on children’s child care arrangements by age for 2001. These data
indicate that 61% of children five and younger, and not yet in kindergarten,
participate in some form of non-parental care. For even the youngest children (ages
0-2), 52% participate in some form of non-parental care, although participation in
non-parental care rises with age. Additionally, older preschool aged children ( 3-5)
are much more likely to participate in center based programs than are younger
children (ages 0-2), with participation rates of 57% and 17%, respectively. (see
Table 1).
3 National Research Council, Eager to Learn: Educating Our Preschoolers, Washington,
National Academy Press, 2000, p. 2.
4 In this report, the terms preschool, prekindergarten and preprimary care and education
programs are used interchangeably. Because existing national data are based on parental
responses, and an academic program may call itself a day care center, a preschool or a
prekindergarten, parental responses on whether their child’s care includes an academic
component often simply reflect the title of the program their child attends. State data, which
are available for prekindergarten (including Head Start programs) programs, are discussed
in the text of the report below.

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Table 1. Child Care Arrangements of Preschool Children, Not
Yet Attending Kindergarten by Age: 2001
(Numbers in thousands)
Number and percent in non-parental
arrangements
Total
Non-
Center
population
Relative
relative
based
Parental
of childrena
Total
care
careb
programc
care only
Characteristic
No.
No.
%
No.
%
No.
%
No.
%
No.
%
Total
20,252 12,397 61 4,681
23 3,308
16 6,761 33 7,885 39
Child’s age
Less than 1
3,868 1,598 41
877
23
564
15
298
8 2,270 59
1 year old
3,902 2,113 54
907
23
800
21
625 16 1,789 46
2 years old
3,931 2,368 60
946
24
742
19 1,014 26 1,562 40
Total (0-2)
11,701 6,079 52 2,730
23 2,106
18 1,937 17 5,621 48
3 years old
3,795 2,510 66
894
24
558
15 1,625 43 1,284 34
4 years old
3,861 3,073 80
870
23
527
14 2,546 66
788 20
5 years old
896
734 82
187
21
117
13
654 73
161 18
Total (3-5)
8,551 6,318 74 1,951
23 1,201
14 4,825 57 2,233 26
Source: U.S. Department of Education, National Center for Education Statistics, Early Childhood
Program Participation Survey of National Household Education Survey (NHES). 2001 data are the
latest available.
Note: Children may participate in more than one type of care; therefore row numbers may sum to
more than totals. Numbers also may not sum to totals due to rounding.
a. Most 5-year-old children are enrolled in kindergarten, estimates for this report are based only on
children who have not entered kindergarten. It includes children who are enrolled in school but
are ungraded.
b. Non-relative care includes family day care and nanny care.
c. Center based programs include day care centers, nursery schools, prekindergarten, preschools, and
Head Start programs.

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Data indicate that of 3-5 year olds not yet in kindergarten, children in poverty
were less likely (48%) to be in center-based programs than were children not in
poverty (60%) (See Table 2). There is a clear correlation between rising income and
participation of children in center-based care. Seventy-five percent of children in
households with more than $75,000 in income participated in center-based care,
compared to 48% of children in households with incomes of $20,000 or less.5
Additionally, 3-5 year olds whose mother graduated from college or had a
graduate degree were much more likely (68% and 73%, respectively) to attend a
center-based program than were 3-5 year olds whose mother did not graduate from
high school (38%). And, language spoken most at home by a child’s mother was
strongly linked to whether or not the child participated in a center-based program.
For children where English was spoken most at home, 59% participated in a center-
based program compared to 36% of children in homes where a language other than
English was spoken most.
Black, non-Hispanic children were more likely (63%) than either white non-
Hispanic children (59%) or Hispanic children (40%) to be in a center-based program.
Participation by black children is partly attributable to greater participation in Head
Start programs by black children than by white or Hispanic children.
5 Because children may participate in more than one kind of care many children are counted
more than once. (For example, a child may attend Head Start in the morning, and then
attend another center-based program or family day care center in the afternoon.)

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Table 2. Child Care Arrangements of Preschool Children
3-5 Years Old, Not Attending Kindergarten,
by Child and Household Characteristics: 2001
(Numbers in thousands)
Number and percent in non-parental
arrangements
Total
Non-
Center
population
Relative
relative
based
Parental
of childrena
Total
care
careb
programc
care only
No.
No.
%
No.
%
No.
%
No.
%
No.
%
Characteristic
Total (ages 3-5)
8,551 6,318 74 1,951 23 1,201 14
4,825 57 2,233 26
Race/ethnicity
White,
non-Hispanic
5,313 3,971 75 1,039 20
874 17
3,139 59 1,342 25
Black,
non-Hispanic
1,251 1,061 85
459 37
106
9
789 63
189 15
Hispanic
1,506
918 61
343 23
170 11
600 40
588 39
Other
482
367 76
110 23
52 11
297 62
114 24
Language spoken most at home by child’s mother
English
7,368 5,605 76 1,652 23 1,089 15
4,368 59 1,764 24
Other language
984
564 57
219 22
87
9
349 36
420 43
Income range
$20,000 or less
2,106 1,443 69
624 30
183
9
1,018 48
663 32
20,001-35,000
1,607 1,108 69
401 25
187 12
808 50
498 31
35,001-50,000
1,327
844 64
294 22
179 14
582 44
483 36
50,001-75,000
1,724 1,363 79
357 21
320 19
1,074 62
360 21
More than
$75,000
1,788 1,559 87
274 15
332 19
1,343 75
229 13
Poverty statusd
In poverty
2,221 1,501 68
644 29
186
8
1,058 48
720 33
Not in poverty
6,331 4,817 76 1,308 21 1,015 16
3,768 60 1,513 24
Mother’s highest education level
Less than high
school
996
581 58
252 25
58
6
379 38
414 42
High school/GED
2,712 1,877 69
690 26
328 12
1,286 48
835 31
Vocational/
technical or
2,406 1,858 77
608 25
333 14
1,487 62
548 23
some college
College graduate
1,418 1,141 81
227 16
248 18
966 68
277 20
Graduate degree
820
711 87
94 12
210 26
600 73
110 14
Source: U.S. Department of Education, National Center for Education Statistics, Early Childhood
Program Participation Survey of National Household Education Survey (NHES). 2001 data are the
latest available.
Note: Children may participate in more than one type of care; therefore row numbers may sum to
more than totals. Numbers also may not sum to totals due to rounding.

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a. Estimates are based only on children 3-5 years who have not entered kindergarten or who are
enrolled in school but are ungraded.
b. Non-relative care includes family day care and nanny care.
c. Center based programs include day care centers, nursery schools, prekindergarten, preschools, and
Head Start programs.
d. Poverty was defined as a household income of $18,022 for a family of four in 2001.
Research on Efficacy
There is an extensive and growing body of research examining the effectiveness
of early childhood programs. Effectiveness is usually measured by cognitive
functioning, school readiness and/or social adjustment in the shorter-run; and by
subsequent wages, high school graduation rates, criminal activity and welfare use in
the longer-run. The conclusions of four major surveys of the literature on early
childhood program outcomes are discussed below.
In December 2000, a study titled Eager to Learn was released by the Committee
on Early Childhood Pedagogy.6 The Committee was established by the National
Research Council in 1997 to review and synthesize the theory and research on early
childhood pedagogy, and to make recommendations, based on the present state of
knowledge, for early childhood education programs and public policy. Eager to
Learn included 19 specific recommendations in four major areas: (1) teacher
training; (2) teaching materials; (3) public policies to support quality preschools; and
(4) dissemination of information on preschool development.
The Committee made recommendations in all four of these areas that it argued
would significantly improve the U.S. system of preschool education and care. The
Committee agreed that “the case for a substantial investment in a high-quality system
of child care and preschool on the basis of what is already known is persuasive.”7
One of the strongest recommendations made in Eager to Learn was regarding teacher
training. The committee recommended that all children in early care programs be
provided with a teacher who has a bachelor’s degree and specialized education in
early childhood. The Committee on Early Childhood Pedagogy stated,
The professional development of teachers is related to the quality of early
childhood programs, and program quality predicts developmental outcomes for
children. Formal early childhood education and training have been linked
consistently to positive caregiver behaviors. The strongest relationship is found
between the number of years of education and training and the appropriateness
of a teacher’s classroom behavior.8
The importance of teacher education and training runs throughout the literature
on early childhood education. Another major study, The Cost, Quality and Outcomes
Study, begun in 1993, examines the impact of “typical” center-based as opposed to
“model” early childhood programs, by tracking children from preschool through their
6 Eager to Learn, Executive Summary, National Research Council, National Academy Press,
Washington, D.C., 2000.
7 Ibid., p. 322.
8 Ibid., p. 7.

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early elementary years. This study considered two broad measures of quality:
classroom practices and teacher child relationships.9 Based on four years of data
tracking individual children from preschool through second grade, the researchers
found that the quality of care provided is key.
Children who attended quality child care programs (those programs ranking in
the 75th percentile or better) when they were 3 to 4 years old, were reported to have
subsequently scored better on math, language and social skills in early elementary
school than children who attended poor quality child care programs (those programs
ranking in the 25th percentile or less). Furthermore, better classroom behavior and
social skills were reported in children who had closer relationships with their child
care teachers. These positive effects in math skills, thinking/attention skills, and
problem behaviors remained through second grade, but the differential diminished
over time. In addition, the researchers found that the positive effects of quality child
care, and the negative effects of poor quality child care, are most pronounced for
children at risk of not doing well in school.10 Furthermore, the researchers found
teacher pay and qualifications to be linked with quality programs:
Our research indicated that the quality of child care was related to both the
formal education levels and the specialized early childhood training of the
classroom teachers. Similarly, teacher compensation was closely linked to the
quality of services in child care. The findings reported here further underline the
need to raise quality, indicating that these child care experiences continue to
influence children’s development through the early elementary years.11
A 1998 Rand study, Investing In Our Children, authored by Lynn Karoly and
seven colleagues, examined the costs and benefits of early childhood interventions,
specifically those promoting the development of “at risk”12 children, including Head
Start, Individuals with Disabilities Education Act (IDEA) programs, parenting
classes, home visits, preschool and prekindergarten programs. Karoly et al., conclude
that well-designed programs can produce tangible benefits for children and their
families in one or more of four broad domains: cognitive development, education,
economic self-sufficiency, and health.13
Karoly, et al., conducted a cost-benefit study of the two programs included in
their research that had an experimental design, including control groups, and had
long follow-up periods for tracking participants. They concluded (for these two
studies only) that there were tangible benefits, but the benefits may accrue over a
long time period, while the costs occur in the short term. Karoly, et al., also note that
9 Classroom practices consisted of the child care environment, teacher sensitivity and
responsiveness, and teaching style. Teacher-child relationships were determined based on
teacher ratings. FPG Child Development Center, University of North Carolina, The
Children of the Cost, Quality and Outcomes Study Go to School, June 1999.
10 Mother’s level of education was used as a proxy for risk of not doing well in school.
11 The Children of the Cost, Quality Outcomes Study Go to School, June 1999, p. 13.
12 Lynn Karoly et al., Investing in Our Children, Rand, 1998, p. 110. At-risk children,
according to Karoly et al., are those exposed to one or more stressors in the arenas of
cognitive, emotional or resources deficiencies.
13 Ibid., p. 9.

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the question of how best to target participants to obtain the highest benefit to cost
ratios is uncertain. They state that existing scientific research is insufficient to
discern why some programs succeed and others do not; or whether some program
designs work best, i.e., by focusing on: children or parents; infancy or preschool
years; one or multiple independent programs; or individually tailored programs that
serve a smaller pool in comparison to larger programs that serve more children.
A survey conducted by Janet Currie, titled Early Childhood Intervention
Programs: What Do We Know?, examined four studies of model programs that used
random assignment, had low rates of participant attrition, and followed children’s
progress at least through middle school.14 In addition, Currie looked at large scale
publicly funded programs, primarily Head Start programs. The model programs
generally spent more per pupil than the Head Start programs. Currie found that well-
funded, well-designed programs can have a long term impact on children’s outcomes,
especially for disadvantaged children.
The four studies Currie examined were: the Early Training Project; the Carolina
Abecedarian Project; the Perry Preschool Project; and the Milwaukee Project. Currie
found only one of the four had a long term impact on IQ (the Milwaukee Project),
although all four showed a positive effect on long term scholastic success. Sixty-
eight percent of the children who participated in the Early Training Project graduated
from high school compared to 52% of the control group. At age 21, the children who
participated in the Carolina Abecedarian Project were twice as likely to still be in
school or to have attended a four-year college. Positive effects were twice as large
for the most disadvantaged children in this study. The Perry Preschool project found
that as of age 27, children who participated in the project experienced positive effects
on achievement test scores, grades, high school graduation rates, and earnings, in
addition to lower rates of crime and welfare use. Children in the Milwaukee project
were found to have higher IQs in 8th grade than children in the control group, but they
did not have positive gains in other measured areas.
However, these four programs were all “model” programs with low
pupil/teacher ratios and highly qualified staff. Currie did not find the same
conclusive evidence of long term benefits when she examined the Head Start
program. Currie and her colleagues examined Head Start by using siblings (who did
not attend Head Start) of participants as a control group. Head Start is currently the
largest publicly supported preschool program for disadvantaged children with funded
enrollment of 909,608 in FY2003.15 Currie et. al. found that initial test score
improvements for black Head Start participants faded in elementary school, but not
for white students. They surmised that this “fading” might be due to subsequent
school deficiencies, since the black Head Start participants subsequently attended
schools of lower quality than other black children, but this was not true for the white
Head Start students. Currie states:
14 Janet Currie, Early Childhood Intervention Programs: What Do We Know? UCLA and
NBER, Apr. 2000.
15 For more information on Head Start, see CRS Report RL30952, Head Start: Background
and Issues, by Melinda Gish.

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The evidence reviewed above suggests that model early intervention programs
can have positive long-term effects on children. But, there is a large gap between
these programs and the large-scale, publicly-funded interventions that are
currently in place ... A point that is often lost in the controversy over whether
there are long-term benefits of Head Start is that there are many well-documented
short-term benefits. Depending on precisely which benefits are counted and on
how we value them, it can be shown that the short- and medium-term benefits of
Head Start already pay back much of the cost of the program.16
Finally, the measurement of more “typical” programs is usually linked to
evaluations of Head Start, the largest federal program with education and care as its
primary mission. Available studies on Head Start (based on Head Start-funded
Family and Child Care Experience Survey) do provide data on program outcomes,
but do not permit a definitive conclusion regarding program impact; i.e., whether
observed outcomes are due to a child’s participation in Head Start, or are due to other
factors:
Recent data collected on program outcomes show that children participating in
Head Start exhibit many of the skills thought to indicate a readiness to learn in
school. HHS [The U.S. Dept. of Health and Human Services] is now
undertaking efforts to determine the extent to which such outcomes are directly
attributable to children’s participation in the program rather than to other
factors.17
In sum, study data do support positive short-term effects of high-quality early
childhood programs in terms of cognitive skills, school readiness and social behavior;
and positive long-term effects in terms of greater high school completion rates,
higher earnings, less criminal activity and welfare use for “model” early intervention
programs. Long-term effects from more “typical” programs, such as Head Start, are
less conclusive. In part this is due to the difficulty of separating the influence of early
intervention on children’s later success from all the other factors that are significant
in influencing long-term success.
Federal Programs
Federal programs for young children currently provide funding for education
and care, services to education and care facilities, and tax credits to families for child
care. Only the largest programs which explicitly permit funds to be used in part for
early education and care are discussed here.
Title I, Part A of the Elementary and Secondary Education Act
(reauthorized by the No Child Left Behind Act, P.L. 107-110) is the largest
federal program serving disadvantaged children, particularly school-aged children.
After Head Start, it is the largest program providing early education and care to
young children. ED estimates that approximately 2% of children served by Title I
each year are preschoolers. Preschool services are not separately funded under Title
16 Ibid., p. 20.
17 U.S. General Accounting Office, Early Education and Care: Overlap Indicates Need to
Assess Crosscutting Programs, HEHS-00-78, Apr. 2000.

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I — such spending occurs if local educational agencies (LEAs) choose to use some
of their Title I funds for this purpose.
The William F. Goodling Even Start Family Literacy Programs provide
education and related services jointly to parents lacking a high school diploma (or
equivalent) and their young children. Even Start services include basic academic
instruction and parenting skills training for the adults, and early childhood education
for their children through age 7 (children 8 and older may receive services if they are
provided in collaboration with ESEA Title I, Part A), along with necessary
supplementary services such as child care or transportation.18
Early Reading First, authorized by Title I, Part B Subpart 2 of the No
Child Left Behind Act, P.L. 107-110. This early reading initiative provides
competitive grants to LEAs and other public and private entities, from the Secretary
of Education, to: provide preschool age children (particularly those from low-income
families) with greater opportunities for exposure to high-quality language and
literature-rich environments, support professional training, support acquisition of
scientifically based instructional material on reading for preschoolers, and promote
integration of these materials into existing programs serving preschoolers.19
The largest federal program with early childhood development as its primary
mission is Head Start. The Head Start program provides educational services as
well as health, nutrition, and other services to low-income children to prepare them
to enter kindergarten. In 1994, Early Head Start was established so that children
younger than 3 years old could be served in greater numbers by the program.20
The Child Care and Development Block Grant (CCDBG) is the primary
federal grant program supporting low-income families with child care needs. It is
administered by HHS, and provides block grants to states, through mandatory and
discretionary funds (referred to in combination as the Child Care and Development
Fund (CCDF)), which are used to help provide low-income families with child care
subsidies.21
The Social Services Block Grant (SSBG), authorized by Title XX of the
Social Security Act, is a block grant to states. States are authorized to use SSBG
funds for social services, including child care. SSBG is administered by HHS. State
18 See CRS Report RL30448, Even Start Family Literacy Programs: An Overview, by Gail
McCallion; and CRS Report RL33071, Even Start: Funding Controversy, by Gail
McCallion.
19 See CRS Report RL31241, Reading First and Early Reading First: Background and
Funding, by Gail McCallion.
20 For information on Head Start, see CRS Report RL30952, Head Start: Background and
Issues, by Melinda Gish.
21 See CRS Report RL30785, The Child Care and Development Block Grant: Background
and Funding, by Melinda Gish.

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allocations are based on population.22 According to HHS, in FY2003, approximately
7% ($165 million) of total SSBG expenditures were for child care.
The Early Learning Opportunities Act (also known as the Early Learning
Fund), was authorized by the FY2001 Consolidated Appropriations Act (P.L. 106-
554). This program provides grants to communities to enhance school readiness for
children under 5; specifically by funding efforts to improve the cognitive, physical,
social, and emotional development of these children.
Finally, federal support is provided for early childhood education and care
through tax credits to assist parents with child care expenses.23
State Initiatives
A study conducted by the National Institute for Early Education Research
(NIEER), a research and policy analysis organization at Rutgers University, found
that in 2002-2003, 38 states funded preschool programs, compared to seven in
1980.24 The NIEER study primarily relied upon survey and follow-up data provided
by state level administrators of these programs. It found that, in total, states spent
approximately $2.54 billion on these programs in 2002-2003, although three-fifths
of this amount was accounted for by five states. The average per pupil state spending
on preschool was $3,451. Although many of these state preschool programs also
receive local and federal assistance, consistent data on funding from each of these
sources are not available.25
In 2002-2003, 740,000 children were served by these programs, the majority of
them four year olds. Overall, 16% of all four year olds were served by these
programs in 2002-2003. Most states provide very limited funding, if any, for
22 States are entitled to their share, according to a formula, of a nationwide funding ceiling
or “cap” that is specified in the statute. See CRS Report 94-953, Social Services Block
Grant (Title XX of the Social Security Act), by Melinda Gish.
23 See CRS Report RS21466, Dependent Care: Current Tax Benefits and Legislative Issues,
by Christine Scott.
24 Steven Barnett, Kenneth Robin, Jason Hustedt, and Karen Schulman, The State of
Preschool: 2004 State Preschool Yearbook (The National Institute for Early Education
Research, Rutgers University: NJ, 2004). NIEER considers state funded preschool programs
to be those that, in addition to receiving state funds, are primarily geared to serve children,
serve 3- and 4-year-olds (older and younger children may be served as well), operate at least
two days a week, are not funded by the state’s child care subsidy system, and are not geared
primarily for children with disabilities. State supplements to Head Start are included if the
funds significantly expand the number of children who participate.
25 Ibid, p. 7. According to NIEER: “States need to create better data systems that provide
the critical information policymakers need to make informed decisions about expanding and
improving preschool. Most states cannot report unduplicated enrollment counts across early
childhood education programs, nor can they track funding across multiple sources. Such
shortcomings in information gathering do not exist for children in grades K-12. The federal
government should support states in creating or improving data systems for prekindergarten
programs.”

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programs that serve three year olds. Georgia and Oklahoma are currently the only
states that makes prekindergarten available to all families who want their four year
old children to participate. Most states do not limit these programs to the public
schools (although the majority of these programs are in public schools) — many
permit programs to be located in private child care centers and Head Start centers as
well. Most commonly, these programs are half-day programs that operate during the
school year, although 10 state initiatives offer programs that are for the full-school
day, or longer. In many cases, hours of operation are locally determined.26
According to the NIEER study, the quality of these state funded programs also
varies across states. It found that states differ in the following areas: whether they
require teachers to have a Bachelor’s degree, whether specialized early childhood
training is required, allowable student to child ratios, family services provided (such
as health referrals and parent teacher conferences), and program standards.
Policy Issues
Research indicates that the quality of early childhood education and care is
significant for children’s later academic success, particularly for disadvantaged
youngsters. Yet, the U.S. system of preschool education and care presently varies
enormously, not only in quality (however defined) and content, but also in
organization, sponsorship, source of funding, and the extent of government
regulation.
An economic argument can be made for a federal role in providing aid for early
childhood education and care due to externalities and information imperfections in
the market for early childhood care and education.27 This intervention might take the
form of provision of care, subsidies or tax credits for families, tuition credits for early
childhood educators (to provide an incentive for educators to pursue more education),
licensing requirements, or simply the provision of information. Externalities exist
because the benefits of quality early childhood education programs accrue not only
to the families who purchase these services, but to society at large (through lower
taxes for welfare and crime, through higher productivity of well-educated citizens,
etc.). However, when the costs of these services are borne only by parents, the price
paid for these services will be artificially low.28 In addition, because of imperfect
information and geographic limitations, parents may not be able to locate the best
providers of early childhood education and care, or know how best to evaluate the
costs, quality and services of different providers.
26 Ibid., p. 33.
27 A market failure is defined as “a situation in which a market left on its own fails to
allocate resources efficiently.” Deborah Vandell, and Barbara Wolfe, Child Care Quality:
Does It Matter and Does It Need to be Improved?, U.S. Department of Health and Human
Services, Washington, D.C., 2000.
28 Ibid., p. 5. “[M]arket failure perpetuates itself. Because the demand for high-quality care
is too low, compensation is too low, and the more highly trained seek employment in other
spheres. As a result, quality declines, unless intervention occurs.”

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However, even if federal aid is determined to be appropriate, there is no
consensus on how much federal aid should be provided and what form of aid would
be most effective. There is also disagreement on whether such aid should be targeted
to disadvantaged youngsters or should be universal. Others express concern that such
aid may supplant current state programs. There are also questions regarding the
potential role for the federal government in setting standards for early-childhood
education and care; and for encouraging the coordination of any new initiatives with
existing federal and state programs.
Most researchers have found high quality early childhood programs to have
several factors in common: low teacher-child ratios, well trained and well paid
teachers, and low staff turnover rates. Yet well trained, better paid staff, and low
teacher-child ratios translate into more expensive programs. Presently many middle
class families pay privately for their child or children’s early education and care.
Many children from low-income families participate in Head Start, although in 2002
only an estimated 59% of eligible four year olds were able to participate.29
Weighing Costs and Benefits of Universal Preschool. The non-
governmental National Institute for Early Education Research estimates the annual
cost per child of universal, quality preschool at approximately $8,700.30 It bases this
estimate on ED’s projection of 2002 K-12 costs per pupil of $8,800, arguing this is
a good proxy for full school day preschool. The $8,700 per child preschool cost
estimate is derived by applying ED’s $8,800 figure to the following assumptions:
one-third of three and four year olds would attend half day preschool, one-third
would attend a full school day, and one-third would attend a full day year round.
This works out on average, to a cost of $8700 per child. The $8,700 figure is then
multiplied by the Census Bureau’s 2000 data on the population of three and four year
olds to obtain an estimate for the total cost of providing quality preschool for every
three and four year old of approximately $70 billion (this assumes all costs are
provided from public funds) annually.31 NIEER further breaks down these estimates
to take into account alternative scenarios such as making universal preschool
available only for four year olds, or only for children in poverty. It estimates the
annual cost of universal care for four-year olds only, would be $33.8 billion; it
estimates the annual cost to serve only poor 3- and 4-year-olds would be $11.6
billion.32
NIEER estimates that the annual benefit from universally available preschool
for 3- and 4-year-olds would be approximately $25,000 per year for each child
served, substantially more than the estimated cost of $8,700 per child. For this
29 CRS Report RL30952, Head Start: Background and Issues, by Melinda Gish.
30 According to NIEER, this amount would cover all program costs, as well as
administration, support services and wrap around child care for families that need it.
[http://www.nieer.org/].
31 Ibid. Census 2000 data indicates that there were 3.89 million three year olds and 3.99
million four year olds in 2000.
32 Ibid. NIEER uses the March 2002 National Center in Poverty Child Poverty fact sheet
figure of a 17% rate of poverty for children under six.

CRS-14
estimate it draws on results from the Chicago Child Parent Study and the Perry
Preschool Project.33
The Economic Policy Institute has recently published a report that finds similar
costs and benefits of quality preschool, finding the benefit to cost ratio of providing
high-quality preschool to all poor 3- and 4-year-olds would be at least 3 to 1 (i.e., a
$3 return for every $1 invested in preschool):
Using the Perry Preschool cost-benefit ratios, the EPI study translates the
potential benefits of establishing government financed universal preschool for all
poor 3- and 4-year-olds beginning in 2005 into projected future benefits to federal,
state and local governments, in terms of government finance, the economy, and
crime.34 The study finds that for the first 16 years, the program costs would exceed
program benefits. Thereafter, program benefits would be greater than costs. This
would be due to higher tax revenues, lower welfare expenditures, and lower judicial
costs as these children successfully enter the workforce. The study projects there
would be higher productivity and higher future earnings leading to higher Gross
Domestic Product, and improved social security solvency. Additionally, it projects
substantial benefits to individuals (in terms of reduced financial loss and pain and
suffering) from projected reductions in crime.
Presently much of the costs of preschool are borne by families. Costs of quality
preschool can be difficult, it not impossible for many parents to afford. Average
costs (without assessing quality) for a 4-year-old in a child care center in 2000, were
$4,000 to $6,000 per year, according to the Children’s Defense Fund.35 In all states
but one (Vermont) the annual costs of child care in an urban area are greater than the
costs of public college tuition. The costs of preprimary care are particularly
burdensome for low-income families, according to the Children’s Defense Fund:
Even if a two-parent family with both parents working full time at minimum
wage ($21,200 a year before taxes) managed to budget 10 percent of their income
for childcare ($2,140), they would be left several thousand dollars short of what
33 This is the estimated present value of anticipated future benefits. For references and more
information on these studies see [http://www.nieer.org/].
34 In 2003, approximately 20% of the total population of 3- and 4-year-olds were poor.
Robert G. Lynch, Exceptional Returns (Washington, D.C.: Economic Policy Institute,
2004), p. 5.
35 The GAO estimated the cost of high quality early childhood education in 1988 to be
$4,200 annually per child, plus $600 for in-kind contributions. GAO surveyed National
Association for the Education of Young Children (NAEYC) accredited centers. GAO
assumed these accredited programs would give a reasonable estimate of the costs of a high
quality early-childhood education program. U.S. General Accounting Office. Early
Childhood Education. What Are the Costs of High-Quality Programs? Washington, D.C.,
Jan. 1990. Sixty-five percent of preschool costs are attributable to personnel costs. See
CRS Report RL31118, The Child Care Workforce, by Linda Levine.

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they needed to afford average-priced childcare, much less the higher prices
charged by many better quality centers and family childcare homes.36
Nevertheless, although many preschool advocates and researchers acknowledge
the burden of preschool cost on families, particularly low and middle income
families, the prospect of procuring large sums of federal money for universal
preschool is quite daunting, particularly since many of the potential benefits lie well
in the future.
Universal vs. Targeted Preschool. Given the costs of early childhood
education and care, in the context of limited resources, should federal aid be targeted
to disadvantaged children, such as those who are presently not being served by Head
Start? Research data indicate that disadvantaged children especially benefit from
quality early childhood education and care. This research, as well as equity
considerations, might support directing federal aid, if limited, to disadvantaged
children. Proponents of targeting aid argue that universal care would provide care
to children whose families already are paying for care privately and can afford to do
so.
However, proponents of universal care argue that targeted programs miss many
disadvantaged children who would benefit, and that if early childhood education and
care programs become universally available there will also be a much larger number
of families to advocate for the continued existence of these programs, and to
advocate for high quality programs. Finally, there is no clear demarcation between
children who need publically funded programs and those who do not; many working
poor and middle class families, not eligible for publically funded preschool, struggle
to provide quality preschool for their children.
Sponsorship. Another important issue is how best to ensure quality in early
childhood education and care programs. In some European countries, where
universal early childhood care and education are more prevalent, these programs are
usually part of the public education system. Some argue that U.S. early childhood
education and care programs should be run by public schools, because that would
ensure quality standards and an education component to programs. Proponents argue
that having local educational agencies in charge of these programs would help
provide a qualified, well-paid staff and would be best for focusing efforts on
preparing young children for entering elementary school. Others argue that the
public school system has failed low-income children and should not serve as the
model. And, they argue, in order to encourage continuing state and private efforts
to provide quality early childhood education and care programs, flexibility in
programs’ sponsorship (including private providers and Head Start programs),
organization and funding sources should be encouraged.
Congress is also concerned with how to increase the supply of quality early
childhood care and education programs, without supplanting state provision of early-
36 Costs are for 2000, and are based on data collected from local child care resource and
referral agencies. Karen Schulman, The High Cost of Child Care Puts Quality Care Out of
the Reach for Many Families, Children’s Defense Fund, 2000.

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childhood education and care. Opponents of increased federal involvement argue
that this aid will supplant existing private and state initiatives, and that more federal
regulation of early childhood education and care services may effectively increase the
costs of care to families. Furthermore, opponents of more federal aid for early
childhood education and care argue that as a matter of principle such initiatives
unduly interfere with the primary role of families in raising young children.
Additionally, some argue it would be most efficient and politically feasible to build
on existing programs. Because existing state initiatives vary enormously in terms of
funding, structure, the entities providing care, and level of participation, concerns
have also been raised about whether increased federal aid in the form of specific new
programs might duplicate or discourage these efforts. On the other hand, if new
federal aid is provided in a form intended to complement existing state efforts (a
block grant, for example), it may risk a lack of focus.
Finally, some argue that more coordination of new and existing federal
programs in early childhood education and care is needed. In a GAO report issued
in 2000, the agency concluded that there is presently mission fragmentation and
overlap in federal early childhood care and education programs:
Both occur when more than one federal agency (or more than one bureau within
an agency) is involved in the same broad area of need. Fragmentation can create
inefficient service delivery and administrative complexity because various
agencies are administering similar programs serving similar groups of children.
In addition, mission fragmentation makes coordination among agencies
administering these programs necessary. Program overlap creates the potential
for duplication — which occurs when programs have the same goals, the same
activities or strategies to achieve them, or same targeted recipients. However, a
certain amount of redundancy among programs may be necessary to improve
service delivery, or it may indicate that a certain program is related to a number
of areas.37
Thus, some argue that the federal government needs to focus its efforts, not only
on expanding aid for early childhood education and care, but also on developing
more effective coordination among existing programs for early childhood education
and care.
37 U.S. General Accounting Office, Early Education and Care: Overlap Indicates Need to
Assess Crosscutting Programs, HEHS-00-78, Apr. 2000, p. 7.