Photo: Alessandra Hartkopf for Strategies for Children

How much would taxpayers save if one more at-risk child in Detroit entered kindergarten ready to succeed in school? This is the question that the Max M. and Marjorie S. Fisher Foundation asked Wilder Research to investigate. The answer is $100,000.

“About 67% of the ‘one-child dividend’ cuts state government expenses, largely through reduced costs in criminal justice, public assistance and child care subsidies,” according to Fisher Foundation news release on their their recent report.  “Another 29% results in social savings, including reduced costs to crime victims and increased productivity of employed parents. The remaining 3% goes to schools in the form of reduced special education and grade repetition costs.”

Researchers also looked at Michigan children overall and estimated more than $39,000 saved for each additional at-risk child starting school kindergarten ready, “reflecting less costly lifetime education, social service and criminal justice expenditures.”

“Using this new metric,” the news release states, the Max M. & Marjorie S. Fisher Foundation estimates that taxpayers would see a $7.2 million dividend, or savings, for every 1% gain in school readiness among Detroit’s estimated 7,200 kindergarteners. Statewide, every 1% improvement in school readiness among Michigan’s estimated 140,000 kindergarten students would result in a $55.3 million dividend to the state’s budget.”

Researchers gathered data on graduation, expenditures, poverty, crime and other factors for Detroit and the state of Michigan. They then used data from longitudinal studies on the effects of high-quality early education to calculate the estimated taxpayer savings. They did not include the increase in lifetime earnings the school-ready child might enjoy – and with it the increased tax revenues for government coffers.

The report’s findings resonate beyond Detroit and Michigan. “Investing in school readiness,” it concludes, “produces an educated and skilled workforce and social returns with substantial economic value.”

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BTWIC President Mary Reed and Arthur Rolnick (Photo courtesy of Bessie Tartt Wilson Initiative for Children)

Economist Arthur Rolnick — who estimated a 16% return on investment for high-quality early education for children from low-income families – was in town recently as the guest of the Bessie Tartt Wilson Initiative for Children. BTWIC has convened a working group of early education providers, academics and businesspeople to explore the possibility of establishing a sustainable fund for early education in Massachusetts. Rolnick, the former research director of the Federal Reserve Bank of Minneapolis, raised $20 million from Minnesota business leaders to create a scholarship fund for early education in St. Paul that he hopes to replicate statewide. He is also trying to create a permanent endowment for early education in Minnesota.

“Businesses throughout Massachusetts have given generously to K-12 schools to support a range of essential and enrichment programs. The efforts have helped many schools and many children, but the broad impact is difficult to track,” Rolnick and BTWIC President Mary Reed wrote in the Boston Business Journal. “We suggest an alternative that can assist schools, but also fuel economic development. Invest private and public money where you’ll get the greatest and most traceable return on investment: a statewide Early Education Permanent Fund to provide each child in need with high-quality early childhood education programs.”

Rolnick, speaking at a BTWIC event at the State House, delivered a message similar to his keynote at a Thrive in 5 conference in Boston a year ago. In his remarks last week, Rolnick cited the economic evidence on the impact of high-quality early education that he and his colleague Rob Grunewald calculated in 2003, showing a 16% return on investment greater than 6% average annual rate of return from the stock market in the post-World War II era. (more…)

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Timothy Bartik

The recent report on special education in Massachusetts, which raises questions about the over-identification of children from low-income families, has us thinking about the well-documented reductions in referrals to special education for low-income children who attended high-quality early education programs.  For example, longitudinal evidence from the Chicago Child-Parent Centers preschool program has shown program participants were 40% less likely to be placed in special education. Similar effects have been found in the Abecedarian and Perry Preschool interventions, the subjects of the other two major longitudinal studies of high-quality early education.

Economist Timothy Bartik has explored the question of cost savings from this reduction on his Investing in Kids blog. He has estimated the fiscal impact of providing universal pre-kindergarten.

“The additional annual costs per student from special education assignments average nationally over $10,000. These extra annual costs potentially accrue over 13 years (from kindergarten to 12^th grade), so the total cost of a special education assignment can be quite high,” Bartik writes.

“The simulation shows that as of 13 years after the program is begun, the special education cost savings reach a permanent level that covers 48% of the pre-K program’s annual costs. These cost savings increase fairly uniformly from program initiation, so that the cost savings are 4% after one year, 8% after two years, etc.”

The cost savings would be greater in a targeted program. “Special education cost savings will be higher if the early childhood program’s percentage effects on special education usage are higher,” Bartik writes in a follow-up post. “For example, these special education percentage effects might be higher for targeted pre-k programs compared to universal pre-k programs.  The baseline level of special education assignments may be higher for the more disadvantaged children that would be in a targeted pre-k program. Furthermore, pre-k programs may have somewhat greater effects in general for disadvantaged students compared to more advantaged students….

“What does this all mean for policymakers and researchers?” Bartik asks. “I think this points to the need for much more current research on immediate cost savings from reduced special education usage.”

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