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Transcript of Return on investment from Quality Early Childhood Education Partnership for America's Economic...
Return on investment fromQuality Early Childhood Education
Partnership for America's Economic SuccessThe Pew Charitable TrustsInnovative financing techniques for early childhood programsMonday, Nov. 23, 2009
Congressman Jared Polis
Why is Access to Quality Early Childhood Education (ECE) So Important?
IQ’s Letters and numbers Behavioral problems Parental involvement with their school Brain Development It is estimated that at least ½ of the
achievement gap exists prior to children even entering kindergarten.
What does the research tell us?
Conclusive Research Findings
• Numerous long term studies tracking outcomes for children receiving quality ECE
• Overwhelming evidence showing strong positive impact of ECE
• Studies include:– Perry Preschool Project– Abecedarian Project– Barnett Study of Studies– Entwisle Socialization Study– Federal Reserve Economic Impact Analysis
Perry: Educational Effects
0% 20% 40% 60% 80% 100%
Didn't requirespecial education
Graduated fromhigh school on
time
Age 14achievement at
10th percentile +
No-program group Program group
Source: High/Scope Educational Research Foundation
Abecedarian: Educational and Health Effects
0% 20% 40% 60% 80%
Attended a Four-Year College
Non-Smoker atAge 21
Didn't Repeat aGrade
No-program group Program group
Source: Carolina Abecedarian Study
Barnett Summary of Student Success
• Overwhelming evidence across all studies of long term student success
Retention rates
0%
10%
20%
30%40%
50%
60%
70%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Study Number
Perc
en
t
ECE Control Group
Barnett Summary of Student Success
• Overwhelming evidence across all studies of long term student success
Special education rates
0%
20%
40%
60%
80%
100%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Study Number
Pe
rce
nt
ECE Control Group
Barnett Summary of Student Success
• Overwhelming evidence across all studies of long term student successHigh school graduation
0%10%20%30%40%50%60%70%80%
1 2 3
Study Number
Perc
en
t
ECE Control Group
Barnett Summary of Short Term Studies
– All show immediate IQ gains averaging 8 points– All show positive impact on language skills and
behavior– Study with parental education component shows
increased expectations for children
What is the economic impact of
ECE?
Perry: Economic Effects at Age 27
0% 10% 20% 30% 40% 50%
Never onwelfare as adult
Own home
Earn $2,000 +monthly
No-program group Program group
Source: High/Scope Educational Research Foundation
Perry: Effects at Age 40
0% 20% 40% 60% 80%
Employed
Arrested 5x+
Earned $20K+
Program group No-program group
Source: High/Scope Educational Research Foundation
Perry: Arrests per Person by Age 27
0 1 2 3 4 5 6
No programgroup
Programgroup
No program group Program group
Source: High/Scope Educational Research Foundation
Perry PreschoolCosts and Benefits Over 27 Years
-$20,000 $0 $20,000 $40,000 $60,000 $80,000
Welfare Payments
Crime Victims
Justice System
Higher Participants' Earnings
K-12 Ed
Program Cost
For Public For Participant
Perry Preschool Return on Investment To Age 27
• Total Benefit-Cost Ratio = $8.74 to $1
• Estimated Total Annual Rate of Return = 16%
• Public Rate of Return = 12%
Perry Preschool Costs and Benefits Over 40 Years
$15,166
$195,621
$258,888
$0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000
Total Benefit
Public Benefit
Cost
Perry Preschool Return on Investment To Age 40
• Public Benefit/Cost Ratio = $12.90 to $1
• Total Benefit/Cost Ratio = $17.07 to $1
Conclusions from Research Studies
Why Should We Care About Investment in ECE?
Highest $ return on any educational or human capital investment
Dramatic socialization benefits for kids
High educational impact
One of the most effective tools in closing the achievement gap
All of which implies…
Tremendous Opportunity for leveraging social change through investment in ECE!
New Solutions
Linking Resources to Need
• Existing environment of underfunding
• Limited Philanthropic capacity
• Lack of political will for major public investment
What funds investments in physical infrastructure?
Private capital
Examples: School bonds, municipal bonds, Treasury bonds
Creating investments vehicle for private investment in ECE
Demonstrated public rates of return on costs alone in excess of 12% over 20 years
Savings for public agencies including:
School districts, municipalities, states, counties, judicial districts, and the federal government
The Goal
To increase private funding for ECE by offering investors opportunities to share in the gains/savings that are realized over a 20-30 year time horizon from early investments in human capital.
The Product• A model for private investors to adopt a cohort of at-
risk infants, underwrite the cost of their early childhood education, and recoup that investment plus variable interest over a twenty year period. The repayment would come from state and local government agencies whose costs of serving these children will be reduced as a result of the early interventions and would share a portion of the cost savings with the investors.
• If profitable returns can be generated and conveyed, this model provides a scalable source of resources for early childhood education nationally and internationally.
The Opportunity
Scalability:
Instantly meeting the entire accretive early childhood investment needs of the nation through capital markets
Also exportable internationally
Oversight and accountability:
• Self-interested and motivated oversight to ensure the quality of programs
• Accountability• No taxpayer risk
The Challenges
• Methodology of measurement metrics• Methodology and implementation of
conveyance of cost savings to investors• Mobility, tracking and logistics• Interagency agreements and enabling
legislation• Marketing to public and private stakeholders
Thank you for thinking out of the box to ensure that every
American has the opportunity to succeed!