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ECONOMIC DEVELOPMENT AND EARLY CHILDHOOD EDUCATION

ECONOMIC DEVELOPMENT AND EARLY CHILDHOOD EDUCATION. Law and Policy of Universal Preschool. Dennis K. Winters Vice President & Director of Research October 13, 2006. WHAT I WILL DO TODAY SHOW & TELL. Show you the fiscal benefits for K-12

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ECONOMIC DEVELOPMENT AND EARLY CHILDHOOD EDUCATION

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  1. ECONOMIC DEVELOPMENT AND EARLY CHILDHOOD EDUCATION Law and Policy of Universal Preschool Dennis K. Winters Vice President & Director of Research October 13, 2006

  2. WHAT I WILL DO TODAY SHOW & TELL • Show you the fiscal benefits for K-12 • Tell you how to sell this to local constituents • Show you how the economy is changing • Tell you why early education is important

  3. THE EVIDENCE IS IN HUGE RETURNS • Perry Scope • 17 : 1 • Chicago-Child Parent • $7 to $1 total • $4 to $1 public • Abecedarian Educational Child Care • $4 to $1 total • Elmira Prenatal/Early Infancy Project • $5 to $1 total • $4 to $1 public

  4. Personal Success – 20% of gains Higher Income Better Employment Attributes Better Health Public Externalities – 80% of gains Lower Crime Less Social Intervention Greater civil contributions Business More Skilled Workforce Higher Productivity Less Turnover BENEFITS ARE SHAREDACROSS SECTORS

  5. WISCONSIN STUDY FISCAL FLOWS IN K-12 • Title • The Economic Returns to Wisconsin’s Education System from Investment in Four-year-old Kindergarten • Sponsors • Trust for Early Education • The Pew Charitable Trusts • Pre-K Now • Authors • Professor Clive R. Belfield • Queens College, CUNY • Dennis K. Winters • NorthStar Economics, Inc.

  6. SCOPE OF WISCONSIN STUDY FISCAL BENEFITS/COSTS Parameters: • Wisconsin 2002-03 data • Benefits Limited to K-12 Fiscal Flows • State & Milwaukee PS Analysis

  7. WISCONSIN STUDY ASSUMPTIONS • Quality Programs • Trained Staff – BS, Early Ed Certified • Family Outreach – Home Visits @ 1 per 2 wks • Universal Offering • Attracts 32,102 more students • Brings total to 48,153 • Leaves 29% uncovered, 25,861

  8. PROVISION OF PRE-KINDERGARTENCOHORT OF 4-YEAR OLDS Note: * Head Start programs are also available for 3-year olds. This table does not include demographic information on child care provision across the state. Sources: Census (2000); Wisconsin Department of Public Instruction; NIEER Yearbook (2003).

  9. WISCONSIN STUDY FISCAL COSTS & BENEFITS • Costs • Quality Staff • Support Services • Benefits • Reduced Special Education • Reduced Grade Repetition • Better Teaching Environment • Higher Job Satisfaction • Lower Turnover • Less Need for Substitutes • Improved School Environment • Reduced Support Programs

  10. WISCONSIN STUDY FISCAL COSTS • Costs • Quality Staff • Support Services Notes: ‘Actual’ refers to current 2003 expenditures on 4K. ‘Guaranteed high quality’ requires 27% more resources than are needed for ‘Actual’. ‘Comparable to Head Start’ assumes that 4K providers will receive funds equivalent to Head Start funding. Sources: NIEER Yearbook (2003); Marshall et al. (2004); and Head Start data.

  11. WISCONSIN STUDY FISCAL BENEFITS • Benefits • Reduced Special Education • Reduced Grade Repetition

  12. WISCONSIN STUDY SCHOOL SYSTEM FISCAL BENEFITS Notes: Present Value (PV) figures are discounted over the child’s educational span from K–12 at a discount rate of 3.5%. Economic values are in 2004 dollars.

  13. WISCONSIN STUDY FISCAL BENEFITS (continued) • Benefits • Better Teaching Environment • Higher Job Satisfaction • Lower Turnover • Less Need for Substitutes • Improved School Environment • Reduced Support Programs

  14. WISCONSIN STUDY FISCAL BENEFITS (continued) Notes: Present Value figures are discounted over the child’s educational span from K–12 at a discount rate of 3.5%. Economic values are in 2004 dollars.

  15. WISCONSIN STUDY FISCAL COSTS & BENEFITS

  16. MILWAUKEE STUDY FISCAL BENEFITS Notes: Present Value (PV) figures are discounted over the child’s educational span from K–12 at a discount rate of 3.5%. Economic values are in 2004 dollars.

  17. MILWAUKEE STUDY FISCAL COSTS & BENEFITS Notes: Present Value figures are discounted over the child’s educational span from K–12 at a discount rate of 3.5%. Economic values are in 2004 dollars.

  18. WISCONSIN STUDY FISCAL COSTS & BENEFITS • Costs • $207 million • Benefits • $141 million • Net Cost • $66 million • Returns 68 cents on the dollar • Returns 76 cents on the dollar for Milw

  19. FISCAL COSTS &BENEFITS PERSPECTIVE • $66 million < 1% of State Education Budget • Huge Returns to Individual and Society • Imperative to Workforce Development • Imperative to Economic Development

  20. WISCONSIN STUDY EXPANDED COSTS & BENEFITS

  21. HOW DO YOU SELL EARLY EDUCATION TO YOUR CONSTITUENCIES? • PUBLIC • BUSINESS • LEGISLATURE

  22. EVOLUTION OF ECONOMIC PROSPERITY • 19th Century – • Bigger and Better Farms • 20th Century – • Bigger and Better Factories • 21st Century – • Bigger and Better Ideas

  23. (% SHARE) Other (Retail, Construction, Government, etc.) Private Services Manufacturing Agriculture YEAR U.S. SECTOR EMPLOYMENT TRENDS

  24. Old Economy Raw Materials Cost Race to Bottom Workers Chased Jobs Quality of Life was luck of the draw New Economy QoL attracts talent Businesses Chase Talent Value-Added Products Brain Power NEW ECONOMYCHANGED CONSTRUCT

  25. DESIGNED HERE MANUFACTURED THERE • Designed in California • Assembled in China

  26. KATHLEEN

  27. Workforce development and economic development are interrelated and interdependent. Ed = ED

  28. Carly Forina, former CEO HP – Don’t show me your highway interchange or TIF district, show me the number of college graduates NEW ECONOMYTALENT BASED

  29. NEW ECONOMY HIGHER SKILL SET REQUIRED "The days are over when you could walk into a paper mill with a high school diploma and run one of the machines."– Patrick Schillinger, Wisconsin Paper Council President, Center will teach paper-industry technology, Milwaukee Journal Sentinel, JS Online, October 21, 2004.

  30. NEW ECONOMYNEED FOR CREATIVITY & INNOVATION “Today in most fields I know, the struggle is about creativity and innovation. There is no script.” – Robert B. Shapiro, former CEO & Chairman, Monsanto Corporation

  31. WORKPLACE REQUIREMENTS CHANGES IN SKILLS USED AT WORK* * Based on the Dictionary of Occupational Titles Nonroutine interactive Nonroutine analytic. Routine manual Routine cognitive Nonroutine manual Source: Autor, Levy and Murnane, 2003. Source: K-12 Education and Economic Summit presentation by Alan B. Krueger, Princeton University

  32. Former Federal Reserve Chairman Alan Greenspan voiced his concern about a growing earnings gap between highly skilled and unskilled workers. "It's a problem caused basically by our skill mix not keeping up with the technology that our capital stock requires," the Republican Fed chairman said. . . . NEW ECONOMYSCARCITY OF SKILLED WORKERS

  33. THE NEW ECONOMIC EQUATION IN A KNOWLEDGE-BASED ECONOMY BRAIN POWER EARNING POWER =

  34. Source: K-12 Education and Economic Summit presentation by Alan B. Krueger, Princeton University

  35. THE EARNINGS GAP HAS WIDENEDREAL $ TERMS Source: US Census Bureau; Postsecondary Education Opportunity

  36. MEDIAN FAMILY INCOME BY EDUCATIONAL ATTAINMENT Source: U.S. Census Bureau

  37. TAXES 25% (college graduates) OF THE WORKFORCE PAYS 51% OF THE INCOME TAXES

  38. LOW INCOME GROWTH LEADS TO : DETERIORATION OF ECONOMIC CONDITION AND QUALITY OF LIFE • Lower per capita income • Decreased tax base / Budget deficits • Lower bond ratings • Decreased school funding and teacher salaries • Less & fewer public services • Lower quality of life

  39. THREE TALENT OPTIONS FOR PRODUCTION • Import the talent • Export the job • Grow the Talent here

  40. WHY IS EARLY EDUCATION IMPORTANT?

  41. WHY EARLY EDUCATION? AN EARLY FULCRUM • Third Grade Reading Skills • Learn to Read Read to Learn • Forty-Minute Assessment • 80% Accurate

  42. ACHIEVEMENT GAP ESTABILISHED EARLY

  43. ACHIEVEMENT GAP DEPENDENT ON THE MOTHER’S EDUCATION Source: Prof. James Heckman, Nobel Laureate, University of Chicago

  44. POVERTY v. EDUCATION USE THE CORRECT POLICIES • Ed≠f(Poverty) • Poverty =f (Education)

  45. Traditional economic development tools produce a zero public return or worse. See A. Rolnick, Federal Reserve Bank of Minneapolis Returns to high-quality early-childhood initiatives produce huge returns. Perry Preschool 40-year study reports $17-to-$1 total and $13-to-$1 public benefit-cost ratios. NEW ECONOMIC DEVELOPMENT MODELUSING THE RIGHT TOOLS

  46. WHAT MORE DO YOU NEED? THE QUESTIONS HAVE BEEN ANSWERED • What are the returns? • 17: 1 returns; 80% to the Public • Is it fiscally prudent? • Tiny fraction of total public school funding • What is the greatest job need? • Skilled, creative, interactive occupations • What is your alternative investment? • Not a new mall !

  47. EARLY CHILDHOOD EDUCATION BETTER SOONER THAN LATER • Postponing the Investment • only postpones the Rewards • It’s Good for Kids, • It’s Good for Business, • It’s Imperative for the Future

  48. Dennis K. Winters, Vice President & Director of Research • Phone: (608) 441-8060 • Email: nstar@northstareconomics.com • Fax: (608) 441-8064 • Website:www.northstareconomics.com

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