Feb 7, 2017

New report makes economic case for spending more and earlier for learning

A major report released Monday by the Vermont Business Roundtable concludes that a radically expanded early education program that focuses on children aged 0-5 would pay the state back more than three-fold, while also improving social outcomes. According to the report, the lifetime benefits generated by the expanded ECL (early care and learning) programs reaches $77,413 per child, while the additional government investment required is $25,112 per child. Society would receive $3.08 for every additional dollar invested by Vermont’s government in the expansion of ECL programs. After deducting costs, each child would produce more than $52,000 in lifetime benefits to society. The report does not endorse a specific funding source and could come from a variety of sources.

If Vermont were to expand funding to provide early learning to all children birth through 5 likely to need this service, the additional lifetime benefits from the more than 25,000 participating children would reach $1.9 billion, with net benefits of $1.3 billion after deducting the total additional government investment.

The Vermont Business Roundtable, which commissioned the report entitled “Vermont’s Early Care & Learning Dividend,” said that investments in early childhood are an important tool in ensuring the economic success of Vermont. After four decades of research into early childhood investments, the cost-benefit relationship has come into clearer focus demonstrating that investments in early childhood yield strong returns.

In collaboration with the Permanent Fund for Vermont’s Children and Vermont Businesses for Social Responsibility, VBR’s Research & Education Foundation determined that there was a need to better understand how investments in early care and learning programs in Vermont impact young children and the economy.

Research studies have demonstrated that investing in high-quality ECL programs that prepare young children cognitively, physically, socially, and emotionally for success in school prevents or reduces needless public spending throughout the educational, health care, social welfare, and criminal justice systems for juveniles and adults.

VBSR’s Jane Campbell said in a statement: “While many national studies that have found high returns for investments in early childhood have focused on high-risk children, this report utilizes a more holistic approach and is based on providing high-quality, affordable early care and learning programs to Vermont’s youngest children as a whole and is based on Vermont-specific data sets.”

The reports said that children who attend high-quality early learning programs require less special education, repeat grades less, have fewer behavioral problems in school, graduate at a higher rate than others, and have less involvement in the very expensive criminal justice system as both juveniles and adults. As adults, they are more likely to be employed, earn higher incomes, and contribute more in taxes. These positive outcomes reduce future costs more effectively than later intervention such as job training or rehabilitation programs.

Vermont’s ECL programs play a critical role in the economic success of the state. The economic value of these programs can be analyzed for publicly-funded early learning for children age 3–5 and also for the potential benefits of providing high-quality, publicly-supported early care to children 0–2.

This study demonstrates the economic value to state government and the public of investing in early care and learning for children age 0–5 in Vermont. The analysis focuses on the potential benefits if the current ECL programs were expanded to full day or a full year and if public funding was extended to also address the needs of children birth through age 2 likely to need care.

All results are based on Vermont’s demographic and socio-economic information. For each estimation, we show per-child benefits, total benefits computed using Vermont’s population and enrollment data, and estimated returns on the additional investment in early care and learning required for the expansion.

Aly Richards, Permanent Fund CEO, said in a statement after the report was released: “We know that 90 percent of the core development of a child’s brain occurs by the age of five and that, by far, the highest return on investment in education is in the very early years. When children show up at kindergarten prepared for school they have a chance to have success in school, continue on to higher education and contribute to a skilled workforce. We are at a point now in Vermont when we must pay attention to the research and invest our available funds where they will produce the highest returns.”

The benefits associated with publicly-funded ECL programs identified in the literature include:

  • Savings for Vermont’s government in its K–12 public education system through reduced special education costs and reduced grade retention
  • Savings for Vermont’s justice system
  • Additional tax revenues
  • Reduced future health care costs paid by the government
  • Benefits to participating children, including additional net lifetime earnings and reduced future health care costs
  • Benefits to other members of society via reduced cost to victims of crime and reduced health care costs accrued by other private payers.

Per-child lifetime benefits are estimated from age 5–65. Each outcome is assumed to occur at different times in the future; for example, reduced special education is expected to occur during each child’s school career (K–12), crime reductions and savings are accrued by age 36, while personal earnings and income taxes are accrued through age 65. All monetary values are expressed in 2015 dollars. All future benefits and costs are expressed in present-value terms discounted at a rate of 3 percent from the accruing time for each outcome.

The full report may be viewed and downloaded here: vtroundtable.org/wp-content/uploads/sites/31/2017/02/VermontECLDReport_2017.pdf

Click here to read this article on VermontBiz.com. 

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