Hoosier Economy A closer look: The cost and benefits of quality early childhood education...

A closer look: The cost and benefits of quality early childhood education in Indiana


For more than a decade, Indiana Senate Democrats have pushed to make early childhood education accessible for Hoosier children across the state. They’ve argued that ensuring every Hoosier student arrives in kindergarten ready to learn is an investment that far outweighs the cost. Opponents of increasing access to prekindergarten frequently point to cost as reason for blocking a robust, public early education option. But after a full assessment of both the cost and benefits of improving access to early education confirms the return on investment strongly favors both students and the Hoosier economy.

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Estimating the potential cost

A number of factors are to be considered when evaluating the cost of a robust early education program. According to a report released by the Center for Evaluation and Education Policy (CEEP), states spent on average $4,847 per pre-kindergarten student in 2011. States neighboring Indiana spent $4,198 per preschooler in 2011. Comparatively, Indiana’s FY2014-2015 budget allocates more than $13 billion to cover the tuition of students attending the state’s public and charter schools. The budget also sets a base or “foundation” amount for each Hoosier K-12 student at $4,569 in FY14. CEEP estimates that a targeted program for at-risk four-year olds not currently in existing federally-funded programs would cost about $126.5M per year at 100% participation.  In a more likely scenario, If only 75% participated, the cost would be $88 million.

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Just under $200 million of resources earmarked for education will go to fund full-day kindergarten in FY14. In FY14, schools will receive a grant of $2,448 for each student enrolled in kindergarten classes. Local school corporations are then left to fund the difference. To temper the cost, some communities have turned to local philanthropies, community-based partnerships and other organizations for assistance. A statewide early childhood education program could be modeled after Indiana’s full-day kindergarten program while incorporating a blend of public-private partnership and federal funding to help offset cost.

Evaluating the benefits

The benefits, both those realized today and for future generations, of ensuring every Hoosier child enters the classroom ready to learn are numerous. Early childhood programs help jumpstart cognitive development and immerse children from an early age in an environment of social interaction and learning. By narrowing the achievement gap we set our students up to succeed. In a report issued by the Indiana Education Roundtable, researchers found that those students who attended prekindergarten are:

  • More likely to graduate high school (65 percent vs. 45 percent)
  • More likely to be employed (76 percent vs. 63 percent)
  • Earn a significantly higher median annual income ($20,800 vs. $15,300)
  • More likely to own a home (37 percent vs. 28 percent)
  • Less likely to have any arrests (36 percent vs. 55 percent)
  • Less likely to have spent time in prison or jail by age 40 (28 percent vs. 52 percent)
  • Less likely to participate in welfare programs

Report to the Legislative Interim Study Committee on Early Childhood Education>>

The success of students equipped with a quality early childhood education also generates widespread fiscal benefit for the state. The same Indiana Education Roundtable report included research that estimated for every dollar invested, quality prekindergarten programs returned $13 in public benefit. These returns are attributed to savings from fewer incarcerations, reduced spending on special education, remediation and public assistance. Hoosiers earning a higher income also contribute by spending more in their local economies and broaden the state’s tax base. According to a report commissioned by the Indiana Council on Higher Education, after 25 years, the return on a statewide prekindergarten program would outpace costs by $31 billion. For reference, the state’s budget for the next two fiscal years spends nearly $30 billion.

Bottom line

From increasing graduation rates and Hoosier incomes, to lowering public expenditure on remediation and incarceration, investing in early childhood education pays dividends that far outweigh the cost.

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