Universal preschool
is inviting universal disaster
Shikha Dalmia, Lisa Snell
Sunday, December 4, 2005
Ideas that seem great in
theory are often a disaster in practice. California's Preschool for All
initiative being pushed by director-turned-child advocate Rob Reiner is just
such an idea.
This is not mere
ivory-tower doom-mongering. This is what a sober assessment of a similar
universal day care program in Quebec suggests.
If Reiner's initiative is
approved in June, individuals making more than $400,000 a year ($800,000 for
families) will face a 1.7 percent tax increase to raise $2.5 billion to finance
three hours of free preschool a day for all of California's 4-year-olds -- even
the 62 percent who already attend preschool without universal subsidies.
Reiner's initiative is a
statewide version of Proposition H, the universal preschool program that San
Francisco voters approved in March and that will be started in 22 preschools
clustered in four low-income communities in a few months. It authorizes $20
million from the city's general funds over five years for public schools to
offer pre-school services.
The arguments Reiner and
San Francisco child care advocates make are identical to the ones made in
Quebec eight years ago. They claim that an investment in preschool will pay for
itself not once, but many times. A Rand Corp. study estimates that every dollar
spent on preschool will yield $2.50 in savings for the state by, among other
things, boosting graduation rates and diminishing juvenile crime.
Setting aside the inherent
difficulty of accurately quantifying such nebulous and distant benefits, such
calculations inevitably underestimate the ultimate bill because they don't take
into account the inflationary pressures that the program itself creates.
The final price tag for
Quebec's day care program is 33 times what was originally projected: It was
supposed to cost $230 million over five years, but now gobbles $1.7 billion
every year.
With this kind of spending,
one would think that Quebec was offering top-notch day care to every tot,
toddler and teen.
Think again.
Much of the increased
spending has gone not toward increased access, but increased costs. Day care
worker unions, on the threat of strike, negotiated a 40 percent increase in
wages over four years. The cost of care has doubled since the program began,
with the annual per-infant cost now exceeding $15,000.
Besides unions, the other
major reason for the skyrocketing costs is that when people don't pay the full
price for a service, they consume more of it -- what economists call the
problem of the moral hazard: Quebecois taxpayers pay 80 to 90 percent of the
cost of care, requiring parents to pitch in only $7 a day.
Such low co-pays have
encouraged mothers who might otherwise have stayed at home with their newborns
to return to work. But any hope that the program would be able to meet the
demand that it created was doomed right from the start, because it banned new
centers and barred existing ones from participating, decimating the private day
care market. (It has since reversed this policy). Literally overnight, long
lines of desperate parents vying for a "free" day care spot emerged.
Parents registered babies yet to be conceived. And when they did land a spot,
they paid their $7-a-day to hold it -- even if they were months away from using
it.
But perhaps the most
shocking part of Quebec's program is that it is reinforcing the very inequities
it was meant to eradicate.
Many low-income parents,
who lost their child care tax deductions in order to finance the program, have
been crowded out by middle- and upper-income parents more savvy at negotiating
the system. According to research by Peter Shawn Taylor for the Canadian
Taxpayers Federation, half of Quebec's day care spaces are taken by families in
the top 30 percent income bracket.
Is there any reason to
believe that California will dodge Quebec-type cost overruns or shortages or
inequities? None whatsoever.
It is true that
California's program will be for only 4-year-olds, somewhat limiting demand.
However, this will be offset by the greater moral hazard in the program,
because parents won't be required to contribute anything toward their child's
care.
At the same time that it
will fuel demand, the program -- by its very existence -- will shrink supply in
the private sector.
Unlike Quebec, California's
program won't ban new private preschools or bar existing ones from
participating. But private preschools that don't participate will be
hard-pressed to find parents to pay when competing against fully subsidized
schools.
Preschools that do
participate will have to pay wages on the K-12 teacher scale negotiated through
a mandatory collective bargaining process that the unions lobbied for. They
will also face other onerous regulations such as minimum staff-child ratios.
All of this will raise the cost of doing business, driving many private day
care centers out of the market and leaving fewer affordable options for
low-income parents for whom three hours of state-funded day care covers less than
half their needs.
Will California's program
enhance school readiness of children in its care and improve educational
outcomes, one of the main arguments of child care advocates? Not if Quebec's
experience is any indication.
Pierre Lefebvre, an economics
professor at Universite du Quebec, has just completed a study comparing 4- to
5-year-olds in Quebec with kids elsewhere in Canada and found that Quebec kids
have no better scores on the Peabody vocabulary test -- the most widely used
indicator of school readiness.
California's private day
care industry already serves the needs of a majority of parents effectively. In
addition, California and San Francisco already offer child care assistance to
needy parents through welfare-to-work and myriad other programs. Instead of
instituting a huge, new pre-school entitlement, the best way to deal with any
remaining need might be to strengthen such programs.
Universal preschool sounds
progressive, but actually has pernicious unintended consequences for the parents
and children it seeks to help.
Shikha Dalmia is a senior analyst and Lisa Snell director of education policy at Reason Foundation (www.reason.org.) Contact us at insight@sfchronicle.com.