Funding the Future: States' Approaches to Pre-K Finance

"Despite widespread support for early education among policymakers and business and community leaders, the most frequently cited obstacle to expanding quality or access is fiscal constraints. Thus, in an attempt to accommodate these publicly supported programs within the confines of limited state budgets, policymakers leverage states' general revenue dollars with a variety of federal and local contributions to fund pre-kindergarten. They use funds from federal childcare grants, Title I, Individuals with Disabilities Education Act (IDEA), Even Start, Temporary Assistance for Needy Families (TANF), and Head Start to help build their pre-k systems. However, a high-quality, public pre-k program cannot be created solely through better use and coordination of federal funds. State policymakers must allocate substantial, sustainable state funds that can be increased over time.

States have traditionally provided funds for early education through allocation of general revenues. However, as the urgency and breadth of the need for funding becomes widely understood, states are increasingly looking for new sources of funding. As state-funded pre-k programs have grown, states have begun to utilize alternative funding sources such as lottery money, gaming revenues, and special, dedicated taxes to meet the pressing educational needs of young children.

This report examines the range of financial approaches states employ, how effective they have been in raising funds for high-quality programs, how sustainable those sources of funding are, and how they can be increased to improve the quality of and expand access to pre-k.1 The analysis is meant to encourage policymakers to think creatively about ways to supplement and sustain their current streams of revenue in funding pre-k programs in their own states."