Financing Child Care in the United States - Ewing Marion Kauffman ...

STRATEGIC CONSIDERATIONS
• ECI was conceived by an 80–member group of
business leaders, professionals, community
representatives and concerned individuals. The scope
and diversity of this group were crucial to obtaining
broad support to begin the initiative. A business plan
for the initiative was prepared with pro bono help from
Ernst & Young and McKinsey & Company, two
nationally recognized accounting and management
consulting firms. These firms helped to quantify
essential aspects of the project and to describe the
initiative in terms that were meaningful to the business
community. The business plan was key to gaining
approval from the United Way board to proceed with
the project.
• The original 1996 ECI business plan estimated that
70 percent of the children would need part–day
services, 3 hours per day, year–round. The five–year
cost was estimated at $59 million. The United Way of
Allegheny County committed to raising $50–55 million
from the private sector to support the initiative during
the first five years. Interest, parent fees and special
government grants were expected to bring the total to
$59 million. The original plan anticipated that
public–sector support through state budget allocations
would occur by 2002 to sustain the operating system.
It was understood that some private funds would
continue to be needed for those children ineligible for
any public funding source, and to achieve and maintain
high quality in ECI programs.
• The ECI business plan was revised in 1998 and again
in the fall of 1999. The original plan included a major
review and decision–point at year three (1999) or after
1,500 children were enrolled. At that point, the initiative
was to be judged on projected sustainability at year six
(2002). Indicators of potential sustainability included
increases in subsidy funds and specific dollars directed
to quality programming in the State of Pennsylvania’s
annual budget. If the judgment at the decision–point
was negative, then the initiative would continue to
serve enrolled children until they entered kindergarten,
while phasing down. The 1999 review determined that
ECI should continue and should move out of the
United Way. Negotiations are in process to determine
which agency or agencies will lead ECI in the future.
• The passage of Pennsylvania’s welfare reform in 1996,
and its implementation in 1997, required welfare
recipients to be employed within two years of the date
that they started receiving cash assistance. This
affected ECI’s plans and cost estimates. Instead of
mainly part–day services, ECI estimated that 90
percent of the children targeted by the initiative
needed full–day services, 10 or more hours per day,
year–round. The total cost estimate rose to $103
million to serve 7,600 children over five years. The
1999 revised business plan assumed that $48 million
in additional public funds were needed and that these
would come through the state’s child care subsidy
system, Child Care Works. All families with children
enrolled in an ECI program pay a fee based on their
income and family size, either as determined by the
state for participation in Child Care Works or by ECI for
children not eligible for public subsidies.
• An evaluation of ECI is being conducted by the SPECS
(Scaling Progress in Early Childhood Settings)
Evaluation Team of Children’s Hospital of the University
of Pittsburgh. The evaluation focuses on key
performance indicators at the child, family, program and
community levels and outcomes related to school
success. The initial results of the evaluation of ECI are
positive. Overall, ECI children are making 1.5 months of
developmental gain for each month of program
participation. Of the 132 children who have graduated
from ECI and moved to the public schools, none has
been placed in special education and none have been
retained in grade.
• ECI identifies four areas that have been particularly
challenging and substantially slowed down the
anticipated progress: first, they experienced the
struggles that come with start up. After the official
launch of ECI, the process of developing the RFNP,
drafting contract language, preparing an ECI
operations manual, and becoming fully operational took
far longer than expected. The number of
neighborhoods requesting new or renovated space was
much larger than anticipated. Difficulties in
neighborhood decision–making and in the process of
finding and readying space to meet licensing codes
slowed the pace of ECI. New sites took between one
and two years to build and another year to reach full
enrollment.
• Second, tension between ECI’s commitment to
neighborhood decision–making and the perception of
the early childhood community that it was being
excluded from ECI are now being discussed and
resolved. Any initiative that seeks to enroll young
children in high–quality early education will have to
decide whether to improve existing programs, expand
them, create new ones, or do some of each. The
decision will depend on the match between existing
supply and estimated demand, the capacity for
expansion, the quality of the existing supply of
programs, and the local context.
• The third challenge relates to Pennsylvania’s subsidy
system, called Child Care Works. Pennsylvania has
revised Child Care Works several times since ECI
began and has added new funds to the program. While
design issues have been favorably modified in core
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