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Investment in Child Care a Path Out of Budget Problems

March 9, 2008, Op-Ed in Lexington Herald-Leader


By Justin Maxson


A growing body of evidence finds that adequate investment in early childhood education and care is critical for economic development—now and in the future.


Despite rising interest and awareness of the importance of these investments, many fear that the budget crunch in Frankfort will mean cuts to existing programs or suspension of progress on these issues. That’s a choice Kentucky can’t afford to make.


In fact, investment in early care and education will help Kentucky address its ongoing budget problems through enhanced economic growth and savings in other areas. Estimates suggest that for each dollar we spend on early childhood education and care, we save between $2 and $17 in future spending on special education, social services, public aid and criminal justice.


These economic benefits are a critical bonus to the main purpose of these investments:  powerful learning experiences that deeply impact children’s lives.


In recent months, several organizations, including Kentucky Youth Advocates and the Prichard Committee, have issued important reports recommending stronger state support for early childhood care and education.


The Mountain Association for Community Economic Development (MACED) recently joined that conversation with a study of the financial viability of independent child care providers in eastern Kentucky, the region MACED serves.


Independent child care providers across Kentucky are an important part of community and educational infrastructure. Child care centers have the potential to be strong economic engines and providers of good jobs.


Quality early care is especially important in low-income areas like Appalachian Kentucky. Research shows that the benefits of high-quality care are greatest for low-income children, and the inability to access affordable, quality care can be a major barrier for low-income parents seeking education or work.


However, as we discovered, failures in existing public policy make financial viability a struggle for independent providers in eastern Kentucky.


Child care providers in low-income communities face dysfunctional market conditions that mean they don’t bring in enough revenue to pay their bills. They also lack adequate access to resources that help them develop skilled staff, operate their centers effectively and raise the capital they need.

A major source of their problems is that state child care subsidies are not high enough to make centers financially viable, much less cover the costs of quality care.


Child care providers face a no-win situation. One provider explains, “We won’t raise our rates because the families we serve can’t afford it and they will withdraw.” But if providers do not raise rates, they cannot make payroll and keep up with their bills or invest in training and capital improvements.


The result: child care operators and staff carry the burden of a dysfunctional market. “We do not have enough working capital throughout the year. When we first started, we (the two co-directors) didn’t take home paychecks at all.”


Another director commented, “I do not always bring home a paycheck. On a good month I might be able to pay myself $500.”


With the proper resources, we can address these problems. Our report recommends an increase in financial support and incentives and greater state help for child care workers, managers and businesses.


These investments will pay off in expanded opportunities for parents, valuable learning experiences for children, good jobs at child care centers and a stronger and more vibrant economy in the future.

The budget crunch Kentucky faces is caused in part by past unwillingness to invest in those things that improve the economy and the quality of life. As a result, we have expensive problems we must address with little economic base with which to raise the needed revenue.


It’s time for a shift in perspective. The longer we put off the investments that make for prosperity, the longer we wait to prosper.


Justin Maxson is President of the Mountain Association for Community Economic Development (MACED) in Berea, Kentucky.