by Bill Jordan
April 29, 2014
For several years, advocates for early childhood education have been making a strong case for investing more in our youngest kids. Citing evidence from economists like the Nobel-prize winning James Heckman and the former Federal Reserve Chairman Ben Bernanke, we’ve made the case that investing in early childhood provides a substantial return on investment.
“Economically speaking, early childhood programs are a good investment, with inflation-adjusted annual rates of return on the funds dedicated to these programs estimated to reach 10 percent or higher. Very few alternative investments can promise that kind of return. Notably, a portion of these economic returns accrues to the children themselves and their families, but studies show that the rest of society enjoys the majority of the benefits, reflecting the many contributions that skilled and productive workers make to the economy.” —Ben Bernanke, Children’s Defense Fund National Conference, July 24, 2012“Professor Heckman’s analysis of the Perry Preschool program shows a 7 percent to 10 percent per year return on investment based on increased school and career achievement as well as reduced costs in remedial education, health, and criminal justice system expenditures.” —The Heckman Equation
Both of these financial experts make the point that when states invest in early childhood education, the state gets the benefits of a “double bottom line”—that is, not only does the state actually save money, it is also improving the lives of children, which further benefits the state with a more highly educated workforce that will contribute more in income taxes. The concept of a double bottom line is growing in popularity among investors who not only want to make money, but want to ‘do good’ with their money. Firms like Goldman Sachs are now beginning to invest in social impact bonds, including some that are invested in early education strategies. They’re doing it both to ‘do good’ and because they know it’s a sound investment strategy.
Investing our state’s $13 billion Land Grant Permanent Fund was the subject of more than one piece of legislation in the 2014 session. Advocates again worked to educate lawmakers about the return on investment of spending just a tiny percent of the permanent fund’s income to expand early childhood care and education programs. Among the benefits of these programs are reductions in child abuse, increased parental involvement, and improved kids’ school performance. As it has every year in the past three years, this legislation died.
One bill that did pass, however, would allow the state to invest more of the state’s school fund in international corporations (assuming it is approved by the voters in November). That might be a wise decision that gives a good return on investment, but I have more than a little heartburn over the fact that we’re willing to invest billions in foreign corporations, but not even a little bit in our own children.
To be clear, only a tiny percentage of our youngest kids currently have access to home visiting/parent coaching, high-quality child care or pre-K programs. Some legislators simply don’t want to change the status quo regarding the permanent fund, but if there’s another pool of money available for funding these critical programs, we haven’t seen it.
The Governor has no plan to fully fund early learning. The Legislative Finance Committee says it has a plan to phase in more funding over time, but at the rate they’re going, it will be decades before we achieve universal access and the kids who would benefit from these programs today will be parents themselves.
We may make a bit of money investing more of the Land Grant Permanent Fund in international ventures, but unless we decide to spend a fraction of that money on early childhood care and education, it will never improve the quality of our workforce or bolster our state’s economy. New Mexico’s kids deserve better. And with a $13 billion fund, the state can well afford to invest 1 percent in our own future.
Bill Jordan is the Senior Policy Advisor/Governmental Relations for NM Voices for Children. Reach him at firstname.lastname@example.org.