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Innovative Financing Strategies for
Early Childhood Care
Nov 01, 2009
Betsy Zeidman and Jill Scherer
Publisher: The PEW Center on the States

Investments in early childhood education can provide major economic returns to society in terms of a more educated workforce and a population that is less dependent on government services. At the same time, the cost of foregoing these investments is high. Neglecting children during their critical formative years (specifically ages 0-5) results in increased spending on remedial education, prisons, job training, and many other costly public programs.

However, given limited public funding, how can the size and scope of investments in early childhood be increased? How can we leverage existing public and private financing tools to promote early childhood care? This report, commissioned for the Partnership for America's Economic Success, explores methods to increase resources for early-childhood care and development, including:

  • Qualified section 501(c)(3) bonds
  • Real Estate Investment Trusts (REITs)
  • Tax Increment Financing (TIF) districts
  • Developer impact fees
  • Paid family leave laws
  • Credit enhancement
  • Program-related investments (PRIs)

The tools described in the report attempt to increase the supply of early childhood care programs by increasing the funds available to them. These funding options aim to reduce the burden on state and local governments by focusing on new sources of capital. In particular, they align the interests of the private and public sectors, encouraging the private sector to participate in financing early childhood.