New Policy Institute Report Looks at How Other States Are Funding Quality Early Care and Education
How can our state better fund Early Care and Education? The Louisiana Policy Institute for Children has released a new report outlining multiple options for funding early care and education based on the experiences of other states. 

Prioritizing Our Future: How cities and states dedicate funds for early care and education examines a variety of voter-approved funding models used in other cities and states to provide more accessible, affordable, quality early care and education programs for working families.  

Below is a review of some of these funding sources covered in the report and how they are similarly adopted or utilized in Louisiana. To view a one-page summary of the report click here , and to view the complete report, click here .

There has been an increasing demand from Louisiana decision-makers for significant and sustained public sources of investment in early childhood. A state-commissioned panel concluded that Louisiana needs to commit $86 million in initial state investments to begin to bring our early child care programs into line with public need and quality standards. Recent public exchanges, however, make it clear there is no agreed upon approach between state education leaders, legislators and the Governor’s administration to address this $86 million down-payment.

In Louisiana, child care is becoming increasingly cost prohibitive: Families with one infant and one preschooler experienced a 35 percent increase in child care costs between 2010 and 2016. Single parents pay 38 percent of their income for infant center care, and 45 percent of the state’s children are in single parent families. Louisiana currently spends less than one-half of one percent of its general funds on early care and education. It is serving less than 15 percent of its children in need under age four, while two-thirds of young children in Louisiana have both parents in the workforce. Moreover, child care costs almost as much as a public college tuition. 

Legislators and the Governor have supported discussions already underway about allocating new revenue from sports betting, should it be adopted by voters in Louisiana, to early childhood education. This would be consistent with dedicated funding in other states, which are mostly from sin taxes of different types. It would be a welcome, much-needed, consistent source of funds in the future; however, sports betting revenue will not be available for the upcoming fiscal year, and could not solely address the $86 million price tag needed.  

The purpose of this report , as we prepare for a fiscal-only Legislative Session, is to educate our lawmakers and our families on ways other states and cities have allocated specific funding streams to this critical time of life.

Funding Streams in Other States 

Tobacco Tax: Arizona and California voters approved a dedicated tax, generating $143.3 million and $358.3 million, respectively, in Fiscal Year 2018 for early childhood. Louisiana’s tax rate of $1.08 per pack of cigarettes is among the lowest third of tax rates in the country. Tobacco tax revenues generated in Louisiana $314 million in Fiscal Year 2017 and are allocated to healthcare, Medicaid, and the state general fund. 

Tobacco Master Settlement Agreement Funds: Connecticut, Kansas, Kentucky, and Missouri allocated some or all of their settlement funds for early childhood, with annual allocations ranging from $10 million to $40 million. Louisiana divides its settlement funds between bonds, children’s healthcare, and education. Education allocations provide funding for TOPS, $58 million in Fiscal Year 2018, and instructional enhancements in pre-K through grade 12, including $13 million for grades K-12, and under $3 million to pre-K. 

Lottery Funds: Georgia dedicates 25% of lottery revenues to fund the state pre-K and HOPE scholarships programs, generating $358 million in 2017. In Tennessee, $25 million of excess lottery taxes are allocated for voluntary pre-K. In Louisiana, state lottery revenues are predominantly allocated to the Minimum Foundation Program (MFP), which funds grades K-12. In Fiscal Year 2017, $176.5 million was allocated to the MFP. 

Sales Tax: South Carolina levies a one-cent sales tax of which $15.5 million in Fiscal Year 2017 funds half-day Pre-K slots. The entirety of Louisiana’s sales tax revenues, $3.86 billion in Fiscal Year 2017, is allocated to the state general fund. 

School Funding Formula: Colorado, the District of Columbia, Iowa, Kentucky, Maine, Oklahoma, Texas, Vermont, West Virginia, and Wisconsin fund pre-K programs through the state’s school funding/education finance formula. Allocations range from $19 million in Maine to almost $1 billion in Texas. Louisiana’s school funding formula, the MFP, provides funding only for grades K-12 in public schools. In Fiscal Year 2018, the allocation was $3.7 billion.
The Louisiana Policy Institute for Children (LPIC) advances policies to ensure that Louisiana's young children are ready for success in school and in life. We are a source of nonpartisan, independent information on issues concerning children ages birth through four in Louisiana. We also develop policy proposals informed by data, research, best practices and the experiences of other states for improving the outcomes of Louisiana’s young children, and then provide educational and outreach activities around these recommended policy solutions.

To learn how to support LPIC, click here . For the latest news and updates on early care and education, visit our website or follow us on Facebook and Twitter. For more information, contact Melanie Bronfin, mmbronfin@policyinstitutela.org.