Early education economic benefits deserve fair accounting, advocates say

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Jett Loe - Las Cruces Sun-News

5-year old Seth Potts bites into a peach provided as part of a free lunch by Families and Youth, Inc. at Young Park in Las Cruces while 5-year old Vivian Trivizo looks on, June 1, 2016.

A proposal that would allow the state to draw a greater amount from New Mexico’s land grant permanent fund to pay for early childhood education cleared the House of Representatives on Wednesday night on a 37-32 vote.

The constitutional amendment now heads to the Senate with just over a week to go in the session.

If passed there and then by voters on the 2018 ballot, the measure would pump an additional $156 million on average each year for 12 years into the state’s main checking account beginning in 2020. It would pay for home visiting, pre-kindergarten and other early childhood programs.

The proposal’s passage Wednesday evening was delayed several days as House leaders corralled enough ‘yes’ votes to pass the proposal. Now, with little more than a week to go in the session it heads to the Senate, where powerful lawmakers have repeatedly expressed their opposition over the years.

This year’s debate, as in years past, revolves around the long term health of the permanent fund and its ability to continue providing a little more than 10 percent of the state’s general fund, as it does today. Increasing what the state withdraws each year would stunt its growth, reducing what the fund pumps into the state’s main checking account in future years, opponents say.

But advocates say opponents don’t do a fair accounting of benefits when discussing the funds future financial performance.

Among those, increased spending on early childhood programs would help grow a more dynamic state economy, with all the accompanying benefits, supporters say.

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Numerous studies show children benefitting from early childhood programs are more likely to graduate high school, attend college and remain gainfully employed. They’re more likely to be in better health later in life, too. Meanwhile, they’re less likely to go to prison or cost government in other ways

The children who benefit from the investment would in the future “become taxpayers rather than tax takers,” Rep. Moe Maestas, one of the sponsors of the resolution, said during Wednesday evening’s debate on the House floor.

In effect, advocates are asking the state to take a leap of faith, but one that is backed up with research from numerous studies, including one by a Nobel-winning economist.

Advocates point to a recent study by Dr. James Heckman, a Nobel economics laureate at the University of Chicago. It shows a 13 percent return for every dollar invested in early childhood programs.

Heckman examined data that was collected over forty years, following disadvantaged African American children who both did and did not receive early education programming through a project called ABC/CARE in the 1970s in North Carolina.

The ABC/CARE program included a range of “often disjointed” programs utilized today, like home visiting, child well-being, nutrition early learning, childcare and preschool programs — many of which New Mexico would invest in at greater rates than it already does should the constitutional amendment pass muster with the Legislature and voters. The research summary states that such programs “pay for themselves many times over.”

Early education programs, the research noted, improve both the economic conditions of parents today while preparing children for the future.

“ABC/CARE improved the economic prospects of treated children and their mothers, allowing the latter to enter the workforce and increase earnings while their children gained the foundational skills to make them more productive in the future workforce,” the research summary states.

Such research resonates with Dr. Veronica Garcia, superintendent of the Santa Fe School District who administered the state Public Education Department for Gov. Bill Richardson.

“When we consider the economic crisis of our state…the best economic investment, the best economic development strategy is investment in early childhood education,” Garcia told lawmakers during a January 30 hearing on the constitutional amendment before the House Education Committee. “Numerous long-term studies have shown that children who have access to early education programs do better in school.”

General agreement in New Mexico

There is little debate among state decision-makers about the value of early childhood education programs, such as home visiting and pre-kindergarten in improving social and cognitive skills of children as well as how far they go in school while decreasing delinquency and criminal activity.

Since 2012, state lawmakers have increased early childhood program funding by more than 80 percent.

But significant gaps remain.

For example, an analysis by the Legislative Finance Committee in 2015 found only 2,800 at-risk families participating in home visiting programs despite a “reasonable target population” of about 11,500 at-risk families.

The state has significantly expanded pre-Kindergarten for four year olds. When including other programs, like child-care, special education pre-school and Head Start, nearly all four year olds are able to access some form of early education services. But in 2015, an estimated 13,463 low-income three-year olds were not accessing early education services.

The 2015 LFC report recommends the legislature “prioritize incremental PreK appropriation” to expand services to three year olds and full day pre-kindergarten for four year olds.

The legislature has embraced an incremental approach to doing that.

But advocates say withdrawing more from the permanent fund would supercharge the state’s investment and the resulting economic impacts a generation from now would outweigh the resulting slower growth rate of the fund.

Silver Bullet

“It sounds like I’m saying it’s a silver bullet,” Garcia told the House Education committee about the value of such a large scale investment. “I would say there is no silver bullet. But this is probably the highest return on investment strategy that we can invest in.”

Economists agree there isn’t a silver bullet, but say investments in people are a smart strategy if the state wants to change it’s entrenched poverty.

“It’s very hard to point to one policy change and say it’ll change the economy,” said Melissa Binder, Associate Professor in Economics at the University of New Mexico. “But the returns are very great (of early education programs). The evidence shows there’s an impact.”

Because there are multiple factors that contribute to a robust economy, from a scientific perspective there’s no guarantee that the impact of such a large investment would pay off, she said.

But, Binder said, investments in people are important to growing an economy. The question, she said, is whether “we are investing now for the future. The pre-K results are really quite strong about how kids do better in school.”

“We’re poor now,” she noted, with a sizable asset that could be used to change the current condition.

“Nationally that’s the case too,” Binder said. “The country as a whole is not poor, so it’s hard to say we don’t have the resources to invest in early childhood (programs) and infrastructure.”

Cautionary voices

While public opinion polls show the New Mexico public favors the proposal to tap the permanent fund, Senators who control key committees have blocked the idea in the past.

Established in New Mexico’s Constitution, the land grant permanent fund is the third largest such “sovereign wealth” fund in the nation, with a value of a little more than $15 billion.

The fund’s value comes from state land sales and royalty fees from commercial interests for the right to extract and sell oil, gas and other minerals. Interest is earned from investing the accumulated funds in stocks and bond. Each year, around 5 percent is funneled into the state’s general fund, 89 percent going to public education and the rest to a handful of other state institutions.

In 2020, analysts predict a 5 percent distribution to the state’s general fund would be $766,863,713. If this year’s measure is adopted, that would grow to $920,236,456, with the difference — more than $150 million — earmarked for early education.

State analysts strike a cautionary note. The fund grows because it earns interest on the money already in the fund and on the dollars produced by that interest, year after year. In general, they say, 5 percent is the more prudent rate at which to draw down funds.

“A dollar out of the permanent fund isn’t just a dollar, it’s an expensive dollar,” Charles Wollman, spokesman for the State Investment Council, said about the funds distributed to the general fund each year. “It’s a dollar plus its earnings in that year and every other year.”

State analysts put together data showing lawmakers what happens to the fund at the different distribution rates. At a six percent distribution rate, at the end of 12 years the value would be more than $7 billion higher than today’s value. But at a lower distribution rate of 5 percent there would be almost $2.3 billion more.

Still, in 12 years, the projection shows distributions at 6 percent continue to be higher than they would be at 5 percent.

But about 12 years later — at the 25-year mark, analysts project a “tipping” point. That’s when the 6 percent distributed from the permanent fund to the state’s checking account would become smaller than had the distribution remained at 5 percent all along.

“The bigger fund with the smaller distribution ultimately catches up with the smaller fund that’s distributing a larger percentage,” Wollman says. “If you take more funds out today there will be less to distribute in the future for New Mexico education.”

The House amended the constitutional amendment Wednesday evening on the House floor to ensure the the distribution would revert to 5 percent 12 years from 2020. It was unclear Wednesday evening whether the change would allay the concerns of those worrying about the permanent fund’s ability to continue supporting state programs for future generations.

One thought on “Early education economic benefits deserve fair accounting, advocates say

  1. “Numerous studies” are claimed to show a lot of much-later-in-life benefits from early childhood education although the programs have not been around long enough in numbers enough to show anything of the sort. The “numerous studies” are simply the optimistic projections of proponents. Has anyone seen controlled studies of these benefits contrasting children in and not in such programs? In the absence of such studies, an impossibility now, their use to justify trendy thinking makes “educational research” an oxymoron. It made glittering promises about the educational benefits of the “open classroom.” How did that work out? Headstart is luckier because it employs so many people; its benefits are, with one exception (a lower likelihood of a criminal record), entirely employment, not education; nothing distinguishes those in head start programs from those never in head start programs by the time of graduation, including retention rates. Early childhood education programs will employ people, build a constituency, and protect itself from accountability. Early childhood education is yet another a spendthrift boondoggle.

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