Recent public exchanges between state education leaders, legislators and the Governor’s Administration make clear there is no agreed upon approach to addressing the $86 million down-payment a state-commissioned report said was needed to bring Louisiana Early Child Care programs into line with public need and quality standards set forth by federal and state agencies.
But one non-profit that has studied this issue for years has researched multiple options that can be acted upon right now by the State of Louisiana, if there is a will, as other states have done, to explore viable options related to what are commonly known as “sin taxes” on tobacco, gaming and other sources of revenue.
“We spent the Fall discussing with state lawmakers, educators, business and childcare advocates how to develop a sustainable source of funding in Louisiana for more accessible, affordable and quality Early Child Care and Education options for working parents, and we now have a report that identifies how other states are doing it,” said Louisiana Policy Institute for Children Director Melanie Bronfin.
Prioritizing Our Future: How Cities and States Dedicate funds for Early Care and Education explores voter-approved funding models for early childhood care and education used in other states.
“Our report responds to increasing demand from Louisiana decision-makers for significant and sustained public sources of investment in early childhood,” said Ms. Bronfin. “And here are the facts about what others are doing.”
Legislators and the Governor have supported discussions already underway about dedicating new revenue from sports betting, should it be adopted by voters in Louisiana, to early childhood education, but while providing a source of funds, it could not solely address the $86 million price tag needed right away…or the 10-year path of required investment outlined by the State Early Childhood Care and Education Commission convened by State Representative Stephanie Hilferty.
LPIC Director Bronfin added that federal funding for children is projected to make up a shrinking percentage of the national budget.
“In Louisiana, early childhood programs are unable to count on a sustained investment. While recent and time-limited increases in federal funding have allowed the state to serve over 90 percent of 4-year-olds in need, the only state administered program for children under age four has gone from serving almost 40,000 to 15,000 today. There is no secure, stable funding specifically for early care and education in Louisiana.”
The new LPIC reporton revenue sources notes holes in funding for comprehensive, affordable early childhood systems force an unrealistic financial burden upon working parents. 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.
“We’re not alone in needing to address this need,” said Ms. Bronfin. “Some states and localities have developed creative public financing mechanisms for sustainable funding by dedicating voter-approved funding streams specifically for early care and education from sources like tobacco taxes, lottery funds and dedicated sales taxes.”
Below is a review of some of these funding sources covered in the report and how they are similarly adopted or utilized in Louisiana:
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 $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 purpose of this report, as we prepare for a fiscal-only Legislative Session, is to educate our lawmakers and our families that there are ways to allocate specific funding streams at this critical time of life,” said Ms. Bronfin. “Ironically, sin taxes have been the most popular funding source for this purpose, and it is sports betting revenue that has recently been most often mentioned as doable in Louisiana.
“Louisiana 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 working. Moreover, child care costs almost as much as a public college tuition. It’s clear we have to do something and here are some ways to do it.”
Link to the full report is here: https://docs.wixstatic.com/ugd/43cca3_6be1d33d83bf4475bb7374d5ce620727.pdf
About Louisiana Policy Institute for Children
The mission of the Louisiana Policy Institute for Children (LPIC) is to advance policies to ensure that Louisiana's young children are ready for success in school and in life. LPIC is a 501(c)(3) nonpartisan, nonprofit organization that serves as an independent source of data, research, and pertinent information for policy makers, stakeholders and the public at large around issues related to young children in Louisiana. LPIC develops policy proposals informed by research, best practices and the experiences of other states and conducts educational and outreach activities around these recommended policy solutions.