Investing in Early Childhood Education in Ohio: An Economic Appraisal

Early childhood education enhances children’s prospects, as well as providing an economic pay-off to society. Using economic analysis and new empirical evidence, this paper describes and calculates the economic benefits to the state of Ohio that would result from expanding pre-K educational opportunities.

Currently, only 28 percent of three-year-olds in Ohio participate in publicly supported educational programs before kindergarten (through state/federal Head Start, special education, or pre-K providers). For illustrative purposes, the author proposes to raise that proportion to 57 percent and to offer education for two years before kindergarten. This policy would require 42,874 new pre-K places, necessitating a total investment of between $285 million and $482 million.

This investment is likely to yield a strong pay-off for the state government. An economic analysis that includes existing research evidence, new findings from national datasets, and state-specific data for Ohio indicates that an expanded pre-K program would yield cost-savings across several domains:

• The school system would save $242 million. These savings would arise from lower costs for special education, less grade retention, improved working conditions for teachers, lower teacher turnover/absenteeism, and improved school safety.
• Tax revenues would increase by $140 million. Parents and guardians would be free to enter the labor market and the pre-K children would have a higher earning capacity in the future.
• Health and welfare systems would reap savings of $25 million in resource redistribution from existing programs.
• Criminal justice system savings would be $375 million. Pre-K programs have a powerful impact in reducing both juvenile and adult criminal activity.

The net present value to the state of Ohio from expanding the provision of pre-K education is therefore estimated at $372 million. This estimate is based on a 5 percent discount rate and conservative assumptions about impacts. Sensitivity analysis indicates that the net present value is unlikely to fall below $108 million.

This economic analysis establishes that strongly positive returns are expected from investment in pre-K provision in Ohio.

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