Policy Analysis No. 641

The Poverty of Preschool Promises: Saving Children and Money with the Early Education Tax Credit

The political momentum behind state-level preschool programs is tremendous, but existing proposals are often flawed and expensive. Preschool can provide small but statistically significant short-term gains for low-income children; however, these gains usually fade quickly in later grades. There is little evidence to support the belief that large-scale government preschool programs are effective, by themselves, in improving long-term student outcomes. Reform of the existing K–12 system should therefore remain the primary focus of those interested in sustainable improvement in student outcomes.

Given that many states have already instituted pre-K programs, or are committed to doing so, this paper proposes model early education legislation aimed at maximizing their chances for longterm success. The Early Education Tax Credit aims to sustain any potential preschool benefits and establish a solid academic foundation for later success. The program would improve the quality and efficiency of preschool options by harnessing market forces and would pay for itself by using savings generated from the migration of students from public to private schools in grades K–4.

The Early Education Tax Credit approach is unique in meeting the demands of activists for expanded access to high-quality preschool, meeting the needs of children and the preferences of their parents, and meeting the goal of increased educational freedom — all while keeping the budgetary impact low or positive.

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Adam B. Schaeffer is a policy analyst with Cato’s Center for Educational Freedom and author of “The Public Education Tax Credit” (Cato Institute Policy Analysis no. 605).