Partnership for America s Economic Success Making Young Children the Top Economic Priority of the Nation

1. Partnership for America’s Economic SuccessMaking Young Children the Top Economic Priority of the Nation Partnership for Wisconsin’s Economic Success April 28, 2008 Elaine Weiss Senior Associate, Research, The Pew Charitable Trusts Partnership for America’s Economic Success eweiss@pewtrusts.org

2. Partnership for America’s Economic Success The Need Intensifying global competition and steadily growing fiscal imbalances are important American challenges. Twenty percent of American workers are functionally illiterate; we need children to become adults who are literate, numerate, job-ready, team-capable. Many of the traits that make good employees, neighbors and citizens begin in the first five years of life. Great success with the economic case for prekindergarten – how much better off will we be with investments in proven strategies prenatal to five? Hard numbers + new messengers = powerful tools in the budget battles

3. Partnership for America’s Economic Success Background Established in 2006 by a collaboration of 12 funders, business leaders, economists and early childhood experts. Robert Dugger of Tudor Investment Corporation is co-founder and Advisory Board Chair. Managed by and housed at The Pew Charitable Trusts. Purpose: Make all children’s successful development the top economic priority for the nation. Strategy: Strengthen U.S. competitiveness and achieve fiscal sustainability through evidence-based investments in young children prenatal to age five.

4. Partnership for America’s Economic Success

5. Partnership Advisory Board Robert Dugger, Tudor Investment Corporation, Chair Lynson Beaulieu, Schott Foundation for Public Education Marcia Egbert, George Gund Foundation Deborah Harris, Pal-Tech, Inc. Heidi Hartmann, Institute for Women’s Policy Research Ron Haskins, Brookings Institution James Heckman, University of Chicago Paul Hirschbiel, Eden Capital Stuart Hoffman, PNC Financial Services Group Charles Kolb, Committee for Economic Development Milton Little, United Way of Atlanta Barbara Miller, Ohio Children’s Foundation Roy Miller, Children's Campaign George Overholser, Capital One Lynda Parmely, Horace Hagedorn Foundation Dan Pedersen, Buffett Early Childhood Fund Arthur Rolnick, Minneapolis Federal Reserve Bank Ada Sanchez, Peppercorn Foundation Ann Segal, Wellspring Advisors Ana Sejeck, Early Childhood Initiative Foundation Jack Shonkoff, Harvard University Eugene Steuerle, Urban Institute Louise Stoney, Alliance for Early Childhood Finance Sara Watson, The Pew Charitable Trusts Michael Weinstein, Robin Hood Foundation

6. Rationale and Caveats Many reasons to invest other than economics Individual examples don’t add up to a “recipe” – use data points to illustrate the larger picture of children’s development as essential to economic future Gives children’s advocates evidence and language not often had before (impact on GDP) Gives business leaders natural talking points Get out of box of pitting one children’s program against another – instead compare to other expenditures expected to improve the economy A critical area of investment in children’s early years is health; research shows that kids who lack proper health care, or who have untreated conditions, will fall behind not only socially but cognitively and, eventually, lag in adult productivity. A big question for us is, how much do children’s health problems costs us as a society? And, next, what types of treatments/interventions exist that might be cost-effective? Bernard Guyer and a team of colleagues at the Johns Hopkins University conducted an intensive review of the existing research on interventions in four areas of childhood health and interventions: injuries, obesity, mental health, and exposure to tobacco smoke All are extremely costly to society, and policies to deal with them exist, but data on how effective, and cost-effective, those interventions are, varies widely. As might be expected, tobacco exposure and injuries are more easily treated, and interventions have been better studied. Both show strong promise, above Mental health and obesity are more recently identified as “children’s issues,” and they are less understood, and thus treatments, and their cost-effectiveness, less clear. The bottom line is that early treatment is likely to be extremely net beneficial in all cases because it has such long-lasting effects re productivity, adult health, and saving of livesA critical area of investment in children’s early years is health; research shows that kids who lack proper health care, or who have untreated conditions, will fall behind not only socially but cognitively and, eventually, lag in adult productivity. A big question for us is, how much do children’s health problems costs us as a society? And, next, what types of treatments/interventions exist that might be cost-effective? Bernard Guyer and a team of colleagues at the Johns Hopkins University conducted an intensive review of the existing research on interventions in four areas of childhood health and interventions: injuries, obesity, mental health, and exposure to tobacco smoke All are extremely costly to society, and policies to deal with them exist, but data on how effective, and cost-effective, those interventions are, varies widely. As might be expected, tobacco exposure and injuries are more easily treated, and interventions have been better studied. Both show strong promise, above Mental health and obesity are more recently identified as “children’s issues,” and they are less understood, and thus treatments, and their cost-effectiveness, less clear. The bottom line is that early treatment is likely to be extremely net beneficial in all cases because it has such long-lasting effects re productivity, adult health, and saving of lives

7. Research Agenda: Five Areas of Focus Microeconomics – Economic gains from specific interventions Health Parenting Housing Early education Parental income Nutrition Macroeconomics – Economic growth, job creation, fiscal sustainability, and global competitiveness implications of proven investments Sector Analysis – Size of the “youth human capital development” sector Finance Policy – Best ways to pay for proven investments commensurate with economic impact Communications – How to communicate findings and inform policy discussion

8. Research Results: A Children’s Budget Urban Institute/New America Foundation (Gene Steuerle) Federal investments in children are projected to decline by 14 to 29 percent as a portion of federal spending over the next decade Federal spending will rise by $650 billion, but investments in children will see only .01 percent of this increase Federal focus on consumption rather than investment programs jeopardizes our economic growth Given our interest in increased investments in children, we wanted to know how they currently fare in the federal budget, what the trends are, etc. This tells us how important children are currently considered, politically and economically, and thus, what we are up against on both fronts. Gene Steuerle and Gillian Reynolds at the Urban Institute and Adam Carasso at the New America Foundation use data on government spending over the past 40 years to demonstrate those trends and predict future ones. They divide federal spending into two categories: current consumption and investments for the future, acknowledging that it is not always a clear or easy distinction. These categories are critical because investments represent future physical and human capital, the driving forces behind economic growth. Investments in children, in particular, represent good future returns. Because government expenditures, particularly those that automatically continue and increase, Social Security and Medicare, are largely consumption-oriented, investment in general is low, and investment in children, in particular, is inefficiently so and falling. In the investment category, children’s education and research, which benefits children most directly, has seen little change, declining from 3.4% to 2.3% now. Parental work supports have increased, as have children’s social supports, but both are less investment- oriented.Given our interest in increased investments in children, we wanted to know how they currently fare in the federal budget, what the trends are, etc. This tells us how important children are currently considered, politically and economically, and thus, what we are up against on both fronts. Gene Steuerle and Gillian Reynolds at the Urban Institute and Adam Carasso at the New America Foundation use data on government spending over the past 40 years to demonstrate those trends and predict future ones. They divide federal spending into two categories: current consumption and investments for the future, acknowledging that it is not always a clear or easy distinction. These categories are critical because investments represent future physical and human capital, the driving forces behind economic growth. Investments in children, in particular, represent good future returns. Because government expenditures, particularly those that automatically continue and increase, Social Security and Medicare, are largely consumption-oriented, investment in general is low, and investment in children, in particular, is inefficiently so and falling. In the investment category, children’s education and research, which benefits children most directly, has seen little change, declining from 3.4% to 2.3% now. Parental work supports have increased, as have children’s social supports, but both are less investment- oriented.

9. Research Results: A Children’s Budget This slide illustrates graphically the trends discussed just now: Education and research have been relatively flat over the past forty years, peaking around 1970 but down to their 1965 level Work supports, which are less directly investment-oriented, have gone up a bit more, with the addition of the children care entitlements and block grants, and the Earned Income Tax Credit, but they are projected to fall in the next ten years Social supports, also less investment-oriented, have risen with SCHIP , food stamps, and others Of the three categories, the first two will lose ground over the next ten years. Social supports are predicted to retain their current relative level due only to rising health care costs, which will likely also leave more families uninsured, and thus worse off.This slide illustrates graphically the trends discussed just now: Education and research have been relatively flat over the past forty years, peaking around 1970 but down to their 1965 level Work supports, which are less directly investment-oriented, have gone up a bit more, with the addition of the children care entitlements and block grants, and the Earned Income Tax Credit, but they are projected to fall in the next ten years Social supports, also less investment-oriented, have risen with SCHIP , food stamps, and others Of the three categories, the first two will lose ground over the next ten years. Social supports are predicted to retain their current relative level due only to rising health care costs, which will likely also leave more families uninsured, and thus worse off.

10. Research Results: Early Childhood Health Conditions Johns Hopkins University (Bernard Guyer) Unintentional injuries, obesity, mental health disorders, and exposure to smoke in utero and during childhood are major causes of early childhood health problems: Each year, one child in six suffers a serious injury, one in seven preschoolers is obese; as many as one in five has a mental health disorder, and nearly half a million babies are born each year to mothers who smoked while pregnant. They cost society substantial amounts of money: 15% of all medical costs are allocated to injury-related care Obesity-related hospital costs for kids 6-17 years old quadrupled between 1979 ($44 million) and 1999 ($160 million) Extra prenatal care for pregnant smokers costs $4 billion/year Smoking cessation and public safety programs can substantially reduce long-term health-related costs, with benefit-cost ratios as high as 12:1. A critical area of investment in children’s early years is health; research shows that kids who lack proper health care, or who have untreated conditions, will fall behind not only socially but cognitively and, eventually, lag in adult productivity. A big question for us is, how much do children’s health problems costs us as a society? And, next, what types of treatments/interventions exist that might be cost-effective? Bernard Guyer and a team of colleagues at the Johns Hopkins University conducted an intensive review of the existing research on interventions in four areas of childhood health and interventions: injuries, obesity, mental health, and exposure to tobacco smoke All are extremely costly to society, and policies to deal with them exist, but data on how effective, and cost-effective, those interventions are, varies widely. As might be expected, tobacco exposure and injuries are more easily treated, and interventions have been better studied. Both show strong promise, above Mental health and obesity are more recently identified as “children’s issues,” and they are less understood, and thus treatments, and their cost-effectiveness, less clear. The bottom line is that early treatment is likely to be extremely net beneficial in all cases because it has such long-lasting effects re productivity, adult health, and saving of livesA critical area of investment in children’s early years is health; research shows that kids who lack proper health care, or who have untreated conditions, will fall behind not only socially but cognitively and, eventually, lag in adult productivity. A big question for us is, how much do children’s health problems costs us as a society? And, next, what types of treatments/interventions exist that might be cost-effective? Bernard Guyer and a team of colleagues at the Johns Hopkins University conducted an intensive review of the existing research on interventions in four areas of childhood health and interventions: injuries, obesity, mental health, and exposure to tobacco smoke All are extremely costly to society, and policies to deal with them exist, but data on how effective, and cost-effective, those interventions are, varies widely. As might be expected, tobacco exposure and injuries are more easily treated, and interventions have been better studied. Both show strong promise, above Mental health and obesity are more recently identified as “children’s issues,” and they are less understood, and thus treatments, and their cost-effectiveness, less clear. The bottom line is that early treatment is likely to be extremely net beneficial in all cases because it has such long-lasting effects re productivity, adult health, and saving of lives

11. High Price of Diabetes: $116 B in Medical Costs and $58 B in Lost Productivity

12. Research Results: Closing the Poverty Gap Northwestern University (Greg Duncan) Early childhood poverty is associated with a range of adverse adult outcomes. Relative to their poor peers, children living at 200% of poverty: Complete two more years of school; Earn twice as much as adults; Have much better health. One factor that has long been known to impact children’s development, and thus their productivity both in school years and as adults, is the time they spend in poverty in their early years. See stats on slide comparing kids in vs. at twice level of poverty. While it is unclear which things related to poverty – family stresses, crime, housing, neighborhood, schools – are most influential in shaping outcomes, but, as a whole, they have a major impact. In a different paper recently presented, Duncan estimates the costs to the country of childhood poverty total $500 billion/year, or nearly 4% of GDP. The question posed for/by PAES is, what would the benefit to society be of raising all children out of poverty (to the poverty line) from the prenatal period to age five? He finds that schooling increases only slightly, but income and hours worked, thus earnings, increase a lot, and dependence on public assistance falls. Unclear if net benefit or net cost, depends on estimate, perspective. Remaining/next question: given how low US poverty line is (compared to other nations or “basic needs” line), what might be impact of getting kids/families to basic level?One factor that has long been known to impact children’s development, and thus their productivity both in school years and as adults, is the time they spend in poverty in their early years. See stats on slide comparing kids in vs. at twice level of poverty. While it is unclear which things related to poverty – family stresses, crime, housing, neighborhood, schools – are most influential in shaping outcomes, but, as a whole, they have a major impact. In a different paper recently presented, Duncan estimates the costs to the country of childhood poverty total $500 billion/year, or nearly 4% of GDP. The question posed for/by PAES is, what would the benefit to society be of raising all children out of poverty (to the poverty line) from the prenatal period to age five? He finds that schooling increases only slightly, but income and hours worked, thus earnings, increase a lot, and dependence on public assistance falls. Unclear if net benefit or net cost, depends on estimate, perspective. Remaining/next question: given how low US poverty line is (compared to other nations or “basic needs” line), what might be impact of getting kids/families to basic level?

13. Research Results: Closing the Poverty Gap Raising all poor U.S. children to the poverty line would almost pay for itself in adult earnings alone: Cost: $70,000 ($4,326 average per year per family) Benefits: Sharply increase adult earnings ($53,000-$99,000 per child) Decrease welfare dependence ($3,200 lifetime TANF, food stamps) Slightly increase schooling (0.2 years) Raising all poor U.S. children to 150% of poverty line, closer to what is needed to obtain “the basics” would: Cost: $113,000 ($7,066 average per year per family) Benefits: Increase adult earnings by more ($105,000-$193,000 per child) Decrease welfare dependence ($4,650 lifetime TANF, food stamps) Slightly increase schooling (0.3 years)

14. Research Results: Economic Impact of Early Childhood Programs Upjohn Institute (Tim Bartik) Examined job growth impacts of proven programs: Abecedarian, Nurse Family Partnership, Parent-Child Home Program and universal pre-k Each state dollar invested in such programs will increase the present value of state residents’ earnings by 2-5 times Per dollar spent, all these early childhood interventions create more jobs in the long-run than business subsidies If implemented nationally full-scale (based on target audience), and assuming specific interaction effects, by 2088 they could create 7 million jobs and boost GDP by nearly $3 trillion per year. The “traditional” realms of economic development – programs and policies intended to stimulate the jobs and earnings of local residents – include stadiums and conference centers, business subsidies/enterprise zones, job training programs and the like. Recently, however, policy-makers and economists have begun to take a broader view, comparing these against pre-k and, in this paper, early childhood programs. Pre-k has been found to be a much more likely “return” on a city/state’s investment than some of the others. In this paper, Dr. Timothy Bartik asks the same question about early childhood programs – modeled after Abecedarian, Nurse-Family Partnership, and Parent-Child Home Program – to assess their economic development potential The estimates provided here are only rough, as the paper is in draft form, and its methodology has not yet been reviewed or revised. That said, he finds that, as the slide sets out, the returns are good, and early childhood programs are good ED tools; all three provide much better returns on the ED dollar than business subsidies, for example. An advantage of early childhood over universal preschool programs is that they may provide more immediate/short-term benefits, which are attractive to policy-makers.The “traditional” realms of economic development – programs and policies intended to stimulate the jobs and earnings of local residents – include stadiums and conference centers, business subsidies/enterprise zones, job training programs and the like. Recently, however, policy-makers and economists have begun to take a broader view, comparing these against pre-k and, in this paper, early childhood programs. Pre-k has been found to be a much more likely “return” on a city/state’s investment than some of the others. In this paper, Dr. Timothy Bartik asks the same question about early childhood programs – modeled after Abecedarian, Nurse-Family Partnership, and Parent-Child Home Program – to assess their economic development potential The estimates provided here are only rough, as the paper is in draft form, and its methodology has not yet been reviewed or revised. That said, he finds that, as the slide sets out, the returns are good, and early childhood programs are good ED tools; all three provide much better returns on the ED dollar than business subsidies, for example. An advantage of early childhood over universal preschool programs is that they may provide more immediate/short-term benefits, which are attractive to policy-makers.

15. Research Results: Economic Impact of Early Childhood Programs

16. Research Results: The Fiscal Effects of Early Childhood Investments University of Maryland (William Dickens) Investments in early childhood programs – Abecedarian as a model -- increase GDP by over 1% in the long run. Fiscal benefits include increased savings and physical capital investments, education, health, and human capital increases, greater tax revenues, and savings on crime and other ills. NOTE: Only fiscal benefits are considered. Social benefits, which are likely far greater and more immediate, are not considered. The “traditional” realms of economic development – programs and policies intended to stimulate the jobs and earnings of local residents – include stadiums and conference centers, business subsidies/enterprise zones, job training programs and the like. Recently, however, policy-makers and economists have begun to take a broader view, comparing these against pre-k and, in this paper, early childhood programs. Pre-k has been found to be a much more likely “return” on a city/state’s investment than some of the others. In this paper, Dr. Timothy Bartik asks the same question about early childhood programs – modeled after Abecedarian, Nurse-Family Partnership, and Parent-Child Home Program – to assess their economic development potential The estimates provided here are only rough, as the paper is in draft form, and its methodology has not yet been reviewed or revised. That said, he finds that, as the slide sets out, the returns are good, and early childhood programs are good ED tools; all three provide much better returns on the ED dollar than business subsidies, for example. An advantage of early childhood over universal preschool programs is that they may provide more immediate/short-term benefits, which are attractive to policy-makers.The “traditional” realms of economic development – programs and policies intended to stimulate the jobs and earnings of local residents – include stadiums and conference centers, business subsidies/enterprise zones, job training programs and the like. Recently, however, policy-makers and economists have begun to take a broader view, comparing these against pre-k and, in this paper, early childhood programs. Pre-k has been found to be a much more likely “return” on a city/state’s investment than some of the others. In this paper, Dr. Timothy Bartik asks the same question about early childhood programs – modeled after Abecedarian, Nurse-Family Partnership, and Parent-Child Home Program – to assess their economic development potential The estimates provided here are only rough, as the paper is in draft form, and its methodology has not yet been reviewed or revised. That said, he finds that, as the slide sets out, the returns are good, and early childhood programs are good ED tools; all three provide much better returns on the ED dollar than business subsidies, for example. An advantage of early childhood over universal preschool programs is that they may provide more immediate/short-term benefits, which are attractive to policy-makers.

17. Research Results: Closing the Poverty Gap

18. Timing of Economic Returns Immediate: Support wide range of U.S. jobs, help parents stay in labor force, improve birth outcomes, reduce hospitalization costs Short-term (1-3 years): Improve child injury and mortality, food security and nutrition, decrease abuse and maltreatment, improve pregnancy spacing and number of pregnancies Medium-term (4-14 years): Decrease special education placement, grade repetition, juvenile delinquency, teen births Long-term (15+ years): Increase high school graduation, college attendance, decrease use of welfare services, criminal involvement, improve maternal education, contribute to state budgets, GDP and job growth, earnings, home ownership

19. Using the Message in Seattle, Illinois, Minnesota

20. The Message is Getting Out

21. It's a mystery. With all the energy devoted to expanding prekindergarten programs, leaving no K-12 child behind, improving community colleges and sweetening aid for college students, how can the U.S be short of educated workers? Despite frequent assertions by advocates for one solution or another, there is no one sure cure for this. If only we got more kids into high-quality pre-K, it wouldn't be enough. If only we improved K-12 education, it wouldn't be enough. If only we got more teenagers to finish high school, it wouldn't be enough…We have to do them all. “Lack of Well-Educated Workers Has Lots of Roots, No Quick Fix,” David Wessel, The Wall Street Journal Business leaders in South Dakota are taking an interesting approach to economic development. They're using money set aside for recruiting new businesses and investing it in preschool education. Studies show that every dollar spent on early education saves seven dollars down the road, on potential welfare and incarceration costs. “South Dakota makes preschool a form of economic development” Cara Hetland, Minnesota Public Radio

22. Business Leader Support Jim Rohr, CEO of PNC Bank, leading $100 million PNC Grow Up Great George Kaiser, CEO of Kaiser-Francis Oil, major supporter of early care and education in Oklahoma Ed Basha, CEO of Basha’s Grocery Stores, led fight in Arizona for early childhood ballot initiative Massachusetts Strategies for Children campaign business leaders: Mara Aspinall, CEO of Genzyme Genetics; Ronald Sargeant, CEO of Staples; James Brett, CEO of The New England Council; Richard Lord, CEO of Associated Industries of Massachusetts CEO’s of Federal Reserve Banks in Richmond, Cleveland, and San Francisco have made statements in support of early investments as economic development Fed Chairman Ben Bernanke – “high returns that early childhood programs can pay”

23. The Importance of the Message Although education and the acquisition of skills is a lifelong process, starting early in life is crucial. Recent research--some sponsored by the Federal Reserve Bank of Minneapolis in collaboration with the University of Minnesota--has documented the high returns that early childhood programs can pay in terms of subsequent educational attainment and in lower rates of social problems, such as teenage pregnancy and welfare dependency. Federal Reserve Chairman Ben S. Bernanke, speech to the Omaha Chamber of Commerce

24. Partnering with State and Local Groups Wisconsin Department of Workforce Development became the first state “chapter” of PAES, the Partnership for Wisconsin Economic Success PAES presented at University of Miami Forum on Economic and Social Costs of Inadequate Education PAES presented at Board Meeting of Georgia Partnership for Excellence in Education (GPEE) The Davis Foundation in western Massachusetts organized groups of business leaders to come to our meetings, and then held similar follow-up events using PAES data and speakers to further its Cherish Every Child campaign Discussions with Kiwanis International, Corporate Voices for Working Families to present to their members

25. Dissemination and Communication Activities PAES/Invest in Kids Monthly Discussion Forums New findings, leaders, messages, campaigns Toll-free call-in number or join in person in DC; sign up on PAES website West Coast Economic Forum on Early Childhood Investment Feb 28th, with the Milken Institute, in Santa Monica, California Speakers include dPresident of Kiwanis International, CEO of United Healthcare, Lt. Gov. of CO Fourth Annual PAES Conference July 9-10, 2008 in Washington, DC Showcase state and local initiatives; new research; and hands-on consultations to address specific issues and challenges in furthering the invest in kids policy agenda Second Annual Telluride Economic Summit September 21-23, with the Telluride Foundation, in Telluride, Colorado By invitation only; senior business executives Fifth Annual PAES Conference and Culminating Report, spring 2009

26. Disseminating Partnership Findings Across the U.S.

27. Work With Us The nation needs a million voices – join us Sign up to receive monthly PAES updates, including notices of PAES/Invest in Kids monthly forums at www.PartnershipforSuccess.org Participate in monthly forums, upcoming conferences Ask us for research findings Help us secure business leaders to disseminate this message to policy audiences, the public, the business community, and others Link to PAES website and send us items to be posted