Why does Multnomah County need universal preschool?
Oregon consistently ranks as one of the most expensive states in the nation for preschool, and before Preschool for All (PFA), public funds only provided preschool for the families in deepest poverty, reaching under 20% of Multnomah County’s 3- and 4-year-olds. Quality preschool has been out of reach for many families, and far too many children in our community have been denied the crucial and well-known benefits preschool provides, including significant intergenerational effects on education, employment, and health. Universal preschool is a fundamental way Multnomah County can intervene early in the life of a child to increase opportunities for success later on.
Across the country, there is persistent racial disparity in access to preschool. In the 2019-2020 school year, 59% of white 3- and 4-year-olds were enrolled in preschool, compared to 43% of Black children and 46% of Latinx children in the same age group. These disparities have widened even further as a result of the COVID-19 pandemic.
Our community recognized the limitations of the existing system, and in November 2020, passed Preschool for All with 64% of the vote. PFA leverages existing investments in publicly funded preschool and is designed to strategically fill gaps in preschool access, building toward universal access in 2030.
PFA’s Role in Strengthening the Early Childhood System
To achieve quality and avoid unintentional consequences, the Preschool for All Plan always included measured and intentional implementation over 10 years. This means increasing the number of slots over time, while also making investments that will provide the foundation for future growth. We are on track, and our ability to reach universal access depends upon workforce development strategies and investments in child care infrastructure to respond to an early childhood sector hit hard by COVID-19. There are currently 23% fewer child care providers open in Multnomah County than there were prior to the pandemic.
The policymakers behind Preschool for All knew it wasn’t enough to just fund slots – system supports would be necessary to achieve their vision. These supports include higher wages for early educators, coaching and professional development, funding to stabilize infant and toddler care, investments in recruitment and retention of a skilled and diverse workforce, and support for the expansion of child care facilities across Multnomah County. As we build toward universal preschool access, we’re maintaining focus on each of these areas of necessary infrastructure.
Preschool for All wage requirements are significantly higher than the state average, and the target salary for lead teachers is comparable to the average wage of kindergarten teachers. The median hourly wage for a child care worker in Oregon is $13.39, which is less than $28,000 per year. The minimum wage for a preschool teacher assistant at a PFA site is $19.91, and the target salary for a lead teacher with a BA or Step 10 is $37.48.
PFA also provides stabilization funds to sites offering infant and toddler care, increasing wages and benefits for educators who work with 0-3 year-olds and keeping these slots available and these educators in the field.
PFA is funding two navigator positions at community colleges to recruit and retain students, and has established the Hadiyah Miller Memorial Scholarship Fund with awards for students interested in joining or advancing their career in the field of early childhood education.
Our Pathways Program, designed to help providers get ready to apply for Preschool for All slots, has partnered with more than 100 preschool providers this year to support quality improvement and professional growth including training and educational opportunities, business development, peer networks, and individualized coaching.
Additional efforts include a substitute pool so that educators can participate in professional development, funding for innovative new workforce recruitment strategies led by community based organizations, and a partnership with Worksystems on their new effort to support job seekers interested in early education as a viable career option.
PFA’s start-up funds have enabled small business owners to make necessary upgrades to their spaces in order to meet licensing requirements and create engaging environments for young learners. The Preschool for All Facilities Fund will begin late in 2023.
Kids on Carpets
Multnomah County Preschool for All has funded more than 700 slots in 47 preschool programs around the county. This outcome exceeded our Year 1 goal by 44%. Providers are reimbursed $15,000-21,000 per slot depending on their calendar (year-round or school-year) and schedule (full day or school day).
The map to the right shows the number of Year 1 sites by zip code. PFA will grow over time, increasing the number of children and families that it serves each year, as well as the regional site diversity it provides. See the graph below for a projection of slot goals each year as Preschool for All builds on state and federal investments in preschool. This projection is dynamic and will be adjusted if there are future preschool investments made at the state or federal level.
Our priority populations are well-represented throughout the application and enrollment process. The figure below shows the percentages of our 2022-23 preschool students who come from the populations we want to make sure we reach.
We’ve made strides toward simplifying the process families go through to find and apply for the preschool programs that are best for them, as part of a more seamless system across programs and provider types. We’ve established a new online application portal, and are working with culturally specific agencies that utilize their experience, community trust, and cultural and linguistic expertise to outreach to Preschool for All priority populations.
Supporting Small, Culturally Diverse Businesses
We’ve focused much of our planning on how to ensure that home-based child care providers are able to authentically participate in Preschool for All. These small businesses are the most culturally and linguistically diverse group of preschool providers in Multnomah County. They also experience the most barriers when it comes to building and strengthening their businesses. For this reason, we’ve partnered with Micro Enterprise Services of Oregon (MESO) to support in-home and small centers as they navigate their new Preschool for All contracts and strengthen their businesses.
Children’s Institute wrote about the impact of this work in their profile, “Preschool for All is Changing Lives and Transforming Early Learning in Multnomah County.”
Paying for Preschool for All
Preschool improves life-long health, educational, economic, and social outcomes for individual children and their families, but it also provides a high rate of return on the public’s investment: for every dollar spent on high-quality preschool, the community sees a return of between $7 and $10. Investments in early childhood education programs reach far beyond individuals and families, saving money on costly interventions later in life and opening pathways to economic prosperity for generations to come.
There is growing income inequality in our county and nationally, and Multnomah County is an expensive place to live. Early care and education are often out of reach for the families who bring in the lowest incomes. Tuition-free preschool is one way our community has chosen to make sure that every child is able to access high-quality, joyful early learning. The program is designed to be funded by a personal income tax of 1.5% to 3% for the people in the community who bring home the highest incomes. This tax went into effect on January 1, 2021, and the rate is scheduled to increase by 0.8% in 2026. You can read more about our budget and fiscal strategy below.
An Accountable Process
The PFA Ballot Measure and Ordinance called for an advisory group to review program expenditures, advise evaluation efforts, review data, and make policy recommendations to the Department of County Human Services. This group meets quarterly to provide guidance and feedback. Their primary focus is ensuring that initiative implementation aligns with the values and intent of the community-developed Preschool for All Plan, and PFA’s explicit commitment to building an early learning system focused on racial justice and equity.
Members of the PFA Advisory Committee hold key roles in early childhood development and education, and include current and former preschool providers, members of culturally specific organizations, pediatric healthcare providers, school district representatives, and leaders of advocacy organizations. Forty percent of our inaugural group self-reported as parents, and 73% as Black, Latinx, or Asian.
Boston University’s Center on the Ecology of Early Development has received a two-year grant from the Kellogg Foundation to provide external evaluation of Multnomah County Preschool for All. Emphasis will be placed on the teacher and family experience, especially those from our priority populations. As part of this project, we will be utilizing the Assessing Classroom Sociocultural Equity Scale (ACSES) developed by Dr. Stephanie Curenton. ACSES uses a culturally relevant, anti-bias framework designed to improve teacher-child interactions. This research partnership is helping us plan for future evaluation needs, including child outcome indicators.
How is PFA funded?
Preschool for All is funded by a personal income tax of 1.5% on taxable income over $125,000 for individuals and $200,000 for joint filers, and an additional 1.5% on taxable income over $250,000 for individuals and $400,000 for joint filers. The rate is scheduled to increase by 0.8% in 2026. The tax is estimated to apply to less than 8% of Multnomah County tax returns. Based on State Income Tax returns from 2019, it is estimated that 6.6% of return filers would have paid the tax.
The tax is collected by the City of Portland and the program is administered by Multnomah County’s Department of County Human Services.
Personal income varies widely year to year for many high-income earners. Changes in the economy can result in dramatic changes in personal income, especially for income derived from capital gains. Households with higher income tend to make more of their income from capital gains and other non-wage sources – things like selling an asset, such as stocks. Based on information on State Income Tax returns, the County Economist expects capital gains to be approximately 20% of PFA revenue and that amount will vary widely year to year.
The County worked with the State of Oregon Department of Revenue to look at existing tax returns and create a simulated history of the Preschool for All tax: what would have been collected over the past twenty years if this tax had been in place.
This graph of the simulated tax collection history demonstrates the volatility of personal income taxes. If the Preschool for All tax had existed between 2000-2020, there would have been two years where the revenue dropped by 40% from one year to the next. There also would have been a year where the revenue went up by about 60% from the previous year.A large increase in capital gains drove significantly higher than expected revenue for Fiscal Year 2022 with a total of $187 million collected. In calendar year 2022, the stock market did significantly worse than it did in calendar year 2021. Because of this, we expect revenues to go down in Fiscal Year 2023. The Preschool for All tax is new and ongoing data collection will inform future revenue modeling.
Fiscal Stability Strategies: Reserve and Contingency FundsPreschool for All needs to provide a consistent level of service to children and families with a revenue source that is volatile. Families want to know that if they sign up for a PFA slot, that slot will be there for their child, regardless of how much tax revenue has been collected from one year to the next. We’re being strategic to meet the challenge of putting these mismatched revenues and programmatic expectations together.
Preschool for All has three fiscal stability strategies: a reserve fund, a contingency fund, and revenue smoothing. Reserve and contingency funds create ongoing stability for Preschool for All (PFA) and protect the program from unexpected revenue declines from economic fluctuations and unexpected costs. These fiscal stability approaches are informed by government accounting best practices and by Multnomah County’s Financial and Budget Policies.
The reserve and contingency funds were established in Fiscal Year 2022. Each year, funding is added to the reserve so that the total amount is 15% of anticipated PFA tax revenue for that fiscal year. The reserve fund will help to ensure the long-term financial stability of the program, in spite of the volatility of personal income tax. The Fiscal Year 2023 budget included adding $1,050,000 to the reserve fund, bringing the fund total to $16.8 million.Preschool for All tax revenue is also added to the contingency fund so that the total is 10% of anticipated PFA tax revenue for that fiscal year. The contingency fund allows the Preschool & Early Learning Division to address unforeseen expenses. The Fiscal Year 2023 adopted budget included adding $700,000 to the contingency fund, bringing the fund total to $11.2 million.
What is revenue smoothing, and why is it important?
Revenue smoothing is the third Preschool for All fiscal stability strategy. The reserve and contingency funds are long-term financial stability strategies. Revenue smoothing is a limited-term strategy that addresses a specific challenge. As program implementation progresses, expenditures start to outpace annual revenue. Based on current revenue and cost estimates, there will be a 10-year period during Fiscal Years 2029-2038 when costs are higher than the anticipated revenue. This happens right as the program nears universal preschool access. Over time, the gap between revenues and expenses narrows as the pace of slot growth slows. In Fiscal Year 2039, projected revenue catches up with anticipated expenses.
This graph shows anticipated Preschool for All revenue and expenditures. In the early years of the program, revenues are higher than expenses. The money set aside during the early years of Preschool for All implementation when slot numbers remain lower will be used as “revenue smoothing” dollars to ensure that PFA can provide consistent levels of high-quality preschool experiences for Multnomah County families.
The total gap between anticipated revenue and anticipated expenditures between Fiscal Year 2029 and Fiscal Year 2038 is over $400 million. In the Fiscal Year 2023 adopted budget, $68,331,162 was added to revenue smoothing, bringing the total balance to $104,227,522. Unspent funds and additional revenue over yearly projections will be added to revenue smoothing, helping us close the gap.
To meet our commitment to voters, we need to match revenues and expenditures over time to plan for the entire implementation of the program, rather than matching revenue to expenses one year at a time.
This graph is another way to understand revenue smoothing. The blue line is the PFA fund balance. In years where we have a surplus, the fund balance is growing. The green bars are the number of PFA seats we expect to offer each year.
As the number of seats grows and gets closer to full universal access, the fund balance starts to go down. The program switches into deficit, and surplus saved in the first few years of the program will be spent down. Over time, as slot growth slows and the program is well-established, revenue and expenses will even out. This means that the program is fully funded, and aside from contingency and reserve, the fund balance lands near zero at the end of every year.
There are still many unknowns, after only one year of tax collection and less than one year of preschool. We will continue to collect and analyze data and to constantly calibrate our strategies as we go.
Based on everything we know now, Preschool for All is on track to meet our savings goals and to fully fund the program through the full implementation.
How is money being spent this year?
Growing the number of slots over time has always been part of the Preschool for All plan. There are not enough classrooms, teachers, or slots right now for universal preschool.
It takes time and intentional investment to build a new system that will function well into the future. Foundational investments in workforce, facilities, professional development, and other supports for educators and families are essential in order for Preschool for All to meet its long-term goals.
The total operating budget for the 2023 Fiscal Year (July 1, 2022 through June 30, 2023) is $59.7 million. This includes $59.2 million in the adopted budget and $513,000 added in a February 2023 budget modification. The pie chart below outlines the operating budget categories, and details about the categories follow.
Pilot Sites: $19.7 million
Pilot Sites are the first providers in Multnomah County who are interested in participating in Preschool for All and helping to refine the program model. Spending on Pilot Sites makes up over 30% of the Fiscal Year 2023 operating budget. All of this funding goes directly to preschool programs.
In addition to slots, Pilot Site expenses include start-up funding for supplies and furniture, transportation for children to and from preschool, and funding to support the inclusion of children with developmental delays and disabilities.
Infant and toddler stabilization funding is part of the investment at Pilot Sites. Many communities in the United States have lost slots for infants and toddlers when they expand preschool programs. Multnomah County is already a child care desert for infants and toddlers and stabilization funding is designed to help providers keep slots for 0-2 year olds.
Family & Provider Navigation: $1.5 millionThis budget category includes both Family Connector Organizations and the Intermediary Organization. All of these funds are contracted out to community organizations.
Four culturally specific organizations serve as Family Connector Organizations for Preschool for All. Each organization receives funding for a Family Navigator to support families through the application and enrollment process. Family Navigators also connect families to community resources.
The Intermediary Organization offers business development support and holds the PFA Pilot Site contracts with the smallest preschools in Multnomah County, including home-based family child care. Home-based family child care providers are the most diverse group of preschool providers in the community. The Intermediary Organization works closely with PFA administration to ensure that family child care providers’ needs are met and that their businesses can thrive.
Facilities Fund: $8 millionPreschool for All will not be able to reach its long-term goals without new early learning spaces in the community. Many banks are unwilling to provide loans to child care providers, because of their low profits and lack of collateral. In addition, navigating all of the steps to build a new space are complex and confusing.
The Preschool for All Facilities Fund will invest in the construction and renovation of early learning spaces. All of these funds will be contracted out to support the development and improvement of preschool facilities. The facilities fund will be administered by a third-party organization, which will also provide technical assistance to preschool programs that are ready to open new spaces or expand.
Workforce Development + Coaching & Supports: $15.7 millionInvestments in workforce development focus on ongoing support and retention of educators currently in early learning and on the recruitment of future preschool providers and educators. All of these funds are contracted out to partner organizations.
A new Preschool for All coaching team is housed at Child Care Resource & Referral, part of Mt. Hood Community College. Additional investments include:
- Bilingual early education program navigators at Portland Community College and Mt. Hood Community College who help recruit and retain students interested in becoming preschool teachers
- Scholarships for educators to participate in higher education and community trainings
- Innovative strategies to recruit new educators to the field, in partnership with community-based and culturally specific organizations
- Additional capacity to strengthen the child care professional development system in Multnomah County at Oregon Center for Career Development
- A substitute pool to allow educators to participate in professional development
- The Pathways Program, designed to help programs to meet Preschool for All requirements or to support providers interested in starting their own preschool
Early Childhood Mental Health: $1.6 million
Preschool for All funds a team of early childhood mental health specialists that include both Early Childhood Mental Health Consultants who can support coaches and providers with specialized knowledge and resources, and Early Childhood Mental Health Therapists who will work directly with children and families.
The funding for this work will go to the Multnomah County Health Department, which leads the new team. This investment will prevent more costly interventions that often result when mental health challenges are not addressed and support the successful implementation of PFA’s ban on preschool suspensions and expulsions.
Preschool & Early Learning Division Staff: $4.6 million
The Department of County Human Services established the Preschool & Early Learning (PEL) Division in January 2021 in order to implement Preschool for All. The work of PEL includes developing systems, processes, and partnerships to select and support preschool providers, recruit families, and create positive preschool experiences for children.PEL Division staff includes 25 FTE: a Division Director (1.00 FTE), an Operations Team focused on the application system for families, budgets, and contracts (7.00 FTE), a Policy & Partnerships Team focused on program quality, inclusion of children with disabilities, and workforce development (12.00 FTE), and staff focused on administrative, evaluative, and communications functions of Preschool for All (5.00 FTE).
Department of County Human Services (DCHS) System Support: $1.3 millionPreschool for All administrative costs include funding for three positions in DCHS Finance and one position in DCHS Human Resources. These positions help the program run smoothly by providing essential administrative support, such as completing contracts quickly and paying preschool providers in a timely way.
This part of the budget also includes the preschool application and enrollment system. The application system allows parents to apply to Preschool for All and be matched with a preschool provider. It also stores key information, including enrollment and attendance.
Tax Collection: $7.4 millionThe City of Portland collects the Preschool for All personal income tax on behalf of Multnomah County. The funding for tax collection in Fiscal Year 2023 includes $900,000 of start-up charges for establishing a new tax collection system and $6.3 million of operational expenses at the City. An additional $203,560 is used for internal capacity to support the Multnomah County Department of County Management, which oversees the tax collection contract with the City of Portland and manages administrative activities.
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