Monday, July 28, 2014

Report: Pre-K investment pays for itself

May 04. 2014 11:34PM

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Spending $40 million to expand pre-kindergarten education for all children in Luzerne, Lackawanna and Wyoming counties would reverberate beyond the money going to classes and teachers, a new study claims.

It would pump $32 million into the economy through spending on things such as real estate, utilities and retail purchases.

The report, titled “Strengthening Pennsylvania Businesses through Investments in Pre-Kindergarten,” was done by ReadyNation, which bills itself as “a business partnership for early childhood and economic success.”

ReadyNation used “economic multipliers” — statistical formulas designed to show how spending money on one economic sector would impact others — from the “IMPLAN economic model,” a widely used software from a company in Minnesota.

The report argues that spending money to expand pre-k access has a bigger economic impact than investing it in other sectors because the money almost always is spent locally: on local teachers, local construction workers to build or expand facilities, and local goods needed for the facilities, for example.

Spending on pre-K also has a bigger economic impact because early-education teacher wages are relatively low, with the state mean at $27,260, the report notes. That means those teachers will spend most of their money on basics in the area rather than saving or using it out of the area.

The study looked at two scenarios statewide: Fully funding the state’s Pre-K Counts program to provide early education for all children ages 3 and 4 who meet low-income requirements, and providing pre-K for all other children regardless of income.

Statewide, the report says, the first scenario would cost nearly $700 million, helping more than 88,000 children. But it would generate an additional $550 million in new economic activity for other businesses. The second scenario would cost another $326 million to help nearly 80,000 children, creating 8,900 jobs, 1,700 of them outside the education sector.

ReadyNation also issued regional reports, including one for the three local counties that projects $32 million in new, non-school spending from $40 million invested in pre-K.

Available since 1993, the IMPLAN economic model used to make the projections is generally considered ideological neutral, looking strictly at data input to derive indirect impacts from investments in businesses. But critics point out the organizations using the model can skew results by being selective in the data used.

In a 2008 article in Twin Cities Business, author Sara Aase pointed a Minnesota Department of Agriculture study that said ethanol production would generate 18,000 jobs in the state in 2008. But a separate analysis predicted only 35,000 jobs nationwide, casting the statewide number in doubt.

In another instance in Beloit, Wisconsin, a group using the IMPLAN model projected a new casino would attract 4.9 million visitors and generate gross receipts of $300 million. A separate study commissioned by the city projected 1.3 million visitors and only about $100 million.

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