A key fund that provides matching dollars to local communities to support early childhood education will soon run out of money to make the full match unless policy makers find a way to replenish those funds to keep up with demand.
That is the finding of a new study by Leaders for a Better Louisiana which makes projections about the future viability of the Early Childhood Education Fund (ECE Fund). That fund was established by the Legislature in 2017 to provide a dollar-for-dollar state match to local communities that raise money to invest in early childhood education.
“This has been a great policy initiative that has succeeded in bringing local dollars together with state funding to support early childhood education,” said Barry Erwin, Chief Policy Officer of Better Louisiana. “It’s important for us to understand exactly where this fund stands in terms of revenues, because we don’t have much time to find a funding solution before its reserves run out.”
The ECE Fund was seeded with a one-time legislative appropriation of $40 million in 2023. Later lawmakers added a series of dedicated revenue streams to help support it. But as community interest in early childhood education has grown, so has the draw on the fund. The local matches are now utilizing all of the annual dedicated revenue stream and eating into the reserve dollars remaining from the one-time appropriation.
In light of that, Better Louisiana analyzed a number of scenarios to make projections about the life expectancy of the fund. Among the findings:
- If the number of children supported by the fund grows by a modest 10% per year, the revenues needed to sustain it at current levels will be depleted by fiscal year 2027-28.
- If the number of children served remains the same and does not grow, the fund will last only an additional two years beyond that until fiscal year 2029-30.
- Recurring revenue coming into the fund is expected to top out at about the current level of $21 million per year.
- However, projected expenditure needs would total more than $30 million per year by the end of the decade if no additional children were served and nearly $50 million if participation grows by 10% per year.
- The result would be that once the one-time revenues are depleted, the recurring revenues will fall far short of sustaining even the existing number of children being served.
Access to affordable childcare is a critical issue for many working families in Louisiana. But quality childcare can be expensive, particularly for the youngest children, rivalling the cost of college. Because of that, about 57,000 children receive childcare assistance through various publicly-funded early learning programs. But the need is far greater. The state estimates there are about 116,000 additional children without access to affordable, quality childcare in Louisiana.
In the last few years local communities have greatly expanded their efforts to raise money for early childhood education. The result is that according to the most recent data, more than 1,800 additional children are being served because of the ECE Fund, doubling the value of the state’s investment for these particular kids.
However, because communities have been so successful in raising revenues for early childhood education, the local draw on the fund exceeds the dedicated revenues available to replenish it which is creating the current stress on the fund.
In a recent report the state’s Early Childhood Care and Education Commission recommended that Louisiana invest $95 million per year over the next 10 years to meet the state’s early childhood education needs. Given Louisiana’s current financial picture, that will be difficult for the state to achieve on its own, but the ECE Fund can be a tool to leverage greater participation.
“The dollar-for-dollar match provided by the Early Childhood Education Fund provides a strong incentive for communities to invest in early childhood education and effectively makes the state funding go twice as far,” said Erwin. “That’s an approach we ought to encourage.”
Communities across Louisiana are increasingly recognizing the value of expanded access to early childhood education and actively pursuing ways to tap into the ECE Fund. In 2022-23, four parishes raised about $3 million in local funds to support early childhood education. Today that has grown to 14 parishes generating nearly $30 million.
“With more communities committing local dollars to early childhood education, Better Louisiana urges policy makers to consider new funding options to ensure the ECE Fund is sustainable and positioned to grow,” Erwin said. “It is critical that every dollar raised in local communities is matched at the state level so that more children can continue to be served.”