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The Business of Pre-K

Emily Hanford

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The PAES Conference
(Emily Hanford)
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Some of America's most powerful business leaders are on their way to the resort town of Telluride this weekend. They'll be fishing and hiking in the steep Colorado mountains, and then they'll get down to business. What they want is to convince politicians to spend more money on early childhood education. Hedge fund managers, CEOs and chamber of commerce presidents may not seem like obvious advocates for the expansion of social programs, but they've become perhaps the most enthusiastic and effective supporters of preschool. They see the issue in dollars and cents, and they're meeting in Telluride to hone their economic argument as government budgets tighten and policymakers face tough choices about what to fund. American RadioWorks' Emily Hanford has this story about how the support of business leaders is changing the debate about investments in education.


Rob Dugger is a partner with an international hedge fund in Washington, DC. Before that he was a lobbyist for the banking industry, and earlier in his career he was an economist at the Federal Reserve. Dugger knows a lot about finance and economics, and he's very worried about the future of the U.S. economy. "We are on a fiscal path which is unsustainable," he explains. "We've borrowed more than we can afford and spent more than we should and as a consequence, not invested as much as we should."

Dugger works in a handsome office building down the street from the White House. He's been concerned about the U.S. economy for a long time. His shelves are filled with books like "A History of Financial Crises" and "Restoring Fiscal Sanity." He says because the United States is running out of money to pay for many of the things we rely on, the nation needs to decide what's most important.

"What few resources we have," says Dugger, "we want to have them allocated in a way that is best long-term for the society, maximizes growth, gets our country back on its feet, maintains or gets us back to fiscal sustainability. What would do that?"

Dugger wanted to know what kinds of public investments have the biggest and most reliable returns. At first he thought about investments in energy innovation, health care and technology. But then he came across a collection of studies about early childhood education.

The oldest is the Perry Preschool Project. In the early 1960s, a group of children went to a preschool in Ypsilanti, Mich. Researchers kept track of them into adulthood and observed how they did compared to a group of their peers who didn't go to preschool. Forty years later, researchers had documented big differences. The preschool graduates were more likely to be employed, they made more money and they were more likely to own their homes. They were also less likely to be on welfare or report drug abuse. And perhaps the biggest difference of all: They were much less likely to get in trouble with the law. Add it all up, and the savings to society was huge. Two economists at the Federal Reserve took the data and converted it to a "real rate of return" - the kind of number you see on a 401K statement. The figure they came up with was 16 percent, more than twice the return on the stock market.

Rob Dugger saw that number and made an economic decision. Not spending money on preschool, says Dugger, is "like walking down the street, seeing $100 on the sidewalk, and saying I don't need that; in fact, I'll just step on it and walk on. It's absolutely wasteful and nuts!"

And that is how hedge fund manager Rob Dugger became one of the nation's biggest advocates for preschool.

Dugger is at the U.S. Chamber of Commerce in Washington, addressing an overflow audience in the building's biggest room. It's the annual conference of a group he helped create. They call themselves "The Partnership for America's Economic Success" (PAES).

The Partnership for America's Economic Success was created by businesses and foundations, including the Pew Charitable Trusts, which runs it. The goal is to document the economic impact of proven investments in young children. People have come from as far away as Alaska for the conference.

There's plenty of material to take home: reports, pamphlets, charts and graphs. All of this data is one thing that attracts business people. They also like investing in little kids because they don't like many of the expensive programs aimed at teens and adults. It's more cost-effective to prevent problems than to fix them, says businessman and philanthropist J.B. Pritzker.

"It makes intuitive sense to business people," he says, "and it turns out many business people have tremendous influence in the political process. So, if we could bring those two things together, we can really advance the cause here."

Indeed, making the case for kids based on economics has transformed the politics. "Kids' programs need very sharp elbows," explains the partnership's director Sara Watson, "and we see the economic data as providing a new set of arguments for children's programs that we've never had before." Economic data, she says, allows advocates to talk about children's programs and GDP growth "in the same breath," instead of relying on moral arguments.

But the economic argument doesn't work for everyone. Elaine Zimmerman is with the Commission on Children in Connecticut. Her office did focus groups to see what people think of the economic argument, and she came to the conference to report that it works for business people, but it doesn't really work for parents. Parents, she says, "don't want their child turned into a savings plan."

A note of caution, perhaps, for a movement that's gaining speed and traction. State government spending on preschool has reached an all-time high of more than $3.7 billion. And now PAES wants increased investment in other areas of early childhood, from health to housing. But director Sara Watson admits making an economic case for every program will be tough.

"There are some investments in children we should make that will never show a positive rate of return, but we have to do them," she says, "so we want to be careful that we do not set too high of a bar."

Part of the problem with arguing for investments in children is it takes a long time to see the payoff. Hedge fund manager Rob Dugger says we live in a world where people are focused on the quick return. He believes many of his colleagues in business and finance understand the folly of that, and they're eager, especially now, to make more investments for the future. He'll be making the case to them this weekend in Telluride.

  • Music Bridge:
    Old Dracula
    Artist: Matt Rippetoe
    CD: Boink (Bossa Beats)


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    By connie dow

    From wyoming, OH, 09/23/2008

    To Weekend America,

    I am a dance educator who is heavily involved in the early childhood community. I very much appreciate your airing this interesting and thought-provoking story. I'm sure I will be quoting it often!

    Thank you,

    Connie Bergstein Dow

    By connie dow

    From wyoming, OH, 09/23/2008

    To Weekend America,

    I am a dance educator who is heavily involved in the early childhood community. I very much appreciate your airing this interesting and thought-provoking story. I'm sure I will be quoting it often!

    Thank you,

    Connie Bergstein Dow

    By David Ziffer

    From Batavia, IL, 09/22/2008

    If as Ms. Chavez suggests "it's the relationship between the child and the adult that is the key to success for every child", then might I suggest that by far the most natural and beneficial child-adult relationship is the one between the child and its own mother. Despite the fervent wishes of the PC/feminist community, I think the day will come when science confirms our commonsense notion that early separation of a child from its mother is highly destructive, and that the substitution of various less-involved adults for a child's own mother's attention is the source of great psychological and educational dysfunction, much to the disappointment of the burgeoning preschool industry.

    By Okeycha Pettigrew

    From South Holland, IL, 09/22/2008

    If Mr. Duggar decided to invest in early childhood, will he use the same agencies that make it difficult for smaller childcare programs to receive funds or find alternatives, and will it be on a national level?

    By Nancy Chavez

    From Chico, CA, 09/22/2008

    It's always a double-edged sword when Early Childhood Education issues are discussed by the business community...ECE educators are thrilled that the business world is actually aware that the profession exists, however, we don't want Early Childhood to be seen as a business. Young children deserve high-quality childcare and that starts with adults who have the abiltity to relate to young children and can build relationships with them. Sure the profession will always need funds to support early childhood programs, but we are the experts in the field and we know that it's the educators that interact with children every day that make or break the program...and that's where the focus needs to be. It's not the beautiful building with a set curriculum that will create children who respect themselves and others, are engaged in learning, willing to take risks, and look forward to the future...it's the relationship with the their teachers that will help provide them with a happy, healthly future...(and of course their parents/guardians are the key to success).

    Before spending any money, consult the folks who spend time with children everyday. Ask them what works and what doesn't. Ask them what they need to support children and families? Consult with Dr. Ruby Payne, Dr. Thelma Harmes, Dr. Daniel Siegel and Mary Hartzel, Dr. Thomas Armstrong, and Alfie Kohn...just to mention a few...they spend endless hours working on the behalf of children and they know it's the relationship between the child and the adult that is the key to success for every child.

    Nancy Chavez
    Child Development Resource Coordinator

    By Bruno Behrend

    From River Forest, IL, 09/21/2008

    Hedge Fund managers are interested in PROFITS, and nothing else.

    Therefore, to understand their interest in "Universal Pre-School", one only need to look to the prospects of investing in a bureaucratized, politically protected industry that will create a permanent flow of public (taxed) funds into their coffers.

    To see the model in action, all one needs to do is look at a "franchise" of the existing model. It's called a "School District."

    Uninterested in much else besides money, districts now engage in churning bonds, electricity contracts, transport deals, textbook publishing, and managing an army of employees and their "benefit packages."

    Educating your children is an afterthought.

    This is what the "Universal Pre-school INDUSTRY has in store for us."

    After one sees the obvious potential for MORE corruption financed by YOUR tax dollars, one need not really engage in the debate over the value of the actual product (pre-school)

    It is being oversold, and should be a decision left ONLY to parents. If it has ANY value at all, it should individualized and voucherized. Given that parents are the best source of early childhood development, stay-at-home parenting should be the FIRST thing to be subsidized.

    Make no mistake, the greedy hedge fund industry has NO INTEREST in that model.

    By David Ziffer

    From Batavia, IL, IL, 09/21/2008

    I guess I'm truly horrified that there are elements of the business community now fueling up the universal preschool bandwagon. I live in a perfectly middle-class suburb in which the school district apparently doesn't believe in teaching young children anything about punctuation, handwriting, grammar, or spelling. At the end of her fourth grade year I asked my elder daughter to write a paragraph on any subject of her choice. After explaining to her what paragraphs and sentences were, she produced an entirely illegible scrawl. She had been in our local schools for two years with nothing but positive feedback from her teachers, and my wife had been volunteering in the schools for both of those years (she was the first one to notice that nothing was being taught).

    I could tell you more but to make things short, we pulled out both of our daughters, home schooled them for six years, then sent them to a Catholic high school where the teachers actually believe in teaching something.

    Since 1994 I have been studying the public school system and have found that it is entirely in the grip of a philosophy called “inquiry learning” that holds to the idea that children quite literally cannot actually be taught anything, but rather can learn only through their own process of self-guided inquiry. True to this philosophy, most modern elementary school teachers apparently now refrain from teaching, choosing instead to form children into groups in which they will supposedly stimulate each other into a process of inquiry. Not surprisingly, the self-guided inquiry process rarely leads children down the roads of eminently practical topics such as grammar. If you think I'm nuts, why don't you try my little test (above) on your own child. But do it before eating, because you might lose your lunch.

    This system survives despite this lunacy because of the fantastic apathy of the average American, who knows little more about his/her kids' schools other than that they function very well as publicly subsidized day-care centers. The thought that we would pump more money into this monstrosity and further reduce educational choices in what is already one of the most educationally backwards and restrictive countries in the world is simply horrifying. Today it's optional publicly funded preschool, next it's mandatory preschool, then it'll be publicly funded infant care, then mandatory infant care. We are heading down the road to a Vonnegut-esque nightmare in which, like in Communist countries of the past, all “education” of children is in the hands of the state, and children have effectively been removed from the sphere of influence of their own parents.

    I'd say something trite like "wake up Americans" but if there’s one thing I’ve learned in fourteen years of school reform effort, it's pointless. There is no stopping the sheep from stampeding over the cliff. See you at the bottom.

    By Constance Brunig

    From San Diego, CA, 09/20/2008

    To hear that hedge fund managers and big business are interested in pre-school education--I feel like I've fallen off the planet onto a non-parallel universe! As a psychologist who finds the connection between (universal)early childhood education and social and economic benefits obvious--I'm delighted that the "truth" of it has reached a level of society that has the political currency to invest in it, (or even to speak its name). Hooray for Rob Dugger and those in Telluride this weekend bringing gravitas to this subject.

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