Universal Preschool Benefits Miscalculated and Overstated

RAND study compares apples and oranges, exaggerates pre-k's benefits, underestimates costs

On June 6th, California voters will decide whether to enact Proposition 82, the Preschool for All initiative. The $2.3 billion annual cost of the program will be added to the $3 billion California already spends on preschool programs. Most of the $2.3 billion will go to middle- and high-income families who are already paying for preschool in the private market. Less than 10% of the funds will go to low-income families.

Over the last decade, the California Legislature has been unable to justify the additional spending for universal preschool. So what is the new justification for bypassing normal legislative procedures in order to enormously expand spending?

An economic rationale for universal preschool was provided by a widely heralded cost-benefit analysis performed by the RAND Corporation in 2005. The RAND study concluded with the headline-grabbing claim that taxpayers could get "$2 to $4 of benefits for every dollar spent" on preschool.

But universal preschool won't produce anywhere near that return for taxpayers. That's because, in RAND's own words, their projections are "sensitive to assumptions" about the benefits, and our investigation shows that RAND's assumptions are widely off base.

The RAND study arrives at its optimistic conclusion by significantly overstating the benefits of such a program and ignoring enormous costs. We looked at their analysis in depth in our new study - An Assessment of Rand Corporation's Analysis and Proposals for California - and found that the RAND report has a number of problems.

Even if we take their numbers at face value, it is quite easy to show that if we alter any one of their unrealistic assumptions, universal preschool generates net losses from 25 to 30 cents on every dollar. Most telling is that we did not have to go far to find these assumptions — the RAND study documented these alternatives themselves but chose not to use them when making their forecast.

First, the RAND study estimates benefits for California based on selectively chosen studies from cities in other states that do not resemble California in the slightest. They base estimates on small-scale pilot programs aimed at low-income, high-risk populations and they assume the results will scale to all California preschoolers. Other studies have shown that these programs had little measurable long-term benefits but the advocates of this new bureaucratic program simply ignore these facts.

Second, RAND and advocates of universal preschool assume that children from low-income families currently attending government-run preschools will receive, at a minimum, twice the benefits they currently get from preschool. That is, by transferring from their current government-run preschool to a new, universal government-run preschool, these children will be much more successful in life.

Does it make any sense to expand a system that in many ways is already failing low-income families in both the K-12 arena and in preschool? And is it at all believable to expect the new government-run system to be, at a minimum, twice as effective as the existing one? Who has ever heard of a new government program replacing an old one that achieves results of this magnitude?

Third, RAND's benefits argument assumes that children of middle- and upper-income families who already attend private preschool will receive net benefits by transferring to government run universal preschools. Imagine a proposal that plans to put all private restaurants out of business and replace them with government-run cafeterias. Would anyone believe that consumers who were forced out of those private restaurants would be better off once they were closed?

The rosy arguments attempting to justify tax increases and a massive bureaucratic program rely on heroic and unbelievable assumptions belied by the real-world evidence.

The fatal flaws in the arguments for universal preschool suggest we will lose money for every dollar spent on universal preschool and end up with another massive government program that hurts taxpayers, parents, and children.

Christopher Cardiff and Edward Stringham are economics professors at San Jose State University and are the authors of the study An Assessment of Rand Corporation's Analysis and Proposals for California. Reason Foundation's other universal preschool research and commentary is here.






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