A values-based early care and education system would benefit children, parents, and teachers in

Alabama

Alabama

By Elise Gould, Marcy Whitebook, Zane Mokhiber, and Lea J.E. Austin • January 15, 2020

This report was produced by the Economic Policy Institute and University of California Berkeley’s Center for the Study of Child Care Employment.

In states across the nation, underfunding of early child care and education (ECE) is compromising the well-being of ECE teachers and the children in their care. In many states, policymakers simply do not have the information they need to understand the true cost—and the fundamental components required—to create a comprehensive, high-quality ECE system in their state. Proposals for ECE reform have focused primarily on improving access and affordability for families but have ignored the elephant in the room: early care and education is substantially “funded” through low teacher pay and inadequate supports for ECE teachers, who are primarily women, specifically women of color. In addition to being a serious injustice, lack of adequate financial and professional supports for ECE teachers compromises the consistency and quality of care children receive.

Policymakers and other stakeholders in Alabama have an opportunity to disrupt this suboptimal status quo and ensure that Alabama’s ECE system has the funding it needs to work effectively for children, families, and teachers. In this report, we develop an estimate of what it would cost to provide high-quality and comprehensive early care and education for Alabama’s families that does not financially overburden Alabama’s parents—who often manage in the current system by putting their careers on hold to stay home with their kids—and that also does not come at the expense of ECE teachers. Crucially, the amount of funding available for the ECE workforce is the linchpin of a successful early care and education system. Without well-qualified and fairly compensated early educators, ECE programs will not be able to provide and sustain a high standard of care for the children of Alabama. Creating a values-based budget for early care and education requires aligning costs with what is needed.

What will a values-based ECE system cost?

A values-based budget for early care and education that ensures a well-qualified and fairly compensated early care workforce providing a high standard of care for the children of the state would cost from $4.7 billion to $6.4 billion, or $27,000 to $29,000 per child, annually, when fully phased in.1

For context, this amounts to 2.1% to 2.9% of Alabama’s GDP.2 We estimate that an overhauled ECE system in Alabama would serve between 177,000 and 234,000 children and would employ between 73,000 and 99,000 ECE teachers at fair wages.3

These costs acknowledge what policymakers are beginning to recognize: we can’t solve the child care crisis without a major investment. Creating a values-based budget for early care and education requires aligning costs with what is needed (see “Core principles,” below). Well-prepared and well-paid educators are the key.4 A realistic and comprehensive estimate of what it would cost to achieve a skilled and stable workforce requires a key set of assumptions about qualifications, compensation, and ratios of children to teachers.5

The problems with the current early care and education system in Alabama

While the costs of a comprehensively reformed ECE system will be substantial, the status quo is unacceptable. What parents can afford to pay is not enough to provide teachers with fair wages and ensure high-quality care and education for young children; early educators are expected to underwrite the cost of the broken system with their low wages. This expectation is largely unchallenged.

• Early educators are severely underpaid, and as a result, too many are in poverty. Early educators pay a penalty for working with younger children: Alabama ECE teachers with a bachelor’s degree are paid 35.2% less than their colleagues in the K–8 system. And the poverty rate for early educators in Alabama is 17.2%, much higher than for Alabama workers in general (11.3%) and 5.5 times as high as for other teachers (3.1%).6
• Despite low early educator pay, care still costs too much for families.7 Full-time infant care costs, per child, an average of $5,858 per year in Alabama—$3,969 less per year than in-state college tuition (which averages $9,827 per student)8—and takes up 11.6% of a typical family’s income, far higher than the 7% recommended by the U.S. Department of Health and Human Services.9 Early care and education for four-year-olds in Alabama costs $5,061, annually, per child.10 Furthermore, combined state and federal investment falls far short of serving all eligible children who qualify for current subsidy programs, and as a result, many low- and moderate-income families are heavily burdened by the costs of child care.11
• Insufficient financial and professional supports for teachers compromise the stable care that is critical for young children. Low pay fuels turnover among early educators, and lack of adequate resources and professional supports undermines teacher practice and well-being.

Analysis of the costs of a values-based ECE budget

As described above, we find that the annual cost of a fully phased-in high-quality and comprehensive ECE system for Alabama ranges from $4.7 billion to $6.4 billion, or $27,000 to $29,000 per child. The much larger range in aggregate costs relative to per-child costs reflects uncertainty about the age and number of children participating in a transformed ECE system (see Appendix for details). If the investments made fall short of the costs, quality will be undermined for children, parents, and teachers alike.12

Although states have historically spent less per child for children before they enter their school years than for children in K–12 classrooms, services for younger children actually require more teachers (because the child-to-teacher ratios are lower), and families typically need these services for longer hours and more days of the year. Furthermore, schools serving older children benefit from economies of scale that are not available to early childhood settings, given that ECE programs are almost universally smaller (in terms of the number of children they serve at each site) than even the smallest K–12 school. This difference of scale has an impact on costs associated with space, utilities, purchasing, employee benefits, and other similar expenses. The Appendix describes in detail how we derive our cost estimates.

Our estimates are the gross costs that would be needed to comprehensively reform the ECE system. They do not account for the substantial resources that are already invested in this system. Currently, funding for early care and education in Alabama comes from a variety of sources including federal, state, and local governments as well as contributions from parents.13 Alabama typically receives about $308.9 million annually from the federal government for early care and education, and parents in Alabama collectively pay about $423.7 million. By far, the largest cost of the current system is the income parents forgo when they drop out of the labor market or work fewer hours in order to care for their children.14 A new system that draws more heavily on public financing would not just have the capacity to provide high-quality early care for more children, but would also lessen the burden that parents face under the current system.

How will Alabama benefit from a values-based ECE budget?

Alabama stands to benefit by making a serious investment in early care and education in line with the key values articulated in this model. Such an investment will strengthen Alabama in a myriad of ways. It will:

• Create a skilled and stable ECE workforce that can deliver high-quality services and meet growing demand.15
• Support children’s well-being and success with a solid early childhood foundation.
• Remove barriers to work and increase employment and earnings among parents, particularly mothers.16
• Provide benefits to employers from reduced absenteeism and turnover when more stable child care is in place.17
• Provide support for education and professional development for early educators, which can help address wage disparities within the occupation and relative to teachers of older children.18
• Create opportunities that offer a pathway to the middle class—rather than to poverty—for those who would gladly pursue a career in teaching our youngest children if low pay were not an issue.

Appendix: How we estimate the costs

We estimate the costs of a fully phased-in overhaul of Alabama’s ECE system based on the core principles outlined above. In order to estimate the total costs, we answer the following set of questions using a variety of data sources and assumptions.19

How many children are expected to participate in the early care and education system?

• Using five years of data (2013–2017) from the American Community Survey, we estimate the number of children in Alabama at each age (below age 1, age 1, age 2, etc.) for all children under five years old.20
• Given uncertainty about the number of children that will actually participate in the new early care and education system, we provide a range of estimates based on the current numbers of children either in home-based or center-based care in Alabama; the expected demand given the labor force participation rates of parents; the inverse of the homeschooling rate; and the participation rates in our peer countries with more comprehensive ECE systems already in place.21
• We allocate children into home-based versus center-based facilities based on current national data, though we acknowledge that families may make different choices when policies and options change.22
• Using these parameters, we estimate that the number of young children in the reformed ECE system in Alabama would be somewhere between 177,000 and 234,000.

How many staff members will be needed to serve the early care and education system?

• Given the number and distribution of children in each type of care, we determine the number of administrators needed (based on the assumption that each center has about 100 children with one lead administrator/principal and one administrative assistant) and the number of teachers needed (using the recommended ratio requirements—that is, the maximum number of children per teacher in a home-based or center-based ECE setting, which differs by the age of the children).
• Then, we determine how many full-time-equivalent (FTE) teachers with bachelor’s or associate degrees are required given the hours a program is typically open during the week; how much non-contact time is required for lead versus assistant teachers or home-based providers; how many days are available for professional development; and how many days of paid time off (including holidays, vacation, and sick time) are allotted to each teacher.
• Following these parameters, we calculate that the total number of teachers required in Alabama’s reformed ECE system ranges from 73,000 to 99,000.

• In our model, we set FTE annual pay for Alabama early educators with a bachelor’s degree at $55,748. This amount is determined by salaries of elementary and middle school teachers in Alabama, as estimated using Current Population Survey Outgoing Rotation Group (CPS-ORG) weekly and hourly earnings data.23
• We set assistant teacher salaries at $33,449. This amount is based on the ratio of the average pay for workers across occupations with some college or an associate degree to the average pay for workers with a college degree24 and applying that ratio to the salary we set for teachers with a bachelor’s degree in Alabama.25
• Center-based facilities also require administrators and administrative assistants. We set administrator salaries at $61,260; this amount is determined by averaging the salaries of educational administrators for preschools and for elementary and secondary schools in Alabama.26 We set administrative assistant salaries at $35,670, based on the median salary for secretaries and administrative assistants in Alabama.27
• In addition to paid time off, discussed above, benefits—such as health insurance and retirement contributions—are assumed to cost an additional 25% of annual wages for all positions. 

What non-personnel costs are considered?

• The largest non-personnel cost is rent, estimated using square-footage recommendations and the median cost of real estate in the state.28
• Other costs are included as well, such as food, kitchen supplies, educational equipment, utilities, building maintenance, and insurance, among other expenses.29