A cost model measures the true cost of equitably implementing, maintaining, or expanding a program or service for children. Demand for cost modeling in early childhood care and education continues to grow as states and communities further invest in expanding equitable opportunities for children and youth. While the number of technicians that can develop early childhood cost model tools is limited, the importance of increasing access to and understanding of these tools galvanized cost model partners to align in establishing common standards for a broader audience. To drive this work forward, last month Children’s Funding Project, Center for Early Learning Funding Equity, and Prenatal to Five Fiscal Strategies gathered leading experts in early childhood cost modeling to share approaches and explore actionable steps to build skills, knowledge, and partnerships within and across states, territories, and tribes that connect to governance choices. During this inaugural event, partners from technical consulting organizations, early childhood advocates, and philanthropies examined how cost modeling intersects with various social systems and what thoughtful expansion of the cost modeling field looks like as demand for this work grows. Here are our top five takeaways from the event:

1. Cost modeling must be grounded in equity.

Early childhood care and education cost modeling comes with the social responsibility to create an equitable and adequate system of care. When considering cost modeling tools as an important part of the whole early childhood care and education field, there is opportunity for cost models to shed light on how policies and governance choices impact equity in communities. To ensure that cost models focus on equity, cost modeling experts and advocates for children should develop relationships with local governments who leverage their leadership roles to promote equitable practices in early childhood systems to avoid exacerbating existing inequities. As we develop these relationships, we must raise questions that center equity: Who is reviewing services and are they reflective of the children served? Are parent contributions set at an equitable rate? This will ensure that communities and technicians develop cost models that acknowledge inequities and serve as a shifting point to disrupt them.

Additionally, states and communities must develop cost models that include populations that are frequently overlooked. This includes input from all types of providers, such as home-based care and/or licensed-exempt providers. It includes incorporating services and resources for children of all ages and with varying needs, such as dual language learners and children with disabilities. By doing so, cost models are representative of all providers and children and compel progress toward alleviating cost burdens, build more robust data sources, and engage providers and families in a meaningful way. Grounding cost models in equity, advocated for by those in leadership roles, contributes to more inclusive and socially just outcomes in early childhood.

2. Building relationships and coalitions supports the sustainability of early childhood care and education cost modeling.

Providing consistent education and developing skills related to cost modeling at various levels of leadership (among policymakers, advocates, community partners, technical consultants, and providers) is crucial to build trusting relationships that support a sustainable approach to cost modeling. By engaging stakeholders to advocate for and lead this work, these leaders also can  change the conversations in their communities from a scarcity and compliance mindset to encourage collective momentum toward an equitable and proactive approach to children’s funding.

One of the greatest challenges facing early childhood care and education is that it lacks a coordinating structure to standardize, implement, and scale changes to benefit communities. Unlike K-12 schools, early childhood care and education centers do not have an equivalent of a school board or local education agency that works to coordinate equitable funding formulas. States, tribes, territories, and localities need to establish these structures to manage strategic activities for long-term change. By coordinating their efforts, early childhood care and education providers can work together to create a system of funding and governance that responds to a fluid landscape, changing family needs, and alleviates provider burdens.

3.   Standardizing cost modeling will help ensure coherence and consistency.

The inherent complexities and nuances in early childhood care and education cost modeling have contributed to a wide variety of cost model approaches and assumptions, as well as a diverse set of expertise and ways we talk about early childhood care and education financing. Harnessing and coalescing skill sets and knowledge is needed to communicate effectively with a larger audience and increase participation in the cost modeling process. Cost model experts have developed or used a wide variety of cost model types that also have unique, state-specific child care standards that influence the model outputs. With the many types of cost modeling (programmatic, system, narrow cost analysis, comprehensive) and disparate approaches to the work, it is essential to create principles that inform cost models and establish shared language. Establishing a uniform approach creates self-sufficiency in communities to adapt models and allows cost models to endure even with changes in government administrations and shifting economic conditions over time.

4. Outcomes from cost models are based on political climate and feasibility.

Cost modeling presents the unique opportunity to estimate how much money states or communities need to achieve their goals of supporting programs and services for children and youth. As states and communities complete cost models, what they do with those models depends on a state or community’s current political climate and what local leaders think they can accomplish. To many people’s surprise, the gap between their community’s existing funding for a set of programs and services and the true cost of those services can be dramatic and raise questions about where funding will come from to fill the gap. These reactions are valid and important to honor as a pivotal starting point in realizing that it is entirely possible to find funds to meet their community’s needs. Acknowledgement that funding will need to be contributed from each level of government can propel communities to leverage philanthropic support toward larger public investments.

The realization that multiple and innovative funding sources exist pushes against a long-held scarcity mindset in early childhood care and education. Creating actionable steps to seek these funding sources also requires the development of a political strategy to strike a balance between an ambitious vision and the fiscal, political, and operational realities for any new financing strategies. Political strategy and partnerships are equally as crucial as having a cost model in helping leaders and advocates understand the benefits that increasing public funding for early childhood care and education has and meeting the true needs of children and families.

5. Lessons learned from financing reform in other systems, like K-12 education, provide insight on forming an equitable funding system for early childhood care and education.

K-12 public schools and early childhood care and education systems serve the same families, but have different landscapes based on infrastructure and funding. As early childhood care and education cost modelers work to align standards, they can pull lessons from state K-12 funding formulas. As the National Association of State Boards of Education states in its report Fully Funding Pre-K through K-12 Funding Formulas, “[s]tate K-12 funding formulas determine how much funding is needed per pupil for an adequate education and how much of that the state will contribute to each school district. Ideally, the formulas are based on a realistic assessment of adequacy and make adjustments based on differences in needs of children, local capacity to raise revenue, geographic cost differences, and inflation, as well as the number of students enrolled. The extent to which they do so varies by state, but every formula makes some of these adjustments.” While there are still challenges in the funding systems, this increased coherency can be used as a blueprint from which early childhood care and education can learn and apply what works based on unique complexities.

In K-12 public schools, there is growing alignment in working toward an equity-informed funding system. With acknowledgement of this shared goal, advocates pushed for capturing new required school-level funding data that shows inequities across communities, allowing for future choices to be made more equitably. This shift in school-level funding data is an example that early childhood care and education can use to explore its own unique funding structure, such as exploring how much of early childhood should be funded publicly versus funded by parents. Considering the lessons learned from other finance reform efforts, like this data collection change in K-12 public schools, will allow early childhood financing conversations to develop common goals and continue this work toward maintaining equitable and sustainable funding so children can thrive.

Sarah Eicher is a research associate and Kate Ritter is an early childhood advisor at Children’s Funding Project.