According to Art
Rolnick of the University of Minnesota's Humphrey School of Public
Affairs, he spoke at that time with a group from Ready for K (i.e.,
kindergarten). He told them he didn't think they would get any
political traction out of the moral argument that early education was
the right thing to do. Instead, he told them they should make an
economic argument. The group then asked Rolnick to join the board and
to make the economic case.
Rolnick and his Minneapolis Federal Reserve
(Fed) colleague Rob Grunewald analyzed a number of longitudinal
studies and found that early education provides an 18 percent
inflation-adjusted return, most of it a public benefit, when it's
provided to the most at-risk, vulnerable kids. These are the kids,
Rolnick said, who are falling behind, who are born into poverty and/or
whose parents are in prison. In almost all cases, he said, these
vulnerable kids do not succeed, do not finish high school and end up
getting in trouble. "They cost society enormous resources," he said.
The Minnesota Early Learning Foundation (MELF),
mostly a business group founded by then-Cargill, Inc., CEO Warren
Staley, raised $20 million for two programs: Parent Aware and a pilot
program of scholarships for early education programs. Parent Aware
rates early education programs in Minnesota on a one-to-four-star
basis. The pilot program provided scholarships to send at-risk kids,
starting at age three, to high-quality, four-star-rated early
education programs. The program provided 650 scholarships, up to
$13,000 per year, to kids in the Frogtown area of St. Paul whose
family incomes were at or below 185 percent of the poverty level.
Rolnick said the program empowered parents
by providing prenatal home nurse visits, mentors and scholarships at
age three. The parents could choose any four-star-rated early
childhood program, whether Head Start, private or faith-based
programs. He said the parents were very positive about the program,
but were concerned whether the kindergarten-through-grade-three
programs for their children would be four-star-rated.
The MELF pilot gained recognition at the
state, national and international levels. As a result of that pilot
and business community support, which Rolnick said was unique in the
country, the State of Minnesota received a $45-million federal Race to
the Top grant to replicate the Frogtown-area pilot in other areas of
state: the White Earth Reservation, North Minneapolis, St. Paul and a
rural area in Itasca County.
Rolnick pointed out that there is very
little early childhood education infrastructure on the White Earth
Reservation, so providers with a one-star quality rating are eligible
to accept the scholarships. However, those providers must be
progressing toward a four-star rating.
In 2013, the Legislature appropriated $40
million for the scholarships over a two-year period. The 2014
Legislature appropriated an additional $4.6 million, with a commitment
to increase funding in the future. This state money is to be used
for early education scholarships across the state. Rolnick said Gov.
Mark Dayton's goal is, by 2018, to ensure that every at-risk child in
the state has access to high-quality early childhood education.
In terms of long-term economic development,
early childhood education is the best investment we can possibly make.
"That was 10 years ago and no one has challenged it," Rolnick said.
"If you provide the tools to these parents, get these kids engaged and
make sure the kids are born healthy and have access to this kind of
environment, you can go a long way in making sure the kids succeed."
Early childhood education is clearly
catching on as a critical area that's underinvested. Minnesota is
making a lot of progress in this area. Rolnick serves on the early
childhood cabinets of the governor and of Minneapolis Mayor Betsy
Hodges, who is focusing on prenatal to age five. He is also advising
New York City Mayor Bill de Blasio, who has a major emphasis on early
childhood education, and serves on Oregon Governor John Kitzhaber's
early childhood cabinet.
Neuroscience research shows that 90 percent
of brain development takes place before age five. "K through 12
doesn't have a chance if this brain development hasn't taken place
before kids enter kindergarten," Rolnick said. "You might find some
super people out there who can turn some of these kids around, but the
real issue starts much earlier than K-12."
Rolnick said an outside evaluation of the
first kids who participated in the pilot early education scholarship
program showed as first-graders, they were very close to majority kids
in both cognitive and social skills. He said the program's ultimate
goal is to start every family prenatal and that the
prenatal-to-age-three period probably offers the highest return of
He noted that the Northside Achievement
Zone, a program targeted at families in North Minneapolis, is
recording family by family the words parents are actually saying to
their kids every day. "We're using the best practices of research,"
Early childhood development involves both
education and health. "The health component is critical here,"
Rolnick said. MELF uses home-visit nurses before birth to reduce
infant mortality and low-birth-weight babies. The Center for Disease
Control has done studies that show a high correlation between kids'
health metrics in the early years and health 40 years later. He said
the 18 percent return-on-investment for early childhood education that
he and Grunewald estimated is actually a conservative projection,
because it didn't include health-care data.
"It's overwhelming. Hands down, we need to
do a better job of investing in our kids," Rolnick said.
The U.S. Constitution says cities and states
aren't supposed to interfere in interstate commerce. In 1991, Al
Checchi, former co-chairman of Northwest Airlines, offered to locate
an airplane maintenance facility in northern Minnesota in exchange for
a state loan of $320 million. At the time, Rolnick asked why the state
should make such a large, risky investment in Northwest. But then-Gov.
Arne Carlson was worried about Northwest moving their headquarters
someplace else if the state didn't agree to the loan. Rolnick
perceived the state loan to Northwest as interference in interstate
commerce. His colleague Mel Burstein, the Fed's general counsel,
State and local governments spend at least
an estimated $90 billion per year to lure businesses across the
country. A New York Times study reported in December 2012
looked state-by-state and county-by-county at the money spent by state
and local governments on incentives to businesses and came up with
what Rolnick called this conservative estimate.
When we allow cities and states to pick
winners and losers in competing for business, it's a zero-sum game.
"You're not creating jobs, you're just moving jobs from one city to
another or from one state to another," Rolnick said. "It's time to end
the economic bidding war among the states." He explained that
competition among private businesses is good, but the only good
competition among cities and states is over which state or city can
produce the best public goods at the lowest cost.
Rolnick and Burstein proposed that if any
private business gets a subsidy or any preferential treatment that
others don't get, it would have to declare that gift as income. Then
the federal government would impose a 100 percent confiscatory tax.
"The game's over," he said. "It would have ended it overnight."
In 1999, then-Congressman David Minge (D-Minn.)
introduced a bill doing just that, according to Rolnick, but the
sports lobbyists killed it. "If you're a professional sports team,
you're getting billions of dollars from the government," he said.
"This is corporate welfare in the extreme."
Giving subsidies to private businesses is
the wrong way to do economic development. "It's just moving jobs
around in this war," Rolnick said. "Who's really winning the war? The
owners of these companies. The Mall of America got $250 million in
public money. Is there a shortage of retail space? What problem are we
Rolnick said early education should be the
top priority, but it's at the bottom. "We don't have the political
clout," he said. "The kids are invisible. The parents don't vote."
If Congress doesn't act to limit or end the
competition among states and cities in offering subsidies to
businesses, it puts local politicians in a rough spot. Rolnick
said our public policy allows companies to "blackmail" local
governments and that he wouldn't have given the Minnesota Vikings any
public money to build their new stadium. "We need someone to say,
'It's time to think of a national perspective,'" he said. The European
Union does not allow governments to lure jobs from one country to
The right way to promote long-term
competitiveness is through human capital. The Minneapolis Fed did
a study comparing Minnesota's economy to the rest of the country from
1920 to 2000. Per capita income was one measure used in the study. In
1920, Minnesota's per capita income was a little below the national
average, which continued into the1950s. But in the late 1950s, the
state started outperforming the rest of the country, Rolnick said, and
by 2000, Minnesota had one of the top economies in the country and the
The factor that changed in the late 1950s to
propel Minnesota's economy was that the state started to pour money
into education. Rolnick said the state then began to outperform
the nation in education metrics like the number of high school
graduates and people going on to college and technical schools and
getting advanced degrees. The state's workforce rating moved to sixth
or seventh best in the country. "We did so well because the state
invested in human capital," Rolnick said. "Our workforce and work
ethic make Minnesota a great place to do business."
Early childhood education is economic
development with a high public return. Rolnick said early
education should be the first priority in education spending.He
stressed he's not going after K-12 dollars, but after economic
development dollars. "That's the best thing we can do right now if
you're looking to create jobs." He noted that to be competitive, we
also have to take care of our infrastructure. And while we should keep
taxes as low as possible, that must be balanced with the return from
what the state and local governments invest those taxes in.
For the early childhood development program
to succeed, the home visiting nurses and educators must be high
quality. Rolnick stressed that "We worry a lot about quality: the
quality of the school and the quality of the mentors," he said. MELF
evaluates the mentors (nurses and educators), including surveying the
Rolnick said the program tracks all the kids
and parents involved. He said even if a preschool is four-star
rated, the top quality rating, MELF expects all the kids in the
program to pass an assessment for kindergarten readiness. Currently,
he said, fully 50 percent of all Minnesota kids are not ready for
kindergarten. Schools are judged by their outcomes, he said, and will
be cut out of the scholarship program if they don't produce the