A Consolidated Effort: Restructuring N.C. Early Childcare Programs

The Legislature has been engaged in a tenuous balancing act of early childcare programs this year. Attempting to find room for budget savings to face down a $2.4 billion budget shortfall, lawmakers are trying to also mitigate the impact on recipients of proven programs.

One of the more frequent ruminations emerging from the Legislature as to reform possibilities to early childcare programs involves a consolidation. The downsizing should occur between “More at Four,” the pre-kindergarten program aimed at at-risk four year-olds, and “Smart Start,” the omnibus early childcare system run by the non-profit North Carolina Partnership for Children (NCPC).

As the More at Four program is currently structured, the administration is split somewhat evenly between the local Smart Start chapters, known as local partnerships, and the Local Education Agencies (LEA), with 40 local partnerships and 47 LEAs administering the program across the state. Consolidation discussions have typically involved directing either the LEA or Smart Start to absorb the other’s administration of More at Four.

Before a consolidation discussion can proceed in any particular direction, however, legislators should take stock of the efficiency and cost of both the LEA and local partnership administrative systems. It is critical to assess which option would be the most viable for the state to realize desperately needed budgetary savings.

LEAs have remarkably lower administrative costs than local partnerships under Smart Start, with average administrative expenditures at 5.17 percent of budget compared to local partnerships’ average rate of 8.18 percent. This translates directly into a $1.9 million administrative disparity between the two administrative expenditure levels, according to a budget report by the Department of Public Instruction (DPI). Local partnerships’ administrative costs can reach as high as 29.18 percent, as in Durham County, compared to the highest LEA cost of 8.68 percent, such as in Alleghany County.

If local partnerships presently under Smart Start transition to LEAs using the average LEA administration rate, annual administrative costs would total $7.9 million per fiscal year. However, if current LEAs transfer to Smart Start, administrative costs would climb to $12.5 million, resulting in a $4.6 million disparity between the two consolidation options. Consolidation under LEAs results in extra millions saved in administrative expenses.

Thus, simply by using administrative rates to estimate what the monetary impact of consolidation might look like, clear predictions of cost disparities between More at Four operated under LEAs versus the local partnerships can be recognized. Consolidation of More at Four into Smart Start could lose millions of dollars more to administrative expenses and consequently curtail potential savings or the possibility of expanded services.

By Andrew Blackburn and Andrew Henson

This article was posted in Education by Andrew Henson on March 29, 2011 at 4:11 PM.

© 2011 The Civitas Institute. Visit us on the web at www.nccivitas.org.
This article can be found at http://www.nccivitas.org/2011/a-consolidated-effort-restructuring-n-c-early-childcare-programs/

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