Changing Early Education Market Offers Business Growth Opportunities

President Obama signed the re-authorization of the Child Care Development Block Grant (CCDBG) on November 9, 2014. Unlike most of what happens in Washington these days, this bill had bipartisan support. Originally passed in 1990 and reauthorized in 1996, it has been eighteen years since federal childcare standards were revised.

The block grant helps low-income families receiving public assistance and those transitioning from public assistance to obtain federal childcare funds. [1]

In the years since the bill was first made law, there has been a tremendous amount of research into early childhood development and the importance of the 0-4 years window. Many early childhood experts agree with Dr. Roger S. Billings, President of Care Connectors, Inc. who has summarized the research this way:

“The 0 to 4 year-old age group is where all the critical periods are for physical development, language development, and even social development to an extent that’s the market where big bucks should be spent.”[2]

Although the rate of return varies by study, there is general consensus for a significant return on every dollar spent on preschool education. Recent years have seen public schools move to incorporate 4-year-old preschool programs. In the most recent MCH annual report of public school principals 56.0% state that they now have a preschool program with another 8.9% of districts considering it.

This trend is causing an emerging understanding that it’s important for the state to align learning at all levels that is age and developmentally appropriate.

With most state early childhood programs managed under Health & Human Services and K-12 education under state departments of education, realignment means the market for developmentally appropriate educational materials is shifting downward. Education experts are beginning to look at education as a continuous process from birth through grade 12.

The re-authorization of the CCDBG means higher standards particularly for the 180,000 home childcare segment of the market. Specifically, the law spells out tougher guidelines in the areas of health and safety and activities that improve childcare.

Healthy and safety examples include stronger hiring practices like background checks; better adult-child ratios; and emergency preparedness.

Activities to improve childcare include better training and professional development and stronger early childhood development guidelines.

The new rules will have the greatest impact on states that lightly regular home day cares, but will also impact licensed day cares. With average day care costs ranging from $4,000 to $10,000 dollars per year, per child, there is a real need for transparent information for parents and families to make the best decisions.

More than 400,000 childcare providers are affected by these new rules, so there is a huge upside opportunity for both service providers and vendors to expand their range of products and services to serve this market.

As more states take a holistic view of education from birth to grade 12, a larger “funded” marketplace will develop supported by state and federal dollars. This is an opportunity for virtually every company already involved in public education.

What new opportunities do you see for your company as the market expands? Contact MCH to learn more.

[1] Source:  NAEYC, http://www.naeyc.org/policy/federal/ccdbg
[2] Source:  Hood, John. From the Old K-12 to the New “Age 0-18” Market