by Grace Vitaglione, North Carolina Health News
October 30, 2024

By Grace Vitaglione

Cassandra Brooks owns Little Believer’s Academy, which has locations in Garner and Clayton. She operates three NC Pre-K classrooms. But rising costs and stagnant resources have made it hard for her to do business. 

“Every day is just so stressful,” she said.

NC Pre-K serves eligible 4-year-old children, based on criteria such as being at or below 75 percent of the state median income of $66,312 for a family of three in 2024. A child with certain risk factors, such as experiencing developmental delays or being a member of some military families, may also be eligible. The goal is to prepare at-risk kids for K-12 education so they don’t fall behind their peers.

The high-quality program has steep provider requirements that aren’t cheap to fulfill. Lead NC Pre-K teachers must hold a certain license, and each classroom must have at least one teacher and a teacher assistant. 

Those high standards and qualified teachers are what set the program apart, leading to lasting benefits for children — in particular those who have experienced adversity, according to decades of research on early childhood learning.

NC Pre-K providers are partially reimbursed by the state for the program and must come up with other funding to cover the full cost. But the state reimbursement rates and other sources of funding haven’t increased enough to keep pace with rising costs and inflation, providers say. As a result, some providers are feeling compelled to leave the program.

And as the pressure on the state’s system for supporting young children increases with the sunset of federal pandemic-era funds that bolstered wages and benefits, some fear the state’s early childhood care and education programs — subsidies for low-income kids, NC Pre-K and other child care supports — are in danger of fracturing. 

Child care is essential to support the workforce, and NC Pre-K is sometimes the only chance an at-risk child may have at being prepared for K-12, said Sherry Melton, lobbyist and consultant for the NC Licensed Child Care Association. Both programs are vital, she argued.

While the child care system received heightened attention during the legislative session in 2024, NC Pre-K is also in need of support to keep more providers from leaving, advocates said.

‘A good foundation’

Recruiting people who meet NC Pre-K’s teacher requirements and offering them a competitive wage can be difficult for providers.

Brooks lost a couple teachers to the K-12 system, where they likely found better benefits. She doesn’t blame them for trying to better support their families, but it’s frustrating for her as a business owner. Private providers like her often find themselves in competition with public schools for highly qualified teachers.

She receives some money from Wake County and applies for grants. Brooks also relies on tuition payments from non-NC Pre-K children to keep the bills paid. 

Still, her margins are tight.

But Brooks hangs on, in part because she believes in the mission of NC Pre-K, despite the challenges. Her daughter went through NC Pre-K when Brooks was a single mother, and the experience helped both of them. Now, her daughter works as a nurse. 

“I believe that was a good foundation for her,” she said.

Increased costs, stagnant reimbursements

The NC Pre-K system is complicated. It encompasses public and private providers, differing rates of reimbursement and multiple streams of funding. 

Public schools and Head Start centers may also offer NC Pre-K, but private centers receive higher state reimbursement because public schools and Head Start centers can rely on other sources of funding, such as Title I and Head Start. 

But not all schools and Head Start centers receive the same amount of federal funding, and some of them, too, struggle to keep their NC Pre-K classrooms open.

Currently, the reimbursement rate for a private NC Pre-K provider is $719 per child per month, while it’s $496 for a public school provider and $420 for Head Start center. 

State reimbursement rates for private providers have only increased about 10 percent from the maximum rates created in 2012, depending on the teacher’s qualifications, according to Department of Health and Human Services records. Meanwhile, public school and Head Start providers received about a 5 percent increase. 

Providers say those increases don’t come close to accounting for the nearly 40 percent inflation in costs since 2012. Currently, state money covers about half the cost of an NC Pre-K slot on average, said Neil Harrington, research director at the nonprofit advocacy organization NC Child. 

In 2012, those dollars went a lot further. 

Many private providers want to participate in NC Pre-K because, like Brooks, they believe in the mission. But it’s hard to weigh that against financial stability when the rates are so low, the lobbyist Sherry Melton said. As a result, the program is losing providers.

“NC Pre-K is dying,” Melton said. 

From 2019-20 to 2023-24, the total number of NC Pre-K sites decreased by about 4 percent, or an overall loss of 48 sites, according to DHHS data. On average, about 5 percent of NC Pre-K sites leave the program every year — many are replaced by new sites, but not all, a spokesperson said.

Theresa Roedersheimer, the executive director of the NC Early Childhood Foundation who formerly worked at the DHHS Division of Child Development and Early Education, said while the program may not be in the grave, there could be fewer spots in the private sector if providers are forced to leave because of rising costs and inadequate resources.

“I don’t want to say it’s going to hit rock bottom, or that it’s just going to disappear,” she said. “As time continues, you could see the number of available spots start to go down.”

That could have downstream effects on the children who would otherwise be served. Reading proficiency — in particular — and graduation rates from later grades could dip in areas with fewer programs, she said.

‘Novel’ program

Former Gov. Mike Easley campaigned on establishing a state-funded pre-kindergarten effort focused on unserved, at-risk 4-year-old children, said John Pruette, formerly the executive director of the Office of Early Learning at the N.C. Department of Instruction. 

Pruette played a large role in how the program was rolled out. More at Four, which later became NC Pre-K, was established in 2001 with very high program quality standards.

At the time, the program was “really novel” in terms of involving multiple child care and education entities, Pruette said.

Kenneth Dodge is a professor in public policy, psychology and neuroscience at Duke University. When NC Pre-K first rolled out, he and other researchers followed the children in counties with NC Pre-K through high school graduation and compared those children with those in counties without NC Pre-K.

Those researchers found that greater investments in the NC Pre-K program were associated with positive effects on fifth-grade academic achievement scores. Average funding for a full high-quality pre-K program for a particular child resulted in about 6 percent more students graduating from high school in counties where the program was supported, compared with counties with no funding at all, he said.

The impact is partly because of the program’s standards, Dodge said. If it weren’t of high enough quality, NC Pre-K would be “wasting money.”

Another novel aspect was putting all kids into these high-quality preschool classrooms together, no matter who was picking up the tab. 

The state gives a slot to an eligible child, and they can bring that funded slot to any certified NC Pre-K classroom. That way, a family who may not be able to afford preschool otherwise could access it if they wish. 

That’s likely been another reason behind the success of NC Pre-K, Dodge said. He noted that having classrooms with state- and privately funded kids meant that all the students benefited from NC Pre-K’s high quality standards and curriculum, better preparing them to learn.

If a county were to lose its NC Pre-K program, Dodge said, “I would certainly predict that the (high school) graduation rates for those cohorts of children would go down slightly.”

Funding not keeping up

There are 91 local agencies across the state that oversee NC Pre-K classrooms in their areas, while the overall program is administered by the state Division of Child Development and Early Education. 

For example, Wake County Smart Start oversees the NC Pre-K sites in that county.

State appropriations for NC Pre-K overall have remained fairly stagnant since 2011, with the median state funding being around $125 million in that period, according to data from the Office of State Budget and Management, despite the fact that federal funds have crept up. 

Part of the state funding for the program comes from the NC Education Lottery, which saw its annual revenues top $1 billion in 2023.

Nonetheless, lack of funding and resources has led the program to have an extensive waiting list throughout the 2010s. 

Legislators tried to reduce the waitlist for NC Pre-K by funding over 1,700 additional slots in the budget for fiscal year 2017-18, just a fraction of the more than 33,000 children eligible that year. 

But 44 counties turned down that expansion money in 2017, according to a national report. The next year, 34 counties turned down expansion money. The big barrier to expansion, the researchers found, was inadequate revenue and resources, largely because of rising operating costs and stagnant state reimbursement rates. That was even with the additional dollars on the table.

Melton also said many providers just couldn’t afford to hire additional teachers to teach more kids and still cover all their other operating costs.

Rep. Donny Lambeth (R-Winston Salem) said advocacy groups and counties asked legislators to increase slots over the years, and the General Assembly has been able and/or willing to add more or less to the system, depending on the year. 

“Getting something, with more covered, is better than nothing,” he wrote over email. 

But the state doesn’t generate enough income to provide much more than covering that basic inflation, he said.

Running the program

More than 600 NC Pre-K sites statewide are operated by public schools, or 53 percent of the total sites in 2023-24, according to DHHS data. Over 400 are operated by private/nonpublic centers, and almost 150 are operated by Head Start centers.

A percentage of the state’s allocation to a county or region for NC Pre-K goes to the local agency that delivers the program, such as the local Smart Start partnership, to cover administrative costs. 

The current rate of 6.8 percent for administration is too low to adequately deliver a program with strict requirements like NC Pre-K, said Stacey Bailey, NC Pre-K program director at Buncombe Partnership for Children.

The lack of administrative funding creates instability in the program, she said.

Administrative funds can go toward recruiting new NC Pre-K providers, developing transportation plans and reaching out to sign up the children who are hard to reach but may need intervention the most. 

Keeping up with the costs of today

As it was initially conceived, NC Pre-K was designed to be only partially funded by the state, Pruette said. When it was created, the legislature was unlikely to approve a fully state-funded program, so having local contributions was crucial to gaining lawmakers’ support.

In the early days of the program, the state NC Pre-K team helped communities find resources for local contributions and demonstrated how to combine funds to support the full cost of the program, Pruette said. Some communities were able to jump on the effort, while others needed more hand-holding.

That early group of state NC Pre-K leaders earmarked state reimbursement rates by community — typically, more support went to communities with fewer resources, and rates were adjusted year by year. They hoped that would equalize program funding across the state, Pruette explained.

After the program moved to DHHS, the Division of Child Development and Early Education created a statewide rate structure beginning in fiscal year 2012-13 based on provider type instead of what a community could pony up to help. The division based the rates on the average cost for a site to meet NC Pre-K requirements and worked with a subgroup of the NC Pre-K Advisory Committee to set the rates, a spokesperson explained. 

That meant taking into account the other sources of funding available to public schools and Head Start centers that private providers didn’t have access to.

Pruette said he doesn’t disagree with that reasoning, but it’s not as cut and dried as it may seem. 

NC Pre-K was far from perfect during his time — funding was an issue from the beginning, Pruette said. That’s why the program’s early leaders had to come up with those creative strategies to leverage what resources they had. 

But those 11-year-old solutions may not be able to keep up with today’s demands, he said.

Disparity across the state

Relying on donations to support NC Pre-K isn’t always sustainable, said Janet Singerman, president and CEO of Child Care Resources Inc., a child care resource and referral agency based in Charlotte. Political and public will to support the program is also necessary, she said. 

That means the program is subject to disparities in available community resources and support.

For instance, providers in Buncombe and Wake counties receive county money to supplement their NC Pre-K programs. Stacey Bailey from Buncombe County said they were able to stabilize their programs coming out of the pandemic because of those county dollars. 

But the county could decide to put that funding elsewhere in the future, she noted. In the wake of Helene damage, there’s likely to be a lot of competing interests.

In Wake County, it’s become harder in the past couple years to incentivize private providers to stay in NC Pre-K, even with county support, said Gayle Headen, executive director of Wake County Smart Start.

“We are beginning to see a shedding of providers who have been with us for quite some time,” she said. “It is because of that business decision for them.”

New Hanover County Schools operates eight NC Pre-K sites and oversees all the county’s sites. That program receives some county money as well, but it’s not enough. 

It’s a struggle to keep NC Pre-K classrooms afloat and maintain high quality, according to Shannon Smiles, director of Early Childhood Education at New Hanover County Schools.

Rural communities, in particular, may struggle with finding local funds. 

The Southwestern Child Development Commission, a nonprofit that focuses primarily on seven western North Carolina counties, had to pull back from operating NC Pre-K programs. Rates didn’t cover the cost of care, and it was challenging to find and retain qualified teachers, said interim Executive Director Lori Jones.

Supporting all providers

With few resources in the system, some providers feel as though they’re left to fight over crumbs. A 2023 report from the nonpartisan American Institutes for Research found that some of North Carolina’s local NC Pre-K committees — who decide which sites in the area get NC Pre-K slots — may decide to give more slots to a public school system because those slots are cheaper and therefore can serve more kids with less money.

But all three types of providers are crucial for NC Pre-K to work, Pruette said, as well as keep the child care system intact.

The mix of providers differs in every county. Having some of each kind is important to give parents options, Bailey said. 

For example, a family that has an NC Pre-K eligible 4-year-old and a 3-year-old could receive care for both kids at a private center, she said.  Likewise, a family with a second grader and an eligible NC Pre-K child could choose a public school provider where both kids could attend.

Private centers may also be able to provide extra child care hours before and after the NC Pre-K school day, which only lasts six and a half hours. Many parents work longer than that, Bailey noted. 

But some private providers end up making hard decisions based on their budget.

Verner Center for Early Learning in Buncombe County receives county and other government money, CEO Marcia Whitney said. She would like to hire more teachers than the nonprofit center’s budget allows, and it’s become harder to find qualified teachers.

Children’s life experiences have also changed since the COVID-19 pandemic, meaning many need more support from teachers and may have more developmental or behavioral needs, she said. But the center has had to make “deep cuts” since pandemic-era federal funds dried up.

“If we were a for-profit corporation, we would not be operating NC Pre-K,” she said.

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