Financing an early childhood system is an essential part of systems building. Providing a State and its partners with approaches for a sound and solvent finance strategy is critical. This guide provides an overview of key concepts linking State financing options and systems building. The focus is on defining key state-based financing strategies, providing an overview of practical financial management practices, and reviewing financing forecasting tools.
Finance refers to receiving and allocating funds and conducting analysis designed to build capacity and sustain a system. It is important to consider funding an early childhood education system in new and creative ways. Financing strategically is an approach for States to better use existing and new or ongoing resources, maximizing public revenue and allocating that revenue in new ways. It may mean generating new State revenue, creating or enhancing public-private partnerships, and expanding private sector contributions to the system. Financial management and forecasting are essential practices that help States create and sustain a system. Financing strategically builds a more collaborative system and stronger partnerships.
In today’s world, a well-planned financial effort is necessary to support a vision, standards, and outcomes in an early childhood system. There is pressure to show improved outcomes for young children and ensure that they are ready to succeed in school. There is often a lack of coordination of funding for this age group and for the system that is needed to support positive outcomes. Public funds are limited by target populations and narrowly defined specialized activities required by the funding source. Private and philanthropic initiatives designed to improve quality and accessibility of services are also narrowly targeted, short-term, and often uncoordinated. The result is often a lack of funding for services and supports, as well as disjointed funding, and thus a fragmented early childhood system.
Financing an early childhood system is complex. Each entity within the system has unique funding sources and mandates, which often specify services or outcomes to be provided. Identifying, coordinating, managing, and funding sources is crucial to meeting expected outcomes.
 Johnson-Staub, C. (2012). Putting it together: A guide to financing comprehensive services in child care and early education. Washington, DC: Center for Law and Social Policy.