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Multnomah County’s Board of Commissioners on Tuesday heard a briefing on a new model that could more accurately calculate operating expenses for Preschool for All’s providers.
The model, developed by nonprofit consulting group Prenatal to Five Fiscal Strategies, comes as commissioners try to better understand the expenses the universal preschool initiative must incur as it looks ahead to 2030. That’s the year that county officials are seeking to hit several goals for the program, including providing a seat for any three- or four-year-old in the county who would like one, and boosting salary and education goals for preschool teachers and staff.
When complete, the dynamic cost model will consider a number of factors: student age, type of center, mandatory employer taxes and liability coverage, licensing requirements, nonpersonnel expenses like materials and transportation, and Preschool for All’s salary step requirements. This will offer a more data-driven framework to determine reimbursement rates; the county currently estimates per seat costs based on provider feedback and market rates.
The model comes at the start of a second summer of cost discussions on the County Commission about the program, which is funded by a marginal income tax of 1.5% on income over $125,000 for single filers or $200,000 for joint filers, and an additional 1.5% on income over $250,000 for single filers or $400,000 for joint filers. Business groups have thrown their weight behind efforts to modify the marginal income tax that funds the program, and top state officials have worried that it is driving taxpayers out of Multnomah County.
But commissioners, for their part, appear much more concerned with discussions about the program’s long-term financial sustainability. On Tuesday morning, they began raising a flurry of questions about additional expenses the program might have to incur to meet its ambitious 2030 goals, from funding better supports for high-needs students, to possibly financing preschool teachers’ degrees.
The discussion provides an early look into top priorities for the commission as it weighs changes to one of the county’s most controversial taxes.
As WW has previously reported, the county’s consultants modeled two default scenarios that covered expenses for childcare centers and family homes. The firm estimated that under its scenarios, the county was modestly underreimbursing center-based providers on the whole. (Family homes were underreimbursed if they provided full year care, and overreimbursed if they provided school year care.) Using numbers from the latest fiscal year, Prenatal to Five Fiscal Strategies (or P5FS) determined the county underreimbursed full-year child care centers by $2,364 per student.
“Your current PFA rates in fiscal year 2026 are covering about 91% of the true cost of care in a center and 94% in a family childcare home,” Simon Workman, a principal at P5FS, told commissioners Tuesday. “Many states would be very happy with these numbers on their subsidy, but of course there is still room for growth there.”
But the gap between the county’s reimbursement rates and P5FS’s recommended spending grows as the calendar nears 2030.
Much of that change comes because the county hopes it will be able to increase wages for the preschool workforce. Salary is determined by educational steps and positions, and by 2030, the county hopes its lead teachers will all at least hold a relevant associate’s degree. If that workforce scales up, the firm estimates that the average salary for lead teachers will rise from $30.65 an hour to $36.94 an hour.
Tuesday’s presentation estimates 61% of lead teachers lack an associate’s degree. Commissioner Meghan Moyer worried about how the county would realistically expect a dramatic turnaround in just a few years, without committing extra resources.
“I don’t know if we’ve tackled what it would take to get [lead teachers to associate’s degrees],” Moyer says. “In the modeling we don’t address this issue…if we want to meet our own goal, I’m really curious about what options are out there that are feasible and what they would cost.”
Moyer similarly mused on costs of benefits, rising liability insurance costs, and potential solutions that could curb expenses for providers, thereby offsetting some of what the county might have to reimburse. (Danisa McLean, the director of Preschool and Early Learning, says Preschool for All recently established a shared insurance pool in an attempt to curb costs.)
Commissioner Shannon Singleton had her own concerns about if the dynamic cost model would be able to reflect inclusion supports, which fund extra resources for high-need preschoolers. (Providers have long expressed concerns that they remain unsupported in this regard.) The P5FS model funds inclusion aides to support 10% of enrolled children, which Singleton said might be lower than the amount of need she’s heard.
“It doesn’t mean the work that’s happening isn’t good,” she said. “It just means I want to be careful of getting a cost model that doesn’t actually meet the needs of the kids and then we make financial decisions based on something that isn’t really what’s happening on the ground for them.”
Rachel Pearl, director of the county’s Department of Human Services, said funding such supports required a different conversation. She says P5FS’s cost model is meant to establish a baseline for all sites, and that the county will continue to provide additional inclusion supports on top of it.
Concerns with determining the program’s true operating expenses will play a key role in how comfortable commissioners are with making changes to Preschool for All’s revenue stream. While the initiative has been sitting on a nest egg of cash, county officials have long said that they will begin to drain its fund balance as the program grows to scale. Other questions commissioners will weigh this summer include demographic ones about how many children the program will need to serve to reach universality.
