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As Multnomah County tries to map out Preschool for All’s financial future, it will spend $200,000 on a computer model that can calculate how much operating a preschool will cost in the coming decades.
On Thursday, county commissioners unanimously approved the line item, proposed by Commissioners Meghan Moyer and Julia Brim-Edwards, to hire a consulant to develop what’s called a “dynamic modeling tool” for for providers’ operating expenses.
That model will forecast costs by understanding changes to “rent, wages and benefits, insurance, training, student to teacher ratios, materials and supplies, and more,” according to a statement from commissioners. The county is currently in talks with Prenatal to Five Fiscal Strategies, a nonprofit consulting firm that has done similar work on a statewide model for Oregon.
Purchasing that analysis moves the county a little closer to getting its arms around the real costs of its universal preschool initiative, even as business interests agitate for scaling back the tax on high earners that funds it.
In recent months, in part due to pressure from Gov. Tina Kotek, the county has grown more concerned with ensuring Preschool for All is financially sustainable long term. So it has convened two advisory groups, the Technical Advisory Group and Program Advisory Group, otherwise known as the TAG and the PAG, to recommend revenue changes and gague how those would effect delivering on the program’s promises. So far, the TAG has revealed that the county has been vastly overprojecting the number of 3- and 4-year-olds in the county, affecting cost modeling. If the status quo remains, early forecasts suggested the program’s fund balance could be more than a billion by 2040.
But forecasting the fund balance involves projecting revenues and expenses, and in the latter half, both advisory groups have struggled. That’s because currently, there’s no good benchmark on how much seat costs for providers might increase over the next few decades. (Early modeling has assumed seat cost growth at 5% a year, on the lower end of market rates.)
In recent weeks, providers have expressed many concerns with the assumed seat cost growth assumptions. Several have argued that they already incur expenses that aren’t adequately reimbursed, including providing proper support for students with disabilities or developmental delays. (This academic year, the county reimburses providers $17,532 per seat for a six-hour day during the school year, and $25,008 for a 10-hour seat during the calendar year.)
“If we have this study with the more dynamic tool and you combine that with a fresh demographic study to understand what universal means in Multnomah County, we’ll have a much better sense of the overall cost of the program, which will allow us to be better financial stewards and also better support the program,” Brim-Edwards said at the Thursday board meeting.
And county commissioners have been adamant that they will not make choices about Preschool for All’s revenue until they fully understand how those choices would affect the program’s operation, meaning answering operational cost questions is paramount to decision-making in August.
“I am wanting to make sure that we’re building a sustainable program,” Moyer tells WW. “And I think to do that, your foundation has to really be, what is the true cost to do this, not what did a market rate from four years ago say?”
The dynamic model should be completed ahead of August, when the board will once again weigh revenue changes to Preschool for All. The TAG and the PAG are set to deliver their recommendations earlier, in April.
The model will also allow commissioners to understand how some demands from preschool providers might translate into costs. For example, the model could forecast the cost of a smaller class size, or the cost savings from pooled health insurance. It might even account for location costs across Multnomah County for different facilities.
At this point, however, it’s difficult to say what the county will do with the information it collects from such modeling. That’s because while preschool providers are adamant that every operational expenses for every student vary depending on need, the county has relied on set seat rates to forecast far into the future. In other words, providing individualized rates could present a logistical nightmare. (It should be noted that preschool providers do not sign individual contracts for each student, but larger contracts that encompass the number of seats they are allocated.)
Moyer says she doesn’t know how the county will apply such data, but says a first step of hers is to try and understand if the county’s current seat rates are adequate and respond to the needs of all providers.
