Publication Excerpt:

Despite recent funding increases, less than one third of South Carolina’s low income young children receive publicly subsidized early care and education (ECE). Meeting the unmet demand for ECE services would cost the state several hundred million additional dollars. State general revenues and a handful of federal block grant programs provide the lion’s share of funding for ECE in South Carolina and the US overall. Block grants are capped and state revenues are tight. Thus, proposals to expand and/or improve ECE must be accompanied by new financing strategies.

Numerous studies have demonstrated that public investments in ECE yield high returns for children, families and society; but these investments require large, upfront expenditures while the returns can take years to accrue. This report describes a number of possible ways South Carolina could generate new revenue to invest in ECE. It does not endorse any particular approach, rather it lays out a menu of options for stakeholders to consider. Some of these options entail viewing ECE from new or non-traditional perspectives: as critical infrastructure, economic development, preventative health care, and the underpinning of a successful K-12 education system.

State personal income tax and sales tax are the two largest components of South Carolina’s general fund revenue. Sales tax also funds Education Improvement Act (EIA) expenditures.