Paying out of pocket: parental spending on preschool education
Author: Taub Center Staff Bulletin Articles

Extending the Compulsory Education Law to include 3-4-year-olds in the wake of the 2011 social protests has reduced parental spending on preschool with the main beneficiaries, until now, being middle and upper class households

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In July, the Ministry of Education announced that a new subsidized after-school program will begin in the 2017-2018 school year to provide an extended educational framework for students in public preschools in the afternoons, while easing the financial burden on parents.

This development is the most recent in a process of reforms that has occurred in the wake of the 2011 social protests in Israel and the subsequent Trajtenberg Committee (the Committee for Socioeconomic Change headed by Professor Manuel Trajtenberg). A central issue in 2011 — termed the “stroller protest” — called attention to high parental spending on preschool, which burdened young families and had an impact on their financial and employment decisions.

The cost of preschool rose by 43% in real terms from 2003 to 2012, a rise unparalleled in the rest of the education system and far exceeding the increase in household income or spending. Public preschools – while cheaper than private ones – were still paid for by parents, subsidized for those from the lowest socioeconomic backgrounds.

For most of the state’s existence, the Compulsory Education Law provided public funding for children aged 5 and over, except for special cases. However, following the Trajtenberg Committee recommendations, the Knesset decided to extend this law to cover all 3-4-year-olds starting in the 2012-2013 school year. Practically, this means government coverage of public preschool program costs along with subsidies for many private preschool programs.

A recent study conducted by Taub Center researchers Kyrill Shraberman and Nachum Blass finds that, due to the increase in government spending on preschool education, the law resulted in a decline of 11.5% in the average parental payment for 3-4-year-olds specifically. However, at the same time, there was a slight increase in parental spending on daycare for 2-year-olds. This may be due, at least partially, to the fact that parents who previously had to pay for 3-4-year-olds’ education found themselves with more disposable income than in previous years, which could be used toward daycare for their 2-year-old brothers and sisters.

As a result, average household spending per child for all preschool-aged children (ages 2-5) fell by only 3% following implementation of the law. The researchers also found that the law resulted in increased preschool enrollment for 3-4-year-olds: from 80% to 89% among the Jewish population and from 68% to 79% in the Arab Israeli population within the first two years.

As can be seen in the graph below, the main beneficiaries from the universal implementation of the Compulsory Education Law for 3-4-year-olds were middle and upper class households, and not those in the two bottom consumption quintiles. This is because preschool subsidies were already in place for most lower-income families prior to the 2011 social protests as a part of the “long school day” program, which funded public preschool tuition for children in localities with low socioeconomic status.

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To really evaluate the effectiveness of the law for those of different socioeconomic statuses, it is important to take into account the full-day cost of sending a child to a public or private preschool. On the one hand, public preschool costs are covered by the Compulsory Education Law, but, until now, the costs have only fully covered childcare until 2:00pm at the latest.

To enable children to remain in care after official hours, there are supervised public afternoon programs and after school clubs that are eligible for monthly subsidies up to 400 shekels, depending on the socioeconomic status of the parents. However, these subsidies cover only part of the total costs, and parents are expected to make additional payments for afternoon services if they plan to work full time or longer hours.

On the other hand, the vast majority of private institutions, though only partially subsidized by the Compulsory Education Law, provide service throughout the day, including the later afternoon.

This is another illustration of the way the universal implementation of the law primarily benefited middle and upper class households. For families sending their children to private preschool, the law led to a decline in full-day spending due to government subsidies for the earlier part of the day. In contrast, parents sending their children to public preschool still needed to arrange coverage for the afternoon hours if they planned to work after 2pm.

The average afternoon program spending increased by 45% between 2003 and 2014 among households with children aged 3-4 only, rising most notably between 2012 and 2014. The explanation seems to be that, due to subsidized preschool tuition in the morning, many more parents could afford to send children to afternoon programs.

This 45% increase also reflects increased full-time employment among young women, which creates a greater need for extended childcare coverage. Thus, the law enabled more parents of children to use money that would have gone towards preschool costs towards afternoon programs, but it did not necessarily reduce their overall full-day preschool spending burden.

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The new subsidized after-school program, announced this past July, will cover public preschool and elementary school students from the end of the regular school day until 4:00pm and will include a hot meal, teacher supervision, and extracurricular activities. The goal of this measure is to extend childcare coverage for working parents and to ease the financial burden on full-day preschool costs.

It’s important to note that overall spending per student in preschool education relative to Israel’s GDP per capita has not changed significantly since the expansion of the Compulsory Education Law to cover 3-4 year olds. What has changed is the share of this total spending that is provided through private parental payments versus public government spending.

The public share of funding for preschool education grew from about 79% on average before 2011 to 92% in 2012-2013. Accordingly, the private share of funding, which stood at about 21% on average before 2011, dropped to 8% in 2012-2013.

Therefore, the overall cost burden has been falling less on parents and more on the State. The new subsidized after-school program was passed in recognition that, nonetheless, lower and middle income families in public preschools still need more assistance in paying for afternoon care programs.