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Child development experts say high quality childcare can help kids avoid problems later in life - from low achievement in school to arrest records. The problem is the kids who need these care the most often can't get it. So Minnesota is about to try a new approach. The state is turning to the marketplace, betting that well-funded scholarships for poor children will attract high-quality daycare.

The program is not the brainchild of an early childhood expert. It comes, instead, from an economist who says this is a good investment that will save the state money.

NPR's Larry Abramson reports.

LARRY ABRAMSON: From his office in the Federal Reserve Bank of Minneapolis, economist Art Rolnick will almost be able to see construction of the new baseball stadium the city has agreed to build for the Twins. And if the Vikings get their wish, there will also be a football stadium. Here is Rolnick's economic assessment of the gain the twin cities will reap from these two projects.

Mr. ART ROLNICK (Economist): For stadiums, public return is virtually zero.

ABRAMSON: Rolnick is director of research for the Federal Reserve here. He believes there is a much better way to invest those hundreds of millions of dollars - give the money to city's youngest and poorest residents.

Mr. ROLNICK: So that they can send their - not their 18-year-old to college, but their 3- and 4-year-olds to a high quality, early ed program in their community.

ABRAMSON: Now, you're probably thinking, doesn't the government already do this through Head Start? Head Start, according to Rolnick and others, has only brought a limited return on investment because the quality just isn't high enough. Rolnick wants to spend a big bucks - $10,000 per child - on his scholarships. It's not welfare, it's an economic effort to seed the clouds, to lure the very best day care, the kind middle-class parents take for granted, and get it into the city's poorest neighborhoods.

Mr. CHAD DUNKLEY (CEO, New Horizon Academy): We're standing on Rice Street in what's referred to as the North End of St. Paul. It happens to be an area where they have identified a lot of low-income families with young children who they're trying to help give access to quality early-learning programs.

ABRAMSON: Chad Dunkley is CEO of New Horizon Academy, which has 51 locations in Minnesota. He's standing next to a tired-looking cinderblock building that currently houses the Empire Clock Company. This rundown corner isn't exactly prime real estate. But thanks to the promise of the early childhood scholarships, Dunkley plans to transform this place into a New Horizon child care center.

Mr. DUNKLEY: We're actually standing in where our infant program will be.

ABRAMSON: Inside, the employees of Empire Clock look bemused as Dunkley lays out how he plans to turn the place into a topflight child care facility. He's been closing programs in recent years because state reimbursement for child care had dropped. Now, Dunkley is the poster child for Art Rolnick's vision of how to increase the supply of quality care.

Mr. DUNKLEY: This has one of the highest densities of children 0 to 5. But truly because current, existing, state-funding resources don't allow families access to the level of quality care and we want to provide in this community, that's why we wouldn't have come here. We know the kids are here. They just couldn't get to us until this scholarship program became available.

ABRAMSON: Other providers say they're also considering opening new programs in the parts of the city covered by the scholarships. They will initially go to twelve hundred kids in targeted neighborhoods. But to prove Art Rolnick's theory, this program has to do more than just spend money. It has to reap a huge return by making a big difference in kids' lives. According to the research, that means the quality of care must be very high.

Unidentified child: Hello?

ABRAMSON: Here in St. Paul's Frogtown neighborhood, places like the Wilder Child Development Center are hard to find and tough to get into. The scholarships are supposed to change that.

Director Judy Ohm hopes there will be more centers that offer kids what they need, things like…

Ms. JUDY OHM (Director, Wilder Child Development Center): Opportunities for children to freely explore things that they don't have to ask permission for. So the sensory table, this changes routinely for any children, you know, there might be sand in here and there might be water in here.

ABRAMSON: And right now, it's peanuts.

Mr. OHM: Yes, that's right.

ABRAMSON: That's how…

The scholarship program, offered through the Minnesota Early Learning Foundation, will also try to improve quality by measuring it. Kathryn Tout, a local consultant, is developing standards that program overseers will use to measure quality. She says there are lots of basic differences between a center like this one and the homecare settings that many low-income residents use.

Ms. KATHRYN TOUT (Consultant): Something that you see a lot is maybe beautiful materials, but not a teacher sitting here on the floor, helping the children look through them, talking with them, having conversations with them.

ABRAMSON: If this experiment works, kids who get scholarships and better care will be less likely to need special education, less likely to get arrested, less likely to have all sorts of expensive problems years down the road.

Expanding the program statewide or even nationwide would require a lot more money. The question is will those promised benefits impress citizens and lawmakers the way a new stadium would?

Larry Abramson, NPR News.

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