The Woodhill Foundation

May 11, 2000

 

The True Cost of Head Start

Head Start was founded in 1965 by LBJ as part of his War on Poverty. The NASDAQ composite index was founded in 1971. This table shows how much the money spent on Head Start would be worth for each child at age 18, 21, 24 and now (as of market close on 5/05/00).

Cost per child

Cost per child

Value (1999$) at

Year of

First Year in

at age 3

at age 4

NASDAQ = 3816.82

Birth

Head Start

Nominal

In 1999$

Nominal

In 1999$

Age 18

Age 21

Age 24

May 5, 2000

1968

1971

$906

$3,726

$993

$3,957

$9,049

$9,526

$11,557

$61,509

1969

1972

$993

$3,957

$1,057

$3,967

$10,238

$8,984

$14,497

$66,626

1970

1973

$1,057

$3,967

$1,145

$3,869

$13,268

$15,368

$21,202

$95,521

1971

1974

$1,145

$3,869

$1,157

$3,584

$17,777

$21,568

$30,742

$114,792

1972

1975

$1,157

$3,584

$1,264

$3,700

$14,801

$23,883

$35,950

$109,764

1973

1976

$1,264

$3,700

$1,426

$3,921

$17,448

$24,072

$43,341

$108,452

1974

1977

$1,426

$3,921

$1,597

$4,080

$20,182

$28,766

$51,619

$107,414

1975

1978

$1,597

$4,080

$1,755

$4,027

$21,908

$32,978

$71,991

$100,688

1976

1979

$1,755

$4,027

$1,953

$3,949

$20,489

$36,891

$92,312

$92,312

1977

1980

$1,953

$3,949

$2,114

$3,874

$22,343

$40,094

$83,432

1978

1981

$2,114

$3,874

$2,303

$3,977

$28,088

$61,317

$85,760

1979

1982

$2,303

$3,977

$2,198

$3,676

$30,148

$75,440

$75,440

1980

1983

$2,198

$3,676

$2,252

$3,611

$30,826

$64,145

1981

1984

$2,252

$3,611

$2,378

$3,682

$47,013

$65,754

1982

1985

$2,378

$3,682

$2,303

$3,501

$54,733

$54,733

1983

1986

$2,303

$3,501

$2,532

$3,713

$47,957

1984

1987

$2,532

$3,713

$2,690

$3,788

$51,436

1986

1989

$2,690

$3,788

$2,739

$3,679

$51,032

1987

1990

$2,739

$3,679

$1,945

$2,479

$42,143

Source: The Woodhill Foundation.

Calculated from HHS, Census Bureau, and NASD data.

Methodology: We took the total expenditures on Head Start for each year and divided it by the number of children in the program. Then, for each year the child was in the program, we divided that cost per child by the NASDAQ composite in that year. At each age, we multiplied that ratio by the NASDAQ composite for that year (which was a simple average of the monthly closings for 1971 to 1996, and a simple average of daily closings for 1997 to 1999). This is the value of the hypothetical trust fund in that given year. We divided by CPI deflators to convert those numbers to real 1999 dollars. The current (2000) figure is not converted to 1999 dollars.

Implications: The opportunity costs of financing Head Start are unjustifiable given that there is no conclusive evidence that the program benefits participants. Therefore, we recommend that Head Start be replaced by the Parental Educational Investment Choice program, wherein the money current allocated to Head Start would instead be placed in individual trust funds for the eligible low-income children.