Numerous studies have calculated the cost effectiveness of public investment in high-quality prekindergarten (pre-K). The benefits and costs of investment in pre-K have typically been quantified in standard benefit-cost ratios expressed in net present value terms or in rate of return calculations. Long-term analyses of high-quality pre-K programs have found favorable benefit:cost ratios that varied from a minimum of 3.78 to 1 to a high of 17.07 to 1 (e.g., Barnett, 1993; Masse & Barnett, 2002; Reynolds, Temple, Robertson, & Mann, 2002; Schweinhart, Barnes, Weikart, Barnett, & Epstein, 1993; Schweinhart et al., 2005). Rate of return calculations have similarly illustrated cost effectiveness. For example, Rolnick and Grunewald (2003) estimated that annual real rates of return on public investments in the Perry Preschool pre-K program were 12% for the nonparticipating public and government and 4% for participants, so that total returns exceeded 16%.

One drawback of these methods of calculating the cost effectiveness of pre-K investment is that they are not well understood or routinely used by the legislators, typically at the state level, who actually formulate public policy with respect to pre-K. State legislators are more likely to examine the budgetary implications of policy proposals by analyzing their state-level year-by-year expenditure and revenue impacts. Thus, one potentially useful way of depicting the overall benefits and costs of pre-K investment is to translate net present value benefit:cost ratios and rate of return calculations into annual budget outlay and revenue consequences for each state.