A top Federal Reserve Bank economist recently told more than 200 business executives and advocates that investing in quality preschool programs carries a huge rate of return.

Art Rolnick (left), senior vice president and director of research at the Federal Reserve Bank of Minneapolis, said his analysis of longitudinal early childhood studies found a 16 percent real rate of return on the initial investment. As a comparison, long-term stock market investments get a 6 percent to 7 percent rate of return, he said. (Read his study.)

"Early childhood development is economic development, with a high public rate of return," Rolnick said. "We clearly need to fully fund these programs."

Rolnick's speech, "Dollars and Sense: The High Rate of Return on Early Childhood Investments," was sponsored by Action for Children, Chicago Metropolis 2020, Ounce of Prevention Fund and Voices for Illinois Children. The event raised awareness of Preschool for All, a proposal to make high-quality preschool available to all 3- and 4-year-olds whose parents want them to participate.

Rolnick said that 4 percent of preschool’s rate of return directly benefits the child in the form of a better job and higher salary. The public rate of return is even higher, with 12 percent of the benefit in the form of a better-educated workforce, reduced crime and less need for special education services, he said.

"The market signal is clear: If you want good-paying jobs, if you want a good economy, you need an educated workforce,” Rolnick said. “Sixteen percent probably understates the benefit of preschool.”

Chicago business leaders praised Rolnick’s analysis and Preschool for All.

“His thesis is irrefutable,” said Harrison I. Steans, trustee of the Steans Family Foundation. “We have to get behind the idea that every child in Illinois deserves a crack at going to school prepared.”

Illinois’ $60 million increase in state funding for early childhood education since 2003 is “an important step, but it’s not enough,” said M. Hill Hammock, vice chairman and chief operating officer of LaSalle Bank Corp. “We need to push our elected officials at all levels to continue to invest in children."

Rolnick said states will reap a greater benefit from investing in quality preschool than in spending millions of dollars to lure companies to relocate from one state or city to another. These business tax incentives are "a zero-sum move," he said. "There's no additional jobs, it's just relocating jobs."

Event hosts included Norman R. Bobins, LaSalle Bank Corp.; Valerie B. Jarrett, The Habitat Co.; Richard Kiphart, William Blair & Co.; Dolores Kohl, Dolores Kohl Education Foundation; Samuel J. Meisels, Ed.D., Erikson Institute; Michael H. Moskow, Federal Reserve Bank of Chicago; Diana Mendley Rauner; Raul Raymundo, The Resurrection Project; Patrick G. Ryan, Jr., First Look; Paul Snyder, KPMG; and Harrison I. Steans, Steans Family Foundation.

Preschool for All envisions providing voluntary, high-quality preschool for all 3- and 4-year-olds in Illinois. Children in families earning moderate incomes have the hardest time accessing services because they don’t qualify for government-funded programs but cannot afford full tuition. Preschool for All legislation is expected to be introduced this winter, calling for a five-year phase-in of a comprehensive system that is built on existing programs like child care, Head Start and preKindergarten.

Achieving Preschool for All will require people across Illinois to speak out in favor of the proposal. Make sure you support Preschool for All.