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San Antonio, Texas: Public Funding of Childcare Services: Subsidy or Human Capital Investment?

Project status

Completed May, 1999

Lead Agency

Smart Start of San Antonio, Texas

Contact Person

Nancy Hard
Consulting Manager
Smart Start
816 Cameron
Suite 215
San Antonio, TX 78212
Tel: 210-225-0276

Research Firm

Jon Hockenyos
Managing Director
Texas Perspectives, Inc.
111 Congress Avenue
Suite 1200
Austin, Texas 78701
Fax 512-480- 3257


  • Children Served
  • Multiplier Effects on Local Economy
  • Governmental Transfers / Subsidies
  • Tax Receipts / Fiscal Impact


  • Stand-Alone Executive Summary/Brochure
  • Involved Business / Economic Development

Case Study

Case Study: San Antonio, Texas
"Public Funding of Childcare Services: Subsidy or Human Capital Investment?"
Date of Study Completion: May, 1999



The San Antonio economic impact study was sponsored by SMART START (also known as the Corporate Child Care Collaborative), a non-profit organization that addresses local child care issues founded by a local business leader and the Mayor’s wife. SMART START contracted with Texas Perspectives, Inc., a local consulting firm that specializes in return on investment studies (using input/output analysis) to conduct most of the data analysis. Additionally, a number of local business leaders, including a vice-president of Bank of America, a representative of the City of San Antonio, and a representative of the local newspaper were involved as advisors.


The intent of this report was to demonstrate the economic returns from local child care subsidies in San Antonio, Texas. In 1999 the Mayor of San Antonio and other city government policy makers began discussing the possibility of devoting city funds for child care. They had experience using I/O studies to help make a case for expenditures, and requested a cost-benefit analysis of local child care subsidies. Involving the private sector in this effort seemed to be a logical step, since San Antonio had a long history of public/private partnerships. For example, about five years before the study a public/private partnership involving local corporations created an endowment for early child care and education. Many of these individuals were still involved, and provided leadership and assistance for the 1999 economic impact study.

The Study:

Sector Definition

This study dealt with only a portion of the child care sector in San Antonio and projected the economic impact of increasing child care capacity by 3,000 slots through subsidization. 3,000 was the number of children on the San Antonio waiting list for public child care support.

Data Analysis

Measurement* San Antonio, TX
Number of Establishments not reported
Child Care Labor Force not reported
Children Served 3,000
Gross Receipts not reported
Number of Parents with Children in Paid Care  
Multiplier Effects on Local Economy X
Governmental Transfers / Subsidies X
Tax Receipts / Fiscal Impact

* All measurements were in regards to the impact of 3,000 new subsidized child care slots and not to the industry as a whole.

The study notes that the sector has economic, social and redirected (lower future social services needs) benefits. It focuses on earnings and employment, which were analyzed by looking at direct and indirect economic benefits using an input/output model. The report calculated benefits for the San Antonio metro area but costs only for the city.

Unique Findings

The study had a special focus regarding the scope of the child care industry. First, it was assumed that all families that would benefit from the program presently were not participating in the labor force and that each family had 1.5 children. Upon receiving access to child care, one new worker from each family would earn an hourly wage of $6.28. The study found that all subsidies would be recovered through increased tax revenue generated by the new jobs and their indirect economic benefits.


Organizational Change and Outreach

Both the local child care community and city officials have changed the way they talk about child care. Justification for child care on purely economic merits and language referring to costs, benefits and profits was used throughout the report. There was an obvious attempt to distance the policy from a welfare stigma while suggesting that more child care ought to be subsidized by the city. For the past 2-3 budget cycles in San Antonio child care has been talked about in terms of workforce and employment and not in terms of a welfare program.

A P owerPoint presentation, entitled “Child Care: Return on Investment” was created based on results from the study and has been used by the City's Community Initiatives Division when making presentations and budget requests within state government.

In addition to its strong ties to the business community, the committee has regularly talked with the editorial board of the local paper. The newspaper wrote a story about the report, and has continued to assist in publicizing the work of the committee.


At the time the study was conducted, the City Council was deliberating an increase in child care subsidy funding. The increase was secured. In addition, the four primary investors in child care in the San Antonio area -- the City of San Antonio, Alamo Workforce Development, the United Way and the collaborative of corporate partners-- signed a letter of agreement that delineated each group’s roles regarding leveraging funds and supporting child care. Since that time, the four partners have continued to revise and update this agreement. These leaders are also using the ten-year anniversary (of the original report and agreements) as a platform to prepare an updated report and put their findings back into the public discourse.

Interview with:
Nancy L. Hard, President/CEO
Family Service Association
June 29, 2004