New horizons for early education — interview with Chad Dunkley | VIEWPOINT

Chad: We have to build the financial stability
of families so they can expand and grow. It is absolutely critical for the future of
this country that we do that. Katharine: Hey, Chad. Thanks so much for being here today at American
Enterprise Institute. I’m thrilled you’re here to talk about New
Horizon Academy, which is a chain of childcare centers that you run that serve children from
birth onwards. Chad: Yes, thank you, Katharine. Yes, I’m CEO of New Horizon Academy. We’re a Minneapolis based provider. We have nearly 100 schools now in four states,
Minnesota, Iowa, Colorado, and Idaho. Thanks for having me. Katharine: So you have an unusual story in
how you got into this business. Tell me a little bit about how you became
the CEO of New Horizon Academy. Chad: Yeah, happy to. So my mom opened the first New Horizon Academy
classroom back in 1971 in the suburb of Minneapolis. And my twin brother and I were actually some
of the first kids enrolled in the program. I often say the behavior guidance policies
we have are because of how we behaved back then. And I kind of grew up with the business, but
I wasn’t really sure I was gonna stay actually. And I was in law school and my last year of
law school, I became a young father. It was really that moment, becoming a parent,
holding that little boy in my hands, I realized what my mom started back in 1971. There’s absolutely no better place for me
to focus my attention and energy and spend a career making a difference for kids and
families. Katharine: So you decided not to be a lawyer,
and you, at that point, became CEO of the company or were you working alongside your
mom? Chad: Yeah, I worked alongside my mom. I had done almost every role in the company
when I was a kid from waxing floors, to painting walls, to being an aid in the classroom, to
various roles and leading different parts of our company. At that moment, it was just a decision. I did finish my law degree. I’m licensed to practice. I use it every day in business. But it was really that moment where I decided
my path and my career was New Horizon. So I grew up in the business in different
roles through Vice President of Operations. For about 10 years, I was the Chief Operating
Officer. And then about the last six years, I’ve been
CEO of New Horizon. Katharine: So when you became CEO, what was
the company like? How many schools? How many kids? What states were you in? Chad: Yeah, we were only in two states. We did have some programs in Idaho, and maybe
we had about 50 locations, 60 locations at that time. So we’ve nearly doubled, actually, in this
last year. We’ve gone through our fastest growth. We’ve opened a dozen centers in the last 12
months, nearly a center a month. So we’re in an exciting phase of expansion
in an exciting industry that has so much happening. Katharine: And so tell me what exactly what
your New Horizon schools do. Who do they serve? How often? What hours? Chad: Yeah, most of our schools are open Monday
through Friday 6 a.m. to 6:30 p.m., which is, you know, the primary hours families need
to support work. I think one unique thing about New Horizon
Academy, we are really committed to serving all families. And so, years ago, Minnesota used to be one
of the best states to help even low-income families access high-quality center-based
care. And I should pause for a minute. New Horizon has always been highly committed
to quality. We were the first large provider in the country
where 100% of our programs were nationally accredited by the National Association for
the Education of Young children, which is our gold standard, our federal gold standard
for quality. We have participated in many studies on helping
children’s executive function. We worked with Yale on health and safety policies
in early childhood to make programs better. We were the first provider in the country
to work with the Institute of Agriculture and Trade Policy on helping children eat more
fruits and vegetables. So we’re really thought leaders in the industry
on quality and doing what’s right for children. But what’s difficult in our industry is serving
low-income children. That area has been dramatically underfunded,
but Minnesota was a leader until about 2003. We were able to serve all families. We had schools located in very low-income
communities. I’m proud of our work because those children,
as we know now, the research says, “Make the greatest academic gains.” And so in 2003, like many states, we were
faced with a huge budget deficit in Minnesota, and they slashed all the funding. They took all of the supports to really have
those or help those families access schools like mine that were really helping their children
get ready for school. And that’s really when not only did I care
about and was the leader of my company but realized I needed to get involved in advocacy. We’re making a mistake here, where I watched
firsthand the impacts on kids and families as they lost access to good programs, and
they lost jobs, and couldn’t find quality for their kids. And really, until recently, we haven’t seen
some of those investments come back. So for a long time, New Horizon Academy went
from serving all families to serving only high-income families. Because in early childhood, if you’re gonna
run high-quality programs, the cost is pretty difficult for middle-income families. And I know we probably wanna talk about the
unique early learning scholarship model, at some point, that helped us recommit to the
families that need us most. Katharine: So before we get to that, so let
me just clarify. What are the ages of the kids that you serve? Chad: We serve babies as little as six weeks,
though that’s uncommon these days, more families start about 12 weeks, and all the way through
the end of fourth grade in our before and after school programs and summer school age
programs. Katharine: So the younger children, sort of
pre-kindergarten, so birth to age five, they are mostly there all day. Is that correct? Chad: Correct. Katharine: New Horizon is a for-profit. Is that right? Chad: Correct. Yep. Katharine: I imagine you get questions about
what kind of quality a for-profit is providing. So do people wonder whether you’re in this
just to make money rather than to improve the well-being of kids, and what are your
comments on that? Chad: That’s a very good question, and it
is a difficult thing that we face being in the for-profit industry. I think, though, when you sit around a table
and you start explaining your passion for doing this right by kids, that starts to go
away. It’s about relationships. But every time there’s somebody, a new advocate
in Early Childhood, it’s almost like you have to re-establish that credibility. But we are very committed. People can come into our schools anytime,
see the services we’re delivering. We have very low teacher turnover, very high
parents satisfaction. And we participated in a number of studies
showing how well our kids enter…how prepared they are when they enter kindergarten. So I think the proof is in the work you do,
but I do think there is a for-profit bias that sometimes happens in early childhood. But doing our job well is the best way to
combat that. Katharine: Do you think there are any advantages
to childcare companies, childcare providers being for-profit? Chad: I think the advantage about the delivery
system we have, just like you ask any economist, there are market forces that constantly push
our programs to make sure that we’re meeting the needs of our customers by let’s say, the
service hours. We’re open at 6 a.m. because parents need
it. We close at 6:30 p.m. because the market wants
that. And I also know that if I don’t connect with
our families and make sure that they’re a partner in helping us raise their children,
they can choose somebody else, which makes me look constantly at what my competitors
are doing, and ways to improve the delivery of my service. So I think there’s a lot of market forces
that we don’t wanna lose as we decide, how do we grow and change the way we invest in
early childhood? Because I absolutely believe we have to invest
more in early childhood and help support families access to quality. You know, as Art Rolnick always talks about,
“We need to keep these competitive forces,” because you watch the public school system
and maybe very well-intentioned people have designed a system that cares more about the
adults than it does about the children. And that’s what I love about early childhood. I can love the children and put them first,
and also care a lot about what their families need. And let’s not lose that as we design a system. But I am perfectly comfortable saying we have
to have quality. There has to be measurements of quality. We have to be committed to quality because
care is not helpful to children if it’s not quality. It’s actually harmful. And so I think there’s a way to keep the benefits
of both, but we have to be very careful how we design this system so we don’t forget the
family. Katharine: So you mentioned Art Rolnick. Tell me who Art Rolnick is, and I know that
he was involved in starting a really innovative approach to funding early childhood that you
were involved with, sort of from the ground up. So tell me who he is and what that was all
about. Chad: So Art Rolnick is was the Chief Economist
to the Federal Reserve Bank in Minneapolis, and he was dragged into this early childhood
thing by a board chair that I was with. Todd Otis was the chair of the Democratic
Party on this board called Ready 4 K. We had an ex-Republican Governor, Al Quie,
a Democratic Mayor, Don Fraser, who all met him for lunch and said, “Look, we need the
business community to get involved. We need more investments in early childhood.” And as they were dragging them into this,
he said, “Well, I wanna look at the economic case. How can you prove the economic case?” And that’s when they started to discuss these
longitudinal studies that were coming out, like the Perry Preschool study, which is very
well known. And that’s when I went back, and I know the
research, and it’s pretty clear that what they’ve done to validate that there’s a huge
return on investment when you invest in early childhood, and that really most of the benefits
go to society, not just the family or the child. And that really changed the conversation in
Minnesota. And I think Art’s work has changed the conversation
around the country, that there are some things that are worth government investment or public
commitment too, and early childhood one of those. The research is really powerful. Katharine: And so, what did he do with that
information? So then what happened? Chad: Well, we all strategized on this board
of Ready 4 K, well, how would we design a system that worked better for kids and families,
worked better for the providers in the system? And that’s when we came up with early learning
scholarships. One of the great things about early childhood,
too, right now, if families can afford it, is they get to choose what works for them. Katharine: So tell me, what are early learning
scholarships, which are sort of 101? How does it work? What is the thinking behind it? Chad: So it’s a parent choice model, and it
allows families that qualify once, based on their income, to choose any provider, headstart,
a childcare centre, a family childcare school district as long as their program is highly
rated. And that scholarship stays with the child
once they get it until they enter kindergarten. And it’s worked beautifully for families because
if the school district is right for you, if those hours work for you, sometimes school
districts don’t serve families the hours they need, then great, go ahead and do that if
that’s the right thing for your family. If New Horizon is the right thing for your
family, you can come choose our school. And it may be because it’s a location, quality,
whatever it is, but it really respects families. That’s what I love so much about it. And on the ground, we’ve watched it do amazing
things for kids and families in Minnesota. Katharine: It’s targeted at low-income families,
correct? I know that it is, you’ve shared with me that
as the scholarship… So, well, tell me the history of… So it was started as a project of this business
group, right? And there’s a component that helps parents
choose called Parent Aware, right? Which is I understand was taken very seriously
and promoted widely. Tell me about how that worked? Chad: Yeah, so it was really interesting. So the business community said, Art brought
the business community together and said, “I have this concept, and I’d like us to test
it. And I don’t want government interference.” As a matter of fact, when they first put it
together, they were gonna put some legislators on this Minnesota Early Learning Foundation
Board. I was actually gonna be one of the members
too. And they said, “No providers and no politicians. We’re gonna come up with our own plan.” Katharine: Just the business community? Chad: Just the business community. And they put in $20 million of their own money. They selected four areas in the state of Minnesota,
and said, “We’re gonna pilot these scholarships. We’re going to evaluate the children and see
how they do.” And he did convince me, though, to build a
school in one of these pilot areas. And so we… Katharine: To build a school? Chad: To build a school so we could be part
of the project in an area, north of St. Paul. So we built our Rice Street school there. We were part of the pilot project. The children attended these schools. They saw not just New Horizon located in the
area but other schools in the area expand services because they… Katharine: This had been a low-income area
that had fewer childcare providers previously. Chad: And then they assessed the children,
and they did wonderfully in almost every skill level. And we took that evidence to the state, and
the state began investments in early childhood. But you asked, it’s not just about bringing
resources, there has to be a measure of quality. As I mentioned, we know enough about brain
development to know that children have to be in a quality environment. It’s only quality that achieves results. And so, at the very same time, we were investing
in early learning scholarships you mentioned, we created a program to evaluate quality called
Parent Aware. We had some groups come together to try to
identify the areas of quality that should be measured and evaluated. We also created a system in Parent Aware that
help providers who got into the program. It had additional resources to help them move
up the levels of quality, so we had to do both of those pieces together. Otherwise, if you’re just giving scholarships
and sending parents to any private provider, and there aren’t measurements of quality,
you won’t get the same results. Katharine: Parents have a hard time choosing,
right? They don’t have a lot of information. They don’t understand what the landscape is. What did you guys do to address that? Chad: You know, because we had the business
minds together, they really thought of this in a very different way. So not only did we create Parent Aware, but
they did a ton of marketing and advertising for a couple of years… Katharine: …to parents? Chad: To parents. You couldn’t listen to a radio for more than
20 minutes without hearing a Parent Aware ad, but they put it everywhere. They had billboards. They had TV commercials that were making parents
aware that we now have this system. And I can tell you, as a private provider,
not just in this Rice Street location because my schools were four-star rated, we saw a
dramatic increase in all of our schools because parents now had an easy way to identify, “How
can I find quality?” Katharine: And so you mentioned that the business
community piloted this with no government money or even involvement. The results are good, were good, and then
what happened? Chad: We brought that evidence to the state,
and Governor Dayton, at the time, and legislators were pretty impressed by the evidence. And they began…I believe, the first year
might have been $40 million to… Katharine: This is a Republican-controlled
legislature. Is that correct? Chad: It was, with a Democratic governor. Correct. And that’s the nice thing about this model
with scholarships. It really is a bipartisan approach. And there’s a lot of movement around the country,
both Republicans and Democrats that we have to do more. For particularly low-income children, I think
there’s a big agreement there that we want all children to come to kindergarten with
the skills and abilities they need to thrive from kindergarten and beyond, the studies,
and the research. Everybody’s heard about, you know, Jack Shonkoff’s
brain research to Art and others validating the Perry Preschool study and other studies
of intervention for disadvantaged children. If they get high quality, they come to kindergarten
on an equal footing with a real opportunity to thrive. And that’s what we want in this country is
opportunity for our children. Katharine: So as you know, the national profile
of childcare has been raised pretty dramatically in the last few weeks. Elizabeth Warren proposed a federal childcare
bill as a part of her platform, which $70 billion a year on February 26th. I believe they’re expecting that the childcare
for working families is going to be introduced in the House, $30, $40, $50 billion a year. What are your thoughts, from your experience
in Minnesota, for how we should be thinking about this? What advice do you have for our country as
we are just starting to tackle scaling our childcare systems up and making them accessible
to more children? Chad: Well, I would say we need to do something. These proposals are pretty significant. And sometimes, people put out a messaging
bill that really can’t practically happen. I really think we have to make a giant step
forward on early childhood. Katharine: And why? Why do you say that? Chad: A number of things. One, 2017, we had the lowest birth rate in
30 years. But we need, in this country, our families
to feel financial security so they can grow their families. And right now, young families or families
in these prime childbearing years are stressed, even the New York Times asked families, “Why
are the birth rates going down?” And they said the number one reason they may
have less children or no children is the cost of childcare. And I think we kind of done a little bit of
a disservice. We told families now quality matters. We told them their children should be in a
high-quality program. But for most of those families, what we told
them they should have for their children, they can’t afford. And there are moments where we should intervene. We know the demographics are changing in our
country, and we know that a big part of the federal government is supporting our seniors. We need these young families not only to grow
and expand but to feel confident they can stay in the workforce if they choose to. So more intervention is needed. And I think a lot of well-intentioned politicians
realized the problem is large. But I would caution anyone from, one, proposing
something that we’re never gonna have enough money to do. And two, if we do this too quickly and don’t
do it with high quality, it won’t work for kids. And the problem with a massive investment
in early childhood is we didn’t build the workforce. The workforce is a difficult part. We don’t have a lot of people going in to
get education degrees. For those of us in early childhood, we’ve
had to find and develop our own systems of growing our own. We bring those interested in early childhood
in as an aid in the classroom. If they’re excellent with kids, we help them
go back to school and get degrees. So I think we have to be really thoughtful
in that design because just providing care for kids does not help them. If you look at the research, they can actually
cause harm. You need well-intentioned, well-trained staff
that know how to have high-quality adult-child interactions. That’s the key to early childhood. It’s the relationship with the adults around
you. And so I would say, we can dream big, but
we have to do this well. Whatever we do, we do well. And the other thing is, we’ve shortchanged
our low-income children in this country. We’ve underfunded the Child Care and Development
Block Grant. Many states pay… The rate they pay for childcare is so
low that you can hardly pay the teachers less than minimum wage. I mean, you look at the average hourly rates
that we’re paying childcare centers and family childcare around the country, it’s less than
we pay a babysitter to basically watch our kids, maybe they’re not even doing that while
we’re out at the movie on a Friday night. And so we do have to really think about…we
have to do more. We have to do more. Families don’t have financial security. You know, I have made comments around that,
you know, when Roosevelt said, social security, our whole country was concerned about the
financial health of our seniors. It’s time for a package of family security. We have to build the financial stability of
families so they can expand and grow. It is absolutely critical for the future of
this country that we do that. Katharine: So let’s say you got to be early
childhood czar in the federal government. What would you do? How would you direct this effort? Chad: Well, I would start looking at the early
learning scholarship model. I think it’s a really well thought out model. It really allows us, as we said, parent choice
that gives parents the flexibility of choosing something that fits for their child. Katharine: And it targets disadvantaged kids. Chad: It does. And I would start there. I would start with larger scholarships for
those families, but I would use that system on a sliding fee scale to give a little bit
of help to middle-income families as well because they are the ones sometimes left out
of being able to access the real high-quality programs. But I think that model also requires quality
of programs. Like I said, it’s not just access, quality
and access go together, and children need that to thrive in this country. So I would say that model is a really good
model to bring to the federal government. But start with our lowest income families,
make sure they have a place, make sure it’s a place that’s quality so their child can
enter the kindergarten classroom-ready. But we do have to start thinking about strategies
that help middle-income families so they have a real choice as well. Katharine: So when this group was launching,
the Early Learning Scholarship model, as I understand it, one of the concerns that was
expressed about whether it would work is that the idea was empowering low-income families
to access high-quality care. However, those families lived in neighborhoods
that did not have an adequate supply of high-quality care. So as I understand it, people were concerned
that families would receive these scholarships and have nowhere to spend them. So how did that play out? Chad: You know, that’s a great question. The exact opposite happened. In the pilot areas not only did New Horizon
Academy open a program, but many family childcare centers began the rating process immediately
when they found out new resources could be available. So one of the pieces of evidence we brought
to the state was showing how much more highly-rated care was available, Headstart opened new classrooms,
the school districts in the area expanded to new classrooms. And as another piece of evidence, after the
state really started to step up investments in scholarships, I told you New Horizon Academy
was really happy about serving low-income families when the state stepped back its investment
in 2003. Now that I’m confident that those investments
continued, I actually opened four new urban schools in the last couple of years, some
of our nicest, most impressive schools ever in communities that need us most. And in our 50 years, I’ve never had four schools
fail faster than these four schools. So it showed these communities had been significantly
underserved. And with this new money, we’re not afraid
to serve these children. As a matter of fact, it gives me great pride
to serve the children that need us most. I know I had an opportunity to tour you through
one of those schools just recently, but it makes me proud. And there are many other providers who are
ready, willing, and able but have not had the resources to serve the families who need
us most. So that is one of the best parts about the
market-driven early childhood system. The market will step up if the resources are
there. They’re just simply not there in most parts
of the country. Katharine: So Minnesota invested a lot in
developing the Parent Aware system. The business community was engaged with that. It’s something that’s been so well-publicized
with families in Minnesota. Do you think it makes more sense for the federal
government to be setting sort of a national Parent Aware system, or do you think there
is some benefit to be gained by allowing states to build their own systems for this? Chad: So I think that’s a complicated answer. But I can tell you, nearly 40 states have
begun design of a quality rating system. It’s long been suggested to use federal quality
dollars to design a system of identifying quality. The new Child Care and Development Block Grant
requirements suggested that one of the… And it’s been a great thing because every
state has had to have a conversation about quality. As a provider that operates in a lot of states,
it should look more similar. And I think that’s what we need to work on. But I do like the idea that on the ground
in the states, people are talking about quality, how do we identify quality? But kids don’t need different experiences
in Idaho as they do in Minnesota, as they do in other states. So those quality criteria should look very
similar in states. But the strategies to also allow and give
families access to that quality is also something that states can be somewhat innovative with
because each state is different, each state has different demographics different…are
there more rural? Are they more urban? So everybody has different challenges, and
it’s hard to solve local problems from Washington sometimes, but there should be guiding principles
of what quality looks like. And let’s not make this so complex that it’s
very difficult for providers to go through the system. So I guess I’m in between on that. There’s some guidance we should give, strong
guidance on what that looks like. There’s also places like, NAYC, the National
Association for the Education of Young Children. They have federal standards for quality. They have an accreditation system that’s been
well vetted and revised over the years to follow. Katharine: And is voluntary for providers,
correct? Chad: And it’s voluntary. Correct. But it is also a really valid measure. We had a study done back in Minnesota in 2000,
I think it was 6 or 7 that evaluated, how do kids do that attend accredited centers
compared to the general public? And we were showing, at the time, about 50%
of Minnesota kids were ready for school in Minnesota. But if they attended accredited center, over
90% in every learning domain were fully prepared for kindergarten. So we do have some systems out there that
are already really good at identifying program quality. And we should be elevating those pretty quickly,
so parents can get easy information like Parent Aware, where they can go online and find out
the rating of their child care provider. Katharine: So one last question, what are
your goals for New Horizon? Where do you hope to go? Where are you hoping to see yourself at New
Horizon 10 years down the line? Chad: That’s a good question. We’ve been very careful with growth. I’m really proud of the consistent quality
we’ve offered. Like I told you, being 100% accredited was
really important to me. I wanna be really careful that that consistent
quality stays. And so, I’m excited about growth going into
these new states. It’s been so fun to meet families who say,
“This is what I dreamed I could have for my child.” I’m really proud of the schools that we build,
the quality we offer, how we treat our people. I am really proud, and I do think we do something
unique. And I wanna grow as fast as I can do with
consistent quality and high-quality people. And right now, we’re in the most exciting
time of growth in the history of our company, and I hope that continues. But if I don’t see consistent quality in the
new states we’re going into and the new schools we’re opening, I’m gonna slow that down because
I got into this and stayed into this because I care about kids. I care about their experiences, and I care
that we’re fulfilling the promises we make to families that are… The children who attend New Horizon Academy
are loved, well cared for, and we are teaching them academic and social skills that will
last a lifetime. Katharine: Thank you very much. Chad: Thank you, Katharine. Katharine: Hey, everyone. That’s the end of our discussion with Chad
Dunkley of New Horizon Academy. Thanks for watching. If you enjoyed what you saw, remember to like
the video or leave us a comment. And be sure to check out the rest of our videos
and research from AEI.

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