State Financing for Preschool Fell 10 Percent, Report Says State financing for preschool fell by more than $548 million, or close to 10 percent, in the 2011-12 school year, the largest annual drop in a decade, according to a report released Monday. "The State of Preschool," released by the National Institute for Early Education Research at Rutgers University, also showed that enrollment in state-financed preschool has stagnated at about 28 percent of 4-year-olds and 4 percent of 3-year-olds. The decline in financing worked out to about $400 per child. Of the 40 states that offer state-subsidized preschool, 27 states reduced per-child funds in 2011-12. The overall financing figures were adjusted for inflation. W. Steven Barnett, director of the institute and lead author of the report, described the preschool situation as "a state of emergency." The report, which has been released annually since 2002, came a few weeks after President Obama outlined a plan to finance preschool for all 4-year-olds from low- or moderate-income families. The plan, which would cost $66 billion over 10 years, would be paid for by raising federal cigarette taxes to $1.95 from $1.01 per pack. At a news conference in Washington to unveil the report, Arne Duncan, the secretary of education, said children from low-income families start kindergarten an average of 12 to 14 months behind their wealthier peers in language development and pre-reading skills. "That is morally and educationally unacceptable," he said. And from a long-term economic competitiveness standpoint, it is just plain dumb. Over the decade, state financing per child has fallen more than $1,100 since 2001-02, though overall financing increased 48 percent over the same period. Michael J. Petrilli, executive vice president at the Thomas B. Fordham Institute, an education policy group, said the figures reflected an expansion in enrollment. "This is a policy choice we're making," Mr. Petrilli said, "which is to spread the money around to lots of kids instead of targeting it on the neediest kids." The report noted that quality standards for preschool programs had slipped over the past year. Out of the 40 states that provide state-financed preschool, only four states and one program in Louisiana met 10 benchmarks set by the institute. Given that research showing long-term benefits of early education come from studies of high quality programs, Kris Perry, executive director of the First Five Years Fund, an advocate of early education for disadvantaged children, said she was particularly concerned. "We really should not be tolerating publicly subsidized care that is not quality," she said.