A Friend of the Park Rag sent us a story about Salt Lake County, Goldman Sachs, and the State of Utah working to provide Pre-K to more students in the Granite School District. Pre-k was free to disadvantaged kids but had a long waiting list and cost the Granite School District $1,500 per student for the half day program. So, they weren’t able to expand it.
Enter a relatively new concept: The Social Impact Bond
Politico says, “In 2013, Goldman Sachs and the Pritzker Family Foundation put up $7 million to expand a pre-K program run by the United Way of Salt Lake. The deal was that if the program delivered the results it promised and kept kids from needing special education, the state would pay most of the savings — about $2,600 per student — to the investors. If the program failed, the nonprofit Pritzker Foundation would help cover Goldman’s losses.”
The program allowed the district to expand the Pre-K program to 595 more disadvantaged kids… about half the waiting list. Before the program, it was expected that 110 of the 595 kids would need special education in elementary school. After the program was implemented, kindergarten testing determined that only one child required special education. That saved the state over $280,000 according to the United Way.
The outcome was that the state saved money, the investors made money, and more kids were able to be in Pre-K. It truly was a win-win-win, due to these social impact bonds.
The article continues on to talk about places where the concept hasn’t worked, what the risks are, the benefits of Pre-K, etc. If you are interested in alternative ways of paying for education, you’ll likely enjoy the article.
h/t to the Friend of the Park Rag who sent this in.