Pay for Success Coming to New Jersey

This is truly one of those moments when I wish I hadn't called it, but here comes Pay for Success. John Mooney at NJSpotlight posted this story this morning. State Senator Ruiz has introduced two bills to pay for a new pre-school initiative. 

One involves the dedication of $103 million of state money. Read the full text of the bill here. The other bill is called “Early Childhood Innovation Act”. I love the names given to these things. Anyway, it's a "loan pilot" program. Let's call it what it is: Social Impact Bonds aka Pay for Success. You can read the full text of the bill here.  

I'm not going to go into all the reasons of why Social Impact Bonds are a terrible "solution" for New Jersey. I've already written about and testified against it. You can read all of it here, here, and here.

Keep private money out of public education. Do we need high quality preschool in New Jersey? Yes. Absolutely. What we don't need is Wall St. paying for it with the promise to earn that money back on the backs of our youngest and most vulnerable citizens. 

We ALL deserve better than that. 

Edited to add: Revised bill S973. 

The End of Special Education Part IV

This is really Social Impact Bonds (SIBs), aka Pay for Success, part 2. 

It seems that NJ Senator Teresa Ruiz, Chair of the NJ Senate Education Committee, thinks that SIBs may be a way to pay for the Committee's vision of Pre-K in New Jersey. Tuesday morning I heard a clip of Senator Ruiz on WBGO's news report. My jaw dropped.

Senator Teresa Ruiz says one recommendation is establishing a five-year pilot program allowing the private sector to pay for expanding early childhood education and then receive a portion of the state savings from that investment.

“It allows for programs to really develop more quickly because the funding is there, and certainly, later on, what we can look for is we will save money because we won’t have to have early-intervention programs and classification and wrap-around services because we did the work early on.”

Just. No. 

I wrote about SIB's here, but let me recap. Goldman Sachs funded a SIBs program in Utah. They claim a 99% "success" rate. In other words, 99% of the 3- and 4-year-olds who went through their funded program did NOT require remedial help or special education classification. Goldman Sachs received $260,000 in payment for those 109 out of 110 students. And will continue to receive payment for every year those students are NOT classified for special education. 

You know there are going to be questions, really basic ones, when you see "results" like that. Presumably, Senator Ruiz heard about those results and did not look further into the inevitable questions about the validity of those claims. 

What was the starting criteria for those students? What tests did they use? Medical history? Demographics? How many students would have likely had to have special education if they didn't have the "high quality" Pre-K experience? How many would they expect to classify even with the experience? What is "high quality" Pre-K? What does "high quality" Pre-K cost? How much does Utah spend on Pre-K? What is the threshold that has to be met for Goldman Sachs to earn its money back?

The NY Times DealBook took an unusual and distinctly skeptical look at the program.

A few weeks ago, Senator Ruiz held a hearing on Pre-K. All of the usual associations were there to provide testimony. All agreed that "high quality" Pre-K is essential to a good start in elementary school. It is even more important for children from certain demographics to have these experiences. 

A Rutgers professor of economics, Steven Barnett, testified that "high quality" (he put great emphasis on that) Pre-K could mean as much as a 50% reduction in the need to classify for special education, BUT that most studies show a 10-20% reduction. That is considered to be very good. In this context, 99% is not even statistically possible. 

So, how much did Goldman Sachs spend per student? A measly $1700, not even enough to cover part-time costs of daycare. Pre-Ks used in successful studies spent 4 to 5 times that amount. Again, what exactly is "high quality" Pre-k? Sounds like Goldman Sachs got off cheap.

Goldman Sachs also only had to achieve a 50% reduction to in order to make back their investment, plus 5%. What's unclear and I haven't found out yet is, who would have picked up the tab if the program "failed" and only achieved a 10% reduction? Would Utah have been on the hook for that? Or, would Goldman have simply written it off? Can we please acknowledge that no Wall Street firm is going to enter into a deal like this if they didn't expect to make money?

I'm also not sure what the point of bringing in Wall Street was. Utah, previously, had no Pre-K program. They didn't really even know what the costs are. Usually in Pay for Success, you're trying to show a savings on the government side...which is why in places like Texas, this kind of program has not worked with daycare. You simply can't show great savings if you're not spending any money on it in the first place. 

Now for New Jersey. What is Senator Ruiz attempting to achieve? Her statement, "we won’t have to have early-intervention programs and classification and wrap-around services because we did the work early on" is naive at best and potentially destructive at worst.  

"High quality" Pre-K is not a magic bullet. Students with disabilities will not be magically cured by attending preschool. It sounds too good to be true because it is. New Jersey's classification rate is about 14.5%, higher in low-income districts where this program will take place. 

Will preschool help decrease the percentage of students who need special education services in those districts? I have no doubt that it will. The research supports that presumption. 

Are you going to end the need for Early Intervention, classification, and wrap-around services? No. You aren't. There will always be students who would have been classified no matter how much preschool they had. There will always be students who need wrap-around services because we, as country, much less as a state, are doing nothing to address the poverty that creates the need for these services.

Big picture here is, Goldman Sachs is going to make money on students NOT being classified. RtI is going to become the framework for K-12, delaying as long as possible the identification and classification of students with disabilities. And the Special Education Ombudsman position the Senator is trying to create (because constituents have been begging for help) will work for the NJ Department of Education. 

This does not look good for the students with disabilities in New Jersey. Parents, it's going to be a really interesting (read: ugly) ride while all of this plays out. We don't need a system that further works against students and their families. Find another way to pay for preschool that doesn't involve a negative outcome on our most vulnerable students.

The End of Special Education Part III

Social Impact Bonds, aka Pay for Success. Both terms sound so innocuous. Nothing could be further from the truth.

In the special education world, everyone, including Goldman Sachs (yes, that Goldman Sachs), is trying to reduce the number of students who are formally classified with a learning disability. As we have just celebrated 40 years of IDEA and its success at requiring all children have a free and appropriate education, programs like Pay for Success, are especially heinous.

While there are a fair number of studies on the impact of high quality pre-school on the number of students who later do not need special education services. The range of success is varied, but still a 10-50% reduction is really big. It does makes sense to support high quality preschool. What doesn't make sense is for Wall St. to fund those pre-school programs with the aim of making money off students NOT being classified.

This has already been done in Utah. Goldman Sachs claimed a 99% reduction in "at risk" students being classified. 99%. That cannot possibly be correct. Even if you only use, say, NJ's average of a 14.68% classification rate, that 1%  rate is simply not possible. Goldman Sachs got paid for every single one of the 99% AND they will be paid every year those students are not classified.

Does anyone think, even for a second, that Goldman would enter into a contract where they did not expect to make money? I can't wait to see the long term outcome on this. How many of those kids will actually need services later because they were sold out in pre-school?

Look, I get the public-private partnership idea. In some cases, it may make sense. However, when public education is involved, in our current climate of selling it off to the highest bidder, while looking for some magic pill to "fix" everything, literally selling out our special needs (any!) kids is not acceptable.

And yet, Pay for Success may be here to stay because it is included in the rewrite of ESEA. We've been given about 48 hours to review the entire document before it goes to a vote in Congress. The very first thing I did was a search for the Pay for Success term. And, sure enough, it's in there.

Let me channel my inner Nancy Reagan: Just say NO to ESSA.

We need time. We need educators and parents to weigh in on the rewrite. We need to be sure that this law is supporting public education for all children in this country, not Wall St. firms, not charter school companies, and not testing companies.

Our children deserve so much better than this.