Thursday, December 17, 2015

The End of Special Education Part V

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.


  1. OMG! We won't have to have early intervention case we have high quality PreK!
    I have three kids. One reg ed., one legally blind, one entered school as profoundly autistic.
    How, precisely, would the most awesome preK in the world have helped my one year old legally blind child? Who would have taught me to teach him?
    Would great preK have made my autistic kid neurally typical?
    Would NOT classifying them have led to educational success? Does Ruiz honestly believe that neither kid would need special ed if they got great preK?
    $1700 a year would not have paid for OT!(and, strangely enough, legally blind kids have issues with hand eye coordination !)
    I am way to hot to write to her right now. I will gather my thoughts and write a letter.
    Thanks. I didn't know Ruiz was so short sighted as to believe no child could possibly remain disabled when they had great preK.

  2. "Pay for Success" is in ESSA. I would expect that more states are going to be looking at this model. I'd also be surprised given the many issues with Utah example that anyone would be dying to give this a go.

    Please to email her, call her, prepare testimony for January...anything to let her know we really don't want this. There has to be a better way to fund preschool.

  3. January what and where? I'd be delighted to testify, but at what?

    1. Presumably, there will be hearings on the economic investment plan. You can still write or call her and Senator Sweeney asking for a different way to pay for preschool. Pay for Success has not been successful. As I mentioned about Texas (Dallas), they chose not to go with this model for their daycare. In Utah, they could have borrowed more cheaply (according to the NYTimes) than this program cost.

      Bottom line is there is no simple answer, but the likely negative impact of this plus RtI on students with disabilities is not worth it.

  4. There's a good cautionary guide here about social impact bonds:

  5. You say that Goldman Sachs makes their money back each year the child doesn't go into special do you have any numbers? Can you give a concrete much does a company spend on one child and how much money do they make back and to they get paid for the next 15 years while the child is in school?? Is this going to soak the taxpayer?