How Goldman Sachs could pay for Minnesota’s public preschools

Source: Josh Verges, Pioneer Press, January 10, 2017

In its push for high-quality preschool, Minnesota could turn to investment bankers and philanthropists for the upfront capital that lawmakers have been reluctant to provide. If preschool later proves to save the government money, whether on unspent special education services or by other markers, the investors would get back their seed money and potentially much more. The model, known as Pay for Success, was pioneered in Salt Lake City, where the investment bank Goldman Sachs and the Pritzker Family Foundation received their first preschool payouts in 2015. Sen. Orrin Hatch, R-Utah, succeeded in inserting the concept into the federal government’s new education policy law. The Minnesota Department of Education recently was awarded one of the first grants, worth $397,000, to explore the feasibility of using Pay for Success to fund early-childhood education. … Minnesota is looking to Pay for Success not for expanding preschool but for boosting the quality of existing public preschools that serve mostly low-income students. Officials are proposing a broad expansion of the so-called Pyramid Model, now used in only about 100 Minnesota classrooms. The framework offers increasing levels of support to children who need it and has been shown to boost social-emotional and academic skills. By training teachers and providing classroom materials and expert coaching, the department hopes to start thousands of 4-year-olds on a path for lifelong success. … The Minnesotans involved in the project also are looking at a long list of markers of success. Besides special education placement, they said they might track attendance and suspension rates, scores on social-emotional assessments and third-grade reading tests, and even teacher retention. Temple said that Pay for Success programs are administratively complex, and that it will be difficult to assign a monetary value to each outcome they intend to track. … The greater challenge, Forsberg said, will be figuring out who will pay those investors back. Quality preschool would figure to benefit many levels of government. Individual school districts and the state would save money if fewer students needed special education services. And if those students succeed in school and life, they won’t burden counties with the costs of incarceration or various social services. …