Category Archives: Early.Childhood.Education

States want to do good: Here’s how Wall St. is helping

Source: Ali Montag, CNBC, June 23, 2015

Goldman Sachs could be coming to a pre-K program near you. Or, at least, that may be the case in Pennsylvania. The state is proposing to implement social impact bonds, where private investors, like Goldman Sachs, can provide the upfront cash for legislators to address problems, like early education. … The state is nearing the end of a 30-day review period to get perspective from citizens. Wolf identified five areas of focus that the funding could go toward: Early childhood care, education, recidivism and public safety, health services, and long-term living. ….

Friendly FIRE

Source: Chris Maisano, Jacobin, Jacobin, Issue 15/16, Fall 2014

Social impact bonds offer private interests yet another opportunity to enrich themselves at public expense. …

Goldman Sachs wants you to know that it’s not just about plundering the globe for profit — it wants to do a little good along the way. That’s why the vampire squid has started founding seemingly innocuous philanthropic outfits like the Urban Investment Group (UIG).

Established in 2001, the UIG is the perfect embodiment of what labor journalist Bob Fitch used to call “friendly FIRE,” per the old shorthand for the finance, insurance, and real estate industries. Always attuned to the public-relations value of its activities, UIG promotes itself with a gauzy language of community uplift centered on the buzzword “double bottom line”: the simultaneous pursuit of social change and return on investment.

In a gesture of exquisite irony, its first investment was in the Dorothy Day Apartments, an affordable housing development in Harlem named after the founder of the anticapitalist Catholic Worker movement. Since then, it has invested billions of dollars in projects such as community health centers, charter schools, early childhood education, low- and moderate-income housing units, small business loans, and community development grants. As Alicia Glen, the former UIG chief currently serving as deputy mayor for housing and economic development under Mayor Bill de Blasio, put it: “We’re not all evil squids. We’re nice little calamari.”

Glen’s highest profile deal as head of UIG was a $42 million investment in Citi Bike, the privately funded bike-sharing program whose signature blue bicycles have become ubiquitous throughout Lower Manhattan and the gentrified zones of north-central Brooklyn. But bikes may not be the most important legacy of her tenure at Goldman. The bank, together with some of the biggest names in social policy, philanthropy, and the nonprofit sector, has led the way in establishing the burgeoning field of social impact bonds (SIBs)…..

…The SIB market is still rather small in terms of dollars, but its promoters are intent on achieving rapid growth. The current total value of SIB transactions in the US is estimated at approximately $100 million; sixteen states and Washington, DC either have an active SIB underway or are considering implementing one…..

….Public-sector unions are increasingly aware of the threat SIBs pose and have begun to rally against state-level legislation that would expand their use. AFSCME Council 94 in Rhode Island has been outspoken in its opposition to a bill that would allow the state to implement a $25 million SIB program….

EXCLUSIVE: Audit finds Bilinguals Inc. used taxpayer funds for fancy cars, apartment, funeral expenses

Source: Kenneth Lovett, New York Daily News, June 30, 2014

The new audit found more than $875,000 in improper reimbursements out of the $13.3 million Bilinguals Inc. billed government during the three-year period. … The audit, set to be released Monday, found that Bilinguals Inc. received reimbursements to help cover the cost of rent on a Manhattan apartment for Executive Director Trudy Font-Padron and her husband, Robert Padron, an assistant executive director, “so they wouldn’t be too far from the office,” even though the headquarters are in Forest Hills. Taxpayers also paid parts of the leases, insurance and other costs related to three upscale vehicles – 2009 and 2011 Lexus SUVs and a 2010 Honda CRV – for Font-Padron and her husband, as well as cable TV at their Manhattan apartment, auditors found….All told, auditors found more than $875,000 in improper reimbursements out of the $13.3 million Bilinguals Inc. billed government during the three-year period….
Compliance With the Reimbursable Cost Manual – State Education Department – Bilinguals Inc.
Related: New York State Office of the State Comptroller, Report 2012-S-65, June 2014

From the summary:
Bilinguals provides Special Education Itinerant Teacher (SEIT) services and Preschool Integrated Special Education Services (collectively referred to as the Programs) to children residing in New York City as well as Nassau, Suffolk and Westchester counties. Pursuant to the State Education Law, SED establishes reimbursement rates for special education providers based on the financial information reported in their CFRs. For the three fiscal years ended June 30, 2011, Bilinguals’ Programs reported a total of $13.3 million in reimbursable costs.

Key Findings
We identified $875,729 in non-reimbursable costs including:
– $243,950 in compensation paid to 17 individuals who did not provide services to the Programs during the audit period; $44,277 in improperly allocated personal service costs; $27,329 in excessive compensation paid to the Executive Director (ED) and the Assistant Executive Director (AED); and $218,681 in bonus payments that did not comply with Manual guidelines;
– $29,722 paid for the personal benefit of Bilinguals officials and staff, including but not limited to, the costs for a Manhattan apartment, cable television and three vehicles for the ED and AED; and $15,895 paid for gift cards, clocks, parties and funeral expenses (for a Billinguals employee); and
– $205,695 paid for international recruitment expenses for unqualified individuals and for individuals who did not come to work for the Programs….

Pay for Success Social Impact Finance

Source: ReadyNation, 2014

This page provides a wide range of information on applying pay for success social impact finance to prenatal and early child development and learning.

Pay for success social impact finance is potentially an excellent way for business and philanthropic leaders to increase funding and demonstrate the economic power of quality early childhood investments. To help make this potential a reality, ReadyNation is leading an active effort to develop the research, operational and legal frameworks needed to set up successful early childhood pay for success (PFS) arrangements and provide advisory assistance….

Upcoming Events
Responses to State and Federal Requests for Information
Pay for Success Contract Documents
General Readings on Early Childhood Pay for Success Social Impact Finance
General Readings on Pay for Success Social Impact Finance
Kauffman-ReadyNation Working Group
Pay for Success in the News
U.S. Map of State Statutes and Activities

Early Childhood Pay for Success Social Impact Finance: Organizational Steps, Memorandum of Understanding and Contract Outlines

Source: ReadyNation Working Group on Contracts in Early Childhood Social Impact Finance, Working Paper, June 10, 2013

This report of a ReadyNation working group provides initial contract models for consideration by parties interested in establishing early childhood pay for success (PFS) projects. Its purpose is to provide attorneys, policymakers, funders and others basic information in a single document about the contract aspects of organizing a PFS project. The report discusses the motivations for applying PFS finance principles to early child development, reviews key operational considerations, and provides a sample memorandum of understanding (MOU)….

Compliance With the Reimbursable Cost Manual – State Education Department – TheraCare Preschool Services, Inc.

Source: New York State Office of the State Comptroller, Division of State Government Accountability, 2012-S-21 April 2, 2014

Key Findings
We disallowed $876,898 in costs claimed by TheraCare because they did not comply with applicable provisions of the Manual. The disallowances include:
• $316,539 in compensation paid to TheraCare’s Executive Director, Chief Financial Officer and acting Assistant Executive Director in excess of SED’s allowable compensation levels;
• $474,080 in employee bonus payments that were not in compliance with Manual guidelines;
• $76,766 in unnecessary and inappropriate South American recruitment-related costs;
• $9,513 in other non-personal service expenses that were either unsupported or not program-appropriate.

From the press release:
TheraCare Preschool Services Inc, a downstate provider of preschool special education services, overcharged state taxpayers by more than $875,000 for improper staff bonuses and executive compensation over a three-year period, according to an audit released today by State Comptroller Thomas P. DiNapoli. …. TheraCare, headquartered in New York City, is a for-profit organization that provides special education services to children between the ages of three and five who reside in New York City as well as Westchester, Nassau and Suffolk counties. TheraCare served 651 students during the 2010-11 school year and reported program-related costs for reimbursement of about $50.1 million for the three fiscal years ended June 30, 2011. …..
Audit reveals that preschool special education contractor overbilled New Yorkers for $875G
Source: Stephen Rex Brown, New York Daily News, April 3, 2014

TheraCare Preschool Services gave out $474,000 in improper bonuses and three executives overbilled the State Education Department for $316,539 in salaries, according to state Controller Thomas DiNapoli….

State Comptroller: Preschool special ed contractor overcharged for exec bonuses
Source: Mareesa Nicosia,, April 3, 2014

…Bonus payments to employees are reimbursable by SED only if they are based on merit as measured and supported by employee performance evaluations. Auditors found that TheraCare claimed $253,205 in expenses for bonuses predicated on the organization achieving its budget, not employee performance. In addition, auditors found that TheraCare often awarded its teaching staff a sign-on bonus with the agreement that they will remain in TheraCare’s employ for at least one year. These payments are not performance based and thus do not meet the eligibility requirements for reimbursement by the state. TheraCare inappropriately charged SED $220,875 for these improper bonuses….

Social Impact Bonds: Overview and Consideration

Source: Elizabeth Lower-Basch, Center on Law and Social Policy (CLASP), March 7, 2014

One of the hottest topics in human services is “pay-for-success” approaches to government contracting. In this era of tight budgets and increased skepticism about the effectiveness of government-funded programs, the idea that the government could pay only for proven results has a broad appeal. And those who have identified prevention-focused models that have the potential to improve long-term outcomes and save the government money are deeply frustrated that they have been unable to attract the funding needed to take these programs to scale. Some advocate s for expanded prevention efforts are confident that these programs could thrive under pay for success and see such an approach as a way to break out of the harmful cycle where what limited funds are available must be used to provide services for those who are already in crisis, and there are rarely sufficient funds to pay for prevention. While performance-based contracting has existed for years in a range of human services areas — including job training and placement, welfare-to-work activities, and child welfare — pay for success, and in particular, the version referred to as a “social impact bond” (SIB) has drawn a great deal of attention at all levels of government in recent years. … While only a couple of SIBs are currently underway in the United States, at least 14 states are currently at various stages of exploring SIBs in domains including criminal justice, health care, and early childhood education. …. Because of this high level of interest, many policymakers, practitioners, funders and advocates may need to respond to the question of whether a SIB would be a good way to expand funding for a particular intervention or population in a given state or community. This paper provides background information and a framework to help answer this question. It is based on CLASP’s review of the literature on SIBs, as well as on our extensive knowledge of the literature and experience with performance measurement systems, performance-based contracting, and strategies to link public policy and implementation with research evidence for programs serving low-income and other disadvantaged population. ….

How social impact bonds put private profit ahead of public good

Source: Mark Rosenman, PBS Newshour, Making Sense, February 19, 2014

Not long ago, New York City and Goldman Sachs began to experiment with a new financial instrument — social impact bonds (SIB) — to reward private capital for financing a nonprofit program that might otherwise have been passed over for municipal funding.

There has been some excitement about this notion, as deficit-strapped governments, underfunded charities and too-limited foundations see a potential new source of program dollars, especially one rife with sanctified market aphorisms.

Unfortunately, the SIB model is being touted much more broadly as the next best thing without any critical examination of the assumptions behind it or the funding crisis which drives it.What, for example, would happen if taxes were cut to the point that government is hard pressed just to fund defense, public safety, entitlements and its own operations, and so has to turn to private investors who demand a profitable return to finance critical public infrastructure and nonprofit services? If some have their way, we’re likely to find out.

In fact, we’ve already begun to face exactly that situation. Over 57,000 children have lost Head Start services because of tax cuts and the sequester while Goldman Sachs has launched a “social impact” investment fund to provide private capital as an alternative to public funding for early childhood education and for many other nonprofit program areas experiencing government shortfalls.

We know Head Start saves government at least $7 for every dollar spent on it. If Goldman and Morgan Stanley have their way, we’ll soon have to pay them and their clients a portion of those savings for having replaced taxpayer funding for such programs with private capital investments.

Let’s call it what it is: private profit crowding out a public good. But how did we get here?….
Opinion: Why Let Financial Institutions Profit From Financing Services for the Needy?
Source: Mark Rosenman, Chronicle of Philanthropy, December 12, 2013

Private Investors Put Money on Decreasing Teen Recidivism Rate
Source: PBS Newshour, April 9, 2013
Rikers Island prison houses 88,000 inmates a year, many of whom are repeat offenders. In an effort to decrease the teen recidivism rate, high finance and do-good innovation have made an unlikely partnership. Economics correspondent Paul Solman explores a new way to fund government social services through private investment.

At Rikers Island, Investing in Decision-Making Lessons for Teens in Trouble
Economics correspondent Paul Solman reports on efforts to keep young people from returning to New York’s Rikers Island once they’ve served their time. A privately financed pubic program utilizes evidence-based behavioral therapy to imbue teens with a sense of greater control over their lives and decisions.
Source: PBS Newshour, April 10, 2013

Complaint: Broward denies Pre-K to diabetics

Source: Scott Travis, Sun Sentinel, November 14, 2013

Prekindergarten programs in Broward County are violating federal law by turning away children with diabetes, alleges a complaint filed Thursday with the U.S. Justice Department. The Montgomery, Ala.-based Southern Poverty Law Center said after receiving complaints, it surveyed 75 pre-K programs in the county, posing as prospective parents of diabetic children. Only 16 percent of pre-K programs agreed to make full accommodations, according to the complaint, which the law center filed on behalf of the American Diabetes Association. These accommodations include feeding children special food, checking their glucose levels and giving them insulin. … The complaint is filed against the two agencies that administer the programs in Broward County, the Early Learning Coalition of Broward County and the state Department of Education. … There are about 483 private providers participating in Broward County’s state-funded voluntary pre-K program, serving about 16,000 children. …