Success of New Financing Program in Utah Could be a Model for Funding Early Childhood Education

Media Contact: Brendan Daly (202.794.1580)

WASHINGTON, D.C. (October 8, 2015) – Save the Children Action Network (SCAN) today applauded the success of a Social Impact Bonds, or Pay for Success, financing model for early childhood education in Utah.

Through private financing, a partnership led by United Way of Salt Lake, the Utah High-Quality Preschool Program is delivering a high-impact and targeted curriculum to increase school readiness and academic performance among 3- and 4-year-olds. Nearly 600 low-income 3- and 4-year-olds attended high-quality preschool in the 2013-14 school year.

Based on a predictive standardized test, 110 of these 595 students were identified as likely to use special education in grade school. After one year the high-quality preschool, of those 110 students identified as at risk, only one used special education services the past year in kindergarten.

“The results of this program are very encouraging, and I hope it inspires more investors to get involved in a Pay for Success program in more states,” said Mark Shriver, president of SCAN. “By the age of 5, a child’s brain is already 90 percent developed. Children living in poverty who don’t participate in high-quality early education programs are far more likely to be placed in special education, drop out of school and be arrested for a violent crime. Without an early education early in life, kids fall behind and many never catch up.”

With the anticipated cost of $2,607 per student for special education services, the state of Utah saved more than $280,000 through the program. The private investors will receive 95 percent of any special-education savings to the state until the investments are repaid with interest. After that, the firms will receive 40 percent of ongoing cost savings until the participating students complete sixth grade. All other savings will be returned to the state for use in other areas.

An initial investment of $7 million of private capital from Goldman Sachs and J.B. Pritzker financed the expansion of the Utah High-Quality Preschool program to provide early education services to five cohorts of 4-year-olds, totaling more than 3,500 children over five years.

In July, SCAN unveiled a toolbox of innovative financing solutions aimed at bridging the gap between lawmakers’ desire to expand access to early childhood education and balance the budget. One of the funding mechanisms included in SCAN’s Innovative Financing for Early Childhood Education is Social Impact Bonds.

Utah’s own Senator Orrin Hatch, along with Colorado’s Senator Michael Bennet, has sponsored federal legislation to expand the use of such models across the country.

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Save the Children Action Network is the political voice for kids. We believe that every child deserves the best start in life. That’s why we’re building bipartisan will and voter support to make sure every child in the U.S. has access to high-quality early learning and that no mother or child around the globe dies from a preventable disease or illness. By investing in kids and holding leaders accountable, we are helping kids from birth to age five survive and thrive.