Fred Klonsky hosts special education expert Bev Johns, who explains that social impact bonds (SIB) encourage investors to take over government responsibilities and make a profit.
Special education advocate Bev Johns has written here warning about the impact of Social Impact Bonds on special education services.
What are Social Impact Bonds (SIBs)?
They have become a favorite privatization tool of corporate Democrats and others.
Wall Street loves them.
Also known as Pay for Success programs in which Wall Street investors, often using funding from private philanthropies, invest in social programs which once were funded directly by the government. The aim is to reduce government costs by offering profits to Wall Street.
The profit increases for investors when schools reduce the number of students who receive special education services:
When it comes to special education programs and SIBs, success is quantified by counting how many special needs students are moved out of the programs and how many have services removed or denied.
It is just the opposite of what we have fought in favor of for decades. For those of us who have taught Special Needs students, either as general education teachers, special subject teachers or special education teachers, we look at success as meaning accurately identifying the needs of individual students, providing evidence for those needs, and getting service and support to those students. We never considered that if we determined there was a continuing need to provide services to a student it meant we failed.
We don’t look at special education students in the aggregate. That is the opposite of the essence of the IEP, the Individualized Educational Program.
To make matters worse, SIBS have been included in the reauthorization of ESEA/NCLB.
The Senate reauthorization of No Child Left Behind (ESEA) includes an amendment by Senator Orrin Hatch that rewards investors in bonds if schools reduce special education enrollments.
We need to let every national organization that we belong to know that we oppose the concept of paying Goldman Sachs and other investors for every child that avoids special education (what Sen. Hatch calls Pay-for-Success).
Diane Ravitch's blog 
Is there any detailed information (perhaps from SIB contracts) about the methods used to determine whether children entering kindergarten would not need special education services?
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Yes but there is more. SIB’s were tried first in Great Britain to reduce the rate of recidivism. That did not work. Never mind. The first Social Impact Bond experiment in the USA—a financial product from Goldman Sachs in 2012, was intended to reduce the rate at which juvenile offenders returned to Rikers Island. That program didn’t work either, but gee… the private investors have the data and their investments were backed by philanthropic largess—Bloomberg in that case.
I have written about SIBs on this blog more than once. See below for a sample contract in summary form, circulating internationally because SIBs /Pay for Success (SIB/PFS) contracts are hot financial products.
Children participating in the Utah preschool program will take a Peabody Picture Vocabulary Test. The results are used as a predictive indicator about whether a child is likely to use special education and remedial services as he or she moves up the grades through 6th grade. Every year that a child with a below average score does not use special education or remedial services will generate a Pay-for-Success payment.
In the state of Utah, school districts receive a fixed per annum payment of approximately $2,600 per student from the state to provide special education and remedial services for students in general education classrooms. The amount of the Pay-for-Success payment is based on the actual avoided costs realized by the State of Utah.
Most (SIB/PFS) contracts provide a return to investors of 7% to 10%, and they have huge costs for “intermediaries”—lawyers, accountants, external evaluators, and program managers who represent the interests of the investors.
The program manager usually sits on the board of the “provider” of services and has the power to hire and fire people to keep the program on track and meeting “targets.”
In addition, most SIB/PFS require a counterfactual—think control group—comparable in every respect but denied the program All children that form a cohort receiving or not receiving the program are audited for performance. This data is offered as proof to the investors that the contracted services are making a difference.
Obama jump started the SIB/PFS by sending $200 million to Harvard’s SIB lab and to others who are helping investors make deals—-all while promising to save the gov’ment money. All of these deals should be viewed as loans with high interest rates that will come due if intended benefits from ”the discipline of the market” (more bang for the buck) works to reduce costs of services.
Special education has been targeted because the costs are high and there has a been a campaign to portray schools as putting more kids into special education than really need to be in those programs. In a post below this I have presented one outline of the Utah contract. It is circulating internationally.
Preschool programs have been targeted because economists have calculated the long-term benefits from “high quality” preschool programs from long ago—e.g. Abecedarian and Perry improved the long term quality of life outcomes for participants.
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And ironically, Utah’s definition of “preschool for all” is a computer program. I wish I could make this stuff up. I keep saying that Utah is the canary in the coal mine. This is the future for all of you.
http://www.waterfordupstart.org/
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I have mixed feelings about the ideas in your post. On the one hand it again seems like federal overreach by them incentivizing the non-classification of young students.
As a former ESL teacher in a K-5 school, I am familiar with the Peabody Picture Vocabulary Test, which was used by the speech and language teacher. ELLs, children of poverty, and language impaired children will all have low scores on this test. In our school the ELLs were given ESL, and our speech and language teacher would only accept students that demonstrated a language impairment such as auditory processing. On a rare occasion we had an ELL child that failed to make the progress the others were making, and the child became classified after about two years of ESL instruction. We did not classify lightly.
My other concern is that if there is an incentive not to classify students, there may be students that need special education that will be denied access to this service due to politics. As a result, children may be denied instruction that will help them move forward.
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So the investors negotiate with the public entity to determine a method of assessing whether students will need special education services in the future? For example, might Goldman negotiate a deal with Utah that includes hiring “outside” evaluators of students to determine whether they have “progressed” enough to not need special education services. (Wonder who these outside evaluators would turn out to be?)
This is the military-industrial complex model of private-public collaboration. The “Educational-financial complex” of private-public education.
Breathtaking in its audacity, cynicism, corruption, and arrogance.
They start wars and send your kids to fight them, just as they create nonsense schools and send your kids to “learn” in them. The same folks.
Will parents allow it to happen? When there was a draft, middle class parents (and middle class kids) said “no way in hell” is my kid going to fight your stupid war; hence the origins of the volunteer army. Now there is still a “draft” of all kids into public schools that will suffocate their growth, because elites, who send their kids to Dalton, say it must be thus. Will the parents allow it to happen?
“Neck deep in the big muddy, the big fool said to push on.”
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Reblogged this on Politicians Are Poody Heads.
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Social Impact Bonds are needlessly subjecting America’s children to the slings and arrows of the “marketplace.” IMHO, this is an irresponsible function of government to monetize public school children, and it may even violate their constitutional rights. Even more troubling is including in ESEA an incentive for school districts to deny special education services to students that qualify. Students that are evaluated by professionals should be entitled to receive appropriate services without government interference. This is a misuse of the responsibility of government. I believe any potential savings from this act may very well result in many lawsuits from concerned parents for IDEA violations.
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This is so sick, profits above all and the Feds are leading the cause.
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SIC is right. We have a most corrupt government.
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It’s always disheartening to see how a valuable, worthwhile idea(s) get twisted by bureaucracies and politicians until they are worthless. Early learning opportunities for socio-economically disadvantaged children who can trail behind in kindergarten readiness skills should be a wonderful thing. Ideally, a valid pre-school curriculum for such children would involve a literacy-rich environment with lots of chances to hear books read aloud, the chance to personally interact with books, math concepts imbedded in movement and play, early science exploration, etc. It would provide lots of opportunities to work on pre-literacy skills and the chance to look for “red flags” such as trouble with rhyming, naming objects, following simple directions in sequence, and providing those children with the beginning of phonics instruction, as well as using play to increase reflective thinking and metacognition. There are definitely students who would not need to be identified as requiring special education services if interventions were provided at an early point and continued consistently. That’s the ideal. The reality is, tying identification of students with disabilities to an investment will be a disaster. School districts already have so much incentive to deny a child services. Most special education services are mandated, but not funded by the federal or state gov’t. With a 2% tax cap in NYS, the pressure to keep school budgets lean means districts are actively looking for ways to cut services to the bone. Finding ways to deny students identification, especially in the all important kindergarten year, will become an art if school systems must provide an optimal return on investment. Just look at RTI push. “Response to Intervention” is supposed to provide K-5 students with targeted, intensive interventions to overcome their struggles in math and literacy. It is supposed to be used to prevent excessive identification of students with disabilities because they are receiving the appropriate help needed. Not so much. In many places, it’s used as an excuse to delay or prevent identification. Interventions are often not derived from research based methods. Students are grouped together for expediency in scheduling and the instruction is pitched to the lowest learner, despite the needs and abilities of others in the group. Teachers are denied adequate training and support. Why should “Pay for Success” be any different?
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you said
There are definitely students who would not need to be identified as requiring special education services if interventions were provided at an early point and continued consistently.
that is the theory Enter kindergarten ready to learn and exit with readiness for grade1 and all later grades
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Not getting your point. Very few preschool programs are equipped to identify “red flags” that would indicate a children would struggle with reading. Kindergarten literacy curriculum is often not structured to help students who struggle with literacy. Popular curriculums like Guided Reading or Balanced Literacy lack the components of Phonolgy, Sound-Symbol Association, and Syllable Instruction that are so sorely needed for children who have symptoms of Dyslexia.
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But what about things like MClass? That is used in kindergarten now to track reading readiness (in some states). So will the data something like MClass generates (which I think is really the only reason RttT required “progress monitoring,” for data) be used to inform the “investments” or bets on these children?
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Of COURSE it’s Hatch. As a Utahn, I should have known. He’s a carpetbagging scum who hasn’t ever really lived in Utah, but he’s a Mormon Republican, so he wins every time. He’s so old now that my son commented the other day that he looks like he’s an animotronic from Disneyland. I will write to him a scathing letter decrying this amendment, but it will do no good. He has the same attitude as all other politicians (particularly Republicans) from Utah: screw the little people and especially screw education. I’m embarrassed to be of the same faith as these people, because demonizing and refusing to help the poor is NOT what my faith teaches.
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Diane, I have to stop reading today. I want to jump out of a window. It’s all about new markets for Wall St. Always was. I am afraid my kids are among the last group who will get through public schools before no more exist. What will be around for their kids?
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Oh no, Christine! We have just begun to fight! Wake the town and tell the people.
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Copy that advice, Diane! And this is why I’m working for Bernie. This WILL not be changed by HRC, just as Obama made a worse mess of U.S. education; the John King appointment is simply the last straw. It makes me angry that the press (but not surprising) is “praising” Bernie for “pushing HRC to the left,” when all readers, here, KNOW that–like her former boss–she’ll say all of these good things we want to hear (“break up Wall Street?” That’s who’s, in part, paying for her campaign!)–then, after being elected, will turn around & do the exact opposite.
.
Yes, indeed, “We have just begun to fight! Wake the town and tell the people.” Sign up to work for Bernie, & send in whatever you can, because yes, WE can & YES WE WILL!
(P.S.–Thanks for re-posting Fred.)
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I’m with you Diane. It’s not only privatization and charters, it’s the infiltration of corporatism in our schools. I see my children’s education get coopted by Pearson and PARCC. Teachers become assembly line cogs of computer-based curricula. Who needs books or autonomy? And I watch as my school board of Republican “free market/laissez-faire” wolves cloak themselves in “non-partisan” sheepskin. And my neighbors don’t get it. The high school football team is undefeated, so all must be well.
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The nation’s first Social Impact Bond experiment—a financial product from Goldman Sachs in 2012 was intended to reduce the rate at which juvenile offenders returned to Rikers Island. The program didn’t work but gee… the private investors have the data and their investments were backed by philanthropic largess—Bloomberg in this case.
I have written about SIBs more than once. One of the high profile early preschool SIBs is the The Utah High Quality Preschool Program based on a “targeted curriculum to increase school readiness and academic performance” among 3 and 4 year olds. “As a result of entering kindergarten better prepared, it is expected that fewer children will use special education and remedial services in kindergarten through 12th grade, which results in cost savings for school districts, the State of Utah and other government entities.”
Following summary of the Utah contract is at SOCIAL IMPACT BONDS· UTAH HIGH QUALITY PRESCHOOL SIB
SIB Details
Location-United States, Utah
Commencement date-1 August 2013
Savings area-Early childhood education
Bond Amount-Up to US$7m, staged drawdown
Bond terms (years)-Up to 12 years
Intervention Program
Program description-High impact and targeted curriculum to increase school readiness and academic performance.
Treatment duration-1 year (assumed)
Target population-Disadvantaged children between the ages of 3 and 4 years old, many of whom have English as a second language.
Intervention cohort-Target Population members in Granite and Park City school districts. 3,500 children across 5 annual cohorts (initial cohort 600 children). Approx one-third expected to test as below average on standardised test (Peabody Picture Vocabulary Test): these form the ‘Payment Group’.
Outcome Measurement
Metric-Number of children who do not use special education and remedial services. Measured for each child in the Payment Group in each of the school years K-6.
Counterfactual
Fixed. Assumed that entire Payment Group (those with below average initial test scores) would otherwise have required remedial support. Also implicitly assumed that no children in the balance of the intervention group would need extra support.
Outcome Calculation and Target-Every year that a child within the Payment Group does not use special education or remedial services will generate a Pay-for-Success payment. Breakeven estimated as a 35% reduction in usage by Payment Group. Annual cost of services is $2,600: 95% of avoided costs paid until base return of 5% reached, thereafter 40% of avoided costs paid.
Contracting parties
Government Agency-State of Utah, Utah Salt Lake County
Service Provider-United Way of Salt Lake
Intermediary-United Way of Salt Lake
Evaluator-Unknown
Investor details
Investors-Goldman Sachs and JB Pritzker
Returns-Target base interest rate of 5% – assumed not annualised (not stated). Implied maximum return is approx US$5.5m.
Capital protection-Nil. J.B. Pritzker loan is subordinated.
Comments-Initial investment of US$1m as proof of concept, with intent to roll out 5 year program. This initiative is the first phase in a larger $20 million commitment by J.B. Pritzker, Goldman Sachs and other private investors for the Early Childhood Innovation Accelerator, a fund which aims to increase the availability of high-quality early childhood education while building a strong evidence-base of success.
Source http://socialventures.com.au/case-studies/utah-high-quality-preschool-sib/
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And even the local liberal newspaper posted what was essentially a press release about how “wonderful” this project is:
http://www.sltrib.com/news/3032598-155/preschool-paying-off-for-goldman-sachs
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Social Impact Bonds to prevent special education are based on a false premise, that a learning disability is caused by lack of or inappropriate instruction, economic disadvantage etc., when all that actually has to be ruled out before a child can be identified as having an LD, according to the federal definition under IDEA, which most states have adopted: (See: http://idea.ed.gov/explore/view/p/%2Croot%2Cdynamic%2CTopicalBrief%2C23%2C )
“The child does not make sufficient progress to meet age or State-approved grade-level standards in one or more of the areas identified in 34 CFR 300.309(a)(1) when using a process based on the child’s response to scientific, research-based intervention; or the child exhibits a pattern of strengths and weaknesses in performance, achievement, or both, relative to age, State-approved grade-level standards, or intellectual development, that is determined by the group to be relevant to the identification of a specific learning disability, using appropriate assessments, consistent with 34 CFR 300.304 and 300.305; and the group determines that its findings under 34 CFR 300.309(a)(1) and (2) are not primarily the result of:
A visual, hearing, or motor disability;
Mental retardation;
Emotional disturbance;
Cultural factors;
Environmental or economic disadvantage; or
Limited English proficiency
To ensure that underachievement in a child suspected of having a specific learning disability is not due to lack of appropriate instruction in reading or math, the group must consider, as part of the evaluation described in 34 CFR 300.304 through 300.306:
Data that demonstrate that prior to, or as a part of, the referral process, the child was provided appropriate instruction in regular education settings, delivered by qualified personnel; and
Data-based documentation of repeated assessments of achievement at reasonable intervals, reflecting formal assessment of student progress during instruction, which was provided to the child’s parents.”
Of course, they would have had to consult educators and parents to know all this, but learning from us is beneath know-it-all billionaires like the Pritzkers..
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A most enlightening posting and thread.
Especially your comments.
Thanks to you and everyone else.
😎
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The name Pritzker does sorta stand out in there. So they and Goldman Sachs are actually looking at cashing in by denying 3 and 4 year old children help with learning to speak English?
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AAAAAAARRRRGGGGGHHHHH!!!!!!! That is my scream. I am a special ed teacher. My district wants me to use all the same tests they use with general ed students. We just got done with the NWEA MAP test. Well, between old laptops, no one at school to help you get on the test, and my students who are not readers, my class did not finish. Little K, 7 years old, a girl with TBI, complyed with us trying the reading test.I read it to her. She picked an answer. Did really well moving her finger on the trackpad. But after an hour, she looks up at me and says, i’m tired. I said that’s ok. We will suspend the test. Go take a break. Where did she go? Over to the Winnie the Pooh characters and pretended to read the book. I love this kid. She works her heart out. Never enough.
I am so pissed off tonight because today was early dismissal. Kids began leaving at 1:45. Then two hours of looking at data……..I had things to do, like resetting new stations, iep work, etc. When we got back to our rooms around 4:45, Principal said the building was closing in 5 min. I went off. Yelling at the Universe. Just wasn’t fair. We are a priority school getting your tax dollars to help our kids succeed yet parents won’t help with homework. Frustrated kids and teachers. I am ready to quit. But, I know I am here for a purpose……to advocate for real childhood.
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Thank you, Mary, for your hard work & dedication. I’m quite certain that Little K (& all your students) love you with all their hearts.
And that love is far more precious than gold(man sachs), people (yes, because corporations ARE people–greedy, avaricious, heartless people) who will never understand or know what real people such as yourself and anyone working for the good of humankind have the joy of feeling every day.
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Here’s a link to the Educational Alchemy blog where the author describes how the ESEA is written with model legislation for states (by ALEX) to benefit big business.
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Since people are still posting comments, just would like to add one I’d written on an earlier Klonsky blog w/regard to this subject: I thought other countries like Argentina & Chile “disappeared” people.
Seems like the U.S.government wants to “disappear” special education students. Of course, we must put a stop to this. Call & e-mail your congressmen now!
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http://www.mdrc.org/project/social-impact-bond-project-rikers-island#overview this one was scrapped …. the one in Masschusetts (juvenile justice) continues. Read what Independeng Angus King said in congressional testimony (he is quoted in Governing journal)
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you will find Angus King’s quote here; I like these Independents more and more….http://www.governing.com/topics/finance/gov-social-impact-bonds.html
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and Liz Farmer describes the Rikers Island projectImpact
Evaluation of the Adolescent Behavioral Learning Experience (ABLE) Program at Rikers Island
Source: Vera Institute of Justice, July 2015
Vera determined that the program did not lead to reductions in recidivism for participants. The change in recidivism for the eligible 16- to 18-year-olds, adjusted for external factors, was not statistically significant when compared to the matched historical comparison group. Furthermore, the 19-year-olds and the study group (16- to 18-year-olds) displayed similar trends in rates of recidivism over time, indicating that any shifts were the result of factors other than the ABLE program. The program did not reduce recidivism and therefore did not meet the pre-defined threshold of success of a 10 percent reduction in recidivism bed days.
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Vera Institute of Justice https://csgjusticecenter.org/reentry/posts/social-impact-bonds-gain-momentum-in-the-criminal-justice-field/
so policy in education will be set by the “criminal justice” ideologues — be ready for more boot camps and more test and punish….
I have had reservations about the special ed programs called “Applied Behavior Analysis” which swept the country. at one IEP meeting I tried to declare “he needs language development” he doesn’t need behavior mod. There has to be more to education than just “discipline” and conformity.
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this describes the MA juvenile justice program. http://www.thirdsectorcap.org/portfolio/massachusetts-juvenile-justice-pfs-initiative/
I had a luncheon with friends this past summer that should have been about the Red Sox and the Cardinals and the Marlins…. the lovely, intelligent daughter of the hostess from St Louis had just graduated college and she was working in Boston for the summer on social impact bonds. I couldn’t say a thing I just went into the kitchen to do dishes because I was heart sick. I made sure she had a copy of Diane’s book when she left and she was familiar with it (but I want them to take it to heart and have more of Diane’s philosophy in their graduate school programs).
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from the Governing article I read that Maryland is not moving ahead with the “social imp act” bonds ; but I hear from Cherie Kiesecker Colorado that their state is …. this is a review of Maryland when they were trying it out… I don’t know at what stage they decided to move ahead or forego the plans but Governing magazine states they are not ???
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and, lastly, I prefer Angus King’s comments… “Sen. Angus King, an Independent from Maine, had concerns, saying this kind of financing seems complex and costly.
‘I have a radical idea,’ said King. ‘Instead of trying to contract out with social impact bonds, why doesn’t the government just get it right?’ Social impact bonds are, in essence, ‘a gigantic admission that the government can’t do stuff,’ he said.
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another A. King quote; I like the expression “outfoxed”… but these programs are primed for data rigging…. (we don’t do the double blind studies that are required in medicine) so anyone can show they had “gains” to get profits and it doesn’t require much mendacity to accomplish that.
Senator Angus King (I-ME) sussed out the subtext of the SIB strategy:
“I think this is an admission that government can’t do what it’s supposed to do…. This just strikes me as…it’s a fancy way of contracting out. And as I say, I don’t believe government contracts very well…and the government is always going to be outfoxed on the contracts, in my experience.”
I wrote A. King an email to thank him.
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thursday October 22 http://www.wellesley.edu/event/node/72311
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Followup: Did SIBs make it in to the final ESEA? 😮
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Joe,
The Social Impact Bonds are included in ESSA
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