Susan Ochshorn founded ECE PolicyWorks to advocate for high-quality education for young children.
In this post, she analyzes the pernicious influence of financiers and hedge fund managers on decisions about the fate of young children, as they figure out how to make a profit with “Social impact bonds.”
Everyone loves the idea of early childhoood education. But unfortunately the financiers have figured out how to make it pay—for them.
Ochshorn shows how Goldman Sachs and other investors saw a path to profit and how public officials fell in love with metrics. The children? Not so much.
She gives the background of the social impact bond.
And she concludes that commodifying children is a very bad idea:
“By last summer, the U.S. Department of Education had gotten on board. Under the aegis of John King, former education commissioner of New York, they launched a Pay for Success grant competition, $2.8 million available for state, local, and tribal governments interested in exploring the investment vehicle’s feasibility. Early this year, as Betsy DeVos replaced King in the top job, the department distributed funding ranging from $300 to $400 million to 8 recipients. Rigorous evaluation, as the Urban Institute’s “Pay for Success Early Childhood Education Toolkit,” makes clear, is the sine qua non of the transaction, precise metrics and data collection essential for determining the venture’s outcome.
“To quantify is to have the illusion of mastery over all that defies our control, yet the metrics fall short, the ends perverted: they cannot capture children’s unique capacities, or the uneven trajectory of their development—as messy and challenging as it gets.
“Three- and four-year-olds are not commodities. They have had the grave misfortune of entering the academic arena in a period of measurement gone berserk. What young children need most is time, and sustained support for experiences that nourish their bodies, minds, and spirits—their due, according to the Convention on the Rights of the Child, which the U.S has not yet ratified more than 25 years after the resolution was adopted by the U.N. General Assembly.
“The benchmarks and assessments of the Common Core violate this right—especially for our youngest students. So do social impact bonds. If the payback is contingent upon a particular timetable, and the desired outcomes are not forthcoming, where does that leave the kids?
“Those who have made their millions and billions in private equity, investment banking, and hedge funds see themselves as the saviors of our most vulnerable children. Yet their fancy models are putting our youngest learners at greater risk—along with democracy and the public good.”
Diane Ravitch's blog 
“Social Impact Bonds”
Children are derivatives
They’re really golden sacks
A profitable biz it is
For folks like Goldman Sachs
If evaluation is an important aspect to these “investments,” it should have to be conducted by a legitimate institution of higher education to function as an impartial third party. The fact that the results were so positive should flag some concern over their accuracy, especially when we consider the track record of hedge fund managers.
SomeDAM Poet has it right. Retired Teacher. I think I noted this once before.
The evaluator of the Chicago preschool SIB has a Nobel Laureate in economics. His name is James, J. Heckman.
Preschool SIBS are designed to screen out children with the most severe disabilities before the program begins. The theory and value structure puts the responsibility on the preschool provider to meet specific performance “targets” for each cohort of children. One of these is usually reading by grade three. A usual requirement is that an “intermediary” sits on the board of the provider in order to monitor the management of the program (make the investors feel good).
Some preschool SIBS use scores on the Peabody Picture Test to select children for a program. Low scorers are excluded from the program. The whole SIB is usually marketed as “saving” taxpayers the cost of unnecessary special education services. Of course those “savings” turn out to be the return on investment claimed by those who put money into the program.
SIBS are nothing more than a variety of financial product, and they are being marketed internationally as if the “solution” to difficult problems.
One effect is that governmental responsibilities for the public welfare and the common good, especially social services, are transformed into opportunities for government-endorsed private control and profiteering. Robinhood.org has a bunch of “metrics” designed to show investors and marketers the monetary value of preschool, in this case for NYC, but the reasoning is about the same to justify any SIB.
Click to access Metrics-Equations-for-Website_Sept-2014.pdf
Did they really call them bonds? Sending your kid to school is a bond? Why not a stock? Why didn’t they privatize the Army and call sending kids off to fight a war a stock option? I suppose when investment bankers have children they’re diversifying their portfolios. Twisted fools.
Public education must be fully funded, and not by billionaires with their personal agendas!
These DEFORMERS would NEVER do this to their OWN children.
These wealthy neoliberals prefer Sidwell Friends or the Waldorf School for their own children. Hedge funds are more likely to be robbing the “hood” than pretending to be Robin Hood.
Of course, this started in Utah, where schools are so criminally underfunded that schools will take any money from anywhere, even from the devil himself.
WHY isn’t more reported about Utah and education??? Utah has been dealing with many of the problems for decades that the rest of you have only seen in the last fifteen years. Many of the problems out there have been problems in this state since I was a student in Utah public schools in the 1980s.
Utah’s per pupil expenditure is lower than any other state (by several hundred dollars to the next-lowest state), while the population of students is growing astronomically. The population of Utah is expected to DOUBLE by 2030, yet Utah spends 11% less per year on students than it did in 2008. Schools are falling apart, teachers are leaving like the school system is a sieve, and every lousy idea from every other state has made its way into Utah, if Utah didn’t start it first. Class sizes are the highest or second highest in the nation. But everyone who has a teaching certificate in a building counts on the class sizes, so the librarian, administrators, counselors, and technology specialists all count, making class sizes seems smaller than they actually are.
Utah state legislators own charter chains, or sell land to charter schools at ever increasing rates. In Utah, legislators are part time, so they almost all have other careers. The most common career for a Utah legislator? Developer.
And yet, with the exception of occasionally Diane, and a shout out every so often from Peter Greene, people don’t know what’s happening in Utah.
But YOU SHOULD, because what happens in Utah is coming for you next.
I know what is happening in Utah — or at least I used to know — because I lived there for 15 years.
Things were bad when I was there 20 years ago (with class sizes of 35 to 40) but sadly, it sounds like things have just gotten worse.
The state legislators as charter owners “thing” was actually going on during the eighties. I worked as a tutor at a school run by a State senator just after I graduated from U of Utah.
Like today’s charters, the school got money from the state for every student enrolled but it was a home study program and the students only had to come in every so often (once a week, I think) to stay on the rolls. It was basically a joke and after a few months, I decided I did not want any part of it.
Yeah, the more things change, the more they stay the same, Poet. A lot is the same: class sizes are still 35-40, and even higher, and the legislature is still corrupt. But there are new wrinkles: Utah has one of the highest rates of autism in the country, and there are far more ELL kids in Utah than there used to be. “Stacking ’em deep and teaching ’em cheap” doesn’t work as well as it used to (and it only somewhat worked 20 years ago–I started teaching around the same time you did).
The other main concern that wasn’t present in Utah 20 years ago was the amount of the budget dedicated to K-12 schools. In the late 1980s, Utah taxpayers put more money per taxpayer towards education than any other state. Now, we’re at about 25th in the nation. The diversion of K-12 money from the Uniform School Fund to also fund higher education, as well as the introduction of a flat tax by Governor Huntsman has diverted an estimate 1 BILLION dollars a year from K-12 education. But you can’t convince the public in Utah to support changes. Even a current issue trying to get on the ballot, which would raise the flat tax from 5% to 5.25% and give all of that money to K-12, is facing an uphill battle. For my part, I’m not happy about it, because it’s being sponsored by big businesses (particularly Zion’s Bank) who aren’t looking at corporate tax rates and the big tax give-aways that corporations in Utah get.
So, yes, you are pretty aware, Poet, as these problems have gone on for decades. But what people outside of Utah fail to grasp is that we are much further along the “reform” road than most other states, and that what is happening to children in Utah is coming for these other states. Which is why I WISH that people would pay more attention to what is happening here.