In July of 2013, beneath the veneer of Dr. Seuss, some of the nation’s wealthiest and most influential power players met to discuss one of Wall Street’s latest profit-making schemes: reaping big financial rewards off early childhood education programs.
The event – titled, ever so quaintly, “Oh the Places We’ll Go! The Benefits of Investing in Early Childhood Education” – was hosted by the Center for American Progress and America’s Promise Alliance spin-off, ReadyNation, each of whom are among the country’s leading proponents of social impact bonds (SIB’s) and eyeing pre-K expansion as an opportunity to prove just how profitable the financing model can be.
“The goal is to facilitate creation of “invest-in-kid bonds,” explains a report prepared by ReadyNation and The Kauffman Foundation, “that can be underwritten individually or aggregated into asset-backed securities, which can be invested in by individuals and institutions worldwide.”
And it’s a wolf in sheep’s clothing that can be tough to spot.
In the lead-up to the 2016 election, investors hoping for their piece of the pie pushed politicians to make early childhood education a key part of their platforms, knowing the value that many parents and educators see in these programs.
Groups like Save the Children – run by one of the nation’s biggest cheerleaders for SIB’s, Mark Shriver – ran television ads and put up billboards urging voters to “tell our next president to make early childhood education a priority!” In February, the Brookings Institute ran an article urging newly minted education secretary, Betsy Devos, to “embrace early childhood education.”
Even the notorious American Legislative Exchange Council appears to have made early childhood education a priority in its annual state report cards.
But… what are we really being sold?
Lenders – no surprise – say their programs are all but working miracles. Goldman Sachs, for example, recently claimed its investment in a Utah pre-K program had helped almost 99 percent of the children it was tracking avoid special education in kindergarten.
Researchers, however, were quick to point out the faulty statistics involved in their claims of success.
“Even well-funded preschool programs — and the Utah program was not well funded — have been found to reduce the number of students needing special education by, at most, 50 percent. Most programs yield a reduction of closer to 10 or 20 percent,” Nathaniel Popper wrote in the New York Times.
Other researchers have expressed concerns about the quality of the programs they are implementing. The goal for investors is to bring these programs “to scale,” which means cutting costs and finding short-cuts to achieve metrics that generate pay-outs. With elite organizations like the World Economic Forum calling for the development of digital apps to teach “social emotional” skills, and the rapid advancement of digital learning programs for young children, it’s likely that investments will go toward putting more i-pads in the hands of young children.
Parents concerned about their children’s privacy should also take note: data collection is the fuel on which social impact bonds run.
“It’s the key ingredient to this,” said Bill Crim, senior vice-president at United Way Salt Lake, whose organization is facilitating the pre-K experiment in Utah and recently went so far as to create a video encouraging parents to waive their Family Educational Rights and Privacy Act (FERPA) rights.
“That’s the price of entry,” he said of the data being gathered.
Please don’t get me wrong: high quality early childhood education can be a truly wonderful thing.
This is a scam.