By Luke Garrott
The concept of a "social-impact bond" sounds good. There is a need for investment in segments of the population that consume disproportionate amount of resources, like the chronically homeless, early-onset diabetics or kids who fall behind in school. The idea is that if you intervene early and with precision, like spending money on "housing first" to keep the chronically homeless out of emergency rooms, nutrition and exercise for school kids who are trending towards obesity or pre-K for "at-risk" youth who are headed for special education, then lives are improved and money is saved.
But government doesn't have the money, so it's increasingly turning to private-sector partners like Goldman Sachs. As someone who cringes at seeing the commercialization of public space, especially schools, I am naturally skeptical. But if public money truly isn't there, then the concept of a social-impact bond is worth trying. If the program works — the chronically homeless make fewer ER visits, kids don't get Type-2 diabetes or special ed isn't needed — then the government pays back the investor with the savings created by the intervention. Sounds pretty good, right?
It does to Salt Lake County Mayor Ben McAdams, whose "Pay for Success" program got skewered by The New York Times last week ("Did Goldman Make the Grade?"). You don't have to be a Ph.D. to know that a rigged game brings predictable results. In the case of Salt Lake County's program, at least two measures were completely off. They applied the wrong test (nationally the Peabody Picture Vocabulary Test is not used, especially by itself, to determine whether a child needs special ed) and administered it in the wrong language (the Spanish-speaking pre-schoolers were given the test in English).
"To just assume that all these children would have gone to special education is kind of ridiculous," said one of the child development experts in the Times article. It looks that Pay for Success applied the classic "tyranny of low expectations." The 99 percent success rate of the Utah program raised eyebrows across the country, where pre-K programs usually yield 10 to 20 percent success. No one has ever seen more that 50 percent of a study's participants diverted from special ed.
Touting the virtues of evidence-based policy-making on Trib Talk last week, McAdams stated, "The old way government does things is that we half-heartedly know in our gut that pre-school is good for kids, and then you just fund it. That's not good enough in 2015. We need to be better, more data-driven, and more accountable."
That's a good political sound bite. And it's good business for the investors, who get paid back, with interest, by Salt Lake County, United Way and, if the program continues, the state of Utah.
Bravo, Salt Lake County, for investing in pre-K education. Boo and hiss, for defending a pseudo-scientific methodology that enables private capital to bilk public budgets and make money off public school kids.
I'm OK with offering government services based on "hunches," especially those backed up by studies like the numerous ones that show the benefits of pre-K education for kids likely to fall behind. That should be good enough for the governor and the Utah Legislature to put real investment into education. Instead, we get ginned-up pseudo-science to justify cutting government spending and selling off our schools to bankers.
Luke Garrott is a Salt Lake City Council member and an associate professor of political science at the University of Utah.