Social Impact Bonds: Bankers Get Paid Only If Education Works?

When I am speaking about education policy in different parts of the country (go here please), I am often asked what is coming next in the effort to profit and privatize public goods during the Q&A.

Lynn Davenport, a Cloaking Inequity reader from Texas, asked me to blog information about social impact bonds. What are they? The profit and privatization idea underlying social impact bonds is that communities basically outsource education programs (i.e. Pre-K) to banks and other corporations. The banks and corporations front the money for the program, and then do research on the program to see if it works. If their research shows that it is working, then they get paid a hefty rate— a “Pay for Success” model. Goldman Sachs and Wall Street love this idea! They see dollar signs!

Here is what Lynn sent along about the attempts to implement social impact bonds in Texas:

In April 2017, Texas State Rep. Tan Parker (R-Flower Mound), with the help of TEA Commissioner Mike Morath, put forth HB 2014 which would allow businesses to invest in Social Impact Bonds (SIB), in an effort to improve the math skills of the students whose schools opt into the program. If the students showed improvement with their testing outcomes in math, the business that contributed would receive a return on their investment. HB 2014 would allow the TEA commissioner to designate a campus as a “mathematics innovation zone.” Such a campus would be exempt from accountability interventions for two years and would be allowed to use a “pay for success” program approved by the commissioner. The bill sets up a framework for creating such pay for success programs funded by private investors. TEA commissioner Mike Morath testified that districts would essentially take out a loan from an investor, and repayment would depend upon achievement of measurable outcomes. According to the fiscal note, HB 2014 would cost the state roughly $10 million per year.

 

The “sell” on this approach to the public is that if the students don’t perform well, businesses wouldn’t get their money back.

Despite the failure of HB 2014, the TEA is moving forward with its SIB initiative through the restructuring of the agency. Commissioner Morath hired three former Teach for America (TFA) alums to fill the Deputy Commissioner roles. Under the Deputy Commissioner of Academics is a new position for Director of Social Impact Bonds. They hired a former TFA and KIPP teacher to fill the position.

Are you surprised that TFA and KIPP alums are in the middle of a bankers’ scheme to profit from and privatize education?

The New York Times reported “impact” investing is relatively new in the US and first emerged in the UK. In the US, Goldman Sachs introduced one of the first SIBs for a pre-K program in Utah. The results of “impact” investing are mixed. Much like the accountability system and NCLB, SIBs can result in Campbell’s Law: the more a quantitative social indicator is used for social decision-making, the more subject it will be to corruption pressures and the more apt it will be to distort and corrupt the social processes it is intended to monitor.

 

Also see Alice Linahan interview with Lynn Davenport regarding social impact bonds in Dallas. In conclusion, Susan Ochshorn writes,

…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.

I find it interesting that Texas would like to set their beloved “accountability” metrics aside for several years while their for-profit math programs are implemented. Considering the statistical lies told during the 1990s Texas education miracle (See As good as advertised?: Tracking urban student progress through high school in an environment of accountability), and the political and arbitrary nature of accountability (See “Oh, crap”: Accountability is Arbitrary and Political)… I suspect the “research” on social impact bonds to support education policy pressed by Wall Street will be suspect. As a result, I am not hopeful that social impact bonds will be good education policy.

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Has community-based accountability been impactful for English Learners?

What is community-based accountability? In 2012, I first conceptualized community-based accountability in the post Accountability: Are you ready for a new idea? Over the past several years, California has undertaken this new approach for its more than 4 million students (See all posts on community-based accountability).

Local control has been a bedrock principle of public schooling in America since inception. In 2013, the California Legislature codified a new local accountability approach for school finance. An important component of the new California Local Control Funding Formula (LCFF) approach is a focus on English learners (ELs). The law mandates that every school district produce a Local Control Accountability Plan (LCAP) to engage the local community in defining outcomes and determining funding for ELs.

This week Education Policy Analysis Archives (EPAA) just published a special issue, Education Finance and English Language Learners: Examining Challenges and Opportunities to Improve Education Policy and Practice, guest edited by Oscar Jiménez-Castellanos. EPAA/AAPE is a peer-reviewed, open-access, international, multilingual, and multidisciplinary journal designed for researchers, practitioners, policy makers, and development analysts concerned with education policies.

In this issue I published a new study seeking understand the impact of the new local accountability approach on English Learners with Lisa Romero (California State Sacramento) and Megan Hopkins (University of California San Diego). Based on an exploratory analysis of a representative sample of LCAPs, we show that, although California’s new approach offered an opportunity to support locally-defined priorities and alternatives to top-down accountability, few if any districts had yet took full advantage of the opportunity. That is, the school districts in our sample had not yet engaged with the local community to facilitate significant changes to accountability or redistribution of funding and resources to support educational equity for ELs.

You can read our entire article online here: Vasquez Heilig, J., Romero, L. & Hopkins, M. (2017). Coign of vantage and action: Considering California’ local accountability and school finance plans for English learners, Education Policy Analysis Archives, 25(15), 1-24.*

Please also check out the other articles in the EPAA issue Education Finance and English Language Learners: Examining Challenges and Opportunities to Improve Education Policy and Practice below…

English Language Learner education finance scholarship: An introduction to the special issue Oscar Jiménez-Castellanos

Equity and efficiency of Minnesota educational expenditures with a focus on English learners, 2003-2011: A retrospective look in a time of accountability Nicola A. Alexander, Sung Tae Jang

The politics of schools and money: Building awareness about channeling practices for supplemental resource allocations to serve English language learners Irina Okhremtchouk

State and institutional policies on in-state resident tuition and financial aid for undocumented students: Examining constraints and opportunities Gabriel R. Serna, Joshua M. Cohen, David H. K. Nguyen

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Thank you for reading Cloaking Inequity.

 

 

 

Teach Thought: Reform, Charter Schools, Poverty and Politics

What’s the reason why Democrats and Republicans are afraid to discuss education in their stump speeches or debates? Will the new Every Student Succeeds Act (ESSA) federal education bill be better than No Child Left Behind? What are some positive attributes of charter schools?

In this Teach Thought podcast episode Drew Perkins (Director of Professional Development at TeachThought) and Julian Vasquez Heilig answer these questions and discuss the factors that are driving education reform, charter schools, poverty and the politics behind it all. Also among the topics we broached: charter schools and how to evaluate them, the root cause of our problems in education, and the future of education reform over the next ten years.

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For all of Cloaking Inequity’s posts on charter schools click here.

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Top 10 Education Questions for 2016 Presidential Candidates

Here are my Top 10 education questions for the 2016 Presidential Candidates:

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“Lead Bravely.” How To Change the Story About Community-Based Education

by Sarah Lahm for The Progressive Magazine

Just as the Progressive launched its new “Education Fellows” project, as a way to refocus education policy on democratic, child-centered principles, one of those fellows–California professor Julian Vasquez Heilig–came to Minnesota to talk about community-based education reform.

Vasquez Heilig spoke at the University of Minnesota on September 24 to a late afternoon crowd of around 100 people. Outside the elegant, refurbished halls of the University’s historic Northrup Auditorium, rain clouds threatened to explode, but inside, Vasquez Heilig warmed the audience with his insistence that they, too, can help determine what happens in our nation’s public schools.

Roozbeh Shirazi introduction
Roozbeh Shirazi introduction

University of Minnesota professors Mary Vavrus and Roozbeh Shirazi introduced Heilig. Vavrus and Shirazi have been studying how the mainstream media helps push a negative story about public schools–that they are failing because of union policies and bad teachers.

“Our emotions are being weaponized,” Shirazi said, describing pro-charter school films Waiting for Superman and Won’t Back Down. Both films–the former non-fiction and the latter fiction–have a school choice lottery scene as their climax. Each has a storyline about a fed-up, downtrodden parent whose child attends a miserable, failing public school. The child’s only hope is to get a seat in a stellar, “high-performing” (according to standardized test scores) charter school, which is painted as every child’s educational salvation.

These films are part of a massive attempt to win our “hearts and minds,” Shirazi pointed out, by depicting an overflowing, unmet demand for charter schools. Left out of the picture is the information that charters exclude students who need extra services like special ed, and results are mixed. Some schools serve some kids exceptionally well. Others have been mired in fraud and abuse. None can replace a democratically controlled, universal public school system.

Vavrus noted that the media have been complicit in promoting charter schools, high stakes testing, and anti-union policies as the best solutions for everything that ails our public school systems.

But if the dominant narrative about public schools is just a manipulative storyline pushing false solutions, what should we be advocating for instead?…

Finish the post (for free) at: http://www.progressive.org/news/2015/10/188339/%E2%80%9Clead-bravely%E2%80%9D-how-change-story-about-community-based-education#sthash.Y4qm5HCb.dpuf

Julian Vasquez Heilig and Sarah Lahm
Julian Vasquez Heilig and Sarah Lahm

See the Lecture here:

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