Using social impact borrowing to expand preschool through third grade programs in urban public schools

Area of Science:

• Education Policy
• Public Finance
• Social Impact Investment

Background:

• School districts face budget constraints limiting educational program expansion.
• Research indicates potential economic benefits exceeding costs for expanded education.
• Innovative financing models are sought to fund educational services without tax increases.

Purpose of the Study:

• To describe the application of social-impact borrowing for educational programs.
• To evaluate the feasibility of financing early intervention services through private investment.
• To document the reduction in special education needs as a key performance indicator.

Main Methods:

• Utilizing social-impact borrowing to fund the Child-Parent Center intervention in Chicago Public Schools.
• Forming coalitions of public and private stakeholders including investors, nonprofits, and government.
• Measuring program effectiveness by tracking reductions in the need for special education services.

Main Results:

• Social-impact borrowing facilitated increased access to early education for at-risk students.
• The model demonstrated that private funds can finance public services with repayment from future savings.
• Chicago and Salt Lake County are pioneering pay-for-performance social-impact borrowing for early education.

Conclusions:

• Social-impact borrowing offers a viable mechanism for expanding high-impact educational programs.
• Early intervention's ability to reduce future special education costs is crucial for financial sustainability.
• Public-private partnerships can effectively address educational funding challenges and improve outcomes for at-risk students.