Social Impact Bonds (Pay for Success): Yet Another Privatization Scam
For those of us who know more about public education than Wall Street investment schemes, Valerie Strauss and Kenneth Saltman (education writer and professor at the University of Massachusetts, Dartmouth) did us a favor last week. In her Washington Post column, Strauss published a column by Saltman explaining simply and clearly what Social Impact Bonds are, how they are now privately funding education projects at public expense, and problems with these investment instruments.
In her introduction to Saltman’s column, Valerie Strauss’s describes the use of Social Impact Bonds for funding education projects: “Within the 2015 Every Student Succeeds Act, the K-12 education law that replaced No Child Left Behind, is a provision that provides for the use of federal funds by states and school districts for something known as ‘Pay for Success.’ The Obama administration has actually been funding Pay for Success programs in education and other areas for years, and Congress likes the concept… According to the Corporation for National & Community Service: ‘Pay for Success (PFS) has emerged as a new approach for government to partner with the private sector to fund proven community-based solutions. PFS is an innovative contracting and financing model that leverages philanthropic and private dollars to fund services up front, with the government, or other entity, paying after they generate results. This strategy has gained strong bi-partisan support in Congress, as a strategy for increasing return on taxpayer dollars while improving the quality of services provided in our communities.’ If it sounds as if it’s a way for the private sector to make money off investments in pubic education, that’s because it is.”
Strauss provides an example of the use of Social Impact Bonds: “A Pay for Success program in Utah funded by Goldman Sachs earned a profit for the global investment bank for every student who went through an early-childhood program and was not referred for special education. According to the New York Times: ‘Goldman said its investment had helped almost 99 percent of the Utah children it was tracking avoid special education in kindergarten The Social Impact Bonds (Pay for Success): Yet Another Privatization Scam | janresseger:
