Imagine a division of state government that no longer reports to the Governor. It reports to the Secretary of State. But this division will have a director from the private sector. This director will not have to make their financial information public. The activities of this division will be considered a non-profit agency deliberately removing itself from Freedom of Information Act requests. Welcome to Governor John Carney’s non-transparent public/private partnership where anything can happen behind closed doors and the public will never know about it.
The best way to get something embedded into the American society? The power of distraction. Once again, while all eyes are on Donald Trump, Congress is acting in the dawn of Winter to pass a bill that will affect the children of America. This time, it involves social impact bonds.
This action is only part of a larger bill, known as the 21st Century Cares Act. Spearheaded by Vice-President Joe Biden after the death of his son, Beau Biden, the bill has become so much more than finding a cure for cancer. Special interest groups and lobbyists infiltrated the $6.3 billion bill to include things they want. The bill is expected to pass the U.S. House next week and the U.S. Senate the week after.
The $100 million dedicated to “pay for success”, also known as “social impact partnerships”, will be up to the states to submit grant applications. The states will work with “nonprofit social service providers, intermediaries, evaluators, and philanthropic organizations,” according to an article from the Social Innovation Research Center. I’ve written about social impact bonds a bit since I first came across them over a year ago. These are nothing more than corporations, non-profits, and banks hedging bets on certain outcomes. And reaping the profits if they succeed. For some areas of society, this is not necessarily a bad thing, such as medicine. But when it branches into education, I am very concerned. The timing of this bill coinciding with full implementation of the Every Student Succeeds Act is not a mere coincidence.
The U.S. Dept. of Education will assuredly dip into this vast pool of money. The Social Innovation Research Center all but guarantees this:
The legislation tasks the Treasury Department with overseeing the Social Impact Partnership program, although the department may delegate oversight authority for individual projects to other federal agencies.
ESSA calls for greater intervention in American public schools- more counselors, more community-based organizations, etc. The full invasion of American education by corporations will be like nothing seen before once ESSA is firmly entrenched in every single state. This will, of course, lead to the reinvention of American education into less of a brick-and-mortar system and more of a personalized learning and competency-based system with outside non-profits and corporations calling the shots. Teachers will become glorified moderators to the education technology invading our schools. But with the passage of the 21st Century Cares Act, children will become fodder for nothing more than a gambler in Vegas trying to win big.
Because this legislation is wrapped into such a noble cause, that of curing cancer, it is the perfect vessel for the corporate pigs to come home and feast on the trough. Congress will pass this, regardless of the pork included in it, because “it is the right thing to do”. And once again, children will pay the price.
To see the full bill, and how education will come into play, please go here. Of particular note are pages 946-949. By giving the very vague “improving rates of high school graduation“, that one line is the entrance into education. One of the first forays into public education with Social Impact Bonds by a major U.S. Bank, Goldman Sachs, resulted in a ton of controversy. The bank tried to bet on pre-schoolers in Utah. The “outcome” they wanted was less children getting special education services. But failing to understand why students even need special education in most cases, because of neurological disabilities, shows corporate America doesn’t believe in reasons, just profit.
New Hampshire has a current bill which would allow investors to finance pre-schools in an effort to prevent special education remediation. This “pay for success” program is actually Social Impact Bonds. This latest craze by investors in education is extremely dangerous and should not even be a consideration anywhere in a child’s education. It is a system that has the potential to be widely abused in order for outside corporations to make money off student outcomes.
New Hampshire’s Senate Bill 503 has already gone through their Senate and will be heard in their House Education Committee on Tuesday, April 5th at 10am in the New Hampshire General Court.
I have to wonder what state legislators across the country are even thinking anymore. They are selling out public education to corporations and investors. New Hampshire couldn’t even give this an accurate fiscal note because it is, when you break it down, a bet. A bet that had disastrous consequences in Utah and Chicago Public Schools according to education blogger Fred Klonsky. I wrote about how the legislative apparatus for Social Impact Bonds already happened in Delaware and just today, the Delaware Republican Senate caucus revealed a Poverty Agenda Plan that includes Social Impact Bonds as one of their steps to eliminate poverty. While it is not known if this plan would include educational “pay for success” programs, I know not all of the GOP Senators in Delaware would even want this kind of program in education.
Most of the Social Impact Bond activities in education would seem to be a violation of federal IDEA special education law. Corporations and special education are like oil and water. The former has no reason to be involved at all while the latter is a necessary step towards success for students with disabilities. Response to Intervention is not a replacement for special education, but far too many states seem to think it is. And now big business wants to bet that it is. Response to Intervention (RTI) is based on reading skills and ignores the whole gamut of other areas a disability could come into play. The only reason states want kids reading by 3rd grade is so they can take the state assessment and let the data gravy train speed up. Both RTI and Social Impact Bonds are anti-special education measures. By denying child find, as dictated by IDEA, it is setting up a child with disabilities to fail at an early age. Both RTI and “Pay for Success” programs in education should be abolished immediately. The fact the US Government is promoting these kinds of programs is even more troubling.
States with passed Social Impact Bond legislation or have “Pay For Success” programs already in place are Arizona, Arkansas, California, Colorado, Connecticut, Idaho, Illinois, Maine, Massachusetts, Michigan, Minnesota, Nevada, New Mexico, New York, Ohio (Cuyahoga County), Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, Washington, Washington D.C. and Wisconsin. The United States government has several “Pay for Success” and “Social Innovation Funds” projects going on, including a part written into the Every Student Succeeds Act. (source: PayForSuccess.org)
Earlier this month, a second attempt for “Pay For Success” legislation died in Florida. Other states that explored them but never implemented them are Hawaii, Maryland, New Jersey (a bill was vetoed by Governor Chris Christie), Rhode Island, and Vermont.
If I were a parent of a toddler or pre-schooler in New Hampshire, I would voice my concerns with their House Education Committee immediately! This is absolutely the most disgusting thing I have ever heard of in education and makes all that came before pale in comparison.
Matt Albright with the Delaware News Journal unveiled the Delaware Republican Senate’s Poverty Plan before it was even presented to Delaware lawmakers. Included in these 11 potential ideas are two items that are highly disdained by advocates for public education: Social Impact Bonds and school vouchers.
As if we haven’t learned enough from the problems with corporations dipping into education waters, the Delaware GOP wants Social Impact Bonds, or “Pay For Success” programs in Delaware. I wrote about how Delaware opened the door for Social Impact Bonds last month. This is extremely dangerous for any public education system. Having corporations get the ability to earn a profit from student measures is a potential minefield. If a goal, for example, is to have 95% of students in a pre-school not get special education in the elementary school system based on early interventions in reading, how do we know the results won’t be pushed towards that goal regardless of what a student actually needs? As well, for some students, a disability may not manifest until a later age. We have seen how Goldman Sachs attempted this in another state with very controversial results. Social Impact Bonds have no place in K-12 education. Students should not be fodder for corporate investment.
Also included in the poverty plan is a form of school vouchers called “Scholarship Tax Credits”. This latest round of tax credits in Delaware would give additional tax credit to those who donate to non-profits for the purpose of scholarships to low-income students to attend private schools. This is just another way of getting a school voucher system going. If this point were brought into legislation, it would recognize school vouchers as an additional education funding mechanism in Delaware. This is something Governor Markell opposes on any level. This is one of those rare areas where the two of us are in agreement. Vouchers would further deplete traditional school districts of funding when they are already losing a great deal of local and state funding to charter schools and other choice schools.
There are some other Easter eggs in this plan that concern me. The plan calls for removing some restrictions from federal grants aimed at fighting poverty. Instead of allocations to certain areas, the Delaware GOP wants those restrictions lifted. This could result in the Delaware Department of Education wanting funds to go towards more “focus” or “priority” schools. While most can agree schools with high concentrations of poverty certainly need more money, once the Delaware DOE gets involved, there is no guarantee those funds would make it into the classroom. We saw that happen with Race To The Top funds where the DOE got half of the $119 million the state won. Instead of actually making a difference with that money, most of it went to outside vendors whose reports made Delaware schools look bad and our State Longitudinal Data System, which makes it possible for corporate education reformers to get student data and use it to their advantage.
The part of the plan that also concerns me is an idea concerning more people entering the workforce as an apprentice. The article in the News Journal specifically mentions Zip Code Wilmington, which is run by Ben DuPont. The DuPont family is a huge influence on the Delaware GOP. They are also a huge influence on Delaware charter schools. They run the Longwood Foundation which has donated millions of dollars to Delaware charter schools. This is just more of the same. Governor Markell’s “Pathways to Prosperity” program is clearly designed to track students into certain career paths. I covered a great deal of this master plan a couple weeks ago and I have to wonder how much of it is included in this poverty agenda. I know, many will assume I am looking for things that don’t exist. They said the same thing when I said the Smarter Balanced Assessment will replace the SAT. While it was the opposite, the SAT became more like the Smarter Balanced Assessment when the College Board retooled the SAT to align with Common Core.
One glaring omission about a whole agenda to lift folks out of poverty is no mention of increased wages. The Delaware GOP consistently, as a majority of their party, fights against minimum wage increases. That should be the first step to decreasing poverty. Families can’t survive on the minimum wage. It just isn’t possible. While the plan concedes not all members of the GOP Delaware Senate agree on all of these ideas, it opens the door to Delaware Democrats who may actually want to see programs like Social Impact Bonds in Delaware. Like everything in Delaware, it will come down to who is involved with any type of task forces or committees if this gets to that point.
To read the entire plan, see below:
Social Impact Bonds, or “Pay For Success” programs, exist in many states around the country. To date, Delaware has only participated in a handful of these kinds of programs and none in the education arena. Social Impact Bonds began in the United Kingdom and since 2011, companies have slowly started bringing them to different states. Basically, these are programs where an investor (like Goldman Sachs) decides they can change some type of society issue (like getting pre-Kindergartners the resources they need so they don’t have to go into special education programs when they enter elementary school). They go to the state, sign a very lengthy contract, and based on the goal (like 99% of over 200 students in Pre-K programs won’t get IEPs after their investment) and they get the money back. If they exceed the goal, they may get more (like $277,000 for Goldman Sachs in the Utah Pre-K special education prevention program).
This issue has come up a bit in the past couple months because of a few entries in the Every Student Succeeds Act mentioning Pay For Success. Today, Diane Ravitch wrote about it again based on a recent editorial in The Salt Lake Tribune by two federal US government employees. One of them is the Deputy Assistant Secretary of Policy and Early Learning at the US Department of Education, Libby Doggett, and the other is the Director of The White House Office of Social Innovation, David Wilkinson.
Instead of tearing down new ideas and innovative approaches before they have even had the chance to be fully implemented, let’s applaud those who recognize the urgency of educating children differently and better. Let’s roll up our sleeves. Let’s celebrate what’s working and improve where we are learning lessons.
The validity of the Utah Pay For Success program came under immediate scrutiny because of the 99% victory Goldman Sachs claimed. Issues immediately surfaced around the reliability of the district’s data when it came to being able to identify these students for special education services. This could never happen in Delaware though, right? I wouldn’t be too sure about that. Delaware Governor Jack Markell is all too aware of what Goldman Sachs was doing in Utah. In fact, he praised them for it in a joint editorial in the online magazine called Roll Call in December, 2014. In the opinion piece, Markell and his co-contributor stated:
In Salt Lake County, Mayor Ben McAdams is pioneering a new way for government to focus on what works best. Knowing the impact that quality pre-kindergarten programs have, particularly in lower-income communities, McAdams is using Pay for Success Bonds, where private investors pay for the up-front costs of pre-school and get paid back if the programs succeed in saving taxpayers money from fewer at-risk kids using more expensive programs such as special ed. This pay-for-success model gives government the tools to fund an ounce of evidence-based prevention on the front end out of cost savings on the back end—and can be applied to a variety of social services.
The same year, a company called Start It Up Delaware formed. Using Social Impact Bonds as their source of funding to new companies, the company was formed based on capital provided by Discover Bank. The funding for the Social Impact Bonds came from the Delaware Community Foundation, also the chief source of funding for the Rodel Foundation of Delaware. While this particular company did not begin any education related projects, the link back to the Delaware Community Foundation and in turn, Rodel, could open this possibility in Delaware. Markell was also well aware of this venture because he gave the opening remarks at their launch reception in June of 2014.
In 2013, Newsworks wrote about a program Delaware participated in along with the Corporation for National and Community Service. This initiative placed AmeriCorps members in Delaware to give relief to the National Guard. The program used part of its funding from Social Innovation Funds. Markell, along with US Senators Chris Coons and Tom Carper, was on hand for the big announcement.
Last summer, the Delaware Department of Health and Human Services met to plan a potential new program called “Healthy Neighborhoods”. One of the potential long-term funding machines for this initiative is social impact bonds. In fact, the Chair of the Delaware Center for Health Innovation is also the Executive Chairman of Innovative School Development Corporation, Matt Swanson. It was his idea for social impact bonds as part of the funding for the Healthy Neighborhoods project. In the meeting minutes for the Delaware Health Care Commission, from July 2nd, 2015, Swanson explained the concept of social impact bonds:
Dennis Rochford asked how social impact bonds work in terms of the long term sustainable funding. Mr. Swanson stated that a social impact bond is a funding mechanism that allows philanthropy. Instead of making one time grants that have an end date it is more of a renewable approach where philanthropy can come in through bond funding that will eventually be repaid through marketable innovations that have a future cash flow. Sometimes that offset of dollars is measured against social impact. Instead of repaying actual dollars on the bond there is a measurable impact that offsets the dollar repayment.
And where would these funds come from?
Mr. Swanson stated that they have state resources available and have had multiple meetings with the Delaware Community Foundation.
So we have the Delaware Community Foundation/Rodel connection, and now an Innovative Schools connection. Anyone else?
There could be a very large part of the Delaware Department of Education looking to use social impact bonds in their initiatives, especially since their funding from Race To The Top expired on June 30th, 2015. The Office of Early Learning, which oversees pre-Kindergarten in Delaware, is getting $11 million in Governor Markell’s proposed Fiscal Year 2017 budget, if approved by the General Assembly. But I could easily see this area of the DOE utilizing the part of Every Student Succeeds Act to bring in investors to “Pay For Success” in Delaware nursery schools. I recently attended a presentation by the Director of the Office of Early Learning, Susan Perry-Manning, at the Senate Education Committee a couple of weeks ago. She talked about the funding this program needs now that the feds money has dried up. Throughout the presentation I heard the words “corporation” and “business” several times. It wasn’t just myself that took notice of that either.
In terms of legislation which would allow this in Delaware, it already happened when nobody was even thinking about it. Last year, Delaware Senator Bryan Townsend sponsored Senate Bill 75 which allows more advantages to “social enterprising” companies incorporated in Delaware. According to The National Law Review, this bill was huge:
Although not an early adopter of social enterprise legislation, Delaware has become one of the fastest growing jurisdictions in which social enterprises are incorporated, and is now home to some of the largest and best known benefit corporations, including newcomers Laureate Education, Inc. and Kickstarter, PBC. Along with other amendments to the Delaware General Corporation Law (DGCL), Senate Bill 75, which was signed by Governor Jack Markell on June 24, 2015, amended Delaware’s public benefit corporation law (Sections 361-368 of the DGCL), effective August 1, 2015.
While I am certainly delving into areas outside of my comfort zone when it comes to corporations, I’m seeing this as a backdoor entrance for “benefit for profit” corporations to operate easier. Was this done in anticipation of the Every Student Succeeds Act? It wouldn’t surprise me. I doubt Senator Townsend was aware of this unintended consequence, but Markell signed it and it is now a part of Delaware State Code. House Bill 235, which was recently passed in the Delaware House of Representatives, could definitely be seen as a boon to companies looking to start-up in Delaware. This bill, introduced on January 8th of this year and shot through the General Assembly at lightning speed and signed by Governor Markell on January 27th, “reforms Delaware’s business tax code to incentivize job creation and investment in Delaware, to make Delaware’s tax structure more competitive with other states, and to support small business by making tax compliance less burdensome.” As well as potentially being a pawn in the opt-out House Bill 50 veto override scheme, House Bill 235 would certainly benefit Markell’s education buddies in the corporate world if they planted their company flag in Delaware.
As I told folks on a Facebook thread about social impact bonds earlier today, if Delaware ever tried something like what Utah did with Goldman Sachs, I would not rest until social impact bonds were gone from Delaware. But since many of these type of companies tend to incorporate in Delaware, we have opened up the gates for the rest of the country and the Social Impact Bond invasion. This is just yet another example of the raiding of public education dollars in another Ponzi corporate education reform scheme.