Step by Step Innovation in Utah

An exciting early childhood education initiative is underway in Utah, which will lay the groundwork for a long-term funding strategy to enable future three and four-year-olds to benefit from high-quality early education programs.

Earlier this summer, United Way of Salt Lake City, J.B. Pritzker, and Goldman Sachs announced that they would launch a one-year, $1 million SIB demonstration project to send 450 children – who would otherwise be waitlisted – to pre-school this September. Per the announcement, if an additional payor or payors were secured, the project could expand to benefit 3,700 kids with a multi-year financing of up to $7 million dollars.

There is a lot to inspire us and learn from in the Utah transaction:

1. Bringing together multiple partners takes time and dedication; successful Social Impact Bonds need champions. The original strategy in Utah was to have the State act as payor of outcomes for the Social Impact Bond. Unfortunately, the necessary enabling legislation narrowly failed to pass. Fortunately, United Way of Salt Lake City (UWSLC) stepped forward and agreed to be the payor of outcomes for  up to $1 million during the first year. Their leadership not only allowed the project to take off; it also demonstrates how philanthropy can help accelerate the adoption of Pay for Success (PFS) strategies.

2. Philanthropic leadership can inspire government action: In forging ahead with the project, UWSLC took a risk that the government might not step in as payor to take the work to scale. This week UWSLC’s leadership was matched by that of the Salt Lake County Council, which voted to provide $350,000 in additional outcomes payments. This allows the program to serve an additional 150 children this year, for a total of 600. We are encouraged by the Council’s actions and are eager to see whether the state joins the financing in the future.

3. Salt Lake County Council recognized the value in purchasing educational outcomes: Much of the work in SIBs thus far has focused on issue areas like criminal justice where government sees immediate cost savings from reducing incarceration rates. Education is a longer term investment that requires government to acknowledge the extended, multi-sector benefit of investing in children. The case for investing in young people is clear. Until now, governments in the U.S. had not yet determined how to participate in education-based PFS financing. Salt Lake County’s participation in the Utah project is one way that government can recognize the value of early education, and leverage that long term value for upfront investment in children. Just as Salt Lake County Council recognized UWSLC’s leadership and decided to participate in this project, we hope that other governments will follow Salt Lake County’s lead in pursuing innovative ways to use PFS financing to scale early childhood education.

Entry by Rebecca Leventhal, Director


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