Utah High Quality Preschool SIB
|Location||United States, Utah|
|Commencement date||1 August 2013|
|Savings area||Early childhood education|
|Bond Amount||Up to US$7m, staged drawdown|
|Bond terms (years)||Up to 12 years|
|Program description||High impact and targeted curriculum to increase school readiness and academic performance.|
|Treatment duration||1 year (assumed)|
|Target population||Disadvantaged children between the ages of 3 and 4 years old, many of whom have English as a second language.|
|Intervention cohort||Target Population members in Granite and Park City school districts.|
3,500 children across 5 annual cohorts (initial cohort 600 children).
Approx one-third expected to test as below average on standardised test (Peabody Picture Vocabulary Test): these form the ‘Payment Group’.
|Metric||Number of children who do not use special education and remedial services. Measured for each child in the Payment Group in each of the school years K-6.|
|Counterfactual||Fixed. Assumed that entire Payment Group (those with below average initial test scores) would otherwise have required remedial support. Also implicitly assumed that no children in the balance of the intervention group would need extra support.|
|Outcome Calculation and Target||Every year that a child within the Payment Group does not use special education or remedial services will generate a Pay-for-Success payment.|
Breakeven estimated as a 35% reduction in usage by Payment Group.
Annual cost of services is $2,600: 95% of avoided costs paid until base return of 5% reached, thereafter 40% of avoided costs paid.
|Government Agency||State of Utah, Utah Salt Lake County|
|Service Provider||United Way of Salt Lake|
|Intermediary||United Way of Salt Lake|
|Investors||Goldman Sachs and JB Pritzker|
|Returns||Target base interest rate of 5% – assumed not annualised (not stated).|
Implied maximum return is approx US$5.5m.
|Capital protection||Nil. J.B. Pritzker loan is subordinated.|
|Comments||Initial investment of US$1m as proof of concept, with intent to roll out 5 year program. This initiative is the first phase in a larger $20 million commitment by J.B. Pritzker, Goldman Sachs and other private investors for the Early Childhood Innovation Accelerator, a fund which aims to increase the availability of high-quality early childhood education while building a strong evidence-base of success.|
Download the Utah High Quality Preschool SIB case study (PDF, 212KB)