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Preschool paying off for Goldman Sachs and Utah kids, according to United Way

First Published      Last Updated Oct 07 2015 12:12 am

(Chris Detrick | The Salt Lake Tribune) First graders in Sydney Johnson's class play on the playground during recess at Lincoln Elementary School Tuesday October 6, 2015.

Private funding » Granite School District’s pioneering program lets the state save a bundle on special education.

Enrolling in high-quality preschool programs helps children enter kindergarten prepared to learn — and you can take that to the bank.

That's the message from the United Way of Salt Lake, which announced Wednesday that a check for $267,000 had been cut for investment bankers who funded public-preschool expansion in Utah.

The payment is the result of a unique pay-for-success financing model, in which private firms foot the bill for public services and are repaid with interest if those services generate cost savings for the state.

Private funding allowed about 600 students to enroll in public and private preschool programs in 2013. Of those students, 110 4-year-olds were expected to need special education during their kindergarten year.



But only one of the students — who are now in the first grade — has required special education, which translates to about $281,000 in cost avoidance for Utah's public education system.

"We're excited about the results," said Andrea Phillips, a vice president in Goldman Sachs' Urban Investment Group, "not only because it means the kids are doing well in kindergarten," but also that "our investment is performing."

Goldman Sachs and J.B. Pritzker committed $7 million to the pay-for-success program, which will fund preschool services for five cohorts of children.

The firms will receive 95 percent of any special-education savings to the state until the investments are repaid with interest.

After that, the firms will receive 40 percent of ongoing cost savings until the participating students complete sixth grade.

"We will continue to track these kids in first grade through sixth grade," Phillips said. "We are optimistic that they will continue to do well in school."

The first round of repayments is being made by United Way and Salt Lake County, which committed $1.3 million in an effort to show lawmakers that the financing model could be successful.

And after passing HB96 in 2014, lawmakers committed to using state funds to repay Goldman Sachs and J.B. Pritzker for the remaining four cohorts.

"Usually it takes a long time to stop funding things that aren't working," United Way of Salt Lake President Bill Crim said. "One of the benefits of pay-for-success financing is you can get a quicker look at whether something is working or not."

The high-quality-preschool model is based on a program administered by Granite School District since 2006.

Granite enrolls about 3,000 3- and 4-year-olds each year, with assessments given to identify the likelihood that a student will require special education, which carries an extra per-pupil cost to the state of $2,607 per year.

Many students, particularly English-language learners and children living in poverty, enter kindergarten behind their peers due to a lack of learning opportunities, according to Brenda Van Gorder, Granite's preschool services director.

"They don't have a learning or a potential gap," Van Gorder said. By no fault of their own, "they're showing up to school not prepared, and it's because of an opportunity gap."

During the first three years of Granite's preschool program, 300 students tested as likely to require special-education services.

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