Hostname: page-component-586b7cd67f-t7czq Total loading time: 0 Render date: 2024-11-25T09:01:21.942Z Has data issue: false hasContentIssue false
  • English
  • Français

Using Benefit-Cost Analysis to Scale Up Early Childhood Programs through Pay-for-Success Financing

Published online by Cambridge University Press:  29 December 2015

Judy A. Temple  and
Arthur J. Reynolds
Judy A. Temple*
Affiliation:
University of Minnesota, Humphrey School of Public Affairs, 301 - 19th Avenue South, Minneapolis, MN 55455, USA, e-mail: [email protected]
Arthur J. Reynolds
Affiliation:
University of Minnesota, Institute of Child Development, e-mail: [email protected]
*
*e-mail: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

Increasing access to effective preschool programs is a high priority at local, state, and federal levels. Recently, two initiatives to expand preschool programming in Illinois and Utah have used funds from private investors to scale up existing programs. Private-sector social impact investors provide funding to nonprofit or public preschool providers to increase the number of children served. If the measured outcomes from preschool participation meet predetermined goals, then the estimated government cost savings arising from these preschool interventions are used to repay the investors. Social impact investing with a “Pay-for-Success” contract can help budget-constrained governments expand proven or promising preventive interventions without the need to increase taxes. Benefit-cost analysis (BCA) plays a crucial role in helping to identify which social, educational, or health interventions are suitable for this type of innovative financing. Benefit-cost analysts are needed to design the structure of the success payments that the government will make to the private investors. This paper describes social impact borrowing as a new method for financing public services, outlines the contribution of BCA, and discusses the innovative use of social impact financing to promote scaling evidence-based Child-Parent Centers and other early childhood programs.

Keywords

I26H43benefit-cost analysisearly childhoodeducation and human capitalpreschoolpay for successsocial impact bond
Type
Articles
Information
Journal of Benefit-Cost Analysis , Volume 6 , Issue 3 , Fall 2015 , pp. 628 - 653
Copyright
© Society for Benefit-Cost Analysis 2015 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Barnett, W. Steven et al. (2015). The 2014 State Preschool Yearbook. New Brunswick, NJ: National Institute of Early Education Research, Rutgers University.Google Scholar
Barnett, W. Steven & Masse, Leonard N. (2007). Comparative Benefit-Cost Analysis of the Abecedarian Program and its Policy Implications. Economics of Education Review, 26, 113–125.Google Scholar
Bartik, Timothy, Gormley, William & Adelstein, Shirley (2012). Earnings Benefits of Tulsa’s pre-K Program for Different Income Groups. Economics of Education Review, 31, 1143–1161.CrossRefGoogle Scholar
Belfield, Clive (2005). The Cost Savings to Special Education from Pre-Schooling in Pennsylvania. Harrisburg, PA: Pennsylvania Build Initiative.Google Scholar
Belfield, Clive, Nores, Milagros, Barnett, Steven W. & Schweinhart, Lawrence J. (2006). The High/Scope Perry Preschool Program: Benefit-Cost Analysis Using Data from Age 40 Using Data From the Age 40 Follow Up. Journal of Human Resources, XLI, 162–190.CrossRefGoogle Scholar
Boardman, Anthony. E., Greenberg, David H., Vining, Aidan R. & Weimer, David L. (2011). Benefit-Cost Analysis: Concepts and Practice. (4th ed.). Upper Saddle River, NJ: Pearson Prentice Hall.Google Scholar
Campbell, Frances. A., Ramey, Craig T., Pungello, Elizabeth, Sparling, Joseph & Miller-Johnson, Shari (2002). Early Childhood Education: Young Adult Outcomes From the Abecedarian Project. Applied Development Science, 6(1), 42–57.Google Scholar
Chase, Richard, Coffee-Borden, Brandon, Anton, Paul, Moore, Christopher & Valorese, Jennifer (2008). The Cost Burden to Minnesota K-12 When Children are Unprepared for Kindergarten. Saint Paul, MN: Wilder Research.Google Scholar
Consortium for Longitudinal Studies (1983). As the Twig is Bent...Lasting Effects of Preschool Programs. Hillsdale, NJ: Erlbaum.Google Scholar
Conyers, Liza. M., Reynolds, Arthur J. & Ou, Suh-Ruu (2003). The Effects of Early Childhood Intervention and Subsequent Special Education Services: Findings from the Chicago Child-Parent Centers. Educational Evaluation and Policy Analysis, 25, 75–95.Google Scholar
Council of Economic Advisors (2014). The Economics of Early Childhood Investments. Washington, DC: Executive Office of the President of the United States December.Google Scholar
Cullen, Julie Berry (2003). The Impact of Fiscal Incentives on Student Disability Rates. Journal of Public Economics, 87, 1557–1589.Google Scholar
Dubno, Janis A., Duggar, Robert H. & Smith, Michele R.2013 Financing human capital development for economically-disadvantaged children: applying pay for success social impact finance to early childhood development. Ready Nation Working Paper.Google Scholar
Duggar, Robert & Litan, Robert (2012). Early Childhood “Pay For Success” Social Impact Finance: A PFS Bond Example to Increase School Readiness and Reduce Special Education Costs. Report of Kauffman Foundation – Ready Nation Working Group on Early Childhood Finance Innovation, April.Google Scholar
Greenblatt, Jonathan & Donovan, Annie (2013). The Promise of Pay for Success. Community Development Investment Review, 9(1), 19–22.Google Scholar
Greene, Jay P. (2007). Fixing Special Education. Peabody Journal of Education, 82, 703–723.Google Scholar
Hanushek, Eric A., Kain, John F. & Rivkin, Steven G. (2002). Inferring Program Effects for Special Populations: Does Special Education Raise Achievement for Students with Disabilities? Review of Economics and Statistics, 84, 584–599.CrossRefGoogle Scholar
Heckman, James J., Moon, Seong Hyeok, Pinto, Rodrigo, Savelyev, Peter A. & Yavitz, Adam (2010). The Rate of Return to the High/Scope Perry Preschool Program. Journal of Public Economics, 94, 114–128.Google Scholar
Heckman, James J. et al. (2006). Skill Formation and the Economics of Investments in Disadvantaged Children. Science, 312(June), 1900–1902.Google Scholar
Holt, Emily W., McGrath, Daniel J. & Herring, William L.2007 Timing and duration of student participation in special education in the primary grades. NCES 2007-043 issue brief.Google Scholar
Hibel, Jacob, Farkas, George & Morgan, Paul L. (2010). Who is Placed into Special Education? Sociology of Education, 83, 312–332.Google Scholar
Hibel, Jacob & Jasper, Andrea J. (2012). Delayed Special Education Placement for Learning Disabilities Among Immigrants. Social Forces, 91, 503–530.Google Scholar
Human Capital Research Collaborative (2012). Program Requirement and Guidelines, Midwest Expansion of the Child-Parent Center Program, Preschool to Third Grade. Minneapolis: Human Capital Research Collaborative http://humancapitalrc.org/midwestcpc.Google Scholar
Jenkins, Joseph R., Dale, Philip S., Mills, Paulette E., Cole, Kevin N., Pious, Constance & Ronk, Joan (2006). How Special Education Preschool Students Finish: Status at 19 Years of Age. American Journal of Educational Research, 43, 737–781.CrossRefGoogle Scholar
Karoly, Lynn. A. (2012). Toward Standardization of Benefit-cost Analysis of Early Childhood Interventions. Journal of Benefit-Cost Analysis, 3, 1–45.Google Scholar
Karoly, Lynn. A., Greenwood, Peter W. & Everingham, S. S. et al. (1998). Investing in Our Children: What We Know and Don’t Know About the Costs and Benefits of Early Childhood Interventions. Santa Monica, CA: RAND Corporation.Google Scholar
Karoly, Lynn. A., Kilburn, M. Rebecca & Cannon, Jill S. (2005). Early Childhood Intervention: Proven Results, Future Promise. Santa Monica, CA: RAND.Google Scholar
Kline, Patrick & Walters, Christopher (2015). Evaluating public programs with close substitutes: the case of Head Start. Unpublished paper.Google Scholar
Liebman, Jeffrey. (2011). Social impact bonds: A Promising New Financing Model to Accelerate Social Innovation and Improve Government Performance. Center for American Progress.Google Scholar
Liebman, Jeffrey & Sellman, Alina (2013). Social Impact Bonds: A Guide for State and Local Governments. Harvard Kennedy School Social Impact Bond Technical Assistance Lab.Google Scholar
Ludwig, Jens & Phillips, D. (2007). The Benefits and Costs of Head Start. Society for Research on Child Development Social Policy Report, XXI(3).Google Scholar
Mervis, Jeffrey (2011). Past Successes Shape Effort to Expand Early Intervention. Science, 333(August 19), 952–956.CrossRefGoogle ScholarPubMed
Muschkin, Clara G., Ladd, Helen F. & Dodge, Kenneth A. (2015). Impact of North Carolina’s Early Childhood Initiatives on Special Education Placements in Third Grade. Educational Evaluation and Policy Analysis, 0162373714559096, first published on February 2, 2015 as doi:10.3102/0162373714559096.Google Scholar
Office of Management and Budget (2008). Circular A-11: Preparation, Submission, and Execution of the Budget. Washington, DC: White House.Google Scholar
Olson, John & Phillips, Andrea (2013). Rikers Island: The First Social Impact Bond in the U.S. Community Development Investment Review, 9(1), 97–101.Google Scholar
Popper, Nathaniel (2015). Success Metrics Questioned in School Program Funded by Goldman. New York Times, November 3.Google Scholar
Reynolds, Arthur J. & Ou, Suh-Ruu (2011). Paths of Effects From Preschool to Adult Well-Being: A Confirmatory Analysis of the Child-Parent Center Program. Child Development, 82, 555–581.Google Scholar
Reynolds, Arthur J., Richardson, Brandt A. & Hayakawa, Momo et al. (2014). Association of a Full-Day Versus Part-Day Preschool Intervention with School Readiness, Attendance, and Parent Involvement. Journal of the American Medical Association, 312, 2126–2134.CrossRefGoogle Scholar
Reynolds, Arthur J. & Robertson, Dylan L. (2003). School-Based Intervention and Later Child Maltreatment in the Chicago Longitudinal Study. Child Development, 74, 3–26.CrossRefGoogle ScholarPubMed
Reynolds, Arthur J., Temple, Judy A., Ou, Suh-Ruu, Arteaga, Irma A. & White, Barry A. B. (2011a). School-Based Early Childhood Education and Age-28 Well-Being: Effects by Timing, Dosage, and Subgroups. Science, 333(July 15), 360–364.Google Scholar
Reynolds, Arthur J., Temple, Judy A., Robertson, Dylan L. & Mann, Emily A. (2001). Long-Term Effects of an Early Childhood Intervention on Educational Achievement and Juvenile Arrest: A 15-Year Follow-up of Low-Income Children in Public Schools. Journal of the American Medical Association, 285, 2339–2346.Google Scholar
Reynolds, Arthur J., Temple, Judy A., Robertson, Dylan L. & Mann, Emily A. (2002). Age 21 Benefit-Cost Analysis of the Title I Chicago Child Parent Centers. Education Evaluation and Policy Analysis, 24, 267–303.Google Scholar
Reynolds, Arthur J., Temple, Judy A., White, Barry A., Ou, Suh-Ruu & Robertson, Dylan L. (2011b). Age 26 Cost Benefit Analysis of the Chicago Child Parent Center Early Education Program. Child Development, 82, 379–404.Google Scholar
Rudd, Timothy, Nicoletti, Elisa, Misner, Kristin & Bonsu, Janae (2013). Financing Promising Evidence-Based Programs: Early Lessons From the New York City Social Impact Bond. New York: MDRC.Google Scholar
Temple, Judy A. & Reynolds, Arthur J. (2007). The Benefits and Costs of Investments in Preschool. Economics of Education Review, 26, 126–144.Google Scholar
Temple, Judy A. & Reynolds, Arthur J. (forthcoming). In Israelashvili, Moshe & Romano, John (Eds.), New Developments in the Economics of Prevention: Social Impact Borrowing to Finance Cost-Effective Interventions. New York, NY: Cambridge Handbook of International Prevention Science.Google Scholar
Schweinhart, Lawrence J., Montie, Joanne, Xiang, Zongping, Barnett, Steven W., Belfield, Clive R. & Nores, Milagros (2005). Lifetime effects: The High/Scope Perry Preschool study through age 40. Ypsilanti, MI: High/Scope Press.Google Scholar
United Way of Salt Lake (2015). Initial Results Released for First Social Impact Bond for Early Childhood Education Show Success. Salt Lake City, UT: http://www.uw.org/our-work/cradle-to-kindergarten/sibfactsheet10-1-2015finaledits-4.pdf.Google Scholar
Vera Institute of Justice (2015). Impact Evaluation of the Adolescent Behavioral Learning Experience (ABLE) Program at Rikers Island: Summary. New York, New York City.Google Scholar
Vining, Aidan & Weimer, David L. (2010). An Assessment of Important Issues Concerning the Application of Benefit-Cost Analysis to Social Policy. Journal of Benefit-Cost Analysis, 1, 1–40.Google Scholar
Warner, Mildred (2013). Private Finance for Public Goods. Journal of Economic Policy Reform, 16, 303–319.Google Scholar
White House (1993). Executive Order 12866: Regulatory Planning and Review. Washington, DC: White House.Google Scholar
White House (2013). State of the Union Address. https://www.whitehouse.gov/state-of-the-union-2013.Google Scholar
Zaveri, Heather, Burwick, Andrew & Maher, Erin (2014). The Potential for Cost Savings from Home Visiting Due to Reductions in Child Maltreatment. Washington, DC: Casey Family Programs.Google Scholar