Pay for Success: Main Streets’ Payout to Wall Street

“Pay for Success” sounds good. And the argument for Pay for Success is made more inviting because federal, state, and local governments are cash-strapped. The public will only have to pay for programs that are successful — as determined by metrics and independent reviewers. Pay for Success appears viable and inviting.

These financial transactions are basically “Social Impact Bonds.” Those with large sums of money invest in “social innovation.”

But with BIG MONEY betting on making money from “innovative” education reforms, with early childhood education being the flavor of the year, what impact can we anticipate?

What unintended negative consequences are foreseeable?

HERE’S THE PROBLEM INVESTORS INTEND TO SOLVE: Head Start programs can’t accommodate demand for their services. Funding was cut in 2013, restored (?) in 2015, but damage was done. (I know my state still has a waiting list — demand is high, good market.)

HERE’S THE PROBLEM TAXPAYERS SHOULD CONSIDER: The same “investors” both created the problem and plan to solve it. Instead of lawmakers expanding, strengthening, and improving Head Start as the economy improved, private investors are taking the lead on early childhood education —eventually using our money.

Click to enlarge and TAKE NOTE: The First Five Years Fund ( FFYF ) focuses on increasing FEDERAL investments in early childhood education through “messaging”(????) etc.

Still sound like a good deal? Read on.

As explained in “Wall Street’s Latest Public Sector Rip-Off: Five Myths About Pay for Success by Kenneth J. Saltman,

“…investment banks pay for public services to be contracted out to private providers and stand to earn much more money than the cost of the service…The Every Student Succeeds Act [ESSA] of 2016, the latest iteration of the Elementary and Secondary Education Act of 1965, directs federal dollars to incentivize these for-profit educational endeavors significantly legitimizing and institutionalizing them.

Hum. Make the scheme legal and cement profiting, for Wall Street banks and other investors, into the inner workings of the institution of public education.

Legitimize. Institutionalize. Privatize.

Who got incentivized?

Doesn’t it seem like this combination of millionaires and billionaires could outright provide preschool services if they wanted to? Make no mistake; this is about investments. Will this group be pocketing Pay for Success money? We have to wait and see. But by the time the deal is done, it is done. Chances are we won’t know much about the full deal — until it’s too late.

But we do know the messages being spread. Pay for Success functions as an “accountability” mechanism. Accountability? Just like under No Child Left Behind?

“In theory,… the government only pays the funder if the program meets the metrics. If the program exceeds the metrics, then the investor can receive bonus money making the program much more expensive for the public and highly lucrative for the banks.”

Who sets the metrics?

Recall the cheating scandals over test scores — the “metric” central to No Child Left Behind (NCLB now ESSA)?

We learned a lesson. Didn’t we?

But supposedly, Pay for Success is a better way for us to go forward because…

“it creates a ‘market incentive’ for a bank or investor to fund a social program when allegedly there is not the political will to support the expansion of public services.”

What? When? We don’t want to pay for public services?

Now their marketing says we do support investing in early childhood education. What a difference three years makes! Survey says….We have a unifying issue! Invest now!Legitimate surveys have always shown we support a PUBLIC school system.

People pay their taxes (and expect corporations to do so as well) in part because they want the government to deliver good services to the people who need them.”

This really is another example of Us versus Them — Main Street versus Wall Street. And Wall Street is running a new game. We pay; they play.

“[Pay for Success] Contracts are so convoluted and complicated that what normally would take a month to do takes two years and with financial arrangements so complicated that a university professor in financial management ‘still needed help understanding the financing.’”

Shades of “credit default swaps” — those Wall Street “innovative financial instruments” of Main Street destruction.

If you read Saltman’s whole article, be forewarned. The facts about their propaganda centered on early childhood education services is enough to make a person gag … Suddenly Wall Street cares about Main Street? Right. They are for Us.

Is Pay for Success promising better education at a lower price than what we now pay? Sounds too good to be true?

 

Their game is going to be tough to follow. Please try.

ESSA gives authority to Pay for Success through the Secretary of Education (Betsy DeVos). It also gives her a funding stream for start-up costs for new charter preschools. In addition, there is a focus on rural schools. And ESSA provides transportation costs for the first year of those charters. After that, you will pay out of your state and local pockets of public cash for increasing transportation costs. That in-turn will create a market for more online rural schools. The quality of education?

Remember, this portion of their game started back during the recession.

So let’s go back to that Wall Street induced Great Recession. It was tighten-your-belt time. Crisis. Definitely. Budgets had to be cut? Absolutely. What’s the first to go? The big-ticket state item — education. But every time this happens, local people step up. Most of us willingly fund education. In most states preschools are funded for at least the most needy. Only six states don’t support Head Start or other early childhood education.

Do we need more access to quality preschools? Probably. But is Pay for Success the best investment for taxpayers?

In Why “Pay for Success” Financing Could Cost Taxpayers More Than They Bargained For by Rachel M. Cohen, she writes…

“New Profit—a ‘venture philanthropy fund’ with a board that boasts Bain Capital executives and other investment leaders—launched an advocacy arm in 2007, innocuously named America Forward. When Barack Obama was elected president in 2008, the group recommended that his transition team establish a ‘social innovation fund.'”

President Obama went for it. He even established “the first-ever White House Office of Social Innovation.” Jared Kushner, President Trump’s son-in-law, now leads that office. Kushner’s plans? To remodel our workforce training programs….OUR public programs.

President Obama’s Social Innovation Fund is administered by the Corporation for National and Community Service. Who knew?

“…three foundations have played particularly significant roles: the Rockefeller Foundation, Bloomberg Philanthropies, and the Laura and John Arnold Foundation…. all three foundations have funded the Government Performance Lab at Harvard, established in 2011, that helps implement and expand Pay for Success initiatives. Jeffrey Liebman, who served in the Obama administration as the deputy director for policy at the OMB, runs the Harvard center.”

To be clear, we have a privately-funded private school performance lab reviewing the metrics for Pay for Success. Remember, it is private investors who will be paid for “success.” How independent will the reviews be?

And in case you didn’t catch this fact, the law began under Obama’s administration and the person heading the lab worked for the Obama administration. …. My head is spinning faster than a revolving door!

Disruptive “innovation”? A cycle in need of stopping.

The people coming up with these schemes have so much money they don’t know what to do with it. What these people know is that they don’t want to pay their fair share of taxes. So through OUR lawmakers, they set-up tax credits, loopholes, and under-the-radar innovative financial instruments to be legal tax-dodgers ….. The result: we can’t fund quality social services, our way. That’s how they create problems — for us.

And Ms. Cohen goes on to point out…

“…at its worst, Pay for Success can leave taxpayers paying substantially more than if their governments had just funded programs directly….”

What are the chances they can demonstrate real success? Well, investors are hedging their bets. By choosing to invest in already successful programs (the ones we already know work), their risk becomes minimal. And there is nothing innovative about their “new products” other than the funding mechanism and a new name for some old programs we previously had to cut.

So let’s remember, this plan unfolding before us is about the public service of educating young, very impressionable children. It isn’t just money at risk. Childhood is.

With Pay for Success funding early childhood education programs, we are putting our trust in a financial scheme headed by the same investors who caused the Great Recession — Goldman Sachs, Bank of America, J.P. Morgan, da, da-da, da. Think they have changed their ways? They would like you to think so.

What I don’t understand is the country discarding a successful education system that was the envy of the world for almost 200 years— until the education oligarchy took over.

We need to stop this lopsided deal for expanding public-private partnerships. It is taking total control over educating all our youngest citizens and placing them into a workforce/military development system. And with funders now teaming up with the charter alliance, this has gone too far! It’s a double whammy!

With only 17% of charters shown to outperform public schools, coupling of the First Five Years group with the Charter Alliance is risky….for children and taxpayers alike.

The game is rigged. The cards are stacked against us. We know that.

There may be some circumstances where Pay for Success is a viable idea. Preschool in particular and public education in general is NOT one of those circumstances.

“…the model is appropriate only for a narrow cohort of nonprofits that meet two related criteria: they must be able to effectively deliver and measure their social impact; and they must be able to translate that impact into financial benefits or cost savings that are traceable to the budgets of one or more institutions or government departments.

Although the potential social benefits of PFS [Pay for Success] appear to be real, one cannot ignore the likelihood of unintended negative consequences….

Haven’t we subjected our country’s children to enough “unintended negative consequences”?

It is time to knockdown the house of cards.

Pay for Success is only one item that is wrong with The Every Student Succeeds Act. Demand congress repeal ESSA before the trump card is played. 

 

Stuck in the Muck: Trapped in Outcome-Based Reforms that Don’t Work

If President Trump drained the swamp, we would still be stuck in the muck.

Cartoon provided by Ben Garrison. Visit his site at GrrrGraphics!

Still waiting on leaders to fix health care? And how many decades have we listened to talk about fixing the education system? But, did you know that both these systems are suffering from the same problem?

“Make America great again”? We can’t do that without understanding what changed America. Until then, we spin our wheels, dig ourselves in deeper, and allow the expanding swamp to be refilled.

The problem? We switched drivers — from leaders believing in progress to those driven by outcome-based data, money, and their own arrogance. Our drivers own the world and dictate the rules.

We the People? We don’t know which way to turn. But even if we did, we can’t move forward because we’re stuck in the muck.

Health care, social security, the justice system, the environment, education, on and on — all the major social problems are being kicked down the road. And we are stuck in debt up to our eyeballs while our social safety net develops ever-widening holes.

Most of the holes were created by us and what we don’t know.

In the health care debate, what aren’t we hearing?

“The physicians say the increased use of quality metrics to assess provider performance is having a negative impact on quality of care. Far fewer (22 percent) see quality metrics as having a positive impact on quality.

Nearly half (47 percent) of physicians and just over a quarter (27 percent) of nurse practitioners and physician assistants say the recent trends in healthcare are leading them to consider an earlier retirement.”

Source: NPR Suicides are up. Tracking outcomes isn’t what these people needed us to do.

Physicians and teachers are facing the same problems.

Where we once had community hospitals (schools), we now have health care (charter) management organizations. They control a data-driven system with an eye towards cost-cutting through technology. The technology industry and health treatment (education market) industries are flourishing.

People? We aren’t doing so well. Not only are teens and middle-aged men killing themselves at alarming rates, Americans in general are not as happy as we once were.

We know we need to address heath care. But we seem unaware of how desperately we need to consider real education reform as a national priority.

If we can’t gain control of our own local school systems, what hope do we have of solving our other more complex problems?

When leaders put Standards Based Reforms (SBR) in federal education law, we were trapped in the education metrics of outcome-based reforms.

Once we drop the fallacy that Standards-Based Reforms are a silver bullet, true education reform will be possible.

Statistics now prove what many believe. Standards don’t ensure student achievement. The focus on monitoring outcomes ignores the problems created by separate and unequal schools.

The misconception is that setting “higher, better” standards improves schools. It doesn’t.

Do you know why No Child Left Behind (NCLB) didn’t improve schools? SBR. And the Every Student Succeeds Act (ESSA) perpetuates the same problem. SBR.

“Now we risk setting national curriculum standards instead of recognizing that children need us to identify their individual strengths and weaknesses and work with them to attain a level of mastery of the classroom curriculum as outlined in a locally agreed upon instructional framework.

This isn’t a philosophy that gets away from being held accountable to a standard; it’s one that is responsible for meeting the needs of the individual student along with educational standards.” The Crucial Voice of the People

That is a description of standards-referenced education, not standards-based (NOT the Outcome-Based Theory).

But the country is stuck because our tax dollars for education continue to be spent on SBR, not invested in us.

“We’re stuck because our focus, our funding priorities, and our personal beliefs and attitudes are failing to serve our country.

We are stuck in the standardization of children ditch because we set test scores as our goal—in law and in the minds of Americans.” The Crucial Voice of the People

Metrics rule. Plus, we have not listened to people with a passion for teaching and compassion for children.

“In the last several years, with the continuing emphasis on using data to drive instruction, I find myself increasingly skeptical about what we do to ‘benefit’ students. …

Data seems to be the driver of much educational policy today, even when it means we force students into increased time with their weakest subjects, and excluding content that might intrigue them.  We marvel at the lack of engagement while we simultaneously impose rigid interventions…

I’m very concerned that our fixation on data has become more important than the engagement of students in topics that might lead them to important self-realizations of competency…  It often feels like teachers are working in a system designed for disengagement, while at the same time being evaluated on their skill at maintaining engagement!

Regardless of my knowledge or enthusiasm, I’m still expected to march as a good soldier with what I see as an archaic system…

Our current models mean we–teachers, administrators, and students–fixate more on ‘grades’ than learning.  I can no longer grow as an educator when I feel confined by parameters that fail to prioritize self-discovery and lifelong learning–for all of us.” — Cindy McDonald (A Now Retired Teacher)

We are losing compassionate and passionate public servants. Our public services are trapped in the metrics of Outcome-Based Reforms because we aren’t controlling how our money is spent.

The more automated our human services become, the less service we are providing to humans. People are getting frustrated and blaming the government.

But consider this. The government is not run by people representative of us. Our government is run by the rich, ultra-rich, and the greedy who are willing to look the other way when it comes to using our lawmaking process for their own benefit. Palms are being greased. The “grease” keeps the swamp slimy.

And it is the arrogance of these ultra-rich people, telling us what is best for us, that we should no longer tolerate.

We’re the ones that need to roll up our sleeves and drain the swamp.

To clean House, we need an election revolution every two years until we’re no longer stuck but rather making real progress again.

Start in The House.

In writing about the House of Representatives, James Madison said, “They in a word hold the purse” (Federalist No. 58).

The Constitution: Article I SECTION. 7 “All Bills for raising Revenue shall originate in the House of Representatives…”

“The greater the power is, the shorter ought to be its duration” (Federalist No. 52: Madison). Thus, Article I SECTION. 2 “The House of Representatives shall be composed of Members chosen every second Year by the People…”

One solution offered in Restoring American Happiness is greater public financing of health and education. And we must invest wisely.

We need to control the purse…

“As the people are the only legitimate fountain of power” (Federalist No. 49: Madison), we are central to our own progress as a nation. And to restrain the House requires “above all the vigilant and manly spirit which actuates the people of America, a spirit which nourishes freedom, and in return is nourished by it (Federalist No. 57: Madison).”

Call it an electoral revolt or call it an election revolution. Call it what you will. It is what our nation’s fathers directed us to do. It will nourish progress.

We filled the swamp; we can drain it. And we can refill it with representatives that will invest in the human side of both health care and education….or we drain it again…in two years time.