Social Impact Finance Early Childhood Development Janis Dubno, M.B.A. Director of Early Education Policy Voices for Utah Children Conference of Early Childhood Social Impact Performance Advisors San Diego, California April 28, 2015

ECD Social Impact Finance Feasibility  Indentify programs and models that are improving outcomes and reducing short and long term remediation costs.  Longitudinal outcomes and cost avoidance data and systems.  Independent rigorous evaluation.  Determine the potential economics of an investment.

ECD Social Impact Finance Economics  There are three important relationships in a Social Impact Finance project for high quality prekindergarten:  (1) the ratio of the cost of the intervention (prekindergarten) to the cost of the remediation (special education).  (2) the ratio of intervention impact to non-intervention impact.  (3) the combination of private investor funding, state funding, and federal funding for PFS scholarships for economically disadvantaged children to attend high quality prekindergarten.

The Utah Social Impact Loan for High Quality Preschool (The Proof of Concept)  Partnership with the United Way of Salt Lake (UWSL) and Granite Preschool Services. Philanthropic relationship between UWSL and Goldman Sachs Bank.  The Sustainable Financing Model for High Quality Preschool :  Longitudinal research quantifying cost avoidance in special education and academic performance outcomes.  Demonstration of the economics of an potential investment and the collaboration with Goldman Sachs and Imprint Capital.

The Utah Social Impact Loan for High Quality Preschool (Proof of Concept) Overview  Lenders: Goldman Sachs Urban Investment Group is the senior lender; J.B. Pritzker is the subordinated lender.  Providers: Granite School District, Park City School District, the Guadalupe School (charter), YMCA (non profit), Childrens Express ( daycare center). Lit’l Scholars (daycare center).  The United Way of Salt Lake and Salt Lake County capitalized a repayment fund to repay the investors based on special education cost avoidance.  The United Way of Salt Lake is the intermediary.

The Utah Social Impact Loan for High Quality Preschool (Proof of Concept)  Through 6th grade: Success payments, equal to 95% of special- education cost avoidance, will be used to pay 5% annual interest and repay senior and subordinate debt principle.  After debt principle and interest have been repaid, investors receive "Success Fees" equal to 40% of special-education cost avoidance but only through 6th grade.  After 6th grade: 100% of all special-education cost avoidance will be retained by Utah

Utah School Readiness Initiative  HB96 Utah School Readiness Initiative passed in the 2014 General Session. Provides High Quality Preschool Quality grants to providers to increase quality, independent assessment and data collection. Appropriates funding for Results-based Financing for programs with evidence.  Same private funders and providers as The Proof of Concept transaction.  State of Utah makes success payments based on performance.  Success Payments to the senior and subordinate lenders will be made equal to 95% of the avoided costs of $2,700, or approximately $2,565 per child for every year, Kindergarten through Sixth Grade, up to a maximum interest rate of the Municipal Market Data General Obligation Bond AAA scale for a 10 year maturity at the time of issuance plus 5%  After 6th grade: 100% of all special-education cost avoidance will be retained by Utah

Social Impact Finance and Early Childhood Development ReadyNation Working Paper  “Financing Human Capital Development for Economically Disadvantaged Children: Applying “Pay for Success” Social Impact Finance to Early Childhood Development” Ready Nation Working Paper: authors: Janis A. Dubno, Robert H. Dugger, and Michele R. Smith  Link to the full paper e%20Dubno%20Dugger%20Smith%20Paper% pdf e%20Dubno%20Dugger%20Smith%20Paper% pdf

Contact Information Janis Dubno, M.B.A. Voices for Utah Children Director of Early Education Policy (801)