It’s all about hitting the metrics, baby (boldface mine):
Goldman Sachs is making its second foray into an experimental method of financing social services, lending up to $4.6 million for a childhood education program in Salt Lake City.
This “social impact bond,” in which Goldman stands to make money if the program is successful but will lose its investment if it fails, will support a preschool program intended to reduce the need for special education and remedial services. The upshot, in theory, is that taxpayers will not have to bear the upfront cost of the program.
Goldman is being joined in this effort by the Chicago investor J.B. Pritzker, who is providing a subordinate loan of up to $2.4 million, bringing the total financing to $7 million. The loans will be announced at an event in Chicago on Thursday…..
The loans are going to the United Way of Salt Lake, which oversees the Utah High Quality Preschool Program. The investment’s success will be measured by the level of cost savings when children do not need to use special education services, which are financed by the state.
The loans carry an interest rate of 5 percent, which is paid along with the principal if the program is successful. In the best case, Goldman and Mr. Pritzker would make additional “success fees.”
This foray into special education will merely be the beginning: the obvious expansion is to move from special education reduction to general performance–that is, how well ‘normal’ students do (that’s where most of the students–and the business–are). Like the special education contract, there have to be milestones–quantifiable ‘deliverables’: the obvious ones being student test performance. Contractors will have to ‘make the numbers.’ There is no way such a system could work without testing–it would have to be an integral component (I suppose a system could be built around at high school graduation rates, but that could easily be gamed too). The current emphasis on high-stakes testing is the way to justify this sort of educational assessment: once it becomes ‘normal’ to hire and fire teachers based on scores, the next ‘logical’ step is to privatize and monetize this system. In an educational world where scores (usually in two subjects, reading and math) are the proverbial bottom line, making the numbers is all that matters.
But I’m sure this financial pressure will not exert any pressure whatsoever to game the system, overemphasize testing, or neglect parts of the curriculum–or education in general–that aren’t measured or quantifiable.
Really, it’s not about the money, it’s all about the kids….