Imagine that you have a child who needs special education services. Or maybe you are a parent who has a child who needs special education services. You go looking for a school or a school district that is a good fit for your kid.
Now, let’s imagine that you meet with the Special Education coordinator of the district and she tells you what great work they do.
“Of the 110 pre-school students we had last year, we were able to move 109 into general education and they no longer are labeled as special education,” she beams.
Would you be pleased?
What if you found out the for every student who was moved out of their special education program a Wall Street investment firm received $2500? Then you found out that they would continue to receive that bounty every year until your child leaves the 6th grade.
Would you run like hell to somewhere else.
This is all true.
Wall Street is always looking for a good investment and that’s what Goldman Sachs and the Pritizker family have found in an investment strategy they call social impact bonds.
Can you trust the success of a program that is evaluated by how many students are moved out and which delivers a bonus check to Goldman Sachs for the head of each one?
Fertile soil for corruption, you say?
“The tool of ‘pay for success’ is much better suited to expanding an existing program,” Andrea Phillips, vice president of Goldman’s urban investment group, said in an interview on Wednesday. “That is something we’ve already learned through this.”
The $4.6 million put up by Goldman — and the $2.4 million invested by the Pritzker Family Foundation — went toward expanding an existing preschool program for poor children in Salt Lake County.
The program had already been shown to decrease the need for special education, but it had not been able to expand to meet all of the demand.
Special education and Wall Street is a toxic mix.