Pritzker Family Foundation gets huge returns for their “investment” in Pay for Success social impact bonds. Profits for the reduction of special ed services.


When Illinois Democratic Party gubernatorial candidate J.B. Pritzker touts his involvement in early childhood programs,  he is mostly talking about his family foundation’s investments, along with Goldman Sachs, in Pay for Success social impact bonds.

In 2015 I wrote about Pay for Success and social impact bonds (aka: sibs).

In Chicago, CPS and Mayor Rahm bought into the idea of social impact bonds for early childhood education.

For each child that the system pushes out of special education services, investors such as Goldman Sachs and Pritzker are paid a return of $9,000. The financial incentive for not providing services to students whose disability may require long-term services seems obvious and dangerous.

Incentivizing the reduction in special education services is not in the interest of special needs students.

From a March, 2016 post on this blog by Mark Ohlandt:

I have to wonder what state legislators across the country are even thinking anymore.  They are selling out public education to corporations and investors.  New Hampshire couldn’t even give this an accurate fiscal note because it is, when you break it down, a bet.  A bet that had disastrous consequences in Utah and Chicago Public Schools according to education blogger Fred Klonsky.  I wrote about how the legislative apparatus for Social Impact Bonds already happened in Delaware and just today, the Delaware Republican Senate caucus revealed a Poverty Agenda Plan that includes Social Impact Bonds as one of their steps to eliminate poverty.  While it is not known if this plan would include educational “pay for success” programs, I know not all of the GOP Senators in Delaware would even want this kind of program in education.

Most of the Social Impact Bond activities in education would seem to be a violation of federal IDEA special education law.  Corporations and special education are like oil and water.  The former has no reason to be involved at all while the latter is a necessary step towards success for students with disabilities. 

It appears that J.B. Pritzker’s “involvement” in early childhood education includes having his family foundation receiving hefty returns on CPS students not receiving the special education services they may need.

From a 2014 press release from the City of Chicago:

Chicago’s nearly $17 million Social Impact Bond Program is structured to ensure that its lenders, the Goldman Sachs Social Impact Fund and Northern Trust as senior lenders, and the J.B. and M.K. Pritzker Family Foundation as a subordinate lender, are only repaid if students realize positive academic results. The Program’s goals include: increasing Kindergarten readiness, improving third-grade literacy, and reducing the need for special education services.

From a Social Finance report on the Chicago Pay for Success sibs investments:


The investment in the program is a senior-subordinate loan structure. Goldman Sachs Social Impact Fund ($7.5M) and Northern Trust Company ($5.5M) are senior lender, and The J.B. and M.K. Pritzker Family Foundation is a subordinate lender. Senior lenders will receive payments first until 2022, and subordinate lenders receive payments for additional special education savings until the final cohort completes 12th grade. One-off payments are available per student on the program for i) increased kindergarten readiness ($2,900), and ii) increased third grade literacy ($750). A payment of $9,100 is available for each student that avoids special education, annually compounding at a rate of 1.0%. The outcomes payments per student are equivalent to 95% of the avoided special education costs per year, assuming that the student requires special remedial education from kindergarten until 6th grade.


An April 2016 performance report indicated that 59% of the children who participated in CPC preschool during 2014-15 had kindergarten readiness ratings that met or exceeded national averages. Investors received an outcomes payment of $500,000 based on the kindergarten readiness results for the first cohort.

Not bad a financial return, JB.

Not bad.

Unless you’re a student who needs services and isn’t getting them.

9 thoughts on “Pritzker Family Foundation gets huge returns for their “investment” in Pay for Success social impact bonds. Profits for the reduction of special ed services.

  1. Why would anyone expect anything less of him! Who would have thunk a democrat would push a faux “ I care about the kids narrative” when that’s suppose to be what the Dems say the repugs push! Surprise surprise surprise, …..but I’m not surprised!

  2. The immorality of this investment scheme is breath taking. Children with special needs struggle to acquire academic and social skills. They require as much assistance as possible. Fortunately, there are many professionals trained in providing appropriate supports. The concept of reaping financial rewards on the backs of the most vulnerable children is repugnant.

  3. How is taking a return on your investment immoral? This is a poorly written article which states a conclusion that the author was trying to make long before he looked at any facts.

    1. I made no argument that even mentioned morality. I simply said that the Pritzkers invest in a Wall Street bonds that pay a financial return based on how many special education students do not receive services. That is bad public education policy for the reasons I gave. I, as a 30-year veteran of teaching special needs students, find it problematic as an issue of morality. That you don’t is not function of me not looking at facts. I presented facts. You decided to draw a different moral conclusion than I do.

  4. Sorry, but there seems to be a missing element of information here, which is why do these children not receive special education anymore? In theory, because they no longer need it thanks to their improvement under the prior initiative funded by the SIB.
    I will readily admit I have no idea as to whether all children who have been identified as requiring special education at some point in their life will always need this support, or whether they could have been given prior help to acquire the skills they were lacking so as to follow a “regular” education, but it may be this initiative is on to something. It may also be that this is an extremely elaborate way for unscrupulous investors to swindle money out of governmental institutions – your conclusion suggests that you believe the latter.
    What seems to me as a more pertinent set of questions – and potential criticism – is how the bar was set to evidence that these children no longer needed this assistance, and whether there has been a lasting assessment post integration into a “regular” school of these children.

    1. This is a good point. But what is most problematic is that if a private investor’s profit return is based on the number of students not identified as needing services, this inevitably taints the process.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: