Cassie Cresswell of More Than a Score.
Responding to my post yesterday, my friend Cassie Cresswell from More Than a Score reminds me that CPS has been involved with social impact bonds, Wall Street investors and bounties for moving special education students out of programs for a while.
Just a reminder: social impact bonds pay investors yearly per student based on how many special education students schools can remove from services.
From a 2014 story in Catalyst:
But a review of the loan agreement and related contracts – which were approved by the CPS board and still must go through the City Council — shows that the deal relies on a complicated formula that poses little risk to investors. That’s due largely to the proven track record of the project’s chosen preschool program, child-parent centers. In addition, investors gain good will and publicity in the deal.
The review of the documents found that:
–Nearly $1.3 million of the $16.6 million loan will never reach CPS. That money will go to pay a third-party project manager, audits, additional social services, and legal fees – including up to $250,000 for the investors’ own legal costs.
–In addition, the city must pay $319,000 for an outside group to evaluate the project in the third and fourth years.
–According to the city’s projections, CPS would pay about $21.5 million over the life of the 16-year program in payments for “savings” from fewer special ed services. However, if the program is more successful than expected, CPS will have to pay more, up to a maximum of $30 million.
–The city expects to kick in an additional $4.4 million in “success payments” based on children’s performance on kindergarten readiness and third-grade literacy tests.
This means that if it’s very successful, investors could get back more than double their money over the life of the progam.
Cassie is quoted in the Catalyst story.
“It’s really concerning to have financial deals based on test scores. You’re going to get paid back on how kids score, compounding the fact things are already too high stakes,” says Cassie Cresswell, of the group More Than A Score.