Both House and Senate versions of ESEA include Pay for Success and profits for Goldman Sachs. Act now.


Goldman Sachs CEO Lloyd Blankhein. Double back earnings for “curing” special education students.

-Bev Johns

Education Week blog:

The pending departure of Rep. John Boehner, R-Ohio, the speaker of the House seems to have lit a fire under negotiations on reauthorization of the Elementary and Secondary Education Act.

In fact, U.S. Secretary of Education Arne Duncan said Monday that it could actually “help” ESEA’s chances if Boehner stuck around for a few more weeks.

Aides for all four of the lawmakers that will be involved in crafting a “conference report” (that’s Congress-speak for a compromise bill developed after both the House and Senate have passed competing versions) have been working very, very hard behind the scenes to reach agreement. The key lawmakers here are: Sen. Lamar Alexander, R-Tenn., and Patty Murray, D-Wash., and Reps. John Kline, R-Minn., and Bobby Scott, D-Va.


As of now both the House and Senate ESEA bills include Federal funding for Pay for Success.

Below are actions YOU can take, and then my arguments for removing Pay for Success from ESEA as it is in Utah and Chicago aimed directly at vastly reducing special education (by 99 percent in Utah).

These are the parts of the U.S. House and U.S. Senate ESEA bills that need to be removed in the Conference Committee.

House ESEA (was No Child Left Behind): HR 5 – Student Success Act, Title II Subpart 1 Grants to States, Sec. 2113 (b)(2). “(F) support State or local Pay for Success initiatives that meet the purposes of this part.”

Title II Subpart 1 Formula Grants to States Sec. 2211 (d)(3)(A). “(ix) Supporting State or local Pay for Success initiatives that meet the purposes of this part.”


Senate ESEA (was No Child Left Behind): S.1177 – Every Child Achieves Act (1) allows states and local school districts to invest their Title I, Part D funds (Programs for Neglected, Delinquent, and At Risk Children and Youth, $47.6 million in FY15) in Pay For Success initiatives; (2) allows local school districts to invest their Title IV, Part A funds (Safe and Drug Free Schools and Communities, $70 million in FY15) in Pay For Success  initiatives; and (3) allows states to invest their early childhood coordination funds (Early Learning Alignment and Improvement Grants, newly authorized program) in Pay For Success initiatives


In the Conference Committee between the US House and the US Senate we must get Pay for Success out of ESEA/NCLB as it is now in both the House and Senate versions.

It can be done, but it will not be easy.

Have you made any contact with the National organizations that you belong to?

Have you contacted your own US Representative and your 2 US Senators?


In Conference Committee on S.1177, please remove Pay for Success as an allowable use of funds through Title I, Part D (Prevention and Intervention Programs for Children and Youth Who are Neglected, Delinquent, or At-Risk) and Title IV, which funds programs addressing student health and safety, from the Senate version of ESEA on the ESEA bill.


In Conference Committee, please remove from H.R. 5, the Student Success Act, the provisions that make Pay for Success initiatives an allowable use of state and local funds in Title II and in the Teacher and School Leader Flexible Grant.

Pay for Success has been used in Utah to prevent 99 percent of children supposedly headed for special education from actually being identified for special education, and paid Goldman Sachs and other investors for each child NOT placed in special education. This is a huge financial incentive to NOT identify children as needing special education, and there is absolutely no research stating 99 percent of students in special education should not be there.

In Chicago, Pay for Success may allow Goldman Sachs to double its investment, depending on how many students are NOT identified for special education.


Pay for Success reminds me of RTI (Response to Intervention) now often called MTSS (Multi-Tiered System of Support).

It sounds great, until you see what actually is happening in too many schools in too many States.

In an email discussion last week I received the following: “but from what I thought, Goldman Sachs and other investors get back money until the loan is repaid — and there is no big profit,just normal interest almost like a non-profit — but I may have it wrong”

I replied: You have it completely wrong. I had sent earlier a New York Times article on Utah, and a Catalyst (specialized education newspaper in Chicago) on CPS – Chicago Public Schools.

For Chicago, the deal is structured almost completely in Goldman Sachs (and their partner, the Pritzker Family Foundation – owner of Hyatt Hotels and of many other corporations) favor: almost no risk and possibly MORE than double their money back (more than 100 percent profit).

Read the New York Times article and Salt Lake Tribune articles on Utah.

Goldman Sachs is taking very little risk ($1 million is immediately paid back to Goldman by United Way) and with 99 percent of the students suspected of being eligible for special ed NOT being identified. Goldman would easily make more than double their money back (far more than 100 percent profit). Goldman is getting an immediate $1 million from the United Way? Not only will Goldman get public money each year that a student is NOT identified, but Goldman is getting charitable money immediately.

Non-profit Goldman Sachs? Hardly.

It is like getting $100 today and giving back $200 in public taxpayer money tomorrow.

Or having a credit card with a 100 percent interest rate. Identifying almost no one as having LD or any other disability is not progress.

Have you seen any program anywhere that has a 99 percent success rate?

Do you believe we can “cure” 99 percent of special ed children with LD or any other disability?

Or prevent 99 percent of children from having LD or another disability?

What would motivate a school district to NOT identify 99 percent of students earlier suspected of having a disability?

The answer ranges from the idealistic, I would say Utopian, to simple avoidance of Federal and State law and regs:

(1) they think (and say) that disability does not exist and now they are going to prove it and; (2) they really do believe (and say) that Each and Every child can be proficient on State or Multi-State tests and should be able to go to college: that special ed is counterproductive; (3) because they think it is the right thing to do for all children; (4) they think far too much is spent on kids in special ed when it should be spent on all kids; (5) this is a natural extension of RTI whose original promoters promised a significant reduction in identifications for special ed; (6) if a student is not identified as needing services under IDEA, the school does not have to provide specialized instruction, nor an IEP, nor an FBA or BIP even if needed, etc.; (7) if not identified, or if in RTI, the school is not subject to IDEA or its regs for that child, and neither the parent nor the child have any legal rights under IDEA .  

In fact IDEA so states.

(8) Another direct incentive for schools to non-identify is that they then are NOT subject to State laws and rules, such as any limits on special education class size, etc.

Goldman Sachs special education bonds are in the ESEA reauthorization.

UNITED STATES - May 14: Sen. Orrin Hatch, R-UT., talks to reporters about the Justice Department secretly seizing AP reporters? phone records outside of the weekly Senate luncheon's on May 14, 2013. (Photo By Douglas Graham/CQ Roll Call)

-By Bev Johns

Who knew that the U.S. Senate reauthorization of ESEA (No Child Left Behind) contains an amendment adopted by the Senate from Sen. Orrin Hatch (R-Utah) that adopts the Goldman Sachs concept of paying investors for any child that avoids special education?

An op-ed co-authored by Sen. Hatch in a Utah newspaper states:

Sen. Hatch, has been working in Congress to allow other states to replicate this success. In fact, the Hatch amendment to the Every Child Achieves Act will allow states to implement Pay-for-Success initiatives.

The federal government helps fund many education programs, but Washington seldom knows what’s best for states or local communities. By allowing federal funds to help finance Pay-for-Success initiatives, this amendment will provide states with the flexibility they need to adopt effective, impactful strategies to improve education and save taxpayer money.

The amendment passed as part of the Senate’s education bill this summer and awaits action in the House of Representatives.

Actually the U.S. Senate and House have passed different versions of ESEA and we are faced with a possible Conference Committee between the Senate and House to compromise the two bills.

This possible compromise may not happen as the two bills are very different, and the upcoming departures of House Speaker John Boehner (one of the original authors of No Child Left Behind) and of Secretary of Education Arne Duncan may lessen the pressure to pass a new ESEA.

But we need to let every national organization that we belong to know that we oppose the concept of paying Goldman Sachs and other investors for every child that avoids special education (what Sen. Hatch calls Pay-for-Success).

By the way, Sen. Hatch’s op-ed specifically mentions Goldman Sachs.

Selling special education kids on Wall Street.


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?

Or suspicious?

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.

I would.

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?

Me too.

Reports the New York Times today:

“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.