Chicago and Illinois have long track records of leadership in early childhood education. As early as the 1960s, the Chicago Public Schools was among a handful of pioneering districts that created Child-Parent Centers (CPCs) to provide high-quality early childhood education — PreK to 3rd grade — while supporting low-income parents and engaging them in their children’s education. An influential longitudinal study of CPC alumni shows that the model produced substantial increases in both academic achievement and economic returns to society from higher earnings, reduced involvement in crime and better health.
In the 1980’s, Illinois got in the early learning game by creating a public pre-kindergarten program for children in poverty. By the early 2000’s, a broad coalition of early childhood leaders was pushing Springfield to develop universal, voluntary preschool. In 2007, then-Gov. Rod Blagojevich signed a bill creating Preschool for All, which expanded state funding for early childhood education and allowed programs to be housed in both schools and community-based organizations, while setting higher standards for teachers.
By 2009, the state was spending about $380 million to serve 95,000 3- and 4-year-olds, about half of eligible preschoolers. In Chicago, different barriers emerged in different neighborhoods; in Englewood, parental fears for their children’s safety and distrust of government held down enrollment, while in Little Village, demand for seats far exceeded available space. In both cases, eligible children lost out. In response, early childhood leaders stepped up efforts to reach children most at-risk and identified innovative programs for expansion.
Then the recession hit. By 2014, Preschool for All had lost 25 percent of its state funding and enrollment had fallen to 70,000 children. Hopes that Obama’s universal preschool program would fill the gap never materialized.
Though Congress did not move on Obama’s universal preschool proposal, the U.S. Department of Education has done what it can to shore up early learning funds in the states. Through Race to the Top Early Learning Challenge, Illinois, a second-round winner , received more than $52 million. However, those funds had to serve a dual purpose: expanding access and increasing quality.
Last year, the state met a key Early Learning Challenge goal by unveiling a new rating system for early childhood programs. The ratings are designed to help parents choose programs wisely and offer providers incentives to train staff and use research-based curricula in the classroom.
Last December, the Department awarded Illinois a $20 million expansion grant modeled on the Obama proposal: the feds pony up relatively small funds to spark a deeper state-level commitment to preschool. Springfield has pledged $128 million over four years to support the federal investment, which is renewable at the same amount for up to three more years if the state honors that pledge. Given the state’s financial distress, that is a big if.
Returning to the numbers of children served at the height of Preschool for All in 2009 will be a steep climb, due to both fiscal woes and a shortage of bilingual-credentialed teachers.
See “Illinois gets second-largest preschool expansion grant,” Catalyst December 2014 and “State looks to meet demand for early educators with specialized training,” Catalyst October 2015.
While the state is relying on federal funds to shore up preschool access, Chicago has turned to private funds through a nascent financing strategy: the social impact bond. A social impact bond amasses private capital up front to pay for a public project that is expected to produce both beneficial social outcomes and governmental cost savings. If it works, some of the cost savings are used to pay back the bondholders with interest. The up side for the government is that is doesn’t have to front the expense of a new program, and pays investors only if the project produces cost savings.
In 2013, Goldman Sachs and the Chicago-based Pritzker Family Foundation invested $7 million to expand a Utah preschool program run by the United Way of Salt Lake. The additional funds expanded the program by 595 students, or half the waiting list.
This week Vox reported that the effort is the first example of a successful social impact bond in the United States: only one of the new preschool students needed special education services in kindergarten. The reduction in special education costs saved Utah $281,550. Investors will be paid $267,473 of the savings.
A year ago, Goldman, Northern Trust and Pritzker made a $17 million investment here to expand access to Child-Parent Centers. Though the Board of Education and the City Council both approved the deal, former Board member Henry Bienen voted against it, expressing concerns about the interest rates and how success would be measured.
The investment became the fifth social impact bond in the United States and the second, after Utah, to focus on early childhood education. Six schools are receiving funds to expand preschool enrollment, an expansion that could cut the city’s waiting list by more than half. When the effort launched, there was a goal to add still more preschools. SRI International, a prominent research and development firm, was hired to evaluate the program.
See “Preschool expansion via ‘social impact’ bonds,” Catalyst October 2014 and “For the Record: Paying for preschool with social impact bonds,” Catalyst November 2014