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Wealthy backers invest in Utah preschoolers

Granite School District receives first-of-its-kind, $4.6 million social impact bond from Goldman Sachs
Preschool students in the Granite School District receive Common Core-aligned instruction to prepare for kindergarten.
Preschool students in the Granite School District receive Common Core-aligned instruction to prepare for kindergarten.

High-quality preschools in a Utah district began receiving funds from a first-of-its-kind, $4.6 million social impact bond from investment banking firm Goldman Sachs last fall. The goal is to improve instruction in order to prevent students from needing special education or remedial services.

The loan will allow the Granite School District in Salt Lake City to provide early education services to over 3,500 children for the next five years, with no upfront cost to taxpayers, says Brenda Van Gorder, director of the district’s preschool services.

Social impact bonds, also known as pay-for-success loans, seek to better society and to reduce future costs by investing in prevention and intervention programs. This is the second-ever U.S. social impact bond, and the first for early childhood education. The original bond was created in 2012 by Goldman Sachs with the goal of keeping prisoners from reoffending after being released from Rikers Island in New York City.

The state will repay investors the costs of avoided special education expenses. If the program does not keep students out of special education services, the investors get nothing back.

Utah does not offer state-funded preschool. In 2005, the Granite School District received a three-year, $4.8 million Early Reading First federal grant to provide full-day preschool with research-based curriculum to five at-risk schools. The preschool has already seen sustained success—fourth- and fifth-grade students who participated in the program’s first two years are now significantly outperforming their peers.

Also, of the 238 Reading First students with low scores over the three years of the grant, only seven required special education services in kindergarten or beyond. “It’s not just good for kids and schools—it’s saving money for the state,” Van Gorder says. Preschool would cost Utah $1,500 per student while special ed costs $2,600.

These results were enough for Goldman Sachs to invest. With a combination of the bond and Title I funds, the Granite program has expanded from an initial 12 classrooms to 90, currently serving 3,000 students. Granite’s program emphasizes Common Core-aligned instruction to prepare students for kindergarten; in many other U.S. preschools, students play and explore while teachers observe, Van Gorder says.

Granite assesses incoming preschool students for skills such as language and color- and shape-identification. Those with low scores are considered potentially eligible for special education. But because the students also may have learned less at home, they receive interventions instead of being referred to special education, Van Gorder says.

In the first level of intervention, teachers divide low-scoring students into groups to focus on specific skills. Students who still struggle receive targeted instruction in a group of two or three, or 1-to-1 attention. Data is collected to determine if the children are responding to the instruction, and adjustments are made as needed, Van Gorder says.

“Kids who are identified in preschool as needing special education rarely get out of special education over time, research shows,” Van Gorder says. “We don’t want to put kids in unless they truly are kids with disabilities, not kids who lack the opportunity.”

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