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Paying for the future
Bill pairs private investors with public education

02/18/16
By Ryan Lessard news@hippopress.com



If 60 children in Manchester are put in early childhood education, the district will save $311,000 in taxpayer expense later on because it won’t need as much special education.

That’s according to a recent study by PolEcon Research, says Sen. David Watters, and that’s the impetus behind a bill he’s sponsoring that would get more kids into pre-kindergarten. 
The bill would create a commission to set up a system for funding pre-kindergarten education through a model known colloquially as “pay for success” financing. 
“The risk in these programs is on private investors who will buy the bonds to pay for the programming for four to five years of providing early childhood education,” Watters said. “What we’ve identified is that the real marker of cost savings and that you’ve helped kids is at that third-grade level. Have you reduced the number of children who need special education remediation and who have deficits in third-grade reading? Only if there are savings there do the bondholders get paid off.”
If the bill gets passed, the commission will begin work to define the criteria for a quality early childhood education, identify the education providers and set metrics for education outcomes. An independent review process would be in place for determining whether those metrics are met and investors get a return on their investment. 
“If there haven’t been savings, guess what? They don’t get paid. But the indications are that they certainly will be,” Watters said.
While lawmakers may debate the finer points of the bill, Watters says the verdict is already in when it comes to the benefits of early childhood education.
“The kid who doesn’t have early childhood education from a difficult background is 50 percent more likely to have problems and need special education, is 30 percent more likely to drop out, is 60 percent more likely not to go to college, is 40 percent more likely to have early teenage pregnancy, 70 percent more likely to have criminal justice system involvement later on,” Watters said. “I think the case for early childhood education is made. But, as always in New Hampshire, can we be innovative in finding a way to fund it?”
Watters says the model has already shown to have success in other parts of the country, like Utah.
“It’s been underway most significantly in Salt Lake City,” Watters said. “The bondholders out there are getting paid off because they’re saving so much money for that first-year cohort. And similar reports are appearing in Chicago, which is the largest program of this sort.”
Watters said he crafted the bill with the help of the New Hampshire Children’s Trust, the Save the Children Action Network and the Institute for Child Success. They’ve already had talks with the New Hampshire Bankers Association, Goldman Sachs and the New Hampshire Charitable Foundation with those organizations showing interest in the program. And there may even be some federal money available if a bill backed by Sen. Kelly Ayotte is passed.
While the bill is co-sponsored by prominent Republicans like Senate Majority Leader Jeb Bradley, Watters is hesitant to predict broad bipartisan support. But he is hopeful that the fact that the bill doesn’t use public financing will win over conservatives.
“It’s innovative, and it has that kind of Holy Grail of outcomes-based financing, which a lot of people who are fiscally conservative like myself are very interested in,” Watters said. 





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