Will Econsult Solutions be a foot in the door for early childhood “Pay for Success” in Philadelphia?

My friends at the Alliance for Philadelphia Public Schools have done commendable work researching the slate of candidates initially selected by the nominating panel to be considered for the mayoral-appointed Philadelphia School Board. Reading through their first installment, I noticed that two of the twenty-seven have ties to Econsult Solutions. Suzanne Biemuller is a Senior Policy Advisor and Lee Huang is a Senior Vice President. The name rang a bell, so I decided to do a little more digging.

It is a large economic consulting firm that does business with private and government interests from the Philadelphia region and farther afield. Their extensive client list includes the City of Philadelphia and the Commonwealth of Pennsylvania as well as philanthropies like the MacArthur Foundation, known for promoting digital learning, the W.K. Kellogg Foundation, known for promoting Pay for Success, and the William Penn Foundation, known for hiring Boston Consulting Group to recommend closure of 23 Philadelphia schools and recent initiatives to promote out-of-school time, informal learning initiatives.

One of Econsult Solution’s four areas of practice is public policy and finance. Philip Peterson, a former actuary who now acts as an expert in the use of Pay for Success finance in early childhood education, became an advisor to the firm last September. Peterson’s LinkedIn profile states that he manages KidSucceed LLC, a firm he founded in July 2016 with addresses in Marlton, NJ and Manchester, VT.

KidSucceed

His company provides services similar to those offered by Econsult Solutions, advising on the use of Pay for Success for homelessness and healthcare in addition to early childhood services. This six-minute video features a Q & A on Pay for Success that Peterson did with the National Conference of State Legislatures in August 2016.

Between 2014 and 2016 Peterson worked as Deputy Director for ReadyNation, an organization that promotes adoption of this “innovative” approach to pubic finance. It embodies Third Way privatization, employing private capital to fund public services while demanding that specific measures of success be met. Demonstrating “success” requires collection of copious data, which is most efficiently gathered by pushing service delivery onto digital platforms. Cue the ed-tech impact investors.

ReadyNation is an organization under the umbrella of Council for a Strong America, a coalition of leaders representing military, law enforcement, religious, business, and athletic national interests. It emerged from work initiated by The Pew Charitable Trusts, Biemuller’s former employer. ReadyNation and the Council for a Strong America promote investment in early childhood for the purposes of ensuring children are workforce and military ready. According to his profile from the Institute for New Economic Thinking website, Robert Dugger is a hedge fund manager who co-founded ReadyNation and seeks to build business coalitions to support “high-return investment spending in children prenatal to age five.” There is a lot of money to be made from children living in poverty if you know how to structure it properly. Pay for Success and Social Impact Bonds provide the fiscal policy infrastructure that enables poverty mining.

As Pew wound down their involvement in 2011, ReadyNation went public. That was the year before the concept of social impact bonds was brought over from the UK and piloted at Rikers Island. The following year Dugger, who maintains a close working relationship with University of Chicago human capital researcher Dr. James Heckman, teamed up with the Kauffmann Foundation as the “Kaufmann-ReadyNation Working Group on Early Childhood Finance Innovation” to prepare a progress report entitled “Social Impact “Pay for Success” Finance: A PKSE Bond Example.” Page six of the report boldly states their intention to securitize debt associated with early childhood social impact bonds enabling them to be 1) bought by for-profit and non-profit investors; 2) traded among investors worldwide; and 3) be aggregated into asset-backed securities.

Kauffman ReadyNation SIB 1

Kauffman ReadyNation SIB 2

If you’re not familiar with the dangers of securitized debt, I recommend watching the film The Big Short about the 2008 housing crash. Imagine what they did to mortgages, but next time the vehicle for financial speculation could very well be student education data. I should note that a representative of the Kauffman Foundation was among the Social Innovations conference attendees who participated in a bus tour Comcast brought to Feltonville School of Arts and Sciences in February. You can read more about that excursion here.

Without question, there is serious money on the table. This is not just about early childhood and early literacy being transformed into investment markets for impact investors in the United States. No, this is a global market. On November 1st, hundreds of business people from around the world will gather at the Grand Hyatt Hotel in New York City to plot their strategies to reap profit from children at the 2018 ReadyNation Global Business Summit on Early Childhood. The agenda includes: brain science and economics; corporate leaders in social innovation; effective business-led advocacy; and taking successful programs to scale. What is especially notable is that while the speaker list includes people representing the World Bank, the Federal Reserve, the Marine Corps, chemical companies, venture capital interests, figure skating, churches and even coin laundry operators, there are no early childhood educators. To attend this conference one must request to be approved, and those who are “children’s advocates” or “policy experts” can only attend “with a pre-approved team of at least four business people.”

Global Business Summit

While attracting investors like Goldman Sachs, the metrics demanded by the Pay for Success model have led many to call into question whether or not this approach is actually good for children. See this article in the New York Times and this one in the Chronicle of Philanthropy. There are many ways to define the metrics and deploy screening tools to game the system, just as with charter schools. Additionally, the focus on measurable outcomes is pushing data-driven service delivery via ed-tech platforms. The growing number of early childhood literacy apps coming to market in recent years is surely related to anticipated expansion of this finance model.

Waterford Upstart online preschool, pioneered in Utah and currently being used with refugee families in Philadelphia, is an example of the type of software literacy program designed to harvest data to prove the “impact” required for investors to obtain their profit. Programs like Upstart are promoted as a cheap way to achieve “literacy;” but at what cost to children? If you are not familiar with Pay for Success and Social Impact Bonds and their ties to technology and Big Data, please watch the video in this post and explore some of the supporting materials.

Philadelphia City Council’s Education Committee will hold a public hearing on Monday March 12, 2018 at 1pm in Council Chambers to “discuss how we can better implement educational standards in the early childhood years from Pre-K to 3rd grades to prepare our children for success later in life.” You can read the resolution here.

Is this setting the stage for early childhood and early literacy Pay for Success programs that will usher in expanded technology purchases and data mining? Will Econsult Solutions get a foot in the door with an appointed representative to our new School Board? Will Mr. Peterson perhaps be there on Monday pitching his “innovative” approach to standards-based education funding? Will we be going down the road paved by Salt Lake City and Chicago? Or will Philadelphia strike out in a different direction and instead choose to invest pubic funds to support human relationships that nurture children in ways that cannot be put on a rate card, generate data points, and or enrich Goldman Sachs? Stay tuned.

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