| Notes |
The Utah program, established in 2013 by the United Way of Salt Lake City, sought to reduce demand for costly special education in the Granite School District by providing high-quality pre-kindergarten for children aged 3 and 4 years.
The preschool program was based on research conducted by Voices for Utah Children, an advocacy group for disadvantaged children.
While research showed that early childhood education could reduce costs throughout the child’s education, the majority of Utah 3 and 4-year-olds were not enrolled in pre-kindergarten. Utah was one of only 10 states that provided no state funding for high-quality preschool.
To help fund a high-quality pre-K, Janis Dubno, then director of early education policy for Voices for Utah Children, designed a “sustainable financing model” to illustrate that early childhood education investments could ultimately save money for Utah taxpayers.
Dubno’s model evolved into a results-based financing system that allowed private investors to cover the up-front cost of pre-K programming for at-risk 3- and 4-year olds, with the state reimbursing investors for each child who was considered at risk for later special education intervention upon preschool entry.
The “bond” was more of a bet that the program would work. Investors, who provided $4.6 million of upfront loans, would be paid back by the state if the program worked. A successful

preschool program would save public funds by avoiding the high cost of special education services.
Thus, the program served a secondary purpose of demonstrating to legislators and other policy makers the cost effectiveness of early childhood education.
United Way of Salt Lake convened partners and investors to launch the first year and earmarked $1 million to serve as the repayment fund for the transaction’s first cohort of children.
Salt Lake County added to the repayment fund and became the first government in Utah to embrace the pay-for-success model.
The Utah State Legislature in 2014 passed House Bill 96, the Utah School Readiness Initiative sponsored by House Speaker Greg Hughes, R-Draper. The legislation established the School Readiness Board, made up of appointees from the State Department of Workforce Services, Utah State Office of Education, Utah State Charter School Board, business leaders, and other individuals committed to advancing early childhood education in Utah.
The School Readiness Board is responsible for entering into pay-for-success financing contracts with private investors on behalf of the state.
In 2014, Utah signed a contract with United Way of Salt Lake, Goldman Sachs, and the Chicago-based J.B. Pritzker Foundation to fund the project for the preschool children.
Of the 595 low-income children who attended high-quality preschool financed by the SIB in the 2013-14 school year, 110 of the four-year-olds were identified as likely to use special education in grade school. Results showed that of those 110 students identified as at-risk, only one used special education services in kindergarten. The 110 students will continue to be monitored through sixth grade, generating further success payments based on the number who avoid use of special education in each year.
The successful results led to the first investor payment for any pay-for-success financing mechanism in the U.S. market. |