Thu June 13, 2013
Goldman Sachs Finances Pre-K Programs in Utah
Granite and Park City School Districts are getting a funding boost for their pre-school programs, thanks to an investment deal with Goldman Sachs and Chicago investor J.B. Pritzker. The money will provide hundreds of low-income kids in those districts access to pre-school programs for which they might otherwise be wait-listed.
Goldman Sachs has signed off on a $4.6 million loan, while Chicago investor J.B. Pritzker is providing $2.4 million. Whether they’ll see a return on that investment depends solely on the success of the programs. But Andrea Phillips, with Goldman Sachs says it’s not a risky deal.
“Like we would look at any investment, we spent a lot of time looking at the underlying track record, getting comfortable with who the partners are who are delivering this service," Phillips says. "Based on our review of all of that and our due diligence, we do expect to be repaid.”
She says a broad body of research shows the long-term value of high quality preschool.
“We think this is a potentially new financial instrument for helping finance social and human services," Phillips says. "Particularly as we’re in a time of diminished government resources.”
The concept was modeled after a bill sponsored by Republican State Senator Aaron Osmond this legislative session. Had it passed, it would have expanded early education programs across the state by encouraging businesses to invest in preschools in exchange for the cost savings they deliver. The state would only be required to pay back the loan if the program succeeded.
But since the bill failed, United Way of Salt Lake and Voices for Utah Children joined Granite and Park City school district to develop the model locally.
Bill Crim is with United Way of Salt Lake. He says Granite and Park City qualified for financing because they had several years’ worth of data showing their pre-k programs close achievement gaps and save money. Crim says it doesn’t matter the type of program, as much as the data.
“Any preschool that can demonstrate the precise results of helping the public sector and taxpayers avoid costs down the road, could be eligible for an upfront investment," Crim says.
According to Granite School district, their pre-k program saved the state more than 2,000 per child over 12 years by helping them avoid remediation.
Crim says it’s a fiscally responsible way to address an economic and educational crisis.