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Pay for Preschool Success (RBF in Education)

Created Dec 16 2015, 12:00 AM by Dilshod B. Yusupov



It isn't perfect, but Utah is showing how to make the pay for success model of social programs work.

An innovative new approach to results-based public financing called Pay for Success hit an unexpected bump in the road last month. The country’s second Pay for Success project, a preschool program in Salt Lake City, Utah, reported strong results which, after initial acclaim, were heavily criticized for overstating the project’s benefits.

 

Yet rather than calling the approach into question, the recent debate over Utah’s project actually underscores the value of the outcomes-focused transparency that Pay for Success brings to government spending.


In a Pay for Success approach, private investors provide upfront cash to fund a social program that’s expected to prevent a specific problem from happening and thus save the government money that would otherwise have to be spent down the line. If the project is successful, based on transparent, clearly-measured outcomes, the government pays investors back using the public savings incurred when later remedial costs are avoided. If the project is not successful, investors lose their money and the public pays nothing.

 

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