U.S. Department of Education Announces New Pay for Success Grant Competition for Preschool

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The U.S. Department of Education announced today the availability of $2.8 million for a Preschool Pay for Success grant competition for state, local and tribal governments interested in exploring the feasibility of Pay for Success to expand and improve early learning. The feasibility studies will determine if this model is an effective strategy to implement preschool programs that are high-quality and yield meaningful results.

"We have made great strides in improving the quality of early learning and expanding access through investments like the Preschool Development Grants and the Race to the Top—Early Learning Challenge grants," U.S. Secretary of Education John B. King Jr. said. "Yet, we need to build on these efforts and do more for our nation's youngest learners. These new grants are one way to answer the question of how we can do a better job to make sure we provide access to high-quality preschool and ensure it's available to our kids most at risk. It also provides an opportunity to focus on long-term evidence of effectiveness and to bring in our state and local partners, along with private and philanthropic investments, to test new ideas, develop new solutions, improve the quality of early learning and further improve outcomes for our most vulnerable children."

Goals of the Pilot

The grant program supports initiatives which are based on evidence; focus on outcomes; and improve early, elementary, secondary and postsecondary education, while generating savings for taxpayers. The studies will identify a broad range of measures designed to demonstrate improved student outcomes; potential cost savings to school districts, local governments and states; and general benefits to society.

Potential outcome measures may include:

  • Kindergarten readiness
  • Later improved social and emotional skills
  • Improved executive functioning
  • Reduction in grade retention and in the need for later special education
  • Reduction in discipline referrals, and interactions with law enforcement
  • Increases in high school graduation.

The ultimate aim of the pilot is to improve early learning outcomes through a future high-quality Pay for Success project by providing grants for feasibility studies. However, the pilot does not fund the implementation of preschool services. Preschool programs that are the focus of these feasibility studies must be inclusive of children with disabilities and the Pilot will also establish safeguards to protect the rights of children with disabilities to ensure that they receive the services they need.

The completed studies will be shared publicly to help other communities interested in pursuing this work to decide if it is right for them.

What is Pay for Success?

Across the country, interest continues to grow in the Pay for Success model for preschool financing. The model leverages philanthropic and private dollars—through innovative contracting and financing—that seek to test and advance promising and proven interventions, while paying only for successful impacts and outcomes for families, children, and communities.

Through a Pay for Success project, a government or other entity enters into a contract to pay a service provider for the achievement of concrete, measurable outcomes for specific people or communities. Service providers deliver interventions to achieve these outcomes and payments are made only if the interventions achieve those outcomes agreed upon in advance.

Communities where it is difficult or not possible to secure new or additional government resources may choose to pursue a preschool Pay for Success project as a short-term strategy to finance the immediate costs of providing preschool services or as one strategy to promote more effective investments of public dollars. A feasibility study is an important first step to establish whether Pay for Success is a viable opportunity that will provide benefits to the community.

However, while these innovative strategies are important, they are not a substitute for local, state and federal support for large-scale expansion of early education.

Funding for Pay for Success

The pilot is funded through FY16 Preschool Development Grant program, which is jointly administered with the U.S. Department of Health and Human Services. There will be between 7 and 14 grantees, with awards ranging from $200,000 to $400,000.

Invest in the future

Expanding access to high-quality early education is among the smartest investments that we can make as a country. That's why over the last three years, President Obama has called upon Congress to expand access to high-quality preschool for every child in America, proposing investments that support a continuum of early learning opportunities, beginning at birth and continuing to age five. His 2017 budget proposal includes expanding high-quality early learning programs through two key programs:

  • $350 million for Preschool Development Grants, an increase of $100 million over the FY 2016 funding level, to help states lay the foundation for universal public preschool.

  • $75 billion over 10 years for the Preschool for All proposal to provide universal high-quality preschool programs for all 4-year-olds from low- and moderate-income families.

High-quality preschool is a critical means of expanding educational equity and opportunity by giving every child a strong start. Studies show that attending high-quality early education can result in children building a solid foundation for achieving the academic, health and social outcomes that are of benefit to individual families and to the country as a whole. Children who attend these programs are more likely to do well in school, find good jobs and succeed in their careers than those who don't. And they are less likely to drop out of high school, have interactions with the criminal justice system or experience teen pregnancy. Research has shown that taxpayers receive a high average return on investments in high-quality early childhood education relative to a number of other interventions—particularly those made later in a child's development—with savings in areas like improved educational outcomes, increased labor productivity and a reduction in crime.

Application Information:

The Notice Inviting Applications for the pilot is available in the Federal Register. The deadline for submitting an intent to apply notice is Sept. 12, 2016, and applications are due on Oct. 6, 2016. Grants will be awarded before Dec. 31, 2016.