FILE -- June 3, 2013: Former Secretary of State Hillary Rodham Clinton speaks on stage during the 2013 CFDA Fashion Awards at Alice Tully Hall in New York. (Photo by Brad Barket/Invision/AP)
Last week I wrote about Hillary Clinton’s June 13 speech at the Clinton Global Initiative (CGI) meeting in Chicago, describing her ability to place the issue of opportunities for women and girls in a broader context than women’s rights — showing its relevance to prosperity for all, men included.
She did the same with respect to the other two issues she spoke to in her speech — early childhood education development and job-creating economic development — indeed, treating them as virtually one and the same. Once again, she relied on compelling facts:
- In the U.S. only 50 percent of our children receive any early childhood education, much of it the wealthier half, compared to China’s goal of providing three years of early learning for 70 percent by 2020.
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- The first five years of life have a dramatic effect on later adult development. Seven hundred new neural connections are formed every second, laying the foundation for the learning, behavior and health we need to grow up as productive adults.
- According to pioneering research by Nobel-prize winning economist James Heckman of the University of Chicago, our nation saves seven dollars during a child’s lifetime for every dollar we invest now in early childhood education. Those savings are measured by higher high school graduation rates, greater likelihood of future employment, lower expenditures for special education, lower incarceration rates and a reduction of other social ills.
At the CGI meeting, Clinton launched a new partnership called “Too Small to Fail” to promote the latest brain development research and help parents to take steps to improve the health and well-being of children in their first five years. It will also work with businesses on expanding flexibility and support of young children.
Clinton clearly articulated her belief in the importance of public-private partnerships as “one of the most important problem-solving tools.” And during her speech, she offered a prime and very specific example: Mr. J. B. Pritzker, a leading member of the world-famous business and philanthropic Pritzker family of Chicago, who had announced at the CGI conference the issuance of “Social Impact Bonds” to finance pre-school education programs for at-risk children.
Such bonds are a new tool, sometimes called "results-based financing," that use private capital to achieve positive social outcomes, generating modest financial returns for private investors while simultaneously generating much greater returns in the form of cost savings for cash-strapped state and local governments.
Pritzker announced at the conference a partnership with the investment bank Goldman Sachs to invest $7 million to fund the expansion of a successful pre-school program that reduces the need for special education at Granite District in Salt Lake City, Utah. Over several years, the new financing will benefit more than 3,500 children and save taxpayers millions of dollars.
The bonds in which Pritzker and Goldman Sachs are investing will be repaid by the school districts only out of actual cost savings in special education, which are significant.
Data from a study conducted in 2006-09 demonstrated that 33 percent of low-income kindergarten students would have needed costly special education services paid for by taxpayers. But after participating in the District’s pre-school program, 95 percent of these children no longer needed special education, saving taxpayers more than $2,600 per child each year for 12 years. Heckman, the award-winning economist, would say there are even bigger savings to taxpayers, which aren’t even calculated in these numbers.
Pritzker and Goldman Sachs will see a return on their bonds only to the extent that the projected cost savings in special education actually occur. In other words, all the risk is theirs, not the taxpayers’ or the school district’s.
This is why Clinton took such pains to thank Pritzker during her CGI America speech and to praise his innovative investment in the Social Impact Bonds for early childhood education. She sees this as an important paradigm for “doing good while doing well,” using the public-private partnership mechanism.
If it can work in Salt Lake, she and Pritzker reason, it can work elsewhere — not only for early childhood education but in other areas of great social needs facing America.
Ideas, innovations, partnerships and public service are all part of the ethics and values that have become a way of life for Hillary Clinton since I first met her in law school more than 42 years ago. And this is why, regardless of whether she seeks higher office in the future, she will certainly make an important contribution to the public good in the months and years ahead.
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