How pay for success can move early childhood education forward

Ensuring that all young children receive high-quality education is a priority for many communities – but tight fiscal environments often force those same communities to consider innovative funding paths, such as pay for success (PFS), in order to meet the needs of vulnerable children.

The Pay for Success Early Childhood Education Toolkit addresses practical considerations facing the use of PFS to scale an existing early childhood education (ECE) program or fund the launch of a new one. The first three reports in this toolkit – addressing the evidence base for early childhood interventions, the use of data to inform decision-making, and the measurement and pricing of outcomes in a PFS project – were released over the summer. Today, we are pleased to announce the release of the remaining reports in the ECE Toolkit:

• Program funding and financing: This report discusses strategies for structuring repayment in an ECE PFS project to mitigate risk, which is often one of the more challenging elements of pulling together a deal.

• Project and performance management: The report outlines how the PFS model’s management approach – contracting for outcomes instead of services – can be implemented successfully in an ECE project.

• Evaluation design: Building off of PFSI’s existing research on evaluation design, the role of evaluators in PFS projects, and the use of randomized control trials (RCTs), this report applies an early education lens to look at the unique evaluation considerations required for PFS projects.
  
  

The toolkit represents more than a year of work that drew on lessons learned from the ECE PFS projects in Utah and Chicago, both of which scale preschool models aimed at improving targeted childhood outcomes. This work comes as more and more PFS feasibility studies consider the use of PFS in early education programs and in the wake of the passage of the Every Student Succeeds Act (ESSA), which authorizes the use of PFS in school districts.

Six key takeaways for practitioners interested in pursuing a PFS project in early education have emerged from this toolkit:

1. Evidence shows that high-quality ECE programs can have meaningful effects on children, setting the stage for better outcomes not just in childhood, but throughout their lives.
   
   
2. Access to existing administrative data from schools and other ECE service providers is important, and often enhanced by the collection of new data to adequately measure desired outcomes.
   
   
3. Both tangible savings to government and intangible benefits to participating children and society at large can influence the prices assigned to successful ECE outcomes. Therefore, it is paramount that stakeholders all agree on how the project will measure and price outcomes.
   
   
4. Getting a government to commit to potential payments years down the line is a risk that requires mitigation to attract private or philanthropic funders; in some cases, legislation may be required.
   
   
5. Implementing a PFS project successfully requires selecting a strong ECE service provider, developing a clear governance structure, and using data for effective performance management.
   
   
6. With repayment contingent on the demonstration of program results, planning and executing a rigorous evaluation of program impacts is crucial.
   
   

Above all, the key to a successful PFS project is a strong, collaborative relationship among all of the partners involved. (In fact, this toolkit grew out of our own collaborative work with experts in the PFS model and early childhood education!) These partnerships push all parties to improve their processes through the shared vision of better outcomes for children.

If you would like to learn more about the toolkit, or have any other PFS questions, contact our experts through our Support Center.

Have a Pay for Success question? Ask our experts at [email protected]!

As an organization, the Urban Institute does not take positions on issues. Scholars are independent and empowered to share their evidence-based views and recommendations shaped by research. Photo via Shutterstock.