Financing with a twist

More groups explore how Pay For Success financing can help kids

After bursting onto the national scene a few years ago, Pay For Success financing is gaining traction among Colorado school districts and early childhood organizations.

The Early Childhood Council of Boulder County and Adams County School District 50 are both exploring the British-born financing mechanism as a way to pay for underfunded early childhood programs. Aurora Public Schools may use the model as well, to beef up college and career readiness.

The exploratory work by all three groups unfolds as state law-makers consider Pay For Success legislation for the second year in a row. Last year’s bill, which was introduced late in the session and focused exclusively on early childhood programs, died in committee.

Chalkbeat reporting on PFS

Pay For Success resources

Common PFS focus areas 

  • Early childhood
  • Recidivism
  • Chronic homelessness
  • Juvenile Justice
  • Asthma

The idea behind Pay For Success, or PFS, is that private investors or philanthropists pay upfront for evidence-based social programs. If those programs save public money by preventing costly interventions such as emergency room visits or special education services, the investors are repaid with interest.

The potential savings accrued from Pay For Success projects are calculated by comparing the public costs of an individual or group after an intervention program to the public costs of an individual or group with no intervention.

For example, a school district considering a preschool-based Pay For Success project might use national studies showing that high-quality preschool reduces special education enrollment by 15 percent, to estimate its prospective savings.

If for some reason a Pay For Success project doesn’t yield the hoped-for savings, the investors lose some or all of their money. Therein lies part of the appeal of Pay For Success. While it can inject new funding into effective prevention programs, there is relatively little financial risk to the public entities that stand to benefit from those programs long-term.

When it comes to projects targeting children and youth, the Early Childhood Council of Boulder County is farthest along in the complicated development process. (Among all Colorado projects, a Denver effort to address chronic homelessness among adults is closest to fruition.)

The council is studying the possible expansion of a 30-year-old home-visiting program—the “Community Infant Program”—that aims to prevent child abuse and neglect. If the current cost-modeling work shows an expansion is feasible, the project could launch in 2017 with an five-year investment of $2-4 million. It’s not yet clear who the project’s investors would be.

“We’re not seeing any yellow or red lights. They’re all green,” said Bobbie Watson, executive director of the council.

Growing school district interest

In the last few months, local school districts have also begun testing the waters of Pay For Success. Both Adams 50 and Aurora have applied for grants through the University of Utah Policy Innovation Lab, one of a several intermediary organizations distributing federal dollars to build PFS capacity. The grants of up to $250,000 would primarily pay for new in-house employees to help develop PFS projects in each district.

Adams 50 is also an alternate finalist for a grant through the Boston-based Third Sector Capital Partners, another intermediary for Pay For Success capacity-building grants.

The two districts’ bid for such funding speaks to one of the biggest challenges facing organizations interested in the Pay For Success path: the need for money and expertise long before a project launches.

“This is the big problem with PFS right now,” said Mary Wickersham, a consultant working on the Boulder project. “There’s this dearth of funding on the front end.”

While Watson and her team raised around $150,000 to cover those costs, it’s not easy.

Of the more than 40 Pay For Success proposals received in response to a state “Request For Information” in 2013, only two–Denver’s chronic homelessness project and Boulder’s home-visiting project–are actively moving forward.

Dozens of others, “some portion of which could be great deals … are kind of languishing right now for want of support to get them to the finish line,” said Wickersham.

Preschool potential

Following in the footsteps of school districts in Chicago and Salt Lake City, Adams 50 is considering a PFS project that would expand preschool access. Specifically, the district and two community partners, Growing Home and the Early Childhood Partnership of Adams County, want to increase the number of full-day preschool slots in the district and add parenting classes.

The hope is that such a PFS program would decrease special education costs and improve early reading scores, said Mat Aubuchon, director of early childhood education in Adams 50.

“I think it’s exciting: a potentially totally different kind of funding stream in [early childhood education],” he said.

While half-day preschool is relatively accessible in the district, Aubuchon said there are very few state-funded full-day slots and most families can’t afford to pay for it out of pocket. Three-quarters of the district’s students are eligible for free or reduced-price meals, a proxy for low-income status.

The district and its partners are just starting to hold meetings on Pay For Success with potential investors in the philanthropic community, said Aubuchon. The earliest any project could launch is the 2016-17 school year.

“Obviously, we’re at the very infancy state of even exploring something like this,” he said.

Creating a college-bound culture

Meanwhile, Aurora Public Schools, in partnership with the Aurora Public Schools Foundation, is looking at Pay For Success with an eye toward improving outcomes for older kids.

Borrowing a concept used in Denver schools, the project under consideration would establish “Future Centers” in district high schools where students would get advising on all matters related to college and career readiness. The goal is to strengthen the district’s college-bound culture, decrease drop-out rates, and reduce the need for remediation.

“There’s some really clear metrics of deliverables” around post-secondary readiness, said Cheryl Miller, the district’s assistant director of grants and federal programs. “It perfectly aligns to our new strategic plan.”

Among the state’s 15 largest school districts, Aurora had the lowest on-time graduation rate last year: 55.9 percent. Statewide, 77.3 of high school students graduated on time.

Miller said the district initially considered a preschool-based PFS initiative, but wanted to differentiate itself by trying something outside the early childhood arena.

The goal was to be “doubly innovative,” she said.

More money for mental health

The Early Childhood Council of Boulder County began exploring Pay For Success in late 2013. Intent on using the model to make a positive impact on the youngest children, the council looked at six home-visiting programs already operating in the county.

“My board has particular interest in the birth to three population,” said Watson. “That’s where you get your best return on investment.”

The Community Infant Program, in which nurses and psychotherapists work with families around mental health, rose to the top of the list.

“We have a 30-year track record and I think people were pretty excited about the longevity in the community,” said Program Director Janet Dean.

The program, which has 20 employees and an annual budget of $1.5 million, helps parents create healthy relationships with their babies by addressing issues ranging from post-partum depression to anger, stress and mental illness.

Absent such intervention, children may experience abuse or other types of toxic stress that have long-term consequences on their health, education and well-being. There are financial consequences too, often incurred by the public sector. These can include expensive hospitalizations, court proceedings or entry into the foster care system.

If the number-crunching underway now confirms expectations, Pay For Success funding represents a front-end investment that could defray those back-end costs.

Dean said there are usually 20-30 families waiting for services from the Community Infant Program. An expansion would allow the organization to better serve families in the mountains on the west side of the county and those around Longmont, Lafayette and Louisville.

“We have families waiting for our service,” she said. “Mental health is just not funded, in general, to the level it needs to be funded.”

Feeling flexible

How five Aurora schools in an “innovation zone” are making budget decisions to meet their own needs

PHOTO: Nicholas Garcia
Crawford Elementary School Principal Jenny Passchier observed a writing lesson in October 2015.

When Aurora Public Schools went looking for ways to save money earlier this year, one casualty was a district-wide contract for a service that provides a translator on the phone when one is not available in person.

The decision could have hurt Crawford Elementary School, where students speak about 35 languages and the service is used at least weekly— more at the start of the school year.

But Principal Jenny Passchier was not without options. As one of five schools that comprise Aurora Public Schools’ year-old innovation zone, Crawford has greater autonomy from district rules and budgeting decisions.

So when school resumed a couple of weeks ago, families at the five innovation zone schools got phone calls they could understand because leaders of the schools chose to keep paying for the translation and drop other district services to make up the difference.

“It’s very critical that we have some way to get ahold of our families,” Passchier said. “Especially in maybe more informal situations. We don’t always have translators that are readily available in person, so that was a critical piece that we needed to keep.”

That decision provides a window into what autonomy looks like in Aurora’s innovation zone, Superintendent Rico Munn’s biggest reform bet to date to lift achievement in a district with a challenging student population and poor academic track record.

With the innovation zone, Aurora officials are turning to a school model that other districts across the state and country have tried, with mixed results. Innovation status provides schools charter school-like autonomy, but the schools are operated by the district instead of independently.

The five schools in northwest Aurora started rolling out their innovation plans last school year.

Taking advantage of the state’s innovation law, APS officials created the zone to give schools greater flexibility from some state laws, union or district policies so principals could govern things like curriculum, hiring practices, school calendars and budgets in ways that might improve achievement at their schools.

Last year, in the first year of innovation status, district officials worked with principals of the five schools in the zone to figure out what district services they could do without, and what extra services they wanted to pay for with the money they might have instead.

Principals started by looking at what their school needed help with and then district officials worked with them to analyze how well the existing services worked.

In the case of the TeleLanguage service, district officials calculated that the average district school used the translation service for about 909 minutes, or about 15 hours, per school year. But each of the five schools in the innovation zone used the service for about 2,978 minutes per school year — about three times as often as the average district school.

After the analysis, the five schools decided to drop several services, including cutting the district’s human resources department, and in exchange the schools were given about $500,000 extra in the 2017-18 budget.

How the money is being spent

  • Translation services, $14,000
  • Health Sciences Academy at Aurora Central, $30,000
  • College and career services, $30,000
  • Parent support budget for Student Engagement Advocate, $5,000
  • Talent acquisition and marketing budget, $40,000
  • Three full-time positions, $305,189
  • Individual school supports: Crawford, $20,000; Paris, $20,000; Boston K-8, $20,000; Aurora West, $30,000; Aurora Central, $36,000

“I led all five principals through the process of evaluating the needs of their schools,” said Lamont Browne, executive director of autonomous schools, including the innovation zone. “My approach was very much facilitating what ideas they had for who they were.”

As a zone, the five schools created three new positions with the extra $500,000. The schools hired a student engagement advocate to help communicate with families and improve student attendance (a position that would no longer exist at the district level); a director of instruction and leadership development; and a director of talent and acquisition to pick up some of the district HR department’s traditional duties.

The woman hired for that last role already has helped the five schools fill positions that still were open as school started.

Passchier described the budget redesign process as collaborative and said she spent a lot of time reflecting on her school’s needs.

“We were able to identify what are the zone-wide themes that we can support, but also what are unique things we need at the school level,” Browne said.

Each school made ia case for its own funding needs. For instance, Aurora Central High School hired an additional student engagement advocate that would be dedicated just to the 2,000-student high school. One of the staff person’s primary responsibilities: helping improve poor attendance.

Passchier said Crawford staff wanted to continue some reading work they’d done with a grant that was ending. The school is now using about $5,000 to continue work with a consultant the school found helpful in teaching students to read.

Officials say it’s too early to know how well the redesigned budget is working for the schools, but Passchier said she’s already seeing benefits two weeks into the school year.

The director of student engagement, who will work with the five schools to help them engage families and students with a goal of increasing attendance, already has been at Crawford several times, Passchier said.

Browne said that if principals find other district services they want to reconsider or analyze as the school year unfolds, the budget for the five schools may change.

On the right track

Aurora state test results mostly moving in positive direction

Students at Aurora's Boston K-8 school in spring 2015. (Photo by Helen H. Richardson/The Denver Post).

Aurora Public Schools officials are optimistic after seeing their latest state test scores, a major factor in whether the district will pull itself off the state’s watchlist for chronic poor performance.

The number of eighth graders that met or exceeded expectations on English tests increased by more than the state average. The district’s lowest performing school, Aurora Central High School, nearly doubled the number of ninth graders meeting or exceeding expectations on their English tests.

Another Aurora school, William Smith High School, had the state’s fourth highest median growth percentile for English tests. That means that on PARCC English tests, those students showed improvements on average better than 89 percent of Colorado kids who started with a similar test score from the year before.

But the increases of how many Aurora third graders met expectations on English tests weren’t as big as the average increase across the state. The improvements also still leave the district with far fewer students proficient than in many nearby districts or compared to state averages.

“There’s evidence there that there has been some really hard work by our kids and our staff,” Superintendent Rico Munn said. “We’ve hit a mile marker in a marathon. But we fully recognize we have a lot of work left to do.”

Aurora Public Schools is the only Colorado district at risk of facing state action next year if state ratings don’t improve this fall. Those ratings will in part be based on the state test data made public Thursday. Munn said he has a “positive outlook” on what the data could mean for the district’s rating.

Disaggregated test data also seemed promising. While gaps still exist between students who qualify for free or reduced price lunch and those who don’t, the gap has shrunk. English language learners are performing better than native English speakers in both math and English language arts tests.

The trends are similar in other metro area districts, but Munn said there are some changes that might be responsible for the better performance by students who are learning English.

The district made changes in how schools teach English by including English language development throughout the school day rather than just during a specific time of day.

The district’s overall median growth scores also increased and reached above 50 for English language arts. For students to make at least a year’s growth, they must have a score of at least 50, something especially important in districts like Aurora where a lot of students are behind grade level.

Aurora’s five innovation zone schools, the biggest reform superintendent Munn has rolled out, saw mixed results. Last fall, the five schools each started working on plans the district and state approved giving them flexibility from some district or union rules and state laws.

Find your school’s scores
Search for your school’s growth scores in Chalkbeat’s database here, or search for your school’s test results and participation rates in Chalkbeat’s database here.

For instance, Boston K-8 school, one that was celebrated last year, had big increases in the number of sixth graders meeting standards on English tests, but big decreases in the number of eighth graders that do.

Central High School, another school in the zone, and one that is now on a state action plan because of low performance, had a median growth percentile of 57 for English tests, meaning the school’s students on average had improvements better than 57 percent of Colorado students when comparing them to students who had similar test scores the prior year. But the math growth score was 46 — below the 50 that is considered a year’s worth of growth.

Central also had a decrease when compared to last year in the number of students that did well on a math test taken by the largest number of students, or more than 400.

Munn pointed out that schools had only started working on the changes in their innovation plans months before students took these tests and said district officials aren’t yet attributing the results, negative or positive, to the reforms.

Some of the data for the individual schools was not released publicly as part of the state’s efforts to protect student privacy when the number of students in a certain category is low.

Districts do have access to more data than the public, and Munn said educators in Aurora will continue to analyze it, school by school, to figure out what’s working and what needs to change.

David Roll, principal of Aurora’s William Smith High School, said the test results for his school were somewhat unexpected.

“I was hoping we would continue to show growth, but I was anticipating an implementation dip,” Roll said. “What this is beginning to demonstrate to us in strong terms is that this is a powerful way for students to learn. And by the way it also shows up on their testing.”

The school, an expeditionary learning school which relies on projects and field work, made a change last year to eliminate typical subject courses and instead have students enroll in two projects per semester which each incorporate learning standards from the typical subjects such as history, English and math.

“We always envisioned we were working toward that,” Roll said.

Here’s how William Smith High School ranked on growth scores for English tests: