Feb. 02, 2015

By Rep, Todd Stephens
151st District

For the past year, working with the PA House Majority Policy Committee's efforts to combat poverty, I've learned about the vast benefits a high-quality, early childhood education provides for Pennsylvania's children and taxpayers.

The benefits of a high-quality, early childhood education includes lower special education rates and fewer repeated grades, higher graduation rates and higher earnings, and lower incarceration rates. Children who attend high-quality early learning programs enter the workforce prepared to succeed. For these reasons, education, law enforcement, military, and business leaders all support expanding access to early education programs.

Investments in pre-k not only impact the child, but in many cases, their parents as well. When parents receive quality, dependable child care, they can enter, return to, or grow in the workplace. Studies show that adults with dependable child care are viewed as 15 percent more employable, with a 40 percent to 60 percent chance of remaining in the workplace. That's why the U.S. Chamber of Commerce Foundation strongly supports early childhood education.

Taxpayers benefit too. The three largest cost drivers in Pennsylvania's annual budget are education, human services, and corrections – accounting for almost 90 percent of all expenditures. Reductions in the need for the services provided by these departments would benefit all residents of the Commonwealth.
Unfortunately, despite the overwhelming benefits, only 30 percent of Pennsylvania's 3- and 4-year-olds have access to early childhood education, according to the Pre-K for PA campaign. If we want to help children and taxpayers, we must look for fiscally responsible ways to expand access to these programs.

One method is "social impact financing," which is also known as "pay for success." This would allow private investors to provide up-front capital to expand social services that save taxpayer dollars. The approach is simple: If the program funded by private investors generates a savings for the taxpayers in the future, the investors receive a portion of the savings.

Such agreements have already been used to expand early-learning programs in Chicago and Salt Lake City. While both of those initiatives involved Goldman Sachs and J.B. Pritzker, financial institutions like Bank of America and philanthropic organizations like the Rockefeller Foundation are using this approach to expand access to government programs across the United States and in the United Kingdom.

Social impact financing agreements expand social programs without additional taxpayer funding and provide accountability. If the program is successful, the taxpayers save through future cost reductions; if the program is unsuccessful, the private investors bear the risk.

I have been laying the groundwork to initiate a pay-for-success program to expand early-childhood education in Pennsylvania and will introduce legislation to accomplish this goal soon.

Recognizing our state's budget constraints, this approach to expanding access to early learning is not only be timely, but it would be fiscally responsible to allow private-sector investors to invest in programs for our children in order to save taxpayer dollars down the road.

Let's provide children and taxpayers with a win-win by implementing a social impact financing program to expand pre-k in Pennsylvania. I look forward to working with my colleagues and the Wolf administration to accomplish this goal.

Representative Todd Stephens
151st District
Pennsylvania House of Representatives

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