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House of Representatives
Session of 2017 - 2018 Regular Session


Posted: January 19, 2017 11:02 AM
From: Representative Todd Stephens
To: All House members
Subject: Expanding access to Pre-K through Private Investment (Social Impact Financing)

In an effort to reduce state spending on special education, human services (public welfare) and corrections, I will be re-introducing legislation (prior HB 1053) to expand access to high quality early childhood education services through a Pre-K private investment financing pilot program. This program will allow private capital from investors to finance early childhood education programs now, in exchange for a portion of the savings the state/school district realizes in future years. The private investors share in the savings only when specific outcomes are achieved. If a program fails to achieve the required benchmarks/school savings delineated in the contract, the investor is not paid. This approach, often referred to as “Pay for Success,” guarantees accountability in early childhood education programs and is being implemented across the country with partners such as Goldman Sachs, J.B. Pritzker, Rockefeller Foundation, and Bank of America to help reduce state spending and improve outcomes for children.

Countless studies have shown high-quality early childhood education programs:
  • reduce the need for costly special education services and remediation services;
  • reduce grade retention
  • increase high school graduation rates;
  • decrease corrections expenses through lower incarceration rates; and
  • allow parents to return to the workforce reducing the need for government assistance.
In addition to generating savings for taxpayers, high-quality Pre-K programs prepare children to enter kindergarten ready to learn, providing a greater opportunity for success in school and in life. High-quality early learning is especially cost-effective for, and beneficial to, children whose educational opportunities are hindered by poverty or other circumstances. Business leaders support high quality early childhood education programs because of the benefits to parents seeking employment and because the children of today are the workforce of tomorrow. In sum, high quality Pre-K saves taxpayer dollars while helping our children, our schools and our Commonwealth.

Unfortunately, despite the overwhelming benefits to children, parents, employers and taxpayers, only 30% of Pennsylvania’s three and four year olds have access to high quality early childhood education programs according to the Pre-K for PA campaign. Likewise, thousands of children are on a waiting list for childcare programs, preventing their parents from working more hours and/or returning to the workplace. Increasing access to these programs through private investments will save taxpayer dollars, provide incentives to work, and authorize fiscally responsible private sector investments during difficult budgetary times.

Please join me in co-sponsoring this legislation to expand access to high quality early childhood education programs through a Pre-K Impact Financing Pilot Program.


Introduced as HB1136