| Notes |
Innovative Financing in
Early Childhood Development
Reinventing Our Communities
Baltimore, MA
October 2, 2018
Rob Grunewald, Economist
Community Development, Federal Reserve Bank of Minneapolis*
*The views expressed here are those of the author and not necessarily those of the Federal Reserve Bank of Minneapolis or the Federal Reserve System.
Human Brain Development
Synapse Formation Dependent on Early Experiences
FIRST YEAR
-8 -7 -6 -5 -4 -3 -2 -1 1 2 3 4 5 6 7 8 9 10 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
Birth (Months) (Years)
Sensory Pathways
(Vision, Hearing)
Language Higher Cognitive Function
Source: C. Nelson (2000)
Human
Brain
at Birth 6 Years Old 14 Years Old
Source: Chugani, Phelps & Mazziotta (1987)
Perry Preschool
Costs and Benefits Over 62 Years -$25,000$0 $25,000 $50,000 $75,000 $100,000 $125,000
$150,000
Welfare Payments
Crime Victims
Justice System
Higher Participants' Earnings
K-12 Ed
Program Cost
For Public For Participant
Source: Schweinhart, et al. (2005)
Perry Preschool —
Estimated Return on Investment
Benefit-Cost Ratio = $16 to $1
Annual Rate of Return = 18%
Public Rate of Return = 16%
Heckman Reanalysis = 10%
Sources: Schweinhart, et al. (2005); Author’s calculations; Heckman, Moon,
Pinto, Savelyez, & Yavitz (2010)
Benefit-Cost Ratios for
Other Longitudinal Studies
Abecedarian Educational Child Care
$7 to $1
Chicago-Child Parent
$10 to $1
Elmira Prenatal/Early Infancy Project
$5 to $1
Sources: Garcia, Heckman, Leaf, & Prados (2016); Reynolds, Temple, White, Ou, &
Robertson (2011); Karoly, et al (1998)
Pay for Success early childhood programs
Outcomes tied to success payments
Salt Lake City – Preschool
Reductions in special education and remedial services
Chicago – CPC Preschool
Kindergarten readiness
Reductions in special education services
Third grade literacy
South Carolina – Nurse Family Partnership
Reductions in preterm births
Reduced hospitalizations and emergency room visits
Increase in healthy spacing between births
Increase in mothers served in high-poverty areas
Source: Pay for Success Learning Hub
Pay for Success early childhood programs
Investors and Payers
Salt Lake City – Preschool
Investors: Goldman Sachs, J.B. and M.K. Pritzker Family
Foundation
Payers: Salt Lake County, United Way of Salt Lake for first year,
State of Utah for subsequent years
Chicago – CPC Preschool
Investors: Goldman Sachs, Northern Trust, J.B. and M.K. Pritzker
Family Foundation
Payers: City of Chicago, Chicago Board of Education
South Carolina – Nurse Family Partnership
Investors: A group of foundations (The Duke Endowment largest
contributor), private funders, The Boeing Company
Payers: South Carolina Department of Health and Human
Services
Source: Pay for Success Learning Hub
Social Impact Partnerships to Pay for Results Act
$100 million to fund Social Impact Partnerships
designed to raise private capital to fund social programs
that have the potential to create value for local, state, or
federal government
Government repays investors if certain outcomes are met
50% of support for outcome payments must directly
benefit children
Up to $10 million for feasibility studies
Up to $15 million for evaluation
Sources
Chugani, H.T., Phelps, M.E., & Mazziotta, J.C. (1987). “Positron Emission Tomography Study
of Human Brain Functional Development.” Annals of Neurology 22, 487-497.
Garcia, J.L., Heckman, J.J., Leaf, D.E, & Prados, M.J. (2016). “The Life-cycle Benefits of an Influential Early
Childhood Program.” Human Capital and Economic Opportunity Working Paper Series. The University of Chicago.
Heckman, J. J., Moon, S.H., Pinto, R., Savelyez, P., & Yavitz, A. (2010). “The Rate of Return to the HighScope Perry
Preschool Program.” Journal of Public Economics 94(1-2), 114-28.
Karoly, L.A., Greenwood, P.W., Everingham, S.S., Hoube, J., Kilburn, M.R., Rydell et al. (1998). Investing in Our
Children: What We Know and Don’t Know About the Costs and Benefits of Early Childhood Interventions. Santa
Monica, Cal.: RAND Corporation.
Nelson, C.A. (2000). Neural Plasticity and Human Development: The Role of Early Experience in Sculpting Memory
Systems. Developmental Science 3, 115-130.
Reynolds, A.J., Temple, J.A., Robertson, D.L., & Mann, E.A. (2002). “Age 21 Cost-Benefit Analysis of the Title I
Chicago Child-Parent Centers.” Educational Evaluation and Policy Analysis 4(24), 267-303.
Schweinhart, L.J., Montie, J., Xiang, Z., Barnett, W.S., Belfield, C.R., & Nores, M. (2005). Lifetime Effects: The
High/Scope Perry Preschool Study Through Age 40. Ypsilanti, Mich.: High-Scope Press.
Rob Grunewald
Economist
Community Development
Federal Reserve Bank of Minneapolis
Email: Rob.Grunewald@mpls.frb.org
Web: minneapolisfed.org |